<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>7
<FILENAME>ex99-2form6k_q207.txt
<DESCRIPTION>EX. 99-2
<TEXT>
                                                                   EXHIBIT 99.2
                                                                   ------------


MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's  discussion and analysis for the three and six month periods ended
June 30, 2007 of Precision Drilling Trust (the "Trust" or "Precision") prepared
as at July 24,  2007  focuses  on certain  key  statistics  from the  unaudited
consolidated financial statements and pertains to known risks and uncertainties
relating  to the  oilfield  services  sector.  This  discussion  should  not be
considered  all  inclusive  as it  excludes  changes  that may occur in general
economic,  political and  environmental  conditions.  This discussion should be
read in  conjunction  with the material  contained in  Precision's  2006 annual
report  on pages 30  through  66,  the  unaudited  June 30,  2007  consolidated
financial  statements and related notes and the cautionary  statement regarding
forward-looking information and statements on page 14 of this report.

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(Stated in thousands of Canadian            Three months ended June 30,            Six months ended June 30,
dollars, except per unit amounts)          2007         2006   % Change          2007          2006  % Change
--------------------------------------------------------------------------------------------------------------

<S>                                  <C>          <C>               <C>    <C>          <C>               <C>
Revenue                              $  122,005   $  223,569        (45)   $  532,547   $   759,977       (30)
Operating earnings(1)                    27,074       74,543        (64)      205,253       320,452       (36)
Net earnings                             25,722       88,303        (71)      183,789       312,486       (41)
Cash provided by operations             229,073      339,619        (33)      385,371       380,559         1
Net capital spending                     50,710       48,107          5       105,284        88,974        18
Distributions declared                   56,591      111,681        (49)      128,273       213,304       (40)
Per unit information:
   Net earnings                            0.20         0.70        (71)         1.46          2.49       (41)
   Distributions declared            $     0.45   $     0.89        (49)   $     1.02   $      1.70       (40)
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Non-GAAP measure. See page 13.

<TABLE>
<CAPTION>
FINANCIAL POSITION AND RATIOS
                                                                     June 30,    December 31,        June 30,
(Stated in thousands of Canadian dollars, except ratios)               2007            2006            2006
---------------------------------------------------------------------------------------------------------------

<S>                                                              <C>             <C>             <C>
Working capital                                                  $     77,729    $    166,484    $    135,935
Working capital ratio                                                     1.8             1.8             1.8
Long-term debt                                                   $     51,937    $    140,880    $     44,997
Total assets                                                     $  1,629,942    $  1,761,186    $  1,573,983
Long-term debt to long-term debt plus equity ratio                       0.04            0.10            0.04
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                               PRECISION DRILLING TRUST Q2    1
<PAGE>


OVERVIEW

During the second  quarter of 2007,  Precision  experienced  some of its lowest
activity  and  equipment  utilization  levels in a decade as poor  weather  and
continued  uncertainty  over the  economics  of natural gas drilling in western
Canada  led  customers  to limit  spending.

Demand  for  Precision's  contract  drilling  services  in the  Western  Canada
Sedimentary  Basin ("WCSB") was 54% lower in the second quarter of 2007 than in
the second quarter of 2006. Seasonal second quarter weakness was exacerbated by
record  precipitation  in many areas and some producers opting to defer natural
gas drilling as deteriorating  pricing fundamentals  provided less incentive to
activate rigs after spring  breakup.  The downturn in activity  coincided  with
record industry drilling rig capacity which resulted in low utilization  levels
and competitive  spot market pricing.

Precision's service rig operating hours were 35% lower in the second quarter of
2007  than in the same  period  in 2006 as record  rainfall  in some  areas and
decreased  activity in natural gas well  service work was  partially  offset by
sustained  workover activity in oil related areas.

Activity  declines in Canada were  partially  offset by  Precision's  strategic
entry into the United  States.  During  the  second  quarter of 2007  Precision
marked  the  first  anniversary  of its U.S.  drilling  operations  and  staged
expansion into the U.S. land drilling market.  These operations generated 9% of
revenue  and 17% of  operating  earnings  in the just  completed  quarter.

The current business environment for oilfield services in Canada is challenging
and  Precision  remains  committed  to its  long-term  strategy of investing in
higher  productivity  through  its people and  equipment.  Precision  is in the
process of  constructing a new Employee  Centre in Nisku,  Alberta,  to support
personnel,  safety and training  initiatives and enhance employee retention.  A
drilling  rig was  decommissioned  from  active  service  in July  and  will be
redeployed to the new Employee  Centre to facilitate  employee  orientation and
ongoing training.

Precision  has  allocated  an  estimated  $275  million to capital  spending on
property,  plant and equipment in 2007,  including  $90 million for  productive
capacity  maintenance  of existing  assets and $185  million  for  expansionary
initiatives.  Expansion  capital continues to be directed toward the completion
of the new drilling rig  construction  program  pursuant to long-term  customer
arrangements.  Precision had 13 rigs under  construction  at quarter end, seven
for the  Canadian  market and six for the United  States,  which will bring its
North  American  fleet to 259 drilling rigs during the second  quarter of 2008.

The  investment in operating  personnel,  technology,  equipment and systems is
designed to make Precision an even safer place to work and provide  customers a
level of service that lowers costs  through  gains in  efficiency.  Precision's
second quarter and first half of 2007 are highlighted by the following:


                              [GRAPHICS OMITTED]


2    MANAGEMENT'S DISCUSSION AND ANALYSIS

<PAGE>


                              [GRAPHICS OMITTED]


Financial

For the three months ended June 30, 2007:

o Precision  maintained a strong financial position with working capital of $78
  million, long-term debt of $52 million and a long-term debt to long-term debt
  plus equity ratio of 0.04 as at June 30, 2007.

o Revenue was $122  million,  a decrease of $102  million or 45% from the prior
  year  quarter  due  to  significantly   lower  activity  levels  in  both  of
  Precision's operating segments.

o General and  administrative  costs were $10 million, a decrease of $6 million
  from the same  period  in 2006  due  primarily  to a  recovery  of  long-term
  incentive compensation accruals.

o Operating  earnings  were $27 million,  a decrease of $47 million or 64% from
  the second  quarter of 2006. As a percentage of revenue,  operating  earnings
  were 22% compared with 33% in the second quarter of 2006, a decline of eleven
  percentage  points  due to  reduced  customer  pricing  and  higher  variable
  operating costs.

o Net  earnings  were $26 million or $0.20 per diluted  unit, a decrease of 71%
  compared to $88 million or $0.70 per  diluted  unit in the second  quarter of
  2006.  Precision realized a lower income tax expense in the second quarter of
  2006 when the  federal and  provincial  governments  in Canada  substantively
  enacted  tax rate  reductions  that  resulted  in  Precision  recording a $21
  million reduction in future tax balances compared with a $2 million reduction
  recorded in the second  quarter of 2007,  a  difference  of $0.15 per diluted
  unit.

For the six months ended June 30, 2007:

o Revenue was $533  million,  a decrease of $227  million or 30% from the first
  half of 2006 due to significantly  lower activity levels in both segments and
  declining service pricing for the drilling rig fleet.

o General and administrative  costs were $25 million, a decrease of $14 million
  from the prior  year due  primarily  to a  recovery  of  long-term  incentive
  compensation accruals.

o Operating  earnings were $205 million, a decrease of $115 million or 36% from
  the first half of 2006. As a percentage of revenue,  operating  earnings were
  39% compared with 42% in the first half of 2006, a moderate  decline of three
  percentage points as customer pricing held during the active first quarter of
  2007.

o Net earnings  were $184 million or $1.46 per diluted  unit, a decrease of 41%
  compared to $312 million or $2.49 per diluted unit in the first half of 2006.
  For 2007,  the future  income tax expense  recovery  from  Canadian  tax rate
  reductions  was  $19  million  lower  than  the  prior  year,  or  $0.15  per
  diluted unit.

                                               PRECISION DRILLING TRUST Q2    3
<PAGE>

Operational

o Total capital expenditures in the quarter for the purchase of property, plant
  and equipment were $53 million, a decrease of $8 million from the same period
  in 2006.  Capital  expenditures  for the six months  ended June 30, 2007 were
  $109  million,  a  decrease  of $2 million  from the same  period in 2006 and
  included $83 million for expansionary capital initiatives and $26 million for
  the productive capacity maintenance of existing assets.

o In the quarter,  Precision added one new drilling rig and one new service rig
  and in July one drilling rig was  decommissioned  for training use at the new
  Employee Centre.

o Precision  assigned two new rig builds originally under contract in Canada to
  U.S.  customers in the quarter.  Early in July,  Precision  commissioned  the
  first of five new Super Single(TM) rig builds under contract to a customer in
  Texas.

o Precision  currently  has six drilling  rigs in the United States and another
  five contracted Super Single(TM) rigs at various stages of construction. Once
  these rig builds  are  complete,  Precision  expects to operate a fleet of 11
  rigs in the United States -seven in Texas and four in Colorado.

The trend for lower year-over-year  drilling levels in western Canada continued
in the second quarter of 2007 and led to the lowest drilling rig activity level
for Precision  and the lowest rig  utilization  rates in nearly a decade.

Poor spring  weather  limited  activity in many areas of western Canada but the
greater issue was the  reluctance of producers to initiate  drilling  programs.
Demand for drilling in Canada  remained  soft and in contrast to high  activity
levels in the U.S. land drilling markets.

Some Canadian  customer cash flows and net backs have been  challenged by field
cost escalations,  low new natural gas well production rates, softening natural
gas prices,  a weakening U.S. dollar against other major  currencies  including
Canada,  gas  transportation  cost differentials to U.S. markets and tightening
cash  availability in capital and debt markets.  Licensing for new gas wells in
western  Canada was 45% lower during the first six months of 2007 than the same
period of 2006.

As with a year ago,  fundamentals for the industry remain modest and it appears
to be a  continuation  of 2006  where  high  levels of  natural  gas in storage
prompted  a drop in  drilling  activity  that  still  persists.  Gas in storage
remains  above the  five-year  average in North  America  and close to year-ago
levels when it was a contributing factor in the sharp decline in gas prices and
an abrupt end to the  record-setting  drilling  activity in the WCSB every year
since 2003.

For Precision, weakness in the Canadian contract drilling sector in the quarter
was  partially  offset by more  sustained  well  servicing  activities  for oil
workovers given high oil prices and more activity in the U.S. contract drilling
division where Precision  operated five rigs at 98% utilization.

The increased number of rigs in the industry has magnified the decline in field
activity  levels from recent  years.  At the end of the quarter  there were 887
drilling rigs  registered  with the Canadian  Association  of Oilwell  Drilling
Contractors ("CAODC"),  an increase of 57% over the industry rig fleet in 1999.

During the  quarter,  Henry Hub natural gas spot  prices  averaged  US$7.51 per
MMBtu and closed at US$6.36  compared to an average of US$6.51 per MMBtu in the
second quarter of 2006. West Texas Intermediate crude oil averaged US$64.99 per
barrel during the quarter compared to US$70.48 per barrel in the same period in
2006.

4    MANAGEMENT'S DISCUSSION AND ANALYSIS
<PAGE>

The one-year forward price for North American natural gas traded within a range
of about  $7.00 to $9.00 on  Canadian  and U.S.  exchanges  during  the  second
quarter of 2007  compared  to about  $8.00 to $10.00 in the  second  quarter of
2006.

During the second quarter of 2007, 69% of industry well  completions in western
Canada  targeted  natural gas while 31% targeted oil, which is in line with the
five-year  historical average.  The number of well permits issued in the second
quarter in Alberta,  British Columbia and Saskatchewan fell 43% from the second
quarter of 2006 to 3,479.

Average customer pricing for Precision's  services was down moderately  through
the second quarter.  In general,  spot pricing was  considerably  weaker in the
second  quarter of 2007 while  average day rates were  bolstered  by  long-term
contract  rates and market pricing for  Precision's  Super Single(TM)  rigs. In
terms of cost control, strong economic activity in western Canada and a buoyant
global market has kept Precision  under  inflationary  cost pressure for labour
and certain equipment.

OUTLOOK

Over the past 12 months  Precision moved to diversify its earnings base outside
Canada through its new drilling rig construction program and rig deployments to
regions in the United States with growing natural gas production opportunities.
With six rigs  currently  active and  another  five  new-builds  expected to be
commissioned during the second half of the year, Precision expects to exit 2007
with at least 4% of its fleet operating under long-term  customer  arrangements
in the United States.

While this is an emerging  North American  strategy,  the outlook for Precision
over the second half of fiscal 2007 will  continue to be heavily  dependent  on
its dominant market presence in the oilfield  service sector in western Canada.
The recent build in underground  natural gas storage levels and record industry
equipment  capacity are expected to keep  equipment  utilization  at seasonally
adjusted low levels with continued price competition.

Natural  gas  prices  weakened  during  the  second  quarter  of 2007,  a trend
strikingly  familiar to last year,  compounded  by increases in North  American
natural gas supply  from  liquefied  natural  gas  imports  and strong  onshore
drilling  activity  in the  United  States.  This has muted the impact of lower
Canadian natural gas drilling  activity and the resulting  production  decrease
which would have helped to restore more normal  underground gas storage levels.
The first half of the year  appears to have set the stage for  continued  lower
year-over-year Canadian drilling activity levels during 2007.

Oil-related  demand for drilling  rigs  remains  firm but these  opportunities,
including  the oil sands in  northern  Alberta,  are not  sufficient  to employ
excess industry rig capacity in Canada.

While these conditions cast a negative outlook  extending into 2008,  Precision
remains committed to underlying fundamentals for natural gas and North American
drilling  and well  servicing  opportunities.  Precision  expects the  cyclical
fundamentals  within the oil and gas industry to eventually  restore balance to
North American gas storage levels and stimulate Canadian drilling demand.

These fundamentals include such factors as lower initial well production, steep
first-year  production  decline rates, lower service company pricing and rising
natural gas  consumption  from North  American  economic  growth.  The inherent
benefits of natural  gas in terms of  environmental  emissions  and cost saving
opportunities  away from oil also  stand to help  restore  and  sustain  higher
natural gas prices.

                                               PRECISION DRILLING TRUST Q2    5
<PAGE>


SEGMENTED FINANCIAL RESULTS

Precision's  operations  are reported in two  segments.  The Contract  Drilling
Services  segment  includes  the  contract  drilling  rig,  camp and  catering,
oilfield  supply and  manufacturing  divisions.  The  Completion and Production
Services segment includes the service rig, snubbing,  wastewater  treatment and
rental divisions.

<TABLE>
<CAPTION>
(Stated in thousands of          Three months ended June 30,              Six months ended June 30,
Canadian dollars)                          2007         2006   % Change          2007          2006  % Change
========================================================================================================================

Revenue:
<S>                                  <C>          <C>               <C>    <C>          <C>               <C>
   Contract Drilling Services        $   78,829   $  156,133        (49.5) $  359,724   $   540,295       (33.4)
   Completion and Production Services    44,978       70,291        (36.0)    178,184       226,929       (21.5)
   Inter-segment eliminations            (1,802)      (2,855)       (36.9)     (5,361)       (7,247)      (26.0)
------------------------------------------------------------------------------------------------------------------------
                                     $  122,005   $  223,569        (45.4) $  532,547   $   759,977       (29.9)
========================================================================================================================

Operating earnings:(1)
   Contract Drilling Services        $   24,013   $   61,473        (60.9) $  156,748   $   255,156       (38.6)
   Completion and Production Services     8,954       20,562        (56.5)     60,769        84,349       (28.0)
   Corporate and other                   (5,893)      (7,492)       (21.3)    (12,264)      (19,053)      (35.6)
------------------------------------------------------------------------------------------------------------------------
                                     $   27,074   $   74,543        (63.7) $  205,253   $   320,452       (35.9)
========================================================================================================================
</TABLE>
(1) Non-GAAP measure. See page 13.


SEGMENT REVIEW OF CONTRACT DRILLING SERVICES


                              [GRAPHICS OMITTED]



6    MANAGEMENT'S DISCUSSION AND ANALYSIS
<PAGE>


<TABLE>
<CAPTION>
(Stated in thousands of Canadian   Three months ended June 30,            Six months ended June 30,
dollars, except where indicated)           2007         2006   % Change          2007          2006  % Change
========================================================================================================================
<S>                                  <C>          <C>               <C>    <C>          <C>               <C>
Revenue                              $   78,829   $  156,133        (49.5) $  359,724   $   540,295       (33.4)
Expenses:
   Operating                             44,623       83,563        (46.6)    174,111       251,978       (30.9)
   General and administrative             3,669        5,353        (31.5)      9,826        13,923       (29.4)
   Depreciation                           6,112        5,916          3.3      18,722        19,442        (3.7)
   Foreign exchange                         412         (172)       339.5         317          (204)      255.4
------------------------------------------------------------------------------------------------------------------------
Operating earnings(1)                $   24,013   $   61,473        (60.9) $  156,748   $   255,156       (38.6)
------------------------------------------------------------------------------------------------------------------------

Operating earnings as a
   percentage of revenue                   30.5%        39.4%                    43.6%         47.2%
------------------------------------------------------------------------------------------------------------------------
Drilling rig revenue per
   operating day(2)                  $   18,656   $   20,466         (8.8) $   20,419   $    20,763        (1.7)
========================================================================================================================

Drilling statistics for the three months ended June 30:(2)
                                                             2007                             2006
------------------------------------------------------------------------------------------------------------------------
                                                   Precision       Industry(3)      Precision      Industry(3)
========================================================================================================================
Number of drilling rigs (end of period)                  242              878             234             784
Drilling rig operating days (spud to release)          3,175           13,343           6,900          25,175
Drilling rig operating day utilization                    14%              17%             33%             36%
Number of wells drilled                                  411            1,677             973           3,094
Average days per well                                    7.7              8.0             7.1             8.1
Number of metres drilled (000s)                          572            2,295           1,129           3,998
Average metres per well                                1,392            1,369           1,160           1,292
Average metres per day                                   180              172             164             159
========================================================================================================================

Drilling statistics for the six months ended June 30:(2)
                                                             2007                             2006
------------------------------------------------------------------------------------------------------------------------
                                                   Precision       Industry(3)      Precision      Industry(3)
========================================================================================================================

Number of drilling rigs (end of period)                  242              878             234             784
Drilling rig operating days (spud to release)         14,960           58,749          23,594          81,149
Drilling rig operating day utilization                    34%              38%             56%             58%
Number of wells drilled                                2,139            7,638           3,275          10,523
Average days per well                                    7.0              7.7             7.2             7.7
Number of metres drilled (000s)                        2,714            9,680           3,944          12,895
Average metres per well                                1,269            1,267           1,204           1,225
Average metres per day                                   181              165             167             159
========================================================================================================================
</TABLE>
(1) Non-GAAP measure.  See page 13.
(2) Canadian operations only.
(3) CAODC and  Precision  - excludes  non-CAODC  rigs and  non-reporting  CAODC
    members.

Revenue  for the  second  quarter in the  Contract  Drilling  Services  segment
decreased by 50% to $79 million while  operating  earnings  decreased by 61% to
$24  million  compared  to the same period in 2006.  Activity  was  impacted by
record precipitation in many areas and low customer demand due to concerns over
rising costs and the continued  uncertainty over natural gas prices.  In Canada
during the quarter,  about  one-third of the drilling  operating  days achieved
were from rigs under long-term  customer  arrangements  and as a result pricing
remained  relatively strong at $18,656 per operating day, a decrease of 9% from
the same period in 2006.  With reduced  activity and excess  equipment  supply,
spot market pricing remained highly competitive and average operating day rates
declined  approximately  20%.

                                               PRECISION DRILLING TRUST Q2    7
<PAGE>


Drilling rig operating days,  spud to rig release,  in Canada during the second
quarter of 2007 were 3,175  compared  with 6,900 in 2006,  a decrease  of 3,725
days or 54%. The decline in the quarter was in line with industry trends.  As a
result of reduced  winter  capital  budgets,  Precision's  customers in western
Canada were early to shut down for spring  breakup and  displayed no urgency to
go back to work once road bans were lifted.  Drilling rig operating days in the
United States during the second quarter of 2007 were 352 compared with eight in
the same period in 2006. The camp and catering  division in Canada  experienced
an  activity  decrease  of 74% over the prior year  second  quarter  due to the
decline  in  industry   activity  and  the  increased   availability  of  hotel
accommodations.

Operating  expenses as a function of revenue  increased three percentage points
from the second quarter in the prior year to 57%. On a per operating day basis,
costs for the drilling  rig  division  increased by 2% due to higher crew wages
offset by lower scheduled equipment maintenance, lower wage burden and recovery
of long-term  incentive  compensation  accruals.  Lower  equipment  utilization
increased the per  operating  day cost  associated  with fixed  operating  cost
components.

Depreciation in the Contract  Drilling  Services  segment was up from the prior
year  quarter  due to a higher  capital  asset base  partially  offset by lower
equipment utilization.

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES


                              [GRAPHICS OMITTED]



8    MANAGEMENT'S DISCUSSION AND ANALYSIS
<PAGE>


<TABLE>
<CAPTION>
(Stated in thousands of Canadian   Three months ended June 30,            Six months ended June 30,
dollars, except where indicated)           2007         2006   % Change          2007          2006  % Change
===============================================================================================================

<S>                                  <C>          <C>               <C>    <C>          <C>               <C>
Revenue                              $   44,978   $   70,291        (36.0) $  178,184   $   226,929       (21.5)
Expenses:
   Operating                             29,085       41,303        (29.6)     97,312       119,933       (18.9)
   General and administrative             2,068        2,902        (28.7)      5,253         6,817       (22.9)
   Depreciation                           4,861        5,530        (12.1)     14,844        15,816        (6.1)
   Foreign exchange                          10           (6)       266.7           6            14       (57.1)
---------------------------------------------------------------------------------------------------------------
Operating earnings(1)                $    8,954   $   20,562        (56.5) $   60,769   $    84,349       (28.0)
===============================================================================================================
Operating earnings as a
   percentage of revenue                   19.9%        29.3%                    34.1%         37.2%
---------------------------------------------------------------------------------------------------------------
Service rig revenue per
   operating hour                    $      681   $      658          3.5  $      771   $       708         8.9
===============================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                 Three months ended June 30,              Six months ended June 30,
Well servicing statistics:                 2007         2006   % Change          2007          2006  % Change
===============================================================================================================

<S>                                      <C>          <C>           <C>       <C>           <C>           <C>
Number of service rigs (end of period)      238          237          0.4         238           237         0.4
Service rig operating hours              52,680       81,026        (35.0)    185,091       246,617       (24.9)
Service rig operating hour utilization       24%          38%                      43%           57%
===============================================================================================================
</TABLE>
(1) Non-GAAP measure. See page 13.

Revenue in the Completion and Production  Services segment  decreased by 36% to
$45  million  while  operating  earnings  declined  by 57% to $9 million in the
second  quarter of 2007  compared to the same period in 2006.  The  decrease in
revenue was attributable to the decline in industry  activity due to wet spring
weather  in many  areas  of  western  Canada  and  general  uncertainty  in the
economics  of natural  gas  production  offset by  oil-related  well  servicing
activity.  Precision's  service rig division recorded the lowest second quarter
activity in its eight year history.

Lower industry demand resulted in lower year-over-year revenue in all divisions
within the segment. Revenue for the service rig division represented 80% of the
segment's revenue.  Compared to the prior year second quarter, revenue was down
33% in  the  service  rig  division,  82% in  snubbing  and  36% in the  rental
division.  Generally,  service  rig  pricing  held as prior  year  winter  rate
increases  were fully applied  during the quarter.  Snubbing  revenue  declined
significantly  due to the overall  downturn in natural gas  activity and demand
levels for rig assist  units.  Precision  is changing  the mix of its  snubbing
fleet through the  construction  of four  additional  stand alone units and the
conversion of three rig assist units.

Activity for the Completion and Production  Services  segment declined 35% from
the prior year quarter,  with the service rig fleet generating 52,680 operating
hours for 24%  utilization.  The  reduction  was a result of lower  service rig
demand as  customers  scaled back well  completion  work in line with  drilling
activity,  moderated spending on production  maintenance of existing wells, and
restricted  the  movement of  equipment  due to weather.  New well  completions
accounted for 17% of service rig operating hours in the second quarter compared
to 22% in 2006.

Operating  expenses as a function of revenue  increased six  percentage  points
from the  second  quarter  of the prior year to 65%.  On a per  operating  hour
basis,  costs for the service rig division  increased by 11% due to higher crew
wages, equipment maintenance and fixed costs being spread over a lower activity
base.

Depreciation  in the Completion and Production  Services  segment was down from
the prior year quarter due to lower equipment utilization in the second quarter
of 2007.

                                               PRECISION DRILLING TRUST Q2    9

<PAGE>

SEGMENT REVIEW OF CORPORATE AND OTHER

Corporate  and other  expenses  decreased  by 21% to $6  million  in the second
quarter of 2007 compared to $7 million in the same period of 2006. The decrease
was  primarily  due to a $2 million  expense  recovery of  long-term  incentive
compensation accruals, compared to a $2 million expense accrual in 2006, offset
by gains generated in the second quarter of 2006 from the disposal of corporate
assets.  A  portion  of  the  award  payable  under  the  long-term   incentive
compensation plan depends on the growth in cash distributions over a three-year
period. The amount distributed in the second quarter of 2007 was below the base
distribution  rate,  resulting  in a partial  recovery  of  amounts  previously
accrued.

OTHER ITEMS

Net interest  expense of $2 million for the second  quarter of 2007 was in line
with the prior year.

Precision's  effective  income tax rate,  before enacted tax rate reductions in
Canada, was 8% in the second quarter of 2007. Compared to a corporate tax rate,
the low  effective  income tax rate is primarily the result of the income trust
structure  shifting  all or a portion  of the income tax burden of the Trust to
its unitholders.

LIQUIDITY AND CAPITAL RESOURCES

Precision's  liquidity and solvency position remained strong during the quarter
as working capital exceeded  long-term debt by $26 million as at June 30, 2007,
consistent  with December 31, 2006.  The  financial  position  remained  strong
despite a decrease in activity as a significant  percentage of operating  costs
are  variable  in nature and the Trust  curtailed  discretionary  spending  and
distributions.

During the first half of 2007 Precision  generated cash from operations of $385
million.  The cash was used to repay  long-term  debt of $89  million  and bank
indebtedness  of $30 million,  purchase  property,  plant and  equipment net of
disposal proceeds and related non-cash working capital of $115 million and make
cash distributions to unitholders of $151 million.

The  first  six  months  of 2007  were  further  highlighted  by the  following
financial developments:

o The Trust declared monthly distributions to unitholders of $0.19 per unit for
  the first  four  months  and  $0.13  per unit for May and June for  aggregate
  distributions declared of $128 million or $1.02 per unit.

o Long-term  debt  decreased by $89 million to $52 million for a long-term debt
  to long-term debt plus equity ratio of 0.04.

o Working capital decreased by $89 million to $78 million as Precision realized
  lower activity and  corresponding  revenue compared to 2006 year-end activity
  levels.

DISTRIBUTIONS

Upon conversion to an income trust effective November 7, 2005 the Trust adopted
a policy of making monthly  distributions to holders of Trust units and holders
of exchangeable LP units (together "unitholders"). Precision has a legal entity
structure whereby the trust entity,  Precision Drilling Trust, effectively must
flow its taxable  income to unitholders  pursuant to its  Declaration of Trust.
Distributions  may be  declared in cash or in-kind and  reduced,  increased  or
suspended entirely depending on the operations of Precision and the performance
of its assets, or legislative changes in tax laws by governments in Canada. The
actual cash flow  available for  distribution  to  unitholders is a function of
numerous factors, including the Trust's: financial performance;  debt covenants
and obligations; working capital requirements;  productive capacity maintenance
expenditures and expansion capital expenditure requirements for the purchase of
property, plant and equipment; and number of units outstanding.

10    MANAGEMENT'S DISCUSSION AND ANALYSIS
<PAGE>


In June 2007, the Government of Canada's Bill C-52 Budget  Implementation  Act,
2007 was  enacted  and  included  legislative  provisions  that impose a tax on
certain  distributions  from  publicly  traded  specified  income  flow-through
("SIFT")  trusts at a rate equal to the applicable  federal  corporate tax rate
plus a  provincial  SIFT tax factor (a  combined  31.5% in 2011).  The SIFT tax
measures were initially announced on October 31, 2006. Precision will be a SIFT
trust on the  earlier of January 1, 2011 or the first day after it exceeds  the
normal  growth  guidelines  announced by the federal  Department  of Finance on
December 15, 2006. Due to Precision's legal entity structure,  the enacted SIFT
tax  measures  had no  significant  impact on  Precision's  future  income  tax
provision.

Key  factors  for   consideration   in  determining  cash  flow  available  for
distribution,  in an historical context,  are disclosed within the consolidated
statements of cash flow. A two-year  quarterly  reconciliation of distributable
cash from continuing operations follows:

<TABLE>
<CAPTION>
(Stated in thousands of Canadian dollars,
except per diluted unit/share amounts)                       2006                              2007
---------------------------------------------------------------------------------------------------------------
Quarters ended                                  September 30      December 31         March 31          June 30
================================================================================================================
<S>                                               <C>             <C>             <C>             <C>
Cash provided by continuing operations            $    74,952     $    154,233    $    156,298    $    229,073
Less:
   Purchase of property, plant and equipment
     for productive capacity maintenance              (24,503)         (26,122)        (17,583)         (8,602)
   Unfunded long-term incentive plan
     compensation                                      (5,262)         (10,192)          2,461           4,167
Add:
   Proceeds on sale of property, plant
     and equipment                                      4,251            3,742           1,128            2,130
----------------------------------------------------------------------------------------------------------------
Distributable cash from continuing
   operations(1) (A)                              $    49,438     $    121,661    $    142,304    $    226,768
================================================================================================================
Cash distributions declared (B)                   $   116,785     $    116,912    $     71,682    $     56,591
                                                                                  ==============================
Payout ratio (B)/(A)                                      236%              96%             50%             25%
Per diluted unit information:
   Cash distributions declared                    $      0.93     $       0.93    $       0.57    $       0.45
   Distributable cash from continuing
     operations(1)                                $      0.39     $       0.97    $       1.13    $       1.80
================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                             2005                              2006
----------------------------------------------------------------------------------------------------------------
Quarters ended                                   September 30      December 31        March 31         June 30
================================================================================================================
<S>                                               <C>              <C>              <C>             <C>
Cash provided by (used in) continuing
   operations                                      $   46,978       $  (53,587)     $   40,940      $  339,619
Less:
   Purchase of property, plant and equipment for
     productive capacity maintenance                  (21,482)         (26,931)        (16,449)        (25,049)
   Unfunded long-term incentive plan compensation           -                -          (2,803)         (4,442)
Add:
   Proceeds on sale of property, plant and
     equipment                                          1,831            6,897           8,164          13,180
----------------------------------------------------------------------------------------------------------------
Distributable cash from continuing
   operations(1) (A)                               $   27,327       $  (73,621)     $   29,852      $  323,308
================================================================================================================
Cash distributions declared (B)                                                     $  101,623      $  111,681
================================================================================================================
Payout ratio (B)/(A)                                                                       340%             35%
Per diluted unit/share information:
   Cash distributions declared                     $        -       $     0.56      $     0.81      $     0.89
   Distributable cash from continuing
     operations(1)                                 $     0.22       $    (0.59)     $     0.24      $     2.58
================================================================================================================
</TABLE>
(1) Non-GAAP measure. See page 13.


                                              PRECISION DRILLING TRUST Q2    11
<PAGE>


The quarterly  distributable cash calculation over the past two years serves to
demonstrate  the wide variances from quarter to quarter and highlights the need
to consider seasonal and economic  conditions for cumulative quarters to assess
performance and the reasonableness of distribution payout ratios. Over the past
18 months,  quarterly payout ratios ranged from a low of 25% to a high of 340%.
Management  believes that payout  calculations for any period before 2006 would
not be meaningful  given the Trust November 2005  conversion from a corporation
to an income trust.

For the  quarter  ended June 30,  2007 cash  provided  by  operations  was $229
million, a decrease of $111 million from the 2006 second quarter.  The decrease
was  attributable  to the difference in the change in non-cash  working capital
balances of $65 million and lower year-over-year  earnings.  The realization of
working capital this quarter was lower due to reduced activity, an early winter
shutdown  and the  corresponding  reduction  in first  quarter  trade  accounts
receivable collected in the second quarter of 2007 as compared to 2006. For the
quarter,  property,  plant and equipment additions of $9 million to sustain the
productive  capacity  of  Precision's  equipment  and  infrastructure  were $16
million lower than in the second quarter of 2006.

For the 18-month period ended June 30, 2007, Precision generated  distributable
cash from  operations of $893 million and declared cash  distributions  of $575
million for a payout ratio of 64%.  Excess  distributable  cash of $318 million
was used to fund growth  initiatives  by  purchasing  equipment  and  expanding
Precision's underlying asset base and repay long-term debt. During that period,
Precision invested $253 million toward expansionary capital expenditures,  $171
million  in 2006  and $82  million  in the  first  half of 2007.

The Canadian  drilling  industry is subject to  seasonality  with  activity and
earnings peaking during the winter months in the fourth and first quarters.  As
temperatures  rise in the  spring,  the  ground  thaws  and  becomes  unstable.
Government road bans can restrict activity at any time but are most typical for
spring breakup  during the second quarter before  equipment is able to move for
summer drilling  programs.

As a result,  in combination  with economic cycles,  Precision's  operating and
financial  results  can vary  significantly  by  quarter.  Working  capital  is
typically  at its highest  level  following  the first  quarter  when  accounts
receivable  increase  from  winter  activity  and tend to be lowest  during the
second quarter. The change in the non-cash working capital balance has a direct
impact on cash provided from operations.

QUARTERLY FINANCIAL SUMMARY

<TABLE>
<CAPTION>
(Stated in thousands of Canadian dollars,
except per diluted unit/share amounts)                       2006                                  2007
---------------------------------------------------------------------------------------------------------------
Quarters ended                                   September 30     December 31        March 31         June 30
===============================================================================================================
<S>                                              <C>             <C>             <C>             <C>
Revenue                                          $   349,558     $    328,049    $    410,542    $    122,005
Operating earnings(1)                                142,431          132,396         178,179          27,074
Earnings from continuing operations                  133,552          126,474         158,067          25,722
   Per diluted unit                                     1.06             1.01            1.26            0.20
Net earnings                                         139,667          127,436         158,067          25,722
   Per diluted unit                                     1.11             1.01            1.26            0.20
Cash provided by continuing operations                74,952          154,233         156,298         229,073
Distributions declared                           $   116,785     $    141,435    $     71,682    $     56,591
===============================================================================================================
</TABLE>

12    MANAGEMENT'S DISCUSSION AND ANALYSIS
<PAGE>

<TABLE>
<CAPTION>
                                                             2005                                  2006
---------------------------------------------------------------------------------------------------------------
Quarters ended                                   September 30     December 31        March 31         June 30
===============================================================================================================

<S>                                              <C>             <C>             <C>             <C>
Revenue                                          $   300,016     $    427,861    $    536,408    $    223,569
Operating earnings(1)                                111,956          175,897         245,909          74,543
Earnings from continuing operations                    2,382          120,877         224,183          88,303
   Per diluted unit/share                               0.02             0.96            1.79            0.70
Net earnings                                       1,382,648           83,546         224,183          88,303
   Per diluted unit/share                              11.00             0.66            1.79            0.70
Cash provided by (used in) continuing operations      46,978          (53,847)         40,940         339,619
Distributions declared                           $         -     $     70,510    $    101,623    $    111,681
===============================================================================================================
</TABLE>
(1) Non-GAAP measure. See page 13.


NON-GAAP MEASURES AND RECONCILIATIONS

Precision uses both Canadian generally accepted accounting  principles ("GAAP")
and non-GAAP measures to assess  performance and believes the non-GAAP measures
provide  useful  supplemental  information  to  investors.  Following  are  the
non-GAAP measures Precision uses in assessing performance:

o Operating  earnings:  Management  believes  that in addition to net earnings,
  operating  earnings  is a  useful  supplemental  measure  as it  provides  an
  indication  of  the  results  generated  by  Precision's  principal  business
  activities prior to consideration of how those activities are financed or how
  the results are taxed.

o Distributable  cash from continuing  operations and  distributable  cash from
  continuing  operations per diluted  unit/share:  Management  believes that in
  addition to cash provided by (used in) continuing  operations,  distributable
  cash from continuing operations is a useful supplemental measure. It provides
  an indication of the funds available for  distribution  to unitholders  after
  consideration of the impacts of capital expenditures to maintain the existing
  productive capacity of Precision's assets and long-term unfunded  contractual
  operational obligations.

Precision's method of calculating these non-GAAP measures may differ from other
entities  and,  accordingly,  may not be  comparable  to measures used by other
entities.  Investors should be cautioned,  however,  that these measures should
not be construed as an  alternative to measures  determined in accordance  with
GAAP as an indicator of Precision's performance.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance
that  information  required to be disclosed in reports filed with, or submitted
to, securities regulatory  authorities is recorded,  processed,  summarized and
reported  within the time periods  specified  under  Canadian and United States
securities laws. The information is accumulated and communicated to management,
including  the  principal   executive  officer  and  principal   financial  and
accounting officer, to allow timely decisions regarding required disclosure.

As of June 30, 2007, an evaluation  was carried out,  under the  supervision of
and with the  participation  of management,  including the principal  executive
officer and principal financial and accounting officer, of the effectiveness of
Precision's  disclosure  controls  and  procedures  as defined  under the rules
adopted by the Canadian  securities  regulatory  authorities  and by the United
States  Securities  and  Exchange  Commission.  Based on that  evaluation,  the
principal  executive  officer and principal  financial and  accounting  officer
concluded that the design and operation of Precision's  disclosure controls and
procedures were effective as at June 30, 2007.

                                              PRECISION DRILLING TRUST Q2    13

<PAGE>


During  the  quarter  ended June 30,  2007  there  were no changes in  internal
control over financial  reporting that materially  affected,  or are reasonably
likely to  materially  affect,  Precision's  internal  control  over  financial
reporting.

It should be noted that  while  Precision's  principal  executive  officer  and
principal financial and accounting officer believe that Precision's  disclosure
controls and procedures  provide a reasonable  level of assurance that they are
effective,  they  do  not  expect  that  Precision's  disclosure  controls  and
procedures or internal control over financial reporting will prevent all errors
or fraud.  A control  system,  no matter how well  conceived or  operated,  can
provide only  reasonable,  not absolute,  assurance  that the objectives of the
control system are met.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain  statements  contained in this  interim  report,  including  statements
related to future natural gas prices, estimated capital expenditures, equipment
utilization  levels,  pricing  competition in the Canadian  drilling  industry,
future  natural gas supply growth,  drilling  activity in Canada and the United
States,  expansion in the United States, projected growth of the Completion and
Production  Services and the Contract Drilling Services segments and statements
that contain words such as "could",  "should", "can",  "anticipate",  "expect",
"believe",  "will",  "may" and similar  expressions and statements  relating to
matters that are not historical facts constitute "forward-looking  information"
within  the  meaning  of  applicable   Canadian   securities   legislation  and
"forward-looking statements" within the meaning of the "safe harbor" provisions
of  the  United  States  Private  Securities  Litigation  Reform  Act  of  1995
(collectively "forward-looking information and statements").

These statements include, but are not limited to, statements as to seasonal and
weather conditions  affecting the Canadian oil and natural gas industry and the
demand  for  Precision's  services.  These  statements  are  based  on  certain
assumptions  and analysis made by the Trust in light of its  experience and its
perception  of  historical  trends,  current  conditions  and  expected  future
developments  as well as other  factors  it  believes  are  appropriate  in the
circumstances.  However,  whether actual  results,  performance or achievements
will conform to the Trust's expectations and predictions is subject to a number
of known and unknown risks and  uncertainties  which could cause actual results
to  differ   materially   from  the  Trust's   expectations.   Such  risks  and
uncertainties  include,  but are not limited to:  fluctuations in the price and
demand for oil and natural  gas;  fluctuations  in the level of oil and natural
gas exploration and development activities; fluctuations in the demand for well
servicing,  contract drilling and ancillary oilfield  services;  the effects of
weather  conditions on operations and facilities;  the existence of competitive
operating  risks inherent in well  servicing,  contract  drilling and ancillary
oilfield services; general economic, market or business conditions;  changes in
laws  or   regulations,   including   taxation,   environmental   and  currency
regulations; the lack of availability of qualified personnel or management; and
other unforeseen  conditions which could impact the use of services supplied by
Precision.

Consequently,  all of the  forward-looking  information  and statements made in
this report are qualified by these  cautionary  statements  and there can be no
assurance that the actual results or developments anticipated by the Trust will
be  realized  or,  even if  substantially  realized,  that  they  will have the
expected consequences to or effects on the Trust or its business or operations.
Except as may be required by law,  the Trust  assumes no  obligation  to update
publicly any forward-looking information and statements, whether as a result of
new information, future events, or otherwise.

14    MANAGEMENT'S DISCUSSION AND ANALYSIS
<PAGE>

Precision Drilling Trust

UNITHOLDER INFORMATION


STOCK EXCHANGE LISTINGS                 ACCOUNT QUESTIONS
Units of Precision Drilling Trust are   Precision's Transfer Agent can help
listed on the Toronto Stock Exchange    you with a variety of unitholder
under the trading symbol PD.UN and      related services, including:
on the New York Stock Exchange under
the trading symbol PDS.                 o   Change of address
                                        o   Lost unit certificates
Q2 2007 TRADING PROFILE                 o   Transfer of units to another person
Toronto (TSX: PD.UN)                    o   Estate settlement
High: $30.93
Low: $25.62                             You can contact Precision's
Close: $26.00                           Transfer Agent at:
Volume Traded: 39,651,345               Computershare Trust Company of Canada
New York (NYSE: PDS)                    100 University Avenue
High: US$27.89                          9th Floor, North Tower
Low: US$22.60                           Toronto, Ontario M5J 2Y1
Close: US$24.45                         Telephone: 1-800-564-6253
Volume Traded: 49,073,979                         (toll free in Canada and the
                                                   United States)
TRANSFER AGENT AND REGISTRAR                       1-514-982-7555
Computershare Trust Company of Canada             (international direct dialing)
Calgary, Alberta                        Email: service@computershare.com

TRANSFER POINT                          ONLINE INFORMATION
Computershare Trust Company NA          To receive news releases by email, or to
Denver, Colorado                        view this interim report online, please
                                        visit Precision's website at
                                        www.precisiondrilling.com and refer to
                                        the investor relations section.
                                        Additional information relating to the
                                        Trust, including the Annual Information
                                        Form, Annual Report and Management
                                        Information Circular has been filed
                                        with SEDAR and is available at
                                        www.sedar.com.

                                        ESTIMATED INTERIM RELEASE DATES
                                        2007 Third Quarter - October 25, 2007
                                        Fourth Quarter - February 14, 2008






<PAGE>

Precision Drilling Trust
<TABLE>
<CAPTION>
CORPORATE INFORMATION

<S>                                  <C>                           <C>
HEAD OFFICE                          TRUSTEES                      LEAD BANK
Precision Drilling Trust             Robert J.S. Gibson            Royal Bank of Canada
4200, 150 - 6th Avenue SW            Allen R. Hagerman             Calgary, Alberta
Calgary, Alberta                     Patrick M. Murray
T2P 3Y7                                                            AUDITORS
Telephone: 403-716-4500              DIRECTORS                     KPMG LLP
Facsimile: 403-264-0251              W.C. (Mickey) Dunn            Calgary, Alberta
Email: info@precisiondrilling.com    Brian A. Felesky, CM, Q.C.
Website: www.precisiondrilling.com   Robert J.S. Gibson
                                     Allen R. Hagerman
                                     Stephen J.J. Letwin
                                     Patrick M. Murray
                                     Frederick W. Pheasey
                                     Robert L. Phillips
                                     Hank B. Swartout

                                     OFFICERS
                                     Hank B. Swartout
                                     Executive Chairman
                                     Gene C. Stahl
                                     President and
                                     Chief Operating Officer
                                     Doug J. Strong
                                     Chief Financial Officer
                                     Darren J. Ruhr
                                     Vice President,
                                     Corporate Services and
                                     Corporate Secretary
</TABLE>





</TEXT>
</DOCUMENT>
