Consolidated Financial Statements for the period ended March 31, 2007

Precision Drilling Trust

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

		March 31,		December 31,
(Stated in thousands of Canadian dollars)		2007		2006

ASSETS
Current assets:
Accounts receivable	$	389,398	$	354,671
Income tax recoverable		8,362		8,701
Inventory		8,406		9,073
		406,166		372,445
Property, plant and equipment, net of accumulated depreciation		1,138,730		1,107,617
Intangibles, net of accumulated amortization		353		375
Goodwill		280,749		280,749
	$	1,825,998	$	1,761,186

LIABILITIES AND UNITHOLDERS’ EQUITY
Current liabilities:
Bank indebtedness	$	24,656	$	36,774
Accounts payable and accrued liabilities		114,135		130,202
Distributions payable		23,894		38,985
		162,685		205,961
Long-term incentive plan payable		20,238		22,699
Long-term debt		147,690		140,880
Future income taxes		191,925		174,571
		522,538		544,111
Unitholders’ equity:
Unitholders’ capital (note 3)		1,412,294		1,412,294
Deficit		(108,834)		(195,219)
		1,303,460		1,217,075
	$	1,825,998	$	1,761,186
Units outstanding (000’s)		125,758		125,758

Precision Drilling Trust

CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT (UNAUDITED)


		Three months ended March 31,
(Stated in thousands of Canadian dollars, except per unit amounts)		2007			2006

Revenue	$	410,542		$	536,408
Expenses:
Operating		194,156			242,653
General and administrative		14,555			22,891
Depreciation and amortization		23,484			24,900
Foreign exchange		168			55
		232,363			290,499
Operating earnings		178,179			245,909
Interest:
Long-term debt		2,530			2,911
Other		27			8
Income		(118)			(142)
Earnings before income taxes		175,740			243,132
Income taxes: (note 4)
Current		320			18,364
Future		17,353			585
		17,673			18,949
Net earnings		158,067			224,183
Deficit, beginning of period		(195,219)			(303,284)
Distributions declared		(71,682)			(101,623)
Deficit, end of period	$	(108,834	)	$	(180,724	)
Earnings per unit:
Basic and diluted	$	1.26		$	1.79
Units outstanding (000’s)		125,758			125,461
Weighted average and diluted units outstanding (000’s)		125,758			125,461

Precision Drilling Trust

CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

		Three months ended March 31,
(Stated in thousands of Canadian dollars)		2007		2006

Cash provided by (used in):
Operations:
Net earnings	$	158,067	$	224,183
Adjustments and other items not involving cash:
Long-term incentive plan compensation		(2,461)		2,803
Depreciation and amortization		23,484		24,900
Future income taxes		17,353		585
Changes in non-cash working capital balances		(40,145)		(211,531)
		156,298		40,940

Investments:
Purchase of property, plant and equipment		(55,702)		(49,031)
Proceeds on sale of property, plant and equipment		1,128		8,164
Changes in non-cash working capital balances		(9,643)		5,252
		(64,217)		(35,615)
Financing:
Distributions paid		(86,773)		(104,383)
Increase in long-term debt		6,810		127,764
Changes in non-cash working capital balances		–		(22,060)
Change in bank indebtedness		(12,118)		(6,646)
		(92,081)		(5,325)
Change in cash and cash equivalents		–		–
Cash and cash equivalents, beginning of period		–		–
Cash and cash equivalents, end of period	$	–	$	–

Precision Drilling Trust

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Tabular amounts are stated in thousands of Canadian dollars except unit numbers)

NOTE 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

These interim financial statements for Precision Drilling Trust (the "Trust") were prepared using accounting policies and methods of their application consistent with those used in the preparation of the Trust’s consolidated audited financial statements for the year ended December 31, 2006 except as noted below. These interim financial statements conform in all material respects to the requirements of generally accepted accounting principles in Canada for annual financial statements with the exception of certain note disclosures regarding balance sheet items and transactions occurring prior to the current reporting period. As a result, these interim financial statements should be read in conjunction with the Trust’s consolidated audited financial statements for the year ended December 31, 2006.

Effective January 1, 2007 the Trust adopted new accounting standards issued by the Canadian Institute of Chartered Accountants. The standards regarding the disclosure of comprehensive income (Sections 1530 and 3251) require a statement of comprehensive income, which is comprised of net earnings and other comprehensive income. The Trust does not have any amounts that would be included in comprehensive income, therefore, comprehensive income is equivalent to net earnings and no statement of comprehensive income is presented. The adoption of the standards relating to the recognition, measurement, disclosure and presentation of financial instruments (Section 3855 and 3861), and hedge accounting (Section 3865) did not have a material impact on these consolidated financial statements.

New Canadian accounting standards relating to the disclosure of financial instruments and capital have been issued. The new standards have not yet been applied by the Trust. The application of these standards will result in additional disclosure when they become effective for the fiscal period commencing January 1, 2008.

Certain of the prior period’s comparative figures have been reclassified to conform to the current year’s presentation.

NOTE 2. SEASONALITY OF OPERATIONS

The majority of the Trust’s operations are carried on in Canada. The ability to move heavy equipment in the Canadian oil and natural gas fields is dependent on weather conditions. As warm weather returns in the spring, the winter’s frost comes out of the ground rendering many secondary roads incapable of supporting the weight of heavy equipment until they have thoroughly dried out. The duration of this "spring break-up" has a direct impact on the Trust’s activity levels. In addition, many exploration and production areas in northern Canada are accessible only in winter months when the ground is frozen hard enough to support equipment. The timing of freeze up and spring break-up affects the ability to move equipment in and out of these areas. As a result, late March through May is traditionally the Trust’s slowest time.

NOTE 3. UNITHOLDERS’ CAPITAL

	(a) Authorized - unlimited number of voting Trust units
	- unlimited number of voting exchangeable LP units
	(b) Units issued:

Trust units	Number		Amount

Balance, December 31, 2006	125,536,329	$	1,409,828
Issued on retraction of exchangeable LP units	35,045		390
Balance March 31, 2007	125,571,374	$	1,410,218

Exchangeable LP units	Number		Amount

Balance, December 31, 2006	221,595	$	2,466
Redeemed on retraction of exchangeable LP units	(35,045)		(390)
Balance March 31, 2007	186,550	$	2,076

Summary	Number		Amount

Trust units	125,571,374	$	1,410,218
Exchangeable LP units	186,550		2,076
Unitholders’ capital	125,757,924	$	1,412,294

NOTE 4. INCOME TAXES

The Trust incurs taxes to the extent that there are certain provincial capital taxes, as well as taxes on any taxable income, of its underlying subsidiaries. Future income taxes arise from the differences between the accounting and tax basis of the underlying subsidiary’s assets and liabilities.

The provision for income taxes differs from that which would be expected by applying statutory Canadian income tax rates. A reconciliation of the difference at March 31 is as follows:

		2007			2006

Earnings before income taxes	$	175,740		$	243,132
Federal and provincial statutory rates		33	%		34	%
Tax at statutory rates	$	57,994		$	82,665
Adjusted for the effect of:
Non-deductible expenses		554			266
Income to be distributed to unitholders, not subject to tax in the Trust		(41,166)			(64,968)
Other		291			986
Income tax expense	$	17,673		$	18,949
Effective income tax rate		10	%		8	%

NOTE 5. SEGMENTED INFORMATION

The Trust operates primarily in Canada, in two segments: Contract Drilling Services and Completion and Production Services. Contract Drilling Services includes drilling rigs, procurement and distribution of oilfield supplies, camp and catering services and manufacture, sale, and repair of drilling equipment. Completion and Production Services includes service rigs, snubbing units, wastewater treatment units, and oilfield equipment rental.

Three months ended March 31, 2007		Contract Drilling Services		Completion and Production Services		Corporate and Other	Inter-segment Eliminations			Total

Revenue	$	280,895	$	133,206		–	($3,559	)	$	410,542
Operating earnings		132,735		51,815		(6,371)	–			178,179
Depreciation and amortization		12,610		9,983		891	–			23,484
Total assets		1,278,902		518,047		29,049	–			1,825,998
Goodwil		172,440		108,309		–	–			280,749
Capital expenditures		49,896		5,444		362	–			55,702


Three months ended March 31, 2006		Contract Drilling Services		Completion and Production Services		Corporate and Other	Inter-segment Eliminations			Total

Revenue	$	384,162	$	156,638	$	–	($4,392	)	$	536,408
Operating earnings		193,683		63,787		(11,561)	–			245,909
Depreciation and amortization		13,526		10,286		1,088	–			24,900
Total assets		1,268,052		517,397		46,635	–			1,832,084
Goodwill		172,440		94,387		–	–			266,827
Capital expenditures		41,785		6,972		274	–			49,031