About Precision Drilling

Precision Drilling Corporation (Precision) provides safe and environmentally responsible High Performance, High Value services to the energy industry. The company offers customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as Alpha technologies that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel. The company’s drilling services are enhanced by its EverGreen suite of environmental solutions, which bolsters its commitment to reducing the environmental impact on its operations. Segments The company operates through Contract Drilling Services, and Completion and Production Services segments. Contract Drilling Services This segment operates the company’s drilling rigs in Canada, the U.S. and internationally and provides onshore well drilling services to exploration and production companies in the oil, natural gas and geothermal industries. As of December 31, 2022, the segment consisted of 225 land drilling rigs, including 111 in Canada, 101 in the U.S., 6 in Kuwait, 4 in Kingdom of Saudi Arabia, 2 in the Kurdistan region of Iraq, and 1 in the country of Georgia; engineering, manufacturing and repair services, primarily for Precision’s operations; centralized procurement, inventory, and distribution of consumable supplies for its global operations; diverse offerings from its Alpha technologies including 70 Alpha rigs with commercial AlphaAutomation, 21 commercial AlphaApps, and deployed commercial AlphaAnalytics offering; and wide array of offerings from its EverGreen suite of environmental solutions, such as Battery Energy Storage System (BESS) and real-time fuel/emissions, monitoring capabilities offered across North America, and 60 rigs equipped with dual-fuel engines, natural gas engines and/or power grid tie-in technology. The U.S.: The company offers land drilling services, turnkey drilling services, procurement and distribution of oilfield supplies, and manufacture and refurbishment of drilling and service rig equipment. Canada: The company offers land drilling services, procurement and distribution of oilfield supplies, and manufacture and refurbishment of drilling and service rig equipment. International: The company offers land drilling services. Completion and Production Services This segment includes a number of businesses providing completion and workover services and ancillary services to oil and natural gas exploration and production companies in Canada and the U.S. As of December 31, 2022, the segment consisted of 135 registered well completion and workover service rigs, including 125 in Canada and 10 in the U.S.; more than 1,900 oilfield rental items, including surface storage, power generation, and solids control equipment, primarily in Canada; 103 wellsite accommodation units in Canada; and 782 drill camp beds, 654 base camp beds and three kitchen diners in Canada. Canada: The company offers well completion and workover service rigs, camp and catering services, oilfield surface equipment rental, and wellsite accommodations. The U.S.: The company offers well completion and workover service rigs. Contract Drilling Services Precision Drilling As of December 31, 2022, the company had a large fleet of land drilling rigs deployed in Canada, the U.S. and internationally. Canada – The company operated the largest fleet of land drilling rigs in country. Internationally – As of December 31, 2022, the company were marketing six land drilling rigs in Kuwait, four in Kingdom of Saudi Arabia, two in the Kurdistan region of Iraq, and one in the country of Georgia. Drilling Contracts The company’s contract terms are generally based on the complexity and risk of operations, on-site drilling conditions, the type of equipment used and anticipated duration of work to be performed. Drilling contracts can be for single or multiple wells and can vary in length from a few days on shallow single-well applications to multiple-year, multiple-well drilling programs for more complex applications. Short-term contracts that provide drilling rigs on a well-to-well basis are typically subject to termination by the customer on short notice or with little or no penalty. In 2022, the company had an average of 47 drilling rigs (31 in the U.S., 10 in Canada and six internationally) working under term contracts. Utilization days from term contracts was approximately 37% of the company’s total contract drilling utilization days for the year. The company markets its drilling rigs mainly on a regional basis through sales and marketing personnel. The company secures contracts to drill wells either through competitive bidding or as a result of business development efforts and negotiations with customers. The company’s contracts have been carried out almost exclusively on a daywork basis. Under a daywork contract, the company provides a drilling rig with required personnel, and the customer supervises the drilling of the well; charge the customer a fixed rate per day regardless of the number of days needed to drill the well; and charge the customer a fixed rate per day or a lump sum amount to mobilize the rig to the well site location, rig-up, rig-down and demobilize the rig to a secure site. The company also drilled a small number of wells near the U.S. Gulf Coast (approximately 1% of its the U.S. rig utilization in 2022) on a turnkey basis. Under a turnkey contract, the company agrees to drill a well to a certain depth for a fixed price. Seasonality Drilling and well servicing activity is affected by seasonal weather patterns and ground conditions. In Canada and the northern U.S., wet weather and the spring thaw make the ground unstable, resulting in road restrictions that may limit the movement of heavy oilfield equipment and reduce the level of drilling and well servicing activity primarily during the second quarter of the year (year ended December 31, 2022). In northern Canada, some drilling sites can only be accessed in the winter once the terrain is frozen, which usually begins late in the fourth quarter. The company’s business activity depends, in part, on the severity and duration of the winter drilling season. Drilling Fleet The company focuses on providing drilling technologies that seek to minimize environmental impact. Design innovations and technology improvements, such as multi-well pad capability and rapid mobility between wells, capture incremental time savings during the drilling process. With one of the newest and most technically capable fleets in North America and the Middle East, Precision’s Super Series rigs have been designed for industrial-style drilling: highly efficient, mobile, safe, controllable, upgradable; and able to act as a platform for digital and emission-reducing technology delivery to the well location. Precision has completed relatively low-dollar cost upgrades over the past several years, including additions of walking systems, higher pressure and capacity mud pumps, increased setback capacity and AlphaAutomation and AlphaApps technology. Precision’s Super Series drilling rig fleet meets the industrial-style drilling requirements of the company’s customers in North America and deep, high-pressure/high-temperature drilling projects internationally. As of December 31, 2022, the company had 225 Super Series rigs in its fleet. Alpha Technologies Precision is a leading provider of digital technologies that automate key processes of the drilling cycle and significantly improves the efficiency of the downhole function. The company partners with various industry leaders to develop a widespread portfolio of technology offerings which include: AlphaAutomation, AlphaApps and AlphaAnalytic. As of December 31, 2022, Precision had drilled over 2,600 wells with AlphaAutomation, which includes approximately 850 wells drilled in 2022, enhancing the performance and value of its Super Triple drilling rig fleet. As of December 31, 2022, the company had 70 AlphaAutomation systems commercialized across various basins in the U.S. and Canada, which support an open platform to host multiple in-house, customer-developed or third-party applications. Precision has 21 commercial AlphaApps and offers its AlphaAnalytics data services to further enhance the value proposition of its digital offering. EverGreen Suite of Environmental Solutions In 2021, the company launched its EverGreen suite of environmental solutions, bolstering its commitment to reduce the environmental impact of oilfield operations. The company’s EverGreen suite of environmental solutions consists of EverGreenMonitoring, EverGreenEnergy and EverGreen Fuel Cell. The company tested, field hardened, and implemented its BESS and fuel monitoring system in 2022, and it has multiple commercial agreements in place for each of these technologies for installation on customer locations in the first quarter of 2023. International Grey Wolf International (Grey Wolf) is the company’s platform and market brand for its international oil and natural gas drilling market. Grey Wolf is active in Kuwait and the Kingdom of Saudi Arabia and continues to explore opportunities in various additional international markets. International oilfield service operations involve relatively long sales cycles with bidding periods, contract award periods and rig mobilization periods measured in months. Grey Wolf has a regional office in Dubai, United Arab Emirates. Manufacturing Based in Calgary, Alberta, Rostel Industries manufactures drilling rigs and equipment and refurbishes components for the company’s drilling and service rigs, as well as third-party equipment. Rostel Industries supports the company’s vertical integration, and approximately 72% of its revenue in 2022 was related to Precision business. Oilfield Supply Columbia Oilfield Supply in Canada and Precision Drilling Oilfield Supply in the U.S. utilize general oilfield supply warehouses that procure, package and distribute large volumes of consumable oilfield supplies for the company’s rig sites. The company’s supply warehouses achieve economies of scale through bulk purchasing and standardized product selection and then coordinate distribution to Precision rig sites. Columbia Oilfield Supply and Precision Drilling Oilfield Supply play a key role in its supply chain management. In 2022, 99% of Columbia Oilfield Supply and 100% of Precision Drilling Oilfield Supply activities supported Precision operations. These operations leverage the company’s procurement volumes to the administrative workload for field personnel, enhancing its competitiveness. Technical Support Centres The company operates two contract drilling technical centres, one in Nisku, Alberta and one in Houston, Texas, and one completion and production technical centre in Red Deer, Alberta. These centres accommodate the company’s technical service and field training groups and consolidate field support and training for its operations. The Houston and Nisku facilities have fully-functioning training rigs with the latest drilling technologies. The company’s Global Field Competency Program ensures that its field operations employees obtain competency levels for their current position and potential future positions. The program defines specific skills and learning pathways for certain jobs and identifies any skill gaps that an individual employee is required to remedy. The Global Field Competency Program supports its broader corporate vision and strategy by ensuring its drilling personnel provide High Performance, High Value services to its customers. In 2022, the company completed 989 competency assessments throughout North America. Completion and Production Services Precision Completion and Production Services Precision offers a versatile fleet of service rigs for well completion, workover, abandonment, maintenance and re-entry preparation services. The fleet is strategically positioned throughout western Canada and in the northern U.S. Well Service Activities Well servicing jobs are typically of short duration and generally conducted during daylight hours, so it is important for a service rig to be close to customer demand and be able to move quickly from one site to another. Well servicing requires a unique skill set as crews must deal with the potential dangers and safety concerns of working with pressurized wellbores. Completion and workover services can take a few days to several weeks to complete depending on the depth of the well and the complexity of the completion or workover. On July 27, 2022, the company acquired the well servicing business and associated rentals assets of High Arctic Energy Services, Inc. The transaction added a fleet of 80 service rigs (51 marketed and 29 inactive) to its Canadian well servicing operations, skilled and experienced field personnel, rental assets, ancillary support equipment, inventories and spares, and six additional operating facilities in key basins. As of December 31, 2022, Precision Well Servicing had an industry leading market share in Canada, based on operating hours, of approximately 14% of total industry operating hours. The total Canadian industry well servicing fleet average is approximately 724 service rigs. Precision has an additional 143 well completion and workover service rigs in Canada that are not registered with the industry association. In 2022, Precision Completion and Production Services operated 10 service rigs in the United States. Service Rig Activities Well servicing operations have two distinct functions – workovers and abandonments and completions. The demand for completion services is generally more volatile than for workover services. Of its total oil and natural gas well service rig activity in Canada in 2022: workovers and abandonments accounted for approximately 89%, and completions accounted for approximately 11%. Workovers and Abandonments – Workover services are generally provided according to customer preventive maintenance schedules or on a call-out basis when a well needs major repairs or modifications. Workover services generally involve remedial work, such as repairing or replacing equipment in the well, enhancing production, re-completing a new producing zone, recovering lost equipment or abandoning the well. Producing oil and natural gas wells generally require some type of workover or maintenance during their life cycle. The demand for production or workover services is based on the total number of existing active wells and their age and producing characteristics. Completions – Customers often contract a specialized service rig to take over from a larger, more expensive drilling rig to prepare a newly drilled well for initial production. The service rig and crew work jointly with other services to open and stimulate the wellbore producing zones for initial production. The demand for well completion services is generally related to the level of drilling activity in a region. Precision Rentals Precision Rentals provides more than 1,900 pieces of oilfield rental equipment for rental to customers from three operating centres and 12 stocking points throughout western Canada, supported by a technical service centre in central Alberta. Precision Rentals has four distinct product categories, such as surface equipment (including environmental invert drilling mud storage, hydraulic fracturing fluid storage, production tanks and other fluid handling equipment); wellsite accommodations (fully equipped units that provide on-site office and lodging for field personnel); power generation equipment; and solids control equipment. Precision Camp Services Precision Camp Services provides food and accommodation to personnel working at remote locations in western Canada. As of December 31, 2022, Precision Camp Services had 34 drill camps and base camp dormitories along with kitchen or diners to accommodate 654 people in western Canada. Each drill camp includes six building units that typically accommodate 20 to 25 rig crew members and other personnel and, if required, individual dormitory units that accommodate up to 44 additional personnel can be added. Precision Camp Services has also configured several camps and dormitories to provide housing and meals for base camps with up to 500 personnel on separate major projects in western Canada. As the oil and natural gas industry searches for new reserves in more remote locations, crews need to stay near the worksite, often in camps, throughout the duration of a drilling program. Precision Camp Services serves Precision and other companies in the upstream oil and natural gas sector and, from time to time, other industries operating in remote locations. Seasonality The company’s business activity depends, in part, on the severity and duration of the winter drilling season. Trademarks The company owns registered trademarks, service marks and trade names that it uses in its business, including, but not limited to Precision Drilling Corporation, Precision Drilling, PD logo and design, Grey Wolf, Super Series, Precision Super Single, Super Triple, Alpha, AlphaAutomation, AlphaApps, AlphaAnalytics and EverGreen. History Precision Drilling Corporation was founded in 1951. The company was incorporated in 1951.