EX-99.2 5 exh99_2.htm EXHIBIT 99.2
 
Exhibit 99.2
 
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(Stated in thousands of Canadian dollars)
  
September 30,
2016
    
December 31,
2015
  
ASSETS
            
Current assets:
            
  Cash
  
$
352,194
    
$
444,759
  
  Accounts receivable
    
205,802
      
311,595
  
Income tax recoverable
    
26,489
      
–
  
  Inventory
    
25,438
      
24,245
  
Total current assets
    
609,923
      
780,599
  
Non-current assets:
                
Income tax recoverable
    
–
      
2,917
  
Property, plant and equipment
    
3,630,139
      
3,883,332
  
Intangibles
    
3,673
      
3,363
  
Goodwill
    
206,589
      
208,479
  
Total non-current assets
    
3,840,401
      
4,098,091
  
Total assets
  
$
4,450,324
    
$
4,878,690
  
                 
LIABILITIES AND EQUITY
                
Current liabilities:
                
Accounts payable and accrued liabilities
  
$
217,817
    
$
235,948
  
Income tax payable
    
–
      
7,836
  
Total current liabilities
    
217,817
      
243,784
  
Non-current liabilities:
                
Share based compensation (Note 6)
    
16,263
      
15,201
  
Provisions and other
    
14,542
      
14,520
  
Long-term debt (Note 3)
    
2,005,324
      
2,180,510
  
Deferred tax liabilities
    
220,678
      
303,466
  
Total non-current liabilities
    
2,256,807
      
2,513,697
  
Shareholders’ equity:
                
Shareholders’ capital (Note 4)
    
2,319,293
      
2,316,321
  
Contributed surplus
    
37,819
      
35,800
  
Deficit
    
(521,950
)
    
(397,013
)
Accumulated other comprehensive income (Note 5)
    
140,538
      
166,101
  
Total shareholders’ equity
    
1,975,700
      
2,121,209
  
Total liabilities and shareholders’ equity
  
$
4,450,324
    
$
4,878,690
  

See accompanying notes to interim consolidated financial statements.
 
1

INTERIM CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)

   
Three months ended September 30,
    
Nine months ended September 30,
  
(Stated in thousands of Canadian dollars, except per share  amounts)
  
2016
    
2015
    
2016
    
2015
  
Revenue
  
$
201,802
    
$
364,089
    
$
667,508
    
$
1,210,671
  
Expenses:
                                
Operating
    
137,935
      
226,055
      
419,914
      
737,402
  
General and administrative
    
21,748
      
23,702
      
78,765
      
96,956
  
Restructuring
    
708
      
3,301
      
5,754
      
13,543
  
Earnings before income taxes, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, impairment of goodwill, impairment of property, plant and equipment and depreciation and amortization
    
41,411
      
111,031
      
163,075
      
362,770
  
Depreciation and amortization
    
96,998
      
125,236
      
288,858
      
361,461
  
Impairment of property, plant and equipment
    
–
      
79,573
      
–
      
79,573
  
Operating loss
    
(55,587
)
    
(93,778
)
    
(125,783
)
    
(78,264
)
Impairment of goodwill
    
–
      
16,968
      
–
      
16,968
  
Foreign exchange
    
(1,402
)
    
(12,510
)
    
6,933
      
(32,598
)
Finance charges (Note 7)
    
34,673
      
34,783
      
104,071
      
86,813
  
Gain on repurchase of unsecured senior notes (Note 3)
    
(5,108
)
    
–
      
(9,981
)
    
–
  
Loss before income taxes
    
(83,750
)
    
(133,019
)
    
(226,806
)
    
(149,447
)
Income taxes:
                                
Current
    
(9,999
)
    
818
      
(24,358
)
    
8,334
  
Deferred
    
(26,374
)
    
(47,137
)
    
(77,511
)
    
(65,297
)
     
(36,373
)
    
(46,319
)
    
(101,869
)
    
(56,963
)
Net loss
  
$
(47,377
)
  
$
(86,700
)
  
$
(124,937
)
  
$
(92,484
)
Net loss per share: (Note 8)
                                
Basic
  
$
(0.16
)
  
$
(0.30
)
  
$
(0.43
)
  
$
(0.32
)
Diluted
  
$
(0.16
)
  
$
(0.30
)
  
$
(0.43
)
  
$
(0.32
)
 
See accompanying notes to interim consolidated financial statements.
 
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

   
Three months ended September 30,
    
Nine months ended September 30,
  
(Stated in thousands of Canadian dollars)
  
2016
    
2015
    
2016
    
2015
  
Net loss
  
$
(47,377
)
  
$
(86,700
)
  
$
(124,937
)
  
$
(92,484
)
Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency
    
17,895
      
182,303
      
(130,096
)
    
347,683
  
Foreign exchange gain (loss) on net investment hedge with U.S. denominated debt, net of tax
    
(15,467
)
    
(133,400
)
    
104,533
      
(259,985
)
Comprehensive loss
  
$
(44,949
)
  
$
(37,797
)
  
$
(150,500
)
  
$
(4,786
)
 
See accompanying notes to interim consolidated financial statements.
 
2

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
 
   
Three months ended September 30,
    
Nine months ended September 30,
  
(Stated in thousands of Canadian dollars)
  
2016
    
2015
    
2016
    
2015
  
Cash provided by (used in):
                        
Operations:
                        
Net loss
  
$
(47,377
)
  
$
(86,700
)
  
$
(124,937
)
  
$
(92,484
)
Adjustments for:
                                
Long-term compensation plans
    
983
      
(2,091
)
    
16,072
      
10,616
  
Depreciation and amortization
    
96,998
      
125,236
      
288,858
      
361,461
  
Impairment of property, plant and equipment
    
–
      
79,573
      
–
      
79,573
  
Impairment of goodwill
    
–
      
16,968
      
–
      
16,968
  
Gain on repurchase of unsecured senior notes (Note 3)
    
(5,108
)
    
–
      
(9,981
)
    
–
  
Foreign exchange
    
(2,563
)
    
(13,820
)
    
8,974
      
(34,197
)
Finance charges
    
34,673
      
34,783
      
104,071
      
86,813
  
Income taxes
    
(36,373
)
    
(46,319
)
    
(101,869
)
    
(56,963
)
Other
    
425
      
(58
)
    
565
      
1,291
  
Income taxes paid
    
(2,512
)
    
(1,398
)
    
(13,087
)
    
(11,186
)
Income taxes recovered
    
536
      
–
      
603
      
1,111
  
Interest paid
    
(8,685
)
    
(7,500
)
    
(78,194
)
    
(70,693
)
Interest received
    
691
      
554
      
2,834
      
15,277
  
Funds provided by operations
    
31,688
      
99,228
      
93,909
      
307,587
  
Changes in non-cash working capital balances
    
(14,173
)
    
(38,179
)
    
56,445
      
138,477
  
     
17,515
      
61,049
      
150,354
      
446,064
  
Investments:
                                
Purchase of property, plant and equipment
    
(78,162
)
    
(53,592
)
    
(158,747
)
    
(392,459
)
Proceeds on sale of property, plant and equipment
    
2,125
      
1,085
      
5,830
      
7,559
  
Income taxes recovered
    
–
      
–
      
2,917
      
55,138
  
Changes in non-cash working capital balances
    
9,394
      
(3,985
)
    
(9,890
)
    
(158,261
)
     
(66,643
)
    
(56,492
)
    
(159,890
)
    
(488,023
)
Financing:
                                
Repurchase of unsecured senior notes (Note 3)
    
(55,916
)
    
–
      
(64,325
)
    
–
  
Debt issue costs
    
(59
)
    
–
      
(1,214
)
    
(975
)
Dividends paid
    
–
      
(20,504
)
    
–
      
(61,499
)
Issuance of common shares on the exercise of options
    
12
      
–
      
1,926
      
93
  
     
(55,963
)
    
(20,504
)
    
(63,613
)
    
(62,381
)
Effect of exchange rate changes on cash and cash equivalents
    
1,606
      
21,127
      
(19,416
)
    
51,732
  
Increase (decrease)  in cash and cash equivalents
    
(103,485
)
    
5,180
      
(92,565
)
    
(52,608
)
Cash and cash equivalents, beginning of period
    
455,679
      
433,693
      
444,759
      
491,481
  
Cash and cash equivalents, end of period
  
$
352,194
    
$
438,873
    
$
352,194
    
$
438,873
  
 
See accompanying notes to interim consolidated financial statements.
3

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
 
(Stated in thousands of Canadian dollars)
  
Shareholders’
capital
    
Contributed
surplus
    
Accumulated
other
comprehensive income
(Note 5)
    
Deficit
    
Total
equity
  
Balance at January 1, 2016
  
$
2,316,321
    
$
35,800
    
$
166,101
    
$
(397,013
)
  
$
2,121,209
  
Net loss for the period
    
–
      
–
      
–
      
(124,937
)
    
(124,937
)
Other comprehensive loss for the period
    
–
      
–
      
(25,563
)
    
–
      
(25,563
)
Share options exercised (Note 4)
    
2,972
      
(1,046
)
    
–
      
–
      
1,926
  
Share based compensation expense (Note 6)
    
–
      
3,065
      
–
      
–
      
3,065
  
Balance at September 30, 2016
  
$
2,319,293
    
$
37,819
    
$
140,538
    
$
(521,950
)
  
$
1,975,700
  


(Stated in thousands of Canadian dollars)
  
Shareholders’
capital
    
Contributed
surplus
    
Accumulated
other
comprehensive
income
    
Retained earnings
(deficit)
    
Total
equity
  
Balance at January 1, 2015
  
$
2,315,539
    
$
31,109
    
$
46,292
    
$
48,426
    
$
2,441,366
  
Net loss for the period
    
–
      
–
      
–
      
(92,484
)
    
(92,484
)
Other comprehensive income for the period
    
–
      
–
      
87,698
      
–
      
87,698
  
Dividends
    
–
      
–
      
–
      
(61,499
)
    
(61,499
)
Share options exercised
    
142
      
(49
)
    
–
      
–
      
93
  
Shares issued on redemption of non-management directors’ DSUs
    
640
      
(324
)
    
–
      
–
      
316
  
Share based compensation expense (Note 6)
    
–
      
3,884
      
–
      
–
      
3,884
  
Balance at September 30, 2015
  
$
2,316,321
    
$
34,620
    
$
133,990
    
$
(105,557
)
  
$
2,379,374
  
 
See accompanying notes to interim consolidated financial statements.

4
 
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Tabular amounts are stated in thousands of Canadian dollars except share numbers and per share amounts)
NOTE 1. DESCRIPTION OF BUSINESS
Precision Drilling Corporation (“Precision” or the “Corporation”) is incorporated under the laws of the Province of Alberta, Canada and is a provider of contract drilling and completion and production services primarily to oil and natural gas exploration and production companies in Canada, the United States and certain international locations. The address of the registered office is Suite 800, 525 - 8th Avenue S.W., Calgary, Alberta, Canada, T2P 1G1.

NOTE 2. BASIS OF PRESENTATION

(a) Statement of Compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. The condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Corporation as at and for the year ended December 31, 2015.
These condensed consolidated interim financial statements were prepared using accounting policies and methods of their application consistent with those used in the preparation of the Corporation’s consolidated audited annual financial statements for the year ended December 31, 2015 which were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and Interpretations of the International Financial Reporting Interpretations Committee.
These condensed consolidated interim financial statements were approved by the Board of Directors on October 20, 2016.

(b) Seasonality
Precision has operations that are carried on in Canada which represent approximately 43% (2015 - 41%) of consolidated total assets as at September 30, 2016 and 37% (2015 - 36%) of consolidated revenue for the nine months ended September 30, 2016. The ability to move heavy equipment in 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 Precision’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 Precision’s slowest time in this region.

(c) Reclassification of prior period amounts
Certain comparative amounts have been reclassified to conform to the presentation adopted in the current period.
5
NOTE 3. LONG-TERM DEBT
   
September 30,
    
December 31,
  
   
2016
    
2015
  
Secured credit facility
  
$
–
    
$
–
  
Unsecured senior notes:
                
6.625% senior notes due 2020 (US$621.8 million)
    
815,551
      
899,600
  
6.5% senior notes due 2021 (US$371.8 million)
    
487,731
      
553,600
  
5.25% senior notes due 2024 (US$400 million)
    
524,680
      
553,600
  
6.5% senior notes due 2019
    
200,000
      
200,000
  
     
2,027,962
      
2,206,800
  
Less net unamortized debt issue costs
    
(22,638
)
    
(26,290
)
   
$
2,005,324
    
$
2,180,510
  
                 
During 2016 Precision repurchased and cancelled US$28.2 million of the 6.625% senior notes due 2020 and US$28.2 million of the 6.5% senior notes due 2021 for an aggregate purchase price of US$48.9 million.

During April 2016, Precision agreed with its lending group to amend certain financial covenants governing its senior credit facility. This amendment among other things: (i) temporarily reduces the Adjusted EBITDA (as defined in the debt agreement) to interest expense coverage ratio of greater than 2:1 to 1.5:1 for the period up to and including June 30, 2018, reverting to 2.5:1 thereafter until maturity of the facility; (ii) permits second lien debt up to US$400 million subject to certain terms and conditions; (iii) amends certain negative covenants to, among other things, prevent distributions during the covenant relief period; (iv) adds a new covenant which limits borrowing on the facility to draw a maximum of $50 million on the facility if the only purpose is to accumulate cash; (v) adds a new covenant that restricts the repurchase and redemption of unsecured debt subject to a pro-forma minimum liquidity of US$500 million.
At September 30, 2016, we were in compliance with the covenants of our secured credit facility and unsecured senior notes. Included in the covenants for the unsecured senior notes is a requirement to maintain an Adjusted EBITDA (as defined in the note agreements) to interest coverage ratio of 2:1 for the most recent four consecutive quarters. Based on our projections for the fourth quarter of 2016, the possibility exists that we will not meet the minimum 2:1 ratio this covenant requires. If this occurs, it would limit our ability to incur additional indebtedness, except as permitted under the agreements, until such time as we are in compliance but would not restrict our access to available funds under the secured credit facility or to refinance existing debt. Furthermore, it does not give rise to any cross-covenant violations, give the lenders the right to demand repayment of any outstanding portion of the senior notes prior to the stated maturity dates, nor provide any other forms of recourse to the lenders.

Long-term debt obligations at September 30, 2016 will mature as follows:

2019
  
$
200,000
  
2020
    
815,551
  
Thereafter
    
1,012,411
  
   
$
2,027,962
  
 
6
NOTE 4. SHAREHOLDERS’ CAPITAL
   
Number
    
Amount
  
Common shares
            
Balance December 31, 2015
    
292,912,090
    
$
2,316,321
  
Options exercised:
                
Cash consideration
    
326,768
      
1,926
  
Reclassification from contributed surplus
    
-
      
1,046
  
Balance September 30, 2016
    
293,238,858
    
$
2,319,293
  
 
NOTE 5. ACCUMULATED OTHER COMPREHENSIVE INCOME
   
Unrealized Foreign Currency Translation Gains
    
Foreign Exchange Loss on Net Investment Hedge
    
Accumulated Other Comprehensive
Income
  
Balance, December 31, 2015
  
$
663,886
    
$
(497,785
)
  
$
166,101
  
Other comprehensive income (loss)
    
(130,096
)
    
104,533
      
(25,563
)
Balance, September 30, 2016
  
$
533,790
    
$
(393,252
)
  
$
140,538
  
 
NOTE 6. SHARE BASED COMPENSATION PLANS
Liability Classified Plans
 
   
Restricted Share
Units(a)
    
Performance Share Units(a)
    
Share Appreciation
Rights(b)
    
Non-Management
Directors’ DSUs(c)
    
Total
  
Balance, December 31, 2015
  
$
10,459
    
$
19,624
    
$
6
    
$
2,383
    
$
32,472
  
Expensed during the period
    
4,435
      
5,566
      
(3
)
    
630
      
10,628
  
Payments
    
(5,729
)
    
(9,474
)
    
–
      
–
      
(15,203
)
Balance, September 30, 2016
  
$
9,165
    
$
15,716
    
$
3
    
$
3,013
    
$
27,897
  
                                         
Current
  
$
5,824
    
$
5,807
    
$
3
    
$
–
    
$
11,634
  
Long-term
    
3,341
      
9,909
      
–
      
3,013
      
16,263
  
   
$
9,165
    
$
15,716
    
$
3
    
$
3,013
    
$
27,897
  

 (a) Restricted Share Units and Performance Share Units
 A summary of the activity under the restricted share unit (RSUs) and the performance share unit (PSUs) plans are presented below:
   
RSUs
Outstanding
    
PSUs
Outstanding
  
December 31, 2015
    
2,896,818
      
4,898,455
  
Granted
    
1,872,250
      
3,404,650
  
Redeemed
    
(1,301,318
)
    
(1,124,700
)
Forfeitures
    
(297,773
)
    
(652,316
)
September 30, 2016
    
3,169,977
      
6,526,089
  
 
7

(b) Share Appreciation Rights
A summary of the activity under the share appreciation rights plan is presented below:

   
Outstanding
    
Range of Exercise Price (US$)
    
Weighted Average Exercise Price (US$)
    
Exercisable
  
December 31, 2015
    
343,132
    
$
15.22 – 17.38
    
$
15.93
      
343,132
  
Forfeitures
    
(89,756
)
    
15.22 – 17.38
      
17.22
          
September 30, 2016
    
253,376
    
$
15.22 – 15.79
    
$
15.47
      
253,376
  


(c)  Non-Management Directors – Deferred Share Unit Plan
A summary of the activity under the non-management director deferred share unit plan is presented below:

   
Outstanding
  
December 31, 2015
    
428,028
  
Granted
    
142,683
  
September 30, 2016
    
570,711
  


Equity Settled Plans

(d)  Non-Management Directors
Prior to January 1, 2012, Precision had a deferred share unit plan for non-management directors. Under the plan fully vested deferred share units were granted quarterly based upon an election by the non-management director to receive all or a portion of their compensation in deferred share units. These deferred share units are redeemable into an equal number of common shares any time after the director's retirement.
Deferred share units outstanding as at December 31, 2015 and September 30, 2016 were 195,743.

(e) Option Plan

A summary of the activity under the option plan is presented below:
Canadian share options
  
Outstanding
    
Range of Exercise Price
    
Weighted Average Exercise Price
    
Exercisable
  
December 31, 2015
    
6,168,596
    
$
5.22
      
–
      
14.50
    
$
8.93
      
3,870,673
  
Granted
    
615,200
      
4.46
      
–
      
4.46
      
4.46
          
Exercised
    
(295,768
)
    
5.22
      
–
      
5.85
      
5.85
          
Forfeitures
    
(299,356
)
    
5.85
      
–
      
11.16
      
7.57
          
September 30, 2016
    
6,188,672
    
$
4.46
      
–
      
14.50
    
$
8.70
      
4,369,155
  


8

U.S. share options
  
Outstanding
    
Range of Exercise Price (US$)
    
Weighted Average Exercise Price (US$)
    
Exercisable
  
December 31, 2015
    
4,582,237
    
$
4.95
      
–
      
15.21
    
$
8.30
      
2,468,185
  
Granted
    
2,130,700
      
3.21
      
–
      
5.02
      
3.30
          
Exercised
    
(31,000
)
    
4.95
      
–
      
4.95
      
4.95
          
Forfeitures
    
(1,326,300
)
    
3.21
      
–
      
10.74
      
6.83
          
September 30, 2016
    
5,355,637
    
$
3.21
      
–
      
15.21
    
$
6.70
      
2,644,893
  
 
The per option weighted average fair value of the share options granted during 2016 was $1.79 estimated on the grant date using the Black-Scholes option pricing model with the following assumptions: average risk-free interest rate 1%, average expected life of four years, expected forfeiture rate of 5% and expected volatility of 50%. Included in net loss for the three and nine months ended September 30, 2016 is an expense of $1.1 million (2015 - $1.3 million) and $3.1 million (2015 - $3.9 million), respectively.
 
NOTE 7. FINANCE CHARGES
   
Three months ended September 30,
    
Nine months ended September 30,
  
   
2016
    
2015
    
2016
    
2015
  
Interest:
                        
Long-term debt
  
$
33,301
    
$
33,993
    
$
102,072
    
$
97,990
  
Other
    
108
      
76
      
389
      
789
  
Income
    
(691
)
    
(427
)
    
(2,945
)
    
(15,258
)
Amortization of debt issue costs
    
1,955
      
1,141
      
4,555
      
3,292
  
Finance charges
  
$
34,673
    
$
34,783
    
$
104,071
    
$
86,813
  

NOTE 8. PER SHARE AMOUNTS
The following tables reconcile the net loss and weighted average shares outstanding used in computing basic and diluted earnings per share:
   
Three months ended September 30,
    
Nine months ended September 30,
  
   
2016
    
2015
    
2016
    
2015
  
Net loss - basic and diluted
  
$
(47,377
)
  
$
(86,700
)
  
$
(124,937
)
  
$
(92,484
)
                                 
   
Three months ended September 30,
    
Nine months ended September 30,
  
(Stated in thousands)
    
2016
      
2015
      
2016
      
2015
  
Weighted average shares outstanding – basic
    
293,238
      
292,912
      
293,098
      
292,866
  
Effect of stock options and other equity compensation plans
    
–
      
–
      
–
      
–
  
Weighted average shares outstanding – diluted
    
293,238
      
292,912
      
293,098
      
292,866
  
 
9
NOTE 9. SEGMENTED INFORMATION
The Corporation operates primarily in Canada, the United States and certain international locations, in two industry segments; Contract Drilling Services and Completion and Production Services. Contract Drilling Services includes drilling rigs, directional drilling, procurement and distribution of oilfield supplies, and manufacture, sale and repair of drilling equipment. Completion and Production Services includes service rigs, snubbing units, coil tubing services, oilfield equipment rental, camp and catering services, and wastewater treatment units.

Three months ended September 30, 2016
  
Contract Drilling Services
    
Completion and Production Services
    
Corporate and Other
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
178,463
    
$
24,158
    
$
–
    
$
(819
)
  
$
201,802
  
Operating loss
    
(34,463
)
    
(6,023
)
    
(15,101
)
    
–
      
(55,587
)
Depreciation and amortization
    
86,643
      
6,759
      
3,596
      
–
      
96,998
  
Total assets
    
3,849,729
      
197,835
      
402,760
      
–
      
4,450,324
  
Goodwill
    
206,589
      
–
      
–
      
–
      
206,589
  
Capital expenditures
    
76,966
      
64
      
1,132
      
–
      
78,162
  

Three months ended September 30, 2015
  
Contract Drilling Services
    
Completion and Production Services
    
Corporate and Other
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
324,067
    
$
42,961
    
$
–
    
$
(2,939
)
  
$
364,089
  
Operating earnings (loss)
    
4,020
      
(83,983
)
    
(13,815
)
    
–
      
(93,778
)
Depreciation and amortization
    
113,429
      
8,714
      
3,093
      
–
      
125,236
  
Impairment of property, plant and equipment
    
–
      
79,573
      
–
      
–
      
79,573
  
Total assets
    
4,609,682
      
242,783
      
416,515
      
–
      
5,268,980
  
Goodwill
    
207,459
      
–
      
–
      
–
      
207,459
  
Capital expenditures
    
52,243
      
527
      
822
      
–
      
53,592
  
Nine months ended September 30, 2016
  
Contract Drilling Services
    
Completion and Production Services
    
Corporate and Other
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
601,080
    
$
69,343
    
$
–
    
$
(2,915
)
  
$
667,508
  
Operating loss
    
(47,034
)
    
(24,576
)
    
(54,173
)
    
–
      
(125,783
)
Depreciation and amortization
    
257,334
      
20,537
      
10,987
      
–
      
288,858
  
Total assets
    
3,849,729
      
197,835
      
402,760
      
–
      
4,450,324
  
Goodwill
    
206,589
      
–
      
–
      
–
      
206,589
  
Capital expenditures
    
153,417
      
1,112
      
4,218
      
–
      
158,747
  
 
10

Nine months ended September 30, 2015
  
Contract Drilling Services
    
Completion and Production Services
    
Corporate and Other
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
1,072,075
    
$
144,632
    
$
–
    
$
(6,036
)
  
$
1,210,671
  
Operating earnings (loss)
    
78,397
      
(95,094
)
    
(61,567
)
    
–
      
(78,264
)
Depreciation and amortization
    
325,667
      
26,178
      
9,616
      
–
      
361,461
  
Impairment of property, plant and equipment
    
–
      
79,573
      
–
      
–
      
79,573
  
Total assets
    
4,609,682
      
242,783
      
416,515
      
–
      
5,268,980
  
Goodwill
    
207,459
      
–
      
–
      
–
      
207,459
  
Capital expenditures
    
386,120
      
2,306
      
4,033
      
–
      
392,459
  

The Corporation’s operations are carried on in the following geographic locations:
Three months ended  September 30, 2016
  
Canada
    
United States
    
International
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
75,620
    
$
91,177
    
$
36,870
    
$
(1,865
)
  
$
201,802
  
Total assets
    
1,910,549
      
1,835,423
      
704,352
      
–
      
4,450,324
  
Three months ended September 30, 2015
  
Canada
    
United States
    
International
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
143,482
    
$
172,446
    
$
50,766
    
$
(2,605
)
  
$
364,089
  
Total assets
    
2,147,060
      
2,382,198
      
739,722
      
–
      
5,268,980
  
Nine months ended  September 30, 2016
  
Canada
    
United States
    
International
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
246,096
    
$
310,097
    
$
116,951
    
$
(5,636
)
  
$
667,508
  
Total assets
    
1,910,549
      
1,835,423
      
704,352
      
–
      
4,450,324
  
Nine months ended September 30, 2015
  
Canada
    
United States
    
International
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
440,329
    
$
610,280
    
$
174,769
    
$
(14,707
)
  
$
1,210,671
  
Total assets
    
2,147,060
      
2,382,198
      
739,722
      
–
      
5,268,980
  
 
11
 
NOTE 10. FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable, and accounts payable and accrued liabilities approximate their fair value due to the relatively short period to maturity of the instruments. The fair value of the unsecured senior notes at September 30, 2016 was approximately $1,850 million (December 31, 2015 - $1,736 million).
Financial assets and liabilities recorded or disclosed at fair value in the consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are based on the amount of subjectivity associated with the inputs in the fair determination and are as follows:

Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level III—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The estimated fair value of unsecured senior notes is based on level II inputs. The fair value is estimated considering the risk free interest rates on government debt instruments of similar maturities, adjusted for estimated credit risk, industry risk and market risk premiums.

12
SHAREHOLDER INFORMATION
STOCK EXCHANGE LISTINGS
Shares of Precision Drilling Corporation are listed on the Toronto Stock Exchange under the trading symbol PD and on the New York Stock Exchange under the trading symbol PDS.
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company of Canada
 Calgary, Alberta
TRANSFER POINT
Computershare Trust Company NA
 Canton, Massachusetts
Q3 2016 TRADING PROFILE
Toronto (TSX: PD)
High: $7.00
Low: $4.66
Close: $5.48
Volume Traded: 102,179,001
New York (NYSE: PDS)
High: US$5.56
Low: US$3.51
Close: US$4.18
Volume Traded: 126,055,500
ACCOUNT QUESTIONS
Precision’s Transfer Agent can help you with a variety of shareholder related services, including:
• change of address
• lost unit certificates
• transfer of shares to another person
• estate settlement
Computershare Trust Company of Canada
100 University Avenue
9th Floor, North Tower
Toronto, Ontario M5J 2Y1
 Canada
1-800-564-6253 (toll free in Canada and the United States)
1-514-982-7555 (international direct dialing)
Email: service@computershare.com
ONLINE INFORMATION
To receive news releases by email, or to 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 Precision, including the Annual Information Form, Annual Report and Management Information Circular has been filed with SEDAR and is available at www.sedar.com and on the EDGAR website www.sec.gov.
CORPORATE INFORMATION

DIRECTORS
William T. Donovan
Brian J. Gibson
Allen R. Hagerman, FCA
Catherine J. Hughes
Steven W. Krablin
Stephen J.J. Letwin
Kevin O. Meyers
Kevin A. Neveu
Robert L. Phillips

OFFICERS
Kevin A. Neveu
President and Chief Executive Officer

Niels Espeland
President, International

Douglas B. Evasiuk
Senior Vice President, Sales and Marketing

Veronica Foley
Senior Vice President, General Counsel and Corporate Secretary

Carey Ford
Senior Vice President and Chief Financial Officer

Darren J. Ruhr
Senior Vice President, Corporate Services

Gene C. Stahl
President, Drilling Operations

AUDITORS
KPMG LLP
Calgary, Alberta

HEAD OFFICE
Suite 800, 525-8th Avenue SW
Calgary, Alberta, Canada T2P 1G1
Telephone: 403-716-4500
Facsimile: 403-264-0251
Email: info@precisiondrilling.com
www.precisiondrilling.com
 
 
13