Precision Drilling Corporation Announces 2015 First Quarter Dividend, 2014 Fourth Quarter and Year End Financial Results

CALGARY, ALBERTA--(Marketwired - Feb. 12, 2015) -

(Canadian dollars except as indicated)

This news release contains "forward-looking information and statements" within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements" later in this news release.

The Board of Directors of Precision Drilling Corporation PD PDS ("Precision" or the "Corporation") has declared a dividend on its common shares of $0.07 per common share, payable on March 12, 2015, to shareholders of record on February 27, 2015. For Canadian income tax purposes, all dividends paid by Precision on its common shares are designated as "eligible dividends", unless otherwise indicated by Precision.

Revenue this quarter was $619 million or 9% higher than the fourth quarter of 2013, mainly due to higher drilling activity in the U.S., Canada and internationally along with higher average dayrates in the U.S. and internationally. Revenue from our Contract Drilling Services and Completion and Production Services segments both increased over the comparative prior year period by 10% and 5%, respectively.

Earnings before income taxes, finance charges, foreign exchange, impairment of goodwill, loss on asset decommissioning and depreciation and amortization (adjusted EBITDA) this quarter were $234 million or 18% higher than the fourth quarter of 2013. Our activity for the quarter, as measured by drilling rig utilization days, increased 4% in Canada, 12% in the U.S. and 2% internationally, compared to the fourth quarter of 2013. Our adjusted EBITDA as a percent of revenue was 38% this quarter, compared to 35% in the fourth quarter of 2013. The increase in adjusted EBITDA as a percent of revenue was mainly due to increases in activity and profitability in our Contract Drilling Services segment and lower costs associated with incentive compensation that are tied to the price of our common shares, which resulted in a recovery of $10 million this quarter.

We recorded a net loss this quarter of $114 million, or net loss per diluted share of $0.39, compared to net earnings of $68 million, or $0.24 per diluted share, in the fourth quarter of 2013. During the quarter we recorded asset decommissioning and goodwill impairment charges totaling $222 million that, after-tax, reduced net earnings by $182 million and net earnings per diluted share by $0.62. Effective January 1, 2014 we began calculating depreciation on our drilling rigs and service rigs on a straight-line basis which reduced net earnings for the quarter by approximately $2 million or $0.01 per diluted share compared with what net earnings would have been using the previous depreciation method.

For the year ended December 31, 2014 net earnings were $33 million, or $0.11 per diluted share, compared to net earnings of $191 million, or $0.66 per diluted share in 2013, while revenue was $2.4 billion, or 16% more than in 2013. During the year we recorded an asset decommissioning and goodwill impairment charges totaling $222 million that after-tax reduced net earnings by $182 million and net earnings per diluted share by $0.62. Effective January 1, 2014 we began calculating depreciation on our drilling rigs and service rigs on a straight-line basis which reduced net earnings for the year by approximately $29 million or $0.10 per diluted share compared with what net earnings would have been using the previous depreciation method.

Precision concluded 2014 with $857 million in capital expenditures, approximately $28 million lower than planned. Planned capital expenditures for 2015 are now $467 million and include capital expenditures from new-build announcements in 2014 that will be completed in 2015. Two new build rigs scheduled for customer delivery in 2015 have been deferred. Currently, our customers' needs have been met with existing rigs. A portion of the 2015 capital plan is utilization based and if activity levels increase or decline, Precision has the ability to adjust the plan accordingly.

Kevin Neveu, Precision's President and Chief Executive Officer, stated: "The decline in oil prices over the past eight months has been severe and swift and the energy industry is rapidly adjusting to a lower oil price environment. The clearest picture of this adjustment is in the reported North America industry rig count declines, which we expect will continue in the near term. Although 2015 is likely to be the most challenging year our industry has experienced this decade, I believe we are better positioned than we ever have been to manage through this downturn."

"We are strong believers in the long-term fundamentals supporting oil and natural gas development, and believe that our High Performance, High Value services are even more important for our customers in these challenging times. Our business is scalable and primarily variable cost with the ability to increase and decrease operating expenses and maintenance capital spending with activity, and when we invest in growth capital for customers we protect our capital with long-term contract coverage for our rigs. As of today, we have an average of 105 term contracts for the full year 2015. Precision's strong customer base, diverse geographic exposure, contract coverage, asset quality, scale of operations and liquidity position provide us the financial and operational levers to sustain our business while remaining poised for growth opportunities even in these down cycle periods."

"The quality of our rig fleet is better than it has ever been with a fleet of 217 Tier 1 Super Series rigs at the end of 2014 and 17 additional rigs scheduled for delivery in 2015. These Super Series rigs, a critical component of our High Performance, High Value strategy, deliver maximum efficiency to customers, reducing unconventional resource development costs and increasing their economic returns. Our alliance with Schlumberger, integrating Tier 1 Super Series rigs with premium downhole technology, has proven an effective solution for many of our customers to generate cost savings. In the fourth quarter we had nearly twice the number of alliance jobs as we did in the third quarter."

"Our international operations performed well in 2014 and grew as customers in the Middle East took delivery of three new build rigs during the year and one upgraded rig. We plan to deliver another new-build rig to the region in the first half of this year and upon delivery, we will have 14 rigs working in international operations, an increase from just two rigs three years ago. We will continue to focus on technically challenging work for top customers in the international market and plan to prudently grow this business over the coming quarters."

"We were able to reduce our 2014 capital expenditures during the fourth quarter and have made reductions to our 2015 capital spending plan to address changes in industry conditions. Our financial position remains strong with over $490 million in cash at the end of 2014 and no principal payments due on our long-term debt until 2019."

"Industry downturns are difficult for all, but they affect our rig crews more than anybody else. Each one of our active rigs is crewed by 20 or 25 skilled and trained Precision field hands and at this time last year we had nearly 250 rigs running and today we have less than 200. Precision recruited, trained and developed many excellent crews to support the demands of our customers over the past several years, and unfortunately we now don't have work for many of these dedicated workers. When the industry begins to add rigs again, I am certain Precision rigs will be among the first to be re-activated and I know we will do everything we can to get our Precision trained crews back up and operating our rigs, which are among the most efficient in the industry", concluded Mr. Neveu.

SELECT FINANCIAL AND OPERATING INFORMATION

Adjusted EBITDA and funds provided by operations are additional GAAP measures. See "ADDITIONAL GAAP MEASURES".

Financial Highlights



----------------------------------------------------------------------------
Three months ended
December 31, Year ended December 31,
(Stated in thousands
of Canadian dollars,
except per share %
amounts) 2014 2013 % Change 2014 2013 Change
----------------------------------------------------------------------------
Revenue 618,525 566,909 9.1 2,350,538 2,029,977 15.8
Adjusted EBITDA 234,011 197,744 18.3 800,370 638,833 25.3
Adjusted EBITDA % of
revenue 37.8% 34.9% 34.1% 31.5%
Net earnings (loss) (114,044) 67,921 n/m 33,152 191,150 (82.7)
Cash provided by
operations 134,887 94,452 42.8 680,159 428,086 58.9
Funds provided by
operations 172,059 155,816 10.4 697,474 461,973 51.0
Capital spending:
Expansion 235,636 53,734 338.5 571,383 282,145 102.5
Upgrade 42,529 29,926 42.1 136,475 141,132 (3.3)
Maintenance and
infrastructure 60,085 39,382 52.6 148,832 112,527 32.3
Proceeds on sale(1) (53,304) (3,351) 1,490.7 (101,826) (13,372) 661.5
----------------------------------------------------------------------------
Net capital spending 284,946 119,691 138.1 754,864 522,432 44.5

Earnings (loss) per
share:
Basic (0.39) 0.24 n/m 0.11 0.69 (84.1)
Diluted (0.39) 0.24 n/m 0.11 0.66 (83.3)
Dividends paid per
share 0.07 0.06 16.7 0.25 0.21 19.0
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(1) For the three months ended December 31, 2014 includes proceeds of $44
million from the disposal of our U.S. coil tubing assets and for the
year ended 2014 also includes proceeds of $26 million from the disposal
of certain trucks and other related assets used to support drilling rig
moves in Texas and New Mexico in the third quarter of 2014.
n/m - calculation not meaningful



Operating Highlights



----------------------------------------------------------------------------
Three months ended
December 31, Year ended December 31,
2014 2013 % Change 2014 2013 % Change
----------------------------------------------------------------------------
Contract drilling rig
fleet 313 327 (4.3) 313 327 (4.3)
Drilling rig
utilization days:
Canada 8,550 8,201 4.3 32,810 30,530 7.5
U.S. 9,214 8,258 11.6 35,075 30,268 15.9
International 1,072 1,052 1.9 4,036 3,555 13.5
Service rig fleet 177 222 (20.3) 177 222 (20.3)
Service rig operating
hours 70,350 71,981 (2.3) 273,194 283,576 (3.7)
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Financial Position



----------------------------------------------------------------------------
(Stated in thousands of Canadian dollars, December 31, December 31,
except ratios) 2014 2013
----------------------------------------------------------------------------
Working capital 598,492 305,783
Long-term debt(1) 1,852,186 1,323,268
Total long-term financial liabilities 1,881,275 1,355,535
Total assets 5,308,996 4,579,123
Long-term debt to long-term debt plus equity
ratio(1) 0.43 0.36
----------------------------------------------------------------------------
(1) Net of unamortized debt issue costs.



Our portfolio of term customer contracts, a scalable operating cost structure and economies achieved through vertical integration of the supply chain all help us manage our business through the industry cycles.

Precision's strategic priorities for 2015 are as follows:



1. Work with our customers to lower well costs - Deliver High Performance,
High Value services to customers to create maximum efficiency and lower
risks for development drilling programs. Utilize unique platform of Tier
1 assets, geographically diverse operations and highly efficient service
offering to deliver cost-reducing solutions. Grow our cost-reducing
integrated directional drilling service with the Schlumberger alliance.
2. Maximize cost efficiency throughout the organization - Continue to
leverage Precision's scale to reduce costs and deliver High Performance.
Maximize benefits of variable nature of operating and capital expenses.
Maintain efficient corporate cost structure by optimizing systems for
assets, people and business management. Do not sacrifice focus on worker
safety, premium service quality and employee development.
3. Reinforce our competitive advantage - Gain market share as Tier 1 assets
remain most in demand rigs. High grade our active rig fleet by
delivering new-build rigs and maximizing customer opportunities to
utilize High Performance assets. Deliver consistent, reliable, High
Performance service. Retain and continue to develop the industry's best
people.
4. Manage liquidity and focus activities on cash flow generation.



During the quarter we incurred asset decommissioning and goodwill impairment charges totaling $222 million. The asset decommissioning charge of $127 million is associated with 29 drilling rigs, including ten rigs in the U.S. and 19 rigs in Canada, 35 service rigs and two snubbing units, all of which were based in Canada. In addition, we changed our depreciation estimates at the start of 2014 to reflect the steadily declining demand for legacy drilling rigs and increased demand for highly efficient, technologically advanced drilling rigs. We believe the recent drop in oil prices and the number of new-build drilling rigs that entered the market in 2014 and are expected to be delivered in the first half of 2015, are effectively rendering these legacy assets obsolete.

After the rig decommissioning, completion of a review and reclassification of certain existing rigs and delivery of the 17 contracted and undelivered new-build rigs in 2015, Precision's drilling rig fleet will consist of 330 drilling rigs, including 234 Tier 1 rigs, 74 Tier 2 rigs and 22 PSST rigs. For the Tier 1 rigs, 122 will be in Canada, 106 in the U.S. and six internationally.

Under International Financial Reporting Standards, we are required to assess the carrying value of assets in our cash generating units containing goodwill annually. We believe some of our legacy goodwill no longer has an economic useful life and have taken an impairment charge to reflect this reality. During the quarter we incurred a goodwill impairment charge of $95 million related to our Completion and Production Services segment.

West Texas Intermediate oil prices dropped considerably throughout the third and fourth quarters of this year and have declined by approximately 54% since the third quarter peak on July 23, 2014. As at February 11, 2015, West Texas Intermediate oil prices were approximately US$49.

For the fourth quarter of 2014, the average Henry Hub natural gas price was slightly lower than the 2013 average.



----------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
2014 2013 2014 2013
----------------------------------------------------------------------------
Average oil and natural gas prices
Oil
West Texas Intermediate (per
barrel) (US$) 72.99 97.50 93.06 98.02

Natural gas
Canada
AECO (per MMBtu) (Cdn$) 3.61 3.53 4.45 3.18
U.S.
Henry Hub (per MMBtu) (US$) 3.75 3.85 4.33 3.73
----------------------------------------------------------------------------



Summary for the three months ended December 31, 2014:



-- We realized an operating loss (see "Additional GAAP Measures") this
quarter of $22 million a decrease of $130 million from the fourth
quarter 2013 operating earnings of $108 million. In the fourth quarter
of 2014, we recorded a decommissioning charge of $127 million related to
the decommissioning of certain equipment. Excluding the decommissioning
charges, operating earnings were $105 million or 17% of revenue,
compared to $108 million or 19% in 2013. Operating earnings were
positively impacted by the increase in drilling activity and dayrates in
our contract drilling rig operations partially offset by an increase in
depreciation from moving to the straight-line method, the depreciation
on asset additions and the loss on disposal of selling certain assets.

-- General and administrative expenses this quarter were $26 million, $8
million less than the fourth quarter of 2013. The decrease is due to
lower costs associated with incentive compensation that are tied to the
price of our common shares, partially offset by increased costs
associated with expansion efforts.

-- As a result of our annual review of the estimated useful lives and
method of depreciation for our property, plant and equipment, effective
January 1, 2014 we began calculating depreciation on our drilling rigs
and service rigs on a straight-line basis. Existing assets were assessed
for their remaining useful lives and are being depreciated prospectively
on a straight-line basis. New drilling rigs are depreciated based on the
expected life of individual asset components with an approximate
weighted average life of 15 years and 7% salvage value. New service rigs
are depreciated based on the expected life of the asset component with
an approximate weighted average life of 20 years with 10% salvage value.
The move to straight-line reflects the demand for technologically
advanced assets which are expected to depreciate over time rather than
on a per unit basis. The use of straight-line depreciation results in
idle assets being more aggressively depreciated. In the fourth quarter
of 2014 depreciation expense calculated using the straight-line method
with revised asset life expectancy was $112 million. Had we continued to
depreciate assets using units of production, depreciation would have
been $109 million. The additional depreciation expense for the year
ending December 31, 2014 from this change was approximately $43 million.
Our current quarter depreciation expense includes $17 million related to
losses on disposal of equipment.

-- Under International Financial Reporting Standards, we are required to
assess the carrying value of our assets in cash generating units
containing goodwill annually. Due to the decrease in oil and natural gas
well drilling in Canada and the outlook for pricing, we recognized a $95
million goodwill impairment charge in the quarter which represents the
full amount of goodwill attributable to our Canadian well servicing
operation and wastewater treatment operations.

-- Net finance charges were $30 million, an increase of $7 million compared
with the fourth quarter of 2013 due to interest costs from the issuance
of US$400 million of 5.25% Senior Notes on June 3, 2014 and the
weakening Canadian dollar on our U.S. dollar denominated interest.

-- Average revenue per utilization day for contract drilling rigs decreased
slightly in the fourth quarter of 2014 to $22,648 from the prior year
fourth quarter of $22,932 in Canada and increased slightly in the U.S.
to US$24,118 from US$23,841. The decrease in revenue rates for Canada is
primarily due to competitive pricing in some rig segments partially
offset by added new-build and upgraded rigs entering the fleet compared
to the prior year quarter. The increase in revenue rates for the U.S. is
primarily due to additional Tier 1 and upgraded rigs entering the fleet
compared to the prior year quarter and higher rates for well-to-well and
re-contracted term rigs partially offset by decreased turnkey revenue in
the current quarter. Turnkey revenue for the fourth quarter of 2014 was
US$11 million compared with US$17 million in the 2013 comparative
period. Within the Completion and Production Services segment, the
average hourly rate for service rigs was $906 in the fourth quarter of
2014 compared to $878 in the fourth quarter of 2013. The increase in the
average hourly rate is the result of rig mix partially offset by the
absence of our U.S. coil tubing assets, disposed in the fourth quarter
from the calculation.

-- Average operating costs per utilization day for drilling rigs increased
in the fourth quarter of 2014 to $10,670 from the prior year fourth
quarter of $10,391 in Canada while in the U.S. costs decreased to
US$13,522 in 2014 from US$14,150 in 2013. The cost increase in Canada
was primarily due to a labour rate increase that became effective in the
fourth quarter of 2014. The cost decrease in the U.S. was primarily due
to costs associated with lower turnkey activity.

-- We realized revenue from international contract drilling of $52 million
in the fourth quarter of 2014, a $5 million increase over the prior year
period due to expansion in the Middle East with three new build rigs
deployed in 2014.

-- Directional drilling services realized revenue of $31 million in the
fourth quarter of 2014 consistent with the prior year period.

-- Funds provided by operations in the fourth quarter of 2014 were $172
million, an increase of $16 million from the prior year comparative
quarter of $156 million. The increase was primarily the result of higher
activity levels.

-- Capital expenditures for the purchase of property, plant and equipment
were $338 million in the fourth quarter, an increase of $215 million
over the same period in 2013. Capital spending for the fourth quarter of
2014 included $236 million for expansion capital, $42 million for
upgrade capital and $60 million for the maintenance of existing assets
and infrastructure spending.

-- During the quarter we sold our U.S. coil tubing assets for total cash of
C$44 million.



Summary for the year ended December 31, 2014:



-- Revenue for 2014 was $2,351 million, an increase of 16% from 2013.

-- Operating earnings were $225 million, a decrease of $81 million or 26%
from 2013. In the fourth quarter of 2014, we recorded an asset
decommissioning charge of $127 million related to the decommissioning of
certain equipment. Excluding the decommissioning charge, operating
earnings were $352 million or 15% of revenue, compared to $306 million
or 15% in 2013. Operating earnings were positively impacted by the
increase in drilling activity and rates in our contract drilling rig
operations partially offset by an increase in depreciation from moving
to the straight-line method, the depreciation on asset additions and
losses on disposal of selling certain assets.

-- General and administrative costs were $144 million, an increase of $2
million from 2013 primarily as a result of increased costs associated
with growth efforts partially offset by a decrease in incentive
compensation costs tied to the performance of Precision's common shares
in 2014.

-- Depreciation expense calculated using the straight-line method with
revised asset life expectancy was $431 million for 2014. Had we
continued to depreciate assets using units of production, depreciation
would have been $388 million.

-- Due to the decrease in oil and natural gas well drilling in Canada and
the outlook for pricing, we recognized a $95 million goodwill impairment
charge in 2014 which represents the full amount of goodwill attributable
to our Canadian well servicing operation and wastewater treatment
operations.

-- Net finance charges were $110 million in 2014, an increase of $16
million from 2013. In June 2014 we issued US$400 million of 5.25% Senior
Notes.

-- Funds provided by operations (see "Additional GAAP Measures") in 2014
were $697 million, an increase of $236 million from 2013.

-- We realized revenue from international contract drilling of $195 million
in 2014, a $58 million increase over 2013 due to expansion in the Middle
East with three new-build rigs deployed in 2014.

-- Directional drilling services realized revenue of $124 million in 2014,
a decrease of $4 million from 2013.

-- Capital expenditures for the purchase of property, plant and equipment
were $857 million in 2014, an increase of $321 million over 2013.
Capital spending for 2014 included $571 million for expansion capital,
$137 million for upgrade capital and $149 million for the maintenance of
existing assets and infrastructure.



OUTLOOK

Contracts

Our portfolio of term customer contracts provides a base level of activity and revenue and, as of February 11, 2015, we had term contracts in place for an average of 49 rigs in Canada, 63 in the U.S. and 13 internationally for the first quarter of 2015 and an average of 45 rig contracts in Canada, 49 in the U.S. and 11 internationally for the full year in 2015. In Canada, term contracted rigs normally generate 250 utilization days per year because of the seasonal nature of well site access. In most regions in the U.S. and internationally, term contracts normally generate 365 utilization days per year.

Drilling Activity

In the U.S., our average active rig count in the fourth quarter was 100 rigs, up ten rigs over the fourth quarter in 2013 and up three rigs over the third quarter of 2014. We currently have 86 rigs active in the U.S.

In Canada, our average active rig count in the fourth quarter was 93 rigs, an increase of four over the fourth quarter in 2013 and up five rigs over the third quarter of 2014. We currently have 79 rigs active in Canada.

In general we expect lower drilling activity levels and pricing pressure on spot market rigs in North America as significantly lower oil prices have caused producers to meaningfully reduce drilling budgets. We expect Tier 1 rigs to remain the preferred rigs of producers in the North American market and for us to benefit from our completed fleet enhancements over the past several years as well as recent and scheduled delivery of contracted new-build and upgraded rigs to the North American market in 2015.

Internationally, our average active rig count in the quarter was 12 rigs, consistent with the fourth quarter in 2013 and up one rig over the third quarter of 2014. During the quarter we took delivery of a new-build rig for work in the Kingdom of Saudi Arabia and an upgraded rig for operations in the country of Georgia, scheduled to begin operations in the first quarter of 2015. We expect to take delivery of a new-build rig to begin operations in Kuwait in mid-2015.

Industry Conditions

Industry drilling activity in the U.S. continues to decline with the active rig count down 470 rigs since the industry peak in late November 2014, according to industry sources. Since the peak, the active rig count has declined for 11 consecutive weeks. The active rig count in Canada is maintaining seasonally higher activity levels, but year to date activity levels are well below levels experienced at this time last year. According to industry sources, as of February 6, 2015, the U.S. active land drilling rig count was down approximately 18% from the same point last year and the Canadian active land drilling rig count was down approximately 39%. The decrease in the North American rig count has been caused by lower spending by producers as a result of weaker oil prices.

To date in 2015, approximately 48% of the Canadian industry's active rigs and 81% of the U.S. industry's active rigs were drilling for oil targets, compared to 65% for Canada and 80% for the U.S. at the same time last year.

Capital Spending

Capital spending in 2015 is expected to be $467 million:



-- The 2015 capital expenditure plan includes $355 million for expansion
capital, $73 million for sustaining and infrastructure expenditures, and
$39 million to upgrade existing rigs. We expect that the $467 million
will be split $461 million in the Contract Drilling segment and $6
million in the Completion and Production Services segment.

-- Precision's expansion capital plan for 2015 includes the completion of
17 new-build drilling rigs to be delivered in the first three quarters
of the year, 13 for the U.S., three for Canada and one for Kuwait



The 13 rigs for the U.S. are all Super Triple rigs and are scheduled to be delivered to multiple unconventional basins for five different customers. The new-build rigs in Canada are ST-1200 rigs for three different customers and are expected to be delivered in the first and third quarters of 2015. The Kuwait new-build is a ST-1500 rig and is expected to be delivered in June.

Following is a new-build delivery schedule for deliveries in 2014 and expected deliveries in 2015. All of the rigs shown on the table below are backed by customer contracts.



----------------------------------------------------------------------------
2014 2015
Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total
----------------------------------------------------------------------------
Rig Deliveries
Canada 2 - 1 2 5 2 - 1 - 3
U.S. 1 1 1 4 7 7 6 - - 13
International - 2 - 1 3 - 1 - - 1
----------------------------------------------------------------------------
3 3 2 7 15 9 7 1 - 17
----------------------------------------------------------------------------
----------------------------------------------------------------------------

-- The 2015 capital plan includes minimal rig upgrades and will vary
depending on the scope of the upgrades.

-- Precision's sustaining and infrastructure capital plan is based upon
currently anticipated activity levels for 2015. The Nisku Centre
construction is complete and has been in operation since July.



SEGMENTED FINANCIAL RESULTS

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



----------------------------------------------------------------------------
Three months ended
December 31, Year ended December 31,
(Stated in thousands % %
of Canadian dollars) 2014 2013 Change 2014 2013 Change
----------------------------------------------------------------------------
Revenue:
Contract Drilling
Services 531,710 484,349 9.8 2,017,110 1,719,910 17.3
Completion and
Production Services 89,444 85,385 4.8 343,556 323,353 6.2
Inter-segment
eliminations (2,629) (2,825) (6.9) (10,128) (13,286) (23.8)
----------------------------------------------------------------------------
618,525 566,909 9.1 2,350,538 2,029,977 15.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted EBITDA:(1)
Contract Drilling
Services 232,436 200,271 16.1 821,490 653,664 25.7
Completion and
Production Services 16,014 16,261 (1.5) 57,954 61,032 (5.0)
Corporate and other (14,439) (18,788) (23.1) (79,074) (75,863) 4.2
----------------------------------------------------------------------------
234,011 197,744 18.3 800,370 638,833 25.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) See "ADDITIONAL GAAP MEASURES".



SEGMENT REVIEW OF CONTRACT DRILLING SERVICES



----------------------------------------------------------------------------
Three months ended
December 31 Year ended December 31,
(Stated in thousands
of Canadian dollars, % %
except where noted) 2014 2013 Change 2014 2013 Change
----------------------------------------------------------------------------
Revenue 531,710 484,349 9.8 2,017,110 1,719,910 17.3
Expenses:
Operating 291,308 273,107 6.7 1,147,826 1,019,156 12.6
General and
administrative 7,966 10,971 (27.4) 47,794 47,090 1.5
----------------------------------------------------------------------------
Adjusted EBITDA(1) 232,436 200,271 16.1 821,490 653,664 25.7
Depreciation 102,371 79,687 28.5 381,465 292,217 30.5
Loss on asset
decommissioning 97,947 - n/m 97,947 - n/m
----------------------------------------------------------------------------
Operating earnings(1) 32,118 120,584 (73.4) 342,078 361,447 (5.4)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating earnings as
a percentage of
revenue 6.0% 24.9% 17.0% 21.0%
----------------------------------------------------------------------------
Drilling rig revenue
per utilization day
in Canada 22,648 22,932 (1.2) 22,250 22,108 0.6
----------------------------------------------------------------------------
Drilling rig revenue
per utilization day
in the U.S.(2) (US$) 24,118 23,841 1.2 24,330 23,575 3.2
----------------------------------------------------------------------------
(1) See "ADDITIONAL GAAP MEASURES".
(2) Includes revenue from idle but contracted rig days and lump sum payouts
in 2013.
n/m - calculation not meaningful

Three months ended December 31,
Canadian onshore drilling
statistics:(1) 2014 2013
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Number of drilling rigs (end
of period) 174 797 187 819
Drilling rig operating days
(spud to release) 7,567 33,741 7,202 32,517
Drilling rig operating day
utilization 43% 45% 42% 43%
Number of wells drilled 919 3,009 873 2,975
Average days per well 8.2 11.2 8.2 10.9
Number of metres drilled
(000s) 1,643 6,746 1,489 6,301
Average metres per well 1,788 2,242 1,706 2,118
Average metres per day 217 200 207 194
----------------------------------------------------------------------------

Year ended December 31,
Canadian onshore drilling
statistics:(1) 2014 2013
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Number of drilling rigs (end
of period) 174 797 187 819
Drilling rig operating days
(spud to release) 29,093 131,021 26,983 120,043
Drilling rig operating day
utilization 42% 44% 39% 40%
Number of wells drilled 3,091 10,942 3,211 10,903
Average days per well 9.4 12.0 8.4 11.0
Number of metres drilled
(000s) 5,864 24,657 5,576 22,733
Average metres per well 1,897 2,253 1,736 2,085
Average metres per day 202 188 207 189
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(1) Canadian operations only.
(2) Canadian Association of Oilwell Drilling Contractors ("CAODC"), and
Precision - excludes non-CAODC rigs and non-reporting CAODC members.

United States onshore drilling
statistics:(1) 2014 2013
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Average number of active land
rigs for quarters ended:
March 31 94 1,724 81 1,706
June 30 93 1,802 80 1,710
September 30 97 1,842 81 1,709
December 31 100 1,856 90 1,697
----------------------------------------------------------------------------
Year to date average 96 1,806 83 1,705
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) United States lower 48 operations only.
(2) Baker Hughes rig counts.



Revenue from Contract Drilling Services was $532 million this quarter, or 10% higher than the fourth quarter of 2013, while adjusted EBITDA increased by 16% to $232 million. The increases were mainly due to higher drilling rig utilization days in our U.S. and Canadian contract drilling businesses and higher average day rates in our U.S. and international drilling businesses.

Operating earnings for our international business improved as average day rates increased 27% while drilling rig utilization days for the quarter were 2% higher than the prior year comparative period. The average day rate is up as we are realizing a higher percentage of our fleet utilization from our Middle East operations.

Drilling rig utilization days in Canada (drilling days plus move days) were 8,550 during the fourth quarter of 2014, an increase of 4% compared to 2013 primarily resulting from the delivery of new-build and upgraded rigs over the last 12 months. Drilling rig utilization days in the U.S. were 9,214, or 12% higher than the same quarter of 2013. The increase in U.S. activity was primarily due to strong demand for Tier 1 assets and has resulted in market share gains over the past year due to our high percentage of Tier 1 assets. The majority of our North American activity came from oil and liquids-rich natural gas related plays.

Compared to the same quarter in 2013, drilling rig revenue per utilization day was up 1% in the U.S. while Canada was down 1%. The increase in average dayrates for the U.S. was driven by improved rig mix and higher rates for well-to-well and re-contracted rigs partially offset by lower turnkey revenue. In Canada the dayrate decrease was the result of competitive pricing in some rig segments partially offset by new-build and upgraded rigs entering the fleet compared to the prior year quarter.

In Canada, 42% of utilization days in the quarter were generated from rigs under term contract, compared to 44% in the fourth quarter of 2013. In the U.S., 69% of utilization days were generated from rigs under term contract as compared to 62% in the fourth quarter of 2013. At the end of the quarter, we had 48 drilling rigs under contract in Canada, 63 in the U.S. and 12 internationally.

Operating costs were 55% of revenue for the quarter, which was two percentage points lower than the prior year period. On a per utilization day basis, operating costs for the drilling rig division in Canada were higher than the prior year primarily because of higher crew wages and labour burden. In the U.S., operating costs for the quarter on a per day basis were down from the fourth quarter of 2013 primarily as a result of lower turnkey activity.

During the fourth quarter the Contract Drilling Services segment recognized a loss of $98 million related to the decommissioning of 29 drilling rigs, 19 in Canada and ten in the United States, along with certain spare equipment. Depreciation expense in the quarter was 28% higher than in the fourth quarter of 2013 due to changes in the estimated remaining useful life of our capital equipment, a change to straight-line depreciation and depreciation expense associated with new equipment.

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES



----------------------------------------------------------------------------
Three months ended
December 31, Year ended December 31,
(Stated in thousands of
Canadian dollars, % %
except where noted) 2014 2013 Change 2014 2013 Change
----------------------------------------------------------------------------
Revenue 89,444 85,385 4.8 343,556 323,353 6.2
Expenses:
Operating 70,000 65,199 7.4 268,129 242,768 10.4
General and
administrative 3,430 3,925 (12.6) 17,473 19,553 (10.6)
----------------------------------------------------------------------------
Adjusted EBITDA(1) 16,014 16,261 (1.5) 57,954 61,032 (5.0)
Depreciation 24,849 8,324 198.5 58,621 32,630 79.7
Loss on asset
decommissioning 28,752 - n/m 28,752 - n/m
----------------------------------------------------------------------------
Operating earnings
(loss)(1) (37,587) 7,937 n/m (29,419) 28,402 n/m
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating earnings
(loss) as a percentage
of revenue (42.0%) 9.3% (8.6%) 8.8%
----------------------------------------------------------------------------
Well servicing
statistics:
Number of service rigs
(end of period) 177 222 (20.3) 177 222 (20.3)
Service rig operating
hours 70,350 71,981 (2.3) 273,194 283,576 (3.7)
Service rig operating
hour utilization 33% 35% 32% 36%
Service rig revenue
per operating hour 906 878 3.2 907 854 6.2
----------------------------------------------------------------------------
(1) See "ADDITIONAL GAAP MEASURES".
n/m - calculation not meaningful



Revenue from Completion and Production Services was up $4 million or 5% compared to the fourth quarter of 2013, as higher average rates resulted from improved product mix as a greater proportion of higher end services were provided in the current quarter compared with the prior year. Well servicing activity in the fourth quarter was down slightly over the fourth quarter of 2013 in both Canada and the U.S. Approximately 86% of the fourth quarter Canadian service rig activity was oil related. In the fourth quarter of 2014 we sold our U.S. coil tubing assets.

Average service rig revenue per operating hour in the fourth quarter was $906 or $28 higher than the fourth quarter of 2013. The increase was primarily the result of rig mix as we completed a greater proportion of higher end services in the current year partially offset by the sale of our U.S. coil tubing assets which generally received a higher rate per hour.

Adjusted EBITDA was $16 million, in line with the fourth quarter of 2013 as higher average rates were offset by a decline in activity.

Operating costs as a percentage of revenue increased to 78% in the fourth quarter of 2014, from 76% in the fourth quarter of 2013. Operating costs per service rig operating hour were higher than in the fourth quarter of 2013 mainly because of the increase in costs associated with the coil tubing operations.

Included in depreciation this quarter is the loss on disposal of our U.S. coil tubing assets for $14 million. Depreciation excluding the loss on disposal of our coil tubing assets in the fourth quarter of 2014 was 32% more than the fourth quarter of 2013 because of changes in the estimated remaining useful life of our capital equipment, a change to straight-line depreciation and depreciation expense associated with new equipment.

SEGMENT REVIEW OF CORPORATE AND OTHER

Our Corporate and Other segment provides support functions to our operating segments. The Corporate and Other segment had an adjusted EBITDA loss of $14 million for the fourth quarter of 2014, $4 million less than 2013 comparative period due primarily to lower share based incentive compensation.

OTHER ITEMS

Net financial charges for the quarter were $30 million, an increase of $7 million from the fourth quarter of 2013, driven by the impact of the issuance of US$400 million 5.25% Senior Notes on June 3, 2014 and the impact of the weaker Canadian dollar on our U.S. dollar denominated interest. We had a foreign exchange loss of $1 million during the fourth quarter of 2014 due to the weakening of the Canadian dollar versus the U.S. dollar, which affected the net U.S. dollar denominated monetary position in the Canadian dollar-based companies.

Income tax expense for the quarter was a recovery of $35 million compared with a expense of $20 million in the same quarter in 2013. The decrease is due to the loss on asset decommissioning in the fourth quarter.

In August, 2014 the Ontario Court of Appeal ruled in favour of Precision's wholly owned subsidiary, reversing a decision by the Ontario Superior Court of Justice in June, 2013 regarding the reassessment of Ontario income tax for the subsidiary's 2001 through 2004 taxation years. The Ontario Minister of Revenue has made an application to the Supreme Court of Canada seeking leave to appeal this decision. We expect the Supreme Court of Canada to render its decision on the application for leave to appeal by the end of the first half of 2015.

The $55 million paid to the Ontario tax authorities in 2008, related to the reassessed taxation years, will continue to be reflected as a long-term receivable until this matter is fully resolved.

LIQUIDITY AND CAPITAL RESOURCES

The oilfield services business is inherently cyclical in nature. To manage this, we focus on maintaining a strong balance sheet so we have the financial flexibility we need to continue to manage our growth and cash flow, regardless of where we are in the business cycle.

We apply a disciplined approach to managing and tracking results of our operations to keep costs down. We maintain a variable cost structure so we can be responsive to changes in demand.

Our maintenance capital expenditures are tightly governed by and highly responsive to activity levels with additional cost savings leverage provided through our internal manufacturing and supply divisions. Term contracts on expansion capital for new-build rig programs provide more certainty of future revenues and return on our capital investments.

Liquidity

In June 2014 we issued US$400 million of 5.25% Senior Notes due in 2024 in a private offering. The Notes are guaranteed on a senior unsecured basis by current and future U.S. and Canadian subsidiaries that also guarantee our revolving credit facility and certain other indebtedness. We expect to use the net proceeds from this placement for general corporate purposes, including building new drilling rigs.

In addition, we amended our credit agreement governing our revolving credit facility to, among other things, voluntarily reduce the size of the revolving credit facility from US$850 million to US$650 million and extend the maturity to June 3, 2019.

As at December 31, 2014 we had $1,882 million outstanding under our senior unsecured notes.



Amount Availability Used for Maturity
----------------------------------------------------------------------------
Senior facility
(secured)
----------------------------------------------------------------------------
US$650 million Drawn US$26 General corporate June 3, 2019
(extendible, million in purposes
revolving term outstanding
credit facility letters of credit
with US$250
million accordion
feature)
----------------------------------------------------------------------------
Operating
facilities
(secured)
----------------------------------------------------------------------------
$40 million Undrawn, except Letters of credit
$20 million in and general
outstanding corporate purposes
letters of credit
----------------------------------------------------------------------------
US$15 million Undrawn Short term working
capital
requirements
----------------------------------------------------------------------------
Demand letter of
credit facility
(secured)
----------------------------------------------------------------------------
US$25 million Undrawn, except Letters of credit
US$8 million in
outstanding
letters of credit
----------------------------------------------------------------------------
Senior notes
(unsecured)
----------------------------------------------------------------------------
$200 million Fully drawn Debt repayment March 15, 2019
----------------------------------------------------------------------------
US$650 million Fully drawn Debt repayment and November 15, 2020
general corporate
purposes
----------------------------------------------------------------------------
US$400 million Fully drawn Capital December 15, 2021
expenditures and
general corporate
purposes
----------------------------------------------------------------------------
US$400 million Fully drawn Capital November 15, 2024
expenditures and
general corporate
purposes
----------------------------------------------------------------------------



Our secured facility includes financial ratio covenants that are tested quarterly; we are compliant with these covenants and expect to remain compliant.

The current blended cash interest cost of our debt is approximately 6.2%.

Hedge of investments in U.S. operations

Effective January 1, 2015 we have included the US$400 million of 5.25% Senior Notes due in 2024 as a designated hedge of our investment in our U.S. operations and now all of our U.S. dollar denominated Senior notes are designated as a hedge against our investment in our U.S. operations. To be accounted for as a hedge, the foreign currency denominated long-term debt must be designated and documented as such and must be effective at inception and on an ongoing basis. We recognize the effective amount of this hedge (net of tax) in other comprehensive income. We recognize ineffective amounts (if any) in earnings.

Average shares outstanding

The following table reconciles the weighted average shares outstanding used in computing basic and diluted earnings per share:



----------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
(Stated in thousands) 2014 2013 2014 2013
----------------------------------------------------------------------------
Weighted average shares outstanding -
basic 292,791 280,388 292,533 277,583
Effect of warrants - 7,710 - 9,327
Effect of stock options and other
equity compensation plans - 913 1,271 971
----------------------------------------------------------------------------
Weighted average shares outstanding -
diluted 292,791 289,011 293,804 287,881
----------------------------------------------------------------------------
----------------------------------------------------------------------------



QUARTERLY FINANCIAL SUMMARY

(Stated in thousands of Canadian dollars, except per share amounts)



----------------------------------------------------------------------------
2014
----------------------------------------------------------------------------
Quarters ended March 31 June 30 September 30 December 31
----------------------------------------------------------------------------
Revenue 672,249 475,174 584,590 618,525
Adjusted EBITDA(1) 237,274 129,695 199,390 234,011
Net earnings (loss): 101,557 (7,174) 52,813 (114,044)
Per basic share 0.35 (0.02) 0.18 (0.39)
Per diluted share 0.35 (0.02) 0.18 (0.39)
Funds provided by
operations(1) 231,393 97,805 196,217 172,059
Cash provided by operations 170,127 228,412 146,733 134,887
Dividends paid per share 0.06 0.06 0.06 0.07
----------------------------------------------------------------------------

----------------------------------------------------------------------------
2013
----------------------------------------------------------------------------
Quarters ended March 31 June 30 September 30 December 31
----------------------------------------------------------------------------
Revenue 595,720 378,898 488,450 566,909
Adjusted EBITDA(1) 215,181 88,248 137,660 197,744
Net earnings: 93,313 473 29,443 67,921
Per basic share 0.34 0.00 0.11 0.24
Per diluted share 0.33 0.00 0.10 0.24
Funds provided by
operations(1) 144,682 33,791 127,684 155,816
Cash provided by operations 62,948 182,345 88,341 94,452
Dividends paid per share 0.05 0.05 0.05 0.06
----------------------------------------------------------------------------

(1) See "ADDITIONAL GAAP MEASURES".



ADDITIONAL GAAP MEASURES

We reference Generally Accepted Accounting Principles (GAAP) measures that are not defined terms under International Financial Reporting Standards to assess performance because we believe they provide useful supplemental information to investors.

Adjusted EBITDA

We believe that adjusted EBITDA (earnings before income taxes, financing charges, foreign exchange, impairment of goodwill, loss on asset decommissioning and depreciation and amortization) as reported in the Consolidated Statement of Earnings is a useful measure, because it gives an indication of the results from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and non-cash impairment, decommissioning, depreciation and amortization charges.

Operating Earnings (Loss)

We believe that operating earnings (loss), as reported in the Consolidated Statements of Earnings (Loss), is a useful measure because it provides an indication of the results of our principal business activities before consideration of how those activities are financed and the impact of foreign exchange and taxation.

Funds Provided by Operations

We believe that funds provided by operations, as reported in the Consolidated Statements of Cash Flow is a useful measure because it provides an indication of the funds our principal business activities generate prior to consideration of working capital, which is primarily made up of highly liquid balances.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements contained in this report, including statements that contain words such as "could", "should", "can", "anticipate", "estimate", "intend", "plan", "expect", "believe", "will", "may", "continue", "project", "potential" 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").

In particular, forward looking information and statements include, but are not limited to, the following:



-- the payment of our declared quarterly dividend;
-- our capital expenditure plans for 2015;
-- the number of new build rigs to be delivered to customers including
timing of delivery;
-- our expectations regarding North American drilling activity given the
decline in oil prices;
-- the expected severity of the downturn in the oil and gas sector and our
position heading into it;
-- our plans to continue growing our international business;
-- our strategic priorities for 2015;
-- the expected size of our rig fleet following our announced rig
decommissioning, the review and reclassification of certain existing
rigs and the scheduled delivery of new build and upgraded rigs;
-- continuing market demand for Tier 1 rigs;
-- future hiring plans in the event of a market upturn;
-- the timing regarding the outcome of the leave to appeal to the Supreme
Court of Canada by the Ontario Minister of Revenue involving one of our
subsidiaries;
-- the expected use of the net proceeds from our 2014 Senior Notes
offering; and
-- our expectations regarding our ability to remain compliant with our
financial ratio covenants under our secured facility.



These forward-looking information and statements are based on certain assumptions and analysis made by Precision in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances. These include, among other things:



-- our ability to react to customers' spending plans as a result of the
recent decline in oil prices;
-- the status of current negotiations with our customers and vendors;
-- continued market demand for Tier 1 rigs;
-- our ability to deliver rigs to customers on a timely basis;
-- the general stability of the economic and political environment in the
jurisdictions where we operate;



Undue reliance should not be placed on forward-looking information and statements. Whether actual results, performance or achievements will conform to our expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from our expectations. Such risks and uncertainties include, but are not limited to:



-- volatility in the price and demand for oil and natural gas;
-- fluctuations in the demand for contract drilling, well servicing and
ancillary oilfield services and its impact on customer spending;
-- the risks associated with our investments in capital assets and changing
technology;
-- shortages, delays and interruptions in the delivery of equipment,
supplies and other key inputs;
-- the effects of seasonal and weather conditions on operations and
facilities;
-- the availability of qualified personnel and management;
-- the existence of competitive operating risks inherent in our businesses;
-- changes in environmental and safety rules or regulations including
increased regulatory burden on horizontal drilling and hydraulic
fracturing;
-- terrorism, social, civil and political unrest in the foreign
jurisdictions where we operate;
-- fluctuations in foreign exchange, interest rates and tax rates; and
-- other unforeseen conditions which could impact the use of services
supplied by Precision and Precision's ability to respond to such
conditions.



Readers are cautioned that the forgoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect our business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to Precision's Annual Information Form for the year ended December 31, 2013, which may be accessed on Precision's SEDAR profile at www.sedar.com or under Precision's EDGAR profile at www.sec.gov. The forward-looking statements contained in this news release are made as of the date hereof and Precision undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a results of new information, future events or otherwise, unless so requires by applicable securities laws.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)



----------------------------------------------------------------------------
December 31, December 31,
(Stated in thousands of Canadian dollars) 2014 2013
----------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 491,481 $ 80,606
Accounts receivable 598,063 549,697
Inventory 9,170 12,378
----------------------------------------------------------------------------
Total current assets 1,098,714 642,681
Non-current assets:
Income tax recoverable 58,435 58,435
Property, plant and equipment 3,928,826 3,561,734
Intangibles 3,302 3,917
Goodwill 219,719 312,356
----------------------------------------------------------------------------
Total non-current assets 4,210,282 3,936,442
----------------------------------------------------------------------------
Total assets $ 5,308,996 $4,579,123
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 493,038 $ 332,838
Income tax payable 7,184 4,060
----------------------------------------------------------------------------
Total current liabilities 500,222 336,898
Non-current liabilities:
Share based compensation 14,252 14,431
Provisions and other 14,837 17,836
Long-term debt 1,852,186 1,323,268
Deferred tax liabilities 486,133 487,347
----------------------------------------------------------------------------
Total non-current liabilities 2,367,408 1,842,882
Shareholders' equity:
Shareholders' capital 2,315,539 2,305,227
Contributed surplus 31,109 29,175
Retained earnings 48,426 88,416
Accumulated other comprehensive income (loss) 46,292 (23,475)
----------------------------------------------------------------------------
Total shareholders' equity 2,441,366 2,399,343
----------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 5,308,996 $4,579,123
----------------------------------------------------------------------------
----------------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED)



----------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
----------------------------------------------
(Stated in thousands of
Canadian dollars, except per
share amounts) 2014 2013 2014 2013
----------------------------------------------------------------------------
Revenue $ 618,525 $ 566,909 $2,350,538 $2,029,977
Expenses:
Operating 358,679 335,480 1,405,827 1,248,637
General and administrative 25,835 33,685 144,341 142,507
----------------------------------------------------------------------------
Earnings before income taxes,
finance charges, foreign
exchange, impairment of
goodwill, loss on asset
decommissioning and
depreciation and amortization 234,011 197,744 800,370 638,833
Depreciation and amortization 129,504 90,142 448,669 333,159
Loss on asset decommissioning 126,699 - 126,699 -
----------------------------------------------------------------------------
Operating earnings (loss) (22,192) 107,602 225,002 305,674
Impairment of goodwill 95,170 - 95,170 -
Foreign exchange 1,169 (3,687) (946) (9,112)
Finance charges 30,468 23,328 109,701 93,248
----------------------------------------------------------------------------
Earnings (loss) before income
taxes (148,999) 87,961 21,077 221,538
Income taxes:
Current 3,189 14,681 10,172 45,017
Deferred (38,144) 5,359 (22,247) (14,629)
----------------------------------------------------------------------------
(34,955) 20,040 (12,075) 30,388
----------------------------------------------------------------------------
Net earnings (loss) $(114,044) $ 67,921 $ 33,152 $ 191,150
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings (loss) per share:
Basic $ (0.39) $ 0.24 $ 0.11 $ 0.69
Diluted $ (0.39) $ 0.24 $ 0.11 $ 0.66
----------------------------------------------------------------------------
----------------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)



----------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
--------------------------------------------
(Stated in thousands of Canadian
dollars) 2014 2013 2014 2013
----------------------------------------------------------------------------
Net earnings (loss) $(114,044) $ 67,921 $ 33,152 $ 191,150
Unrealized gain on translation
of assets and liabilities of
operations denominated in
foreign currency 71,779 57,780 171,092 109,195
Foreign exchange loss on net
investment hedge with U.S.
denominated debt, net of tax (41,265) (36,855) (101,325) (72,135)
----------------------------------------------------------------------------
Comprehensive income (loss) $ (83,530) $ 88,846 $ 102,919 $ 228,210
----------------------------------------------------------------------------
----------------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)



----------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
(Stated in thousands of Canadian
dollars) 2014 2013 2014 2013
----------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings (loss) $(114,044) $ 67,921 $ 33,152 $ 191,150
Adjustments for:
Long-term compensation plans (4,544) 4,231 16,197 20,708
Depreciation and
amortization 129,504 90,142 448,669 333,159
Loss on asset
decommissioning 126,699 - 126,699 -
Impairment of goodwill 95,170 - 95,170 -
Foreign exchange (2,845) (4,703) (3,971) (9,216)
Finance charges 30,468 23,328 109,701 93,248
Income taxes (34,955) 20,040 (12,075) 30,388
Other (2,937) (3,345) (6,033) (3,754)
Income taxes paid (1,514) (6,651) (15,601) (109,326)
Income taxes recovered 49 1,674 8,463 3,761
Interest paid (49,258) (37,276) (103,816) (89,156)
Interest received 266 455 919 1,011
----------------------------------------------------------------------------
Funds provided by operations 172,059 155,816 697,474 461,973
Changes in non-cash working
capital balances (37,172) (61,364) (17,315) (33,887)
----------------------------------------------------------------------------
134,887 94,452 680,159 428,086
Investments:
Purchase of property, plant
and equipment (338,250) (123,042) (856,690) (535,804)
Proceeds on sale of property,
plant and equipment 53,304 3,351 101,826 13,372
Changes in income tax
recoverable - 6,144 - 6,144
Changes in non-cash working
capital balances 89,291 (26,690) 124,877 (10,247)
----------------------------------------------------------------------------
(195,655) (140,237) (629,987) (526,535)
Financing:
Increase in long-term debt - 14,781 436,600 29,781
Repayment of long-term debt - - (30,670) -
Debt issue costs - - (10,166) (883)
Dividends paid (20,496) (16,618) (73,142) (58,113)
Issuance of common shares on
the exercise of options 246 278 7,082 2,432
Issuance of common shares on
the exercise of warrants - 48,300 - 48,300
----------------------------------------------------------------------------
(20,250) 46,741 329,704 21,517
----------------------------------------------------------------------------
Effect of exchange rate changes
on cash and cash equivalents 14,408 (2,165) 30,999 4,770
----------------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents (66,610) (1,209) 410,875 (72,162)
Cash and cash equivalents,
beginning of period 558,091 81,815 80,606 152,768
----------------------------------------------------------------------------
Cash and cash equivalents, end
of period $ 491,481 $ 80,606 $ 491,481 $ 80,606
----------------------------------------------------------------------------
----------------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)



----------------------------------------------------------------------------
Accumulated
(Stated in other
thousands of comprehensive
Canadian Shareholders' Contributed income Retained Total
dollars) capital surplus (loss) earnings equity
----------------------------------------------------------------------------
Balance at
January 1,
2014 $ 2,305,227 $ 29,175 $ (23,475) $ 88,416 $2,399,343
Net earnings
for the
period - - - 33,152 33,152
Other
comprehensive
income for
the period - - 69,767 - 69,767
Dividends - - - (73,142) (73,142)
Share options
exercised 10,312 (3,230) - - 7,082
Share based
compensation
expense - 5,164 - - 5,164
----------------------------------------------------------------------------
Balance at
December 31,
2014 $ 2,315,539 $ 31,109 $ 46,292 $ 48,426 $2,441,366
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
(Stated in Accumulated
thousands of other Retained
Canadian Shareholders' Contributed comprehensive earnings Total
dollars) capital surplus loss (deficit) equity
----------------------------------------------------------------------------
Balance at
January 1,
2013 $ 2,251,982 $ 24,474 $ (60,535) $(44,621) $2,171,300
Net earnings
for the
period - - - 191,150 191,150
Other
comprehensive
income for
the period - - 37,060 - 37,060
Dividends - - - (58,113) (58,113)
Share options
exercised 3,707 (1,275) - - 2,432
Shares issued
on redemption
of non-
management
directors'
DSUs 1,238 (1,031) - - 207
Warrants
exercised 48,300 - - - 48,300
Share based
compensation
expense - 7,007 - - 7,007
----------------------------------------------------------------------------
Balance at
December 31,
2013 $ 2,305,227 $ 29,175 $ (23,475) $ 88,416 $2,399,343
----------------------------------------------------------------------------
----------------------------------------------------------------------------



FOURTH QUARTER 2014 EARNINGS CONFERENCE CALL AND WEBCAST

Precision Drilling Corporation has scheduled a conference call and webcast to begin promptly at 12:00 noon MT (2:00 p.m. ET) on Thursday, February 12, 2015.

The conference call dial in numbers are 1-866-226-1793 or 416-340-2216.

A live webcast of the conference call will be accessible on Precision's website at www.precisiondrilling.com by selecting "Investor Centre", then "Webcasts". Shortly after the live webcast, an archived version will be available for approximately 30 days.

An archived recording of the conference call will be available approximately one hour after the completion of the call until March 12, 2015 by dialing 1-800-408-3053 or 905-694-9451, pass code 3574351.

About Precision

Precision is a leading provider of safe and High Performance, High Value services to the oil and gas industry. Precision provides customers with access to an extensive fleet of contract drilling rigs, directional drilling services, well service and snubbing rigs, coil tubing services, camps, rental equipment, and wastewater treatment units backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada. Precision is listed on the Toronto Stock Exchange under the trading symbol "PD" and on the New York Stock Exchange under the trading symbol "PDS".

FOR FURTHER INFORMATION PLEASE CONTACT:
Precision Drilling Corporation
Carey Ford
Vice President, Finance and Investor Relations
403.716.4575
403.716.4755 (FAX)


Suite 800, 525 - 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
www.precisiondrilling.com

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