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,
2015
    
December 31,
2014
  
ASSETS
        
Current assets:
        
  Cash
  
$
438,873
    
$
491,481
  
  Accounts receivable
    
363,284
      
598,063
  
Income tax recoverable
    
–
      
55,138
  
  Inventory
    
21,279
      
9,170
  
Total current assets
    
823,436
      
1,153,852
  
Non-current assets:
                
Income tax recoverable
    
3,297
      
3,297
  
Property, plant and equipment
    
4,231,074
      
3,928,826
  
Intangibles
    
3,714
      
3,302
  
Goodwill
    
207,459
      
219,719
  
Total non-current assets
    
4,445,544
      
4,155,144
  
Total assets
  
$
5,268,980
    
$
5,308,996
  
                 
LIABILITIES AND EQUITY
                
Current liabilities:
                
Accounts payable and accrued liabilities
  
$
282,897
    
$
493,038
  
Income tax payable
    
5,581
      
7,184
  
Total current liabilities
    
288,478
      
500,222
  
Non-current liabilities:
                
Share based compensation (Note 7)
    
11,403
      
14,252
  
Provisions and other
    
18,712
      
14,837
  
Long-term debt (Note 4)
    
2,114,900
      
1,852,186
  
Deferred tax liabilities
    
456,113
      
486,133
  
Total non-current liabilities
    
2,601,128
      
2,367,408
  
Shareholders' equity:
                
Shareholders' capital (Note 5)
    
2,316,321
      
2,315,539
  
Contributed surplus
    
34,620
      
31,109
  
Retained earnings (deficit)
    
(105,557
)
    
48,426
  
Accumulated other comprehensive income (Note 6)
    
133,990
      
46,292
  
Total shareholders' equity
    
2,379,374
      
2,441,366
  
Total liabilities and shareholders' equity
  
$
5,268,980
    
$
5,308,996
  

See accompanying notes to interim consolidated financial statements.




INTERIM CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED)

   
Three months ended September 30,
    
Nine months ended September 30,
  
(Stated in thousands of Canadian dollars, except per share  amounts)
  
2015
    
2014
    
2015
    
2014
  
Revenue
  
$
364,089
    
$
584,590
    
$
1,210,671
    
$
1,732,013
  
                                 
Expenses:
                                
Operating
    
223,872
      
347,710
      
730,744
      
1,047,148
  
General and administrative
    
25,885
      
37,490
      
103,614
      
118,506
  
Restructuring
    
3,301
      
–
      
13,543
      
–
  
Earnings before income taxes, finance charges, foreign exchange, impairment of goodwill, impairment of property, plant and equipment and depreciation and amortization
    
111,031
      
199,390
      
362,770
      
566,359
  
Depreciation and amortization
    
125,236
      
107,537
      
361,461
      
319,165
  
Impairment of property, plant and equipment (Note 8)
    
79,573
      
–
      
79,573
      
–
  
Operating earnings (loss)
    
(93,778
)
    
91,853
      
(78,264
)
    
247,194
  
Impairment of goodwill (Note 8)
    
16,968
      
–
      
16,968
      
–
  
Foreign exchange
    
(12,510
)
    
1,812
      
(32,598
)
    
(2,115
)
Finance charges (Note 9)
    
34,783
      
29,239
      
86,813
      
79,233
  
Earnings (loss) before income taxes
    
(133,019
)
    
60,802
      
(149,447
)
    
170,076
  
Income taxes:
                                
Current
    
818
      
1,335
      
8,334
      
6,983
  
Deferred
    
(47,137
)
    
6,654
      
(65,297
)
    
15,897
  
     
(46,319
)
    
7,989
      
(56,963
)
    
22,880
  
Net earnings (loss)
  
$
(86,700
)
  
$
52,813
    
$
(92,484
)
  
$
147,196
  
Net earnings (loss) per share: (Note 10)
                                
Basic
  
$
(0.30
)
  
$
0.18
    
$
(0.32
)
  
$
0.50
  
Diluted
  
$
(0.30
)
  
$
0.18
    
$
(0.32
)
  
$
0.50
  
See accompanying notes to interim consolidated financial statements.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

   
Three months ended September 30,
    
Nine months ended September 30,
  
(Stated in thousands of Canadian dollars)
  
2015
    
2014
    
2015
    
2014
  
Net earnings (loss)
  
$
(86,700
)
  
$
52,813
    
$
(92,484
)
  
$
147,196
  
Unrealized gain  on translation of assets and liabilities of operations denominated in foreign currency
    
182,303
      
93,930
      
347,683
      
99,313
  
Foreign exchange loss on net investment hedge with U.S. denominated debt, net of tax
    
(133,400
)
    
(55,860
)
    
(259,985
)
    
(60,060
)
Comprehensive income (loss)
  
$
(37,797
)
  
$
90,883
    
$
(4,786
)
  
$
186,449
  
See accompanying notes to interim consolidated financial statements.


 
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

   
Three months ended September 30,
    
Nine months ended September 30,
  
(Stated in thousands of Canadian dollars)
  
2015
    
2014
    
2015
    
2014
  
Cash provided by (used in):
                
Operations:
                
Net earnings (loss)
  
$
(86,700
)
  
$
52,813
    
$
(92,484
)
  
$
147,196
  
Adjustments for:
                                
Long-term compensation plans
    
(2,091
)
    
1,950
      
10,616
      
20,741
  
Depreciation and amortization
    
125,236
      
107,537
      
361,461
      
319,165
  
Impairment of property, plant and equipment
    
79,573
      
–
      
79,573
      
–
  
Impairment of goodwill
    
16,968
      
–
      
16,968
      
–
  
Foreign exchange
    
(13,820
)
    
1,183
      
(34,197
)
    
(1,126
)
Finance charges
    
34,783
      
29,239
      
86,813
      
79,233
  
Income taxes
    
(46,319
)
    
7,989
      
(56,963
)
    
22,880
  
Other
    
(58
)
    
(1,168
)
    
1,291
      
(3,096
)
Income taxes paid
    
(1,398
)
    
(1,218
)
    
(11,186
)
    
(14,087
)
Income taxes recovered
    
–
      
5,060
      
1,111
      
8,414
  
Interest paid
    
(7,500
)
    
(7,588
)
    
(70,693
)
    
(54,558
)
Interest received
    
554
      
420
      
15,277
      
653
  
Funds provided by operations
    
99,228
      
196,217
      
307,587
      
525,415
  
Changes in non-cash working capital balances
    
(38,179
)
    
(49,484
)
    
138,477
      
19,857
  
     
61,049
      
146,733
      
446,064
      
545,272
  
Investments:
                                
Purchase of property, plant and equipment
    
(53,592
)
    
(237,587
)
    
(392,459
)
    
(518,440
)
Proceeds on sale of property, plant and   equipment
    
1,085
      
31,286
      
7,559
      
48,522
  
Income taxes recovered
    
–
      
–
      
55,138
      
–
  
Changes in non-cash working capital balances
    
(3,985
)
    
35,282
      
(158,261
)
    
35,586
  
     
(56,492
)
    
(171,019
)
    
(488,023
)
    
(434,332
)
Financing:
                                
Increase in long-term debt
    
–
      
–
      
–
      
436,600
  
Repayment of long-term debt
    
–
      
–
      
–
      
(30,670
)
Debt issue costs
    
–
      
–
      
(975
)
    
(10,166
)
Dividends paid
    
(20,504
)
    
(17,566
)
    
(61,499
)
    
(52,646
)
Issuance of common shares on the exercise of options
    
–
      
733
      
93
      
6,836
  
     
(20,504
)
    
(16,833
)
    
(62,381
)
    
349,954
  
Effect of exchange rate changes on cash and cash equivalents
    
21,127
      
22,717
      
51,732
      
16,591
  
Increase (decrease)  in cash and cash equivalents
    
5,180
      
(18,402
)
    
(52,608
)
    
477,485
  
Cash and cash equivalents, beginning of period
    
433,693
      
576,493
      
491,481
      
80,606
  
Cash and cash equivalents, end of period
  
$
438,873
    
$
558,091
    
$
438,873
    
$
558,091
  
See accompanying notes to interim consolidated financial statements.



INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)



(Stated in thousands of Canadian dollars)
  
Shareholders'
capital
    
Contributed
surplus
    
Accumulated
other
comprehensive income
(Note 6)
    
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 (Note 5)
    
142
      
(49
)
    
–
      
–
      
93
  
Shares issued on redemption of non-management directors' DSUs
    
640
      
(324
)
    
–
      
–
      
316
  
Share based compensation expense (Note 7)
    
–
      
3,884
      
–
      
–
      
3,884
  
Balance at September 30, 2015
  
$
2,316,321
    
$
34,620
    
$
133,990
    
$
(105,557
)
  
$
2,379,374
  



(Stated in thousands of Canadian dollars)
  
Shareholders'
capital
    
Contributed
surplus
    
Accumulated
other
comprehensive
income (loss)
    
Retained earnings
    
Total
equity
  
Balance at January 1, 2014
  
$
2,305,227
    
$
29,175
    
$
(23,475
)
  
$
88,416
    
$
2,399,343
  
Net earnings for the period
    
–
      
–
      
–
      
147,196
      
147,196
  
Other comprehensive income for the period
    
–
      
–
      
39,253
      
–
      
39,253
  
Dividends
    
–
      
–
      
–
      
(52,646
)
    
(52,646
)
Share options exercised
    
9,936
      
(3,100
)
    
–
      
–
      
6,836
  
Share based compensation expense (Note 7)
    
–
      
4,102
      
–
      
–
      
4,102
  
Balance at September 30, 2014
  
$
2,315,163
    
$
30,177
    
$
15,778
    
$
182,966
    
$
2,544,084
  
See accompanying notes to interim consolidated financial statements.

 

 
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 using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and interpretations of the International Financial Reporting Interpretations Committee. 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, 2014.
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, 2014.
These condensed consolidated interim financial statements were approved by the Board of Directors on October 21, 2015.

(b) Seasonality
Precision has operations that are carried on in Canada which represent approximately 41% (2014 - 49%) of consolidated total assets as at September 30, 2015 and 36% (2014 - 45%) of consolidated revenue for the nine months ended September 30, 2015. 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.

NOTE 3. BANK INDEBTEDNESS
During May 2015, Precision increased the borrowing capacity of an existing secured operating facility to US$40.0 million from US$25.0 million. This secured operating facility is used for the issuance of letters of credit and performance and bid bonds to support international operations.



NOTE 4. LONG-TERM DEBT
   
September 30,
    
December 31,
  
   
2015
    
2014
  
Secured revolving credit facility
  
$
–
    
$
–
  
Unsecured senior notes:
                
6.625% senior notes due 2020 (US$650 million)
    
870,610
      
754,065
  
6.5% senior notes due 2021 (US$400 million)
    
535,760
      
464,040
  
5.25% senior notes due 2024 (US$400 million)
    
535,760
      
464,040
  
6.5% senior notes due 2019
    
200,000
      
200,000
  
     
2,142,130
      
1,882,145
  
Less net unamortized debt issue costs
    
(27,230
)
    
(29,959
)
   
$
2,114,900
    
$
1,852,186
  
                 
During October 2015, Precision agreed with its lending group to amend certain financial covenants governing its senior credit facility with final completion of the amending agreement expected by the end of October 2015. This amendment will among other things (i) eliminate the maximum consolidated total debt to Adjusted EBITDA covenant ratio in its entirety; (ii) reduce the Adjusted EBITDA to interest coverage ratio from 2.75:1.0 to 2.0:1.0 for the period up to and including December 2017 (reverting back to 2.5:1.0 in January 2018); (iii) reduce the consolidated senior debt to Adjusted EBITDA  ratio from 3.0:1.0 to 2.50:1.0;  (iv) reduce the borrowing capacity of the secured revolving credit facility from US$650 million to US$550 million; and (v) place a limitation not to incur or assume more than US$250 million in new unsecured debt unless the new debt is to refinance existing unsecured debt or is assumed through an acquisition.
Long-term debt obligations at September 30, 2015 will mature as follows:

2019
 
  
$
200,000
  
Thereafter
 
    
1,942,130
  
   
$
2,142,130
  
 NOTE 5. SHAREHOLDERS' CAPITAL
   
Number
    
Amount
  
Common shares
        
Balance December 31, 2014
    
292,819,921
    
$
2,315,539
  
Options exercised:
                
Cash consideration
    
16,000
      
93
  
Reclassification from contributed surplus
    
-
      
49
  
Issued on redemption of non-management directors' DSUs
    
76,169
      
640
  
Balance September  30, 2015
    
292,912,090
    
$
2,316,321
  




NOTE 6. ACCUMULATED OTHER COMPREHENSIVE INCOME
   
Unrealized Foreign Currency Translation Gains
    
Foreign Exchange Loss on Net Investment Hedge
    
Accumulated Other Comprehensive
Income
  
 
Balance, December 31, 2014
  
$
219,422
    
$
(173,130
)
  
$
46,292
  
 
Other comprehensive income
    
347,683
      
(259,985
)
    
87,698
  
 
Balance, September 30, 2015
  
$
567,105
    
$
(433,115
)
  
$
133,990
  
NOTE 7. 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, 2014
  
$
10,584
    
$
13,769
    
$
81
    
$
1,989
    
$
26,423
  
Expensed during the period
    
3,912
      
2,818
      
(75
)
    
149
      
6,804
  
Payments
    
(6,681
)
    
(5,120
)
    
–
      
(315
)
    
(12,116
)
Balance, September 30, 2015
  
$
7,815
    
$
11,467
    
$
6
    
$
1,823
    
$
21,111
  
                                         
Current
  
$
5,047
    
$
4,655
    
$
6
    
$
–
    
$
9,708
  
Long-term
    
2,768
      
6,812
      
–
      
1,823
      
11,403
  
   
$
7,815
    
$
11,467
    
$
6
    
$
1,823
    
$
21,111
  

 (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, 2014
  
2,246,696
  
3,450,033
Granted
  
2,119,700
  
2,622,400
Issued as a result of cash dividends
  
92,423
  
150,448
Redeemed
  
(1,064,685)
  
(749,483)
Forfeitures
  
(298,484)
  
(272,111)
 
September 30, 2015
  
3,095,650
  
5,201,287

(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, 2014
    
443,741
    
$
13.26 – 17.38
    
$
15.32
      
443,741
  
Forfeitures
    
(100,609
)
    
13.26 – 13.26
      
13.26
          
September 30, 2015
    
343,132
    
$
15.22 – 17.38
    
$
15.93
      
343,132
  





(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, 2014
    
278,587
  
Granted
    
124,790
  
Issued as a result of cash dividends
    
8,593
  
Redeemed
    
(37,276
)
September 30, 2015
    
374,694
  

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. A summary of the activity under this share based incentive plan is presented below:
Deferred Share Units
  
Outstanding
  
December 31, 2014
    
226,010
  
Issued as a result of cash dividends
    
6,082
  
Redeemed
    
(38,893
)
September 30, 2015
    
193,199
  

(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, 2014
    
5,154,314
    
$
5.22
      
–
      
14.50
    
$
9.43
      
3,185,500
  
Granted
    
1,447,400
      
7.32
      
–
      
7.32
      
7.32
          
Exercised
    
(16,000
)
    
5.85
      
–
      
5.85
      
5.85
          
Forfeitures
    
(378,718
)
    
5.85
      
–
      
14.50
      
9.62
          
September 30, 2015
    
6,206,996
    
$
5.22
      
–
      
14.50
    
$
8.93
      
3,881,187
  

U.S. share options
  
Outstanding
    
Range of Exercise Price (US$)
    
Weighted Average Exercise Price (US$)
    
Exercisable
  
December 31, 2014
    
3,405,774
    
$
4.95
      
–
      
15.21
    
$
9.35
      
1,795,639
  
Granted
    
1,344,900
      
5.79
      
–
      
5.79
      
5.79
          
Forfeitures
    
(124,469
)
    
4.95
      
–
      
15.21
      
9.40
          
September 30, 2015
    
4,626,205
    
$
4.95
      
–
      
15.21
    
$
8.31
      
2,480,147
  


The per option weighted average fair value of the share options granted during 2015 was $1.60 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 44%. Included in net earnings for the three and nine months ended September 30, 2015 is an expense of $1.3 million (2014 - $1.3 million) and $3.9 million (2014 - 4.1 million), respectively.
 


NOTE 8. IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT AND GOODWILL
 
Precision reviews the carrying value of its long-lived assets at each reporting period for indicators of impairment. During the period ended September 30, 2015 the Corporation determined that low commodity prices and its impact on current and future business and industry activity levels was an indicator of impairment and performed a comprehensive assessment of the carrying values of property, plant and equipment and goodwill for the directional drilling, well servicing, camp and catering, oilfield equipment rental, wastewater treatment and U.S. completion and production cash generating units (CGU).
 
The recoverable amount of each CGU was determined using a value in use calculation based on five year cash flow projections. The cash flow projections were based on future expected outcomes taking into account past experience and management expectation of future market conditions with no terminal value growth rate.
 
Cash flows used in the calculation were discounted using a discount rate specific to each CGU. Discount rates are derived from Precision's weighted average cost of capital, adjusted for risk factors specific to each CGU. The after-tax discount rates used in determining the recoverable amount for the CGU's range from 12.9% to 14.4%.
 
As a result of the impairment test, Precision recorded a property, plant and equipment impairment charge related to its well servicing and US completion and production CGUs of $72.8 million, and US$5.1 million respectively and a goodwill impairment charge related to its oilfield equipment rental CGU of $17.0 million. These CGUs are all part of the Completion and Production Services segment.

 
NOTE 9. FINANCE CHARGES
   
Three months ended September 30,
    
Nine months ended September 30,
  
   
2015
    
2014
    
2015
    
2014
  
Interest:
                
Long-term debt
  
$
33,993
    
$
28,639
    
$
97,990
    
$
77,100
  
Other
    
76
      
55
      
789
      
330
  
Income
    
(427
)
    
(406
)
    
(15,258
)
    
(714
)
Amortization of debt issue costs
    
1,141
      
951
      
3,292
      
2,517
  
Finance charges
  
$
34,783
    
$
29,239
    
$
86,813
    
$
79,233
  


NOTE 10. PER SHARE AMOUNTS
The following tables reconcile the net earnings (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,
  
   
2015
    
2014
    
2015
    
2014
  
 
Net earnings (loss) - basic and diluted
  
$
(86,700
)
  
$
52,813
    
$
(92,484
)
  
$
147,196
  
                                 
   
Three months ended September 30,,
    
Nine months ended September 30,
  
(Stated in thousands)
    
2015
      
2014
      
2015
      
2014
  
Weighted average shares outstanding – basic
    
292,912
      
292,757
      
292,866
      
292,445
  
Effect of stock options and other equity compensation plans
    
–
      
1,183
      
–
      
767
  
Weighted average shares outstanding – diluted
    
292,912
      
293,940
      
292,866
      
293,212
  





NOTE 11. 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, 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)
    
6,664
      
(83,983
)
    
(16,459
)
    
–
      
(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
  

Three months ended September 30, 2014
  
Contract Drilling Services
    
Completion and Production Services
    
Corporate and Other
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
502,596
    
$
84,539
    
$
–
    
$
(2,545
)
  
$
584,590
  
Operating earnings
    
106,247
      
6,439
      
(20,833
)
    
–
      
91,853
  
Depreciation and amortization
    
94,618
      
10,911
      
2,008
      
–
      
107,537
  
Total assets
    
4,159,253
      
590,107
      
568,221
      
–
      
5,317,581
  
Goodwill
    
201,719
      
112,139
      
–
      
–
      
313,858
  
Capital expenditures
    
227,629
      
7,329
      
2,629
      
–
      
237,587
  

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)
    
87,442
      
(95,094
)
    
(70,612
)
    
–
      
(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
  





Nine months ended September 30, 2014
  
Contract Drilling Services
    
Completion and Production Services
    
Corporate and Other
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
1,485,400
    
$
254,112
    
$
–
    
$
(7,499
)
  
$
1,732,013
  
Operating earnings
    
309,960
      
8,168
      
(70,934
)
    
–
      
247,194
  
Depreciation and amortization
    
279,094
      
33,772
      
6,299
      
–
      
319,165
  
Total assets
    
4,159,253
      
590,107
      
568,221
      
–
      
5,317,581
  
Goodwill
    
201,719
      
112,139
      
–
      
–
      
313,858
  
Capital expenditures
    
495,576
      
16,575
      
6,289
      
–
      
518,440
  

The Corporation's operations are carried on in the following geographic locations:
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
  
Three months ended September 30, 2014
  
Canada
    
United States
    
International
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
259,493
    
$
276,903
    
$
55,250
    
$
(7,056
)
  
$
584,590
  
Total assets
    
2,605,625
      
2,146,133
      
565,823
      
–
      
5,317,581
  
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
  
Nine months ended September 30, 2014
  
Canada
    
United States
    
International
    
Inter-Segment Eliminations
    
Total
  
Revenue
  
$
787,551
    
$
813,718
    
$
143,757
    
$
(13,013
)
  
$
1,732,013
  
Total assets
    
2,605,625
      
2,146,133
      
565,823
      
–
      
5,317,581
  





NOTE 12. 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, 2015 was approximately $1,883 million (December 31, 2014 - $1,668 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.


 
 
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
 Denver, Colorado
Q3 2015 TRADING PROFILE
Toronto (TSX: PD)
High: $8.26
Low: $4.66
Close: $4.94
Volume Traded: 103,377,120
New York (NYSE: PDS)
High: US$6.68
Low: US$3.49
Close: US$3.72
Volume Traded: 226,921,600
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 EDGAR available at 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
Vice President, Legal and Corporate Secretary

Kenneth J. Haddad
Senior Vice President, Business Development

Robert J. McNally
Executive Vice President and Chief Financial Officer

Darren J. Ruhr
Senior Vice President, Corporate Services

Gene C. Stahl
President, Drilling Operations

Douglas J. Strong
President, Completion and Production Services

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