.2
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
| (Stated in thousands of Canadian dollars) | March 31, 2026 | December 31, 2025 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 41,462 | $ | 85,781 | ||||
| Accounts receivable | 410,271 | 352,142 | ||||||
| Inventory | 53,300 | 48,992 | ||||||
| Total current assets | 505,033 | 486,915 | ||||||
| Non-current assets: | ||||||||
| Deferred tax assets | 2,235 | 2,235 | ||||||
| Property, plant and equipment | 2,159,598 | 2,159,212 | ||||||
| Intangibles | 8,581 | 9,470 | ||||||
| Right-of-use assets | 61,023 | 56,817 | ||||||
| Finance lease receivables | 4,244 | 4,474 | ||||||
| Investments and other assets | 7,440 | 7,567 | ||||||
| Total non-current assets | 2,243,121 | 2,239,775 | ||||||
| Total assets | $ | 2,748,154 | $ | 2,726,690 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 276,444 | $ | 280,652 | ||||
| Income taxes payable | 1,853 | 1,670 | ||||||
| Current portion of lease obligations | 18,637 | 17,778 | ||||||
| Total current liabilities | 296,934 | 300,100 | ||||||
| Non-current liabilities: | ||||||||
| Share-based compensation (Note 7) | 8,034 | 13,780 | ||||||
| Provisions and other | 6,781 | 6,704 | ||||||
| Lease obligations | 49,578 | 47,169 | ||||||
| Long-term debt (Note 5) | 663,859 | 679,291 | ||||||
| Deferred tax liabilities | 99,690 | 90,763 | ||||||
| Total non-current liabilities | 827,942 | 837,707 | ||||||
| Total liabilities | 1,124,876 | 1,137,807 | ||||||
| Equity: | ||||||||
| Shareholders’ capital (Note 8) | 2,245,234 | 2,238,766 | ||||||
| Contributed surplus | 77,831 | 79,270 | ||||||
| Accumulated other comprehensive income | 174,350 | 165,020 | ||||||
| Deficit | (879,253 | ) | (898,992 | ) | ||||
| Total equity attributable to shareholders | 1,618,162 | 1,584,064 | ||||||
| Non-controlling interest | 5,116 | 4,819 | ||||||
| Total equity | 1,623,278 | 1,588,883 | ||||||
| Total liabilities and equity | $ | 2,748,154 | $ | 2,726,690 | ||||
See accompanying notes to condensed interim consolidated financial statements.
| 1 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET EARNINGS (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| (Stated in thousands of Canadian dollars, except per share amounts) | 2026 | 2025 | ||||||
| Revenue (Note 3) | $ | 526,051 | $ | 496,331 | ||||
| Expenses: | ||||||||
| Operating | 360,359 | 329,068 | ||||||
| General and administrative | 41,745 | 29,766 | ||||||
| Earnings before income taxes, (gain) loss on investments and other assets, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization | 123,947 | 137,497 | ||||||
| Depreciation and amortization | 84,330 | 75,036 | ||||||
| Gain on asset disposals | (1,713 | ) | (2,872 | ) | ||||
| Foreign exchange | 448 | 367 | ||||||
| Finance charges (Note 6) | 12,356 | 15,760 | ||||||
| (Gain) loss on investments and other assets | 1,467 | (49 | ) | |||||
| Earnings before income taxes | 27,059 | 49,255 | ||||||
| Income taxes: | ||||||||
| Current | 702 | 1,106 | ||||||
| Deferred | 8,512 | 13,202 | ||||||
| 9,214 | 14,308 | |||||||
| Net earnings | $ | 17,845 | $ | 34,947 | ||||
| Attributable to: | ||||||||
| Shareholders of Precision Drilling Corporation | $ | 17,376 | $ | 34,511 | ||||
| Non-controlling interest | $ | 469 | $ | 436 | ||||
| Net earnings per share attributable to share- holders of Precision Drilling Corporation (Note 9): | ||||||||
| Basic | $ | 1.34 | $ | 2.52 | ||||
| Diluted | $ | 1.34 | $ | 2.20 | ||||
See accompanying notes to condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | ||||||
| Net earnings | $ | 17,845 | $ | 34,947 | ||||
| Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency | 18,244 | (658 | ) | |||||
| Foreign exchange loss on net investment hedge with U.S. denominated debt | (8,914 | ) | (535 | ) | ||||
| Comprehensive income | $ | 27,175 | $ | 33,754 | ||||
| Attributable to: | ||||||||
| Shareholders of Precision Drilling Corporation | $ | 26,706 | $ | 33,318 | ||||
| Non-controlling interest | $ | 469 | $ | 436 | ||||
See accompanying notes to condensed interim consolidated financial statements.
| 2 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | ||||||
| Cash provided by (used in): | ||||||||
| Operations: | ||||||||
| Net earnings | $ | 17,845 | $ | 34,947 | ||||
| Adjustments for: | ||||||||
| Long-term compensation plans | 9,261 | 3,016 | ||||||
| Depreciation and amortization | 84,330 | 75,036 | ||||||
| Gain on asset disposals | (1,713 | ) | (2,872 | ) | ||||
| Foreign exchange | 554 | (783 | ) | |||||
| Finance charges | 12,356 | 15,760 | ||||||
| Income taxes | 9,214 | 14,308 | ||||||
| Other | (13 | ) | — | |||||
| (Gain) loss on investments and other assets | 1,467 | (49 | ) | |||||
| Income taxes paid | (342 | ) | (321 | ) | ||||
| Interest paid | (21,991 | ) | (29,637 | ) | ||||
| Interest received | 424 | 437 | ||||||
| Funds provided by operations | 111,392 | 109,842 | ||||||
| Changes in non-cash working capital balances | (48,238 | ) | (46,423 | ) | ||||
| Cash provided by operations | 63,154 | 63,419 | ||||||
| Investments: | ||||||||
| Purchase of property, plant and equipment | (65,000 | ) | (59,965 | ) | ||||
| Proceeds on sale of property, plant and equipment | 2,287 | 3,765 | ||||||
| Purchase of investments and other assets | (698 | ) | (11 | ) | ||||
| Receipt of finance lease payments | 251 | 208 | ||||||
| Changes in non-cash working capital balances | (11,542 | ) | (1,199 | ) | ||||
| Cash used in investing activities | (74,702 | ) | (57,202 | ) | ||||
| Financing: | ||||||||
| Issuance of long-term debt | 3,000 | — | ||||||
| Repayment of long-term debt | (28,000 | ) | (17,110 | ) | ||||
| Repurchase of share capital (Note 8) | (4,015 | ) | (30,766 | ) | ||||
| Issuance of common shares from the exercise of options | 195 | — | ||||||
| Distributions to non-controlling interest | (300 | ) | — | |||||
| Lease payments | (4,093 | ) | (3,587 | ) | ||||
| Cash used in financing activities | (33,213 | ) | (51,463 | ) | ||||
| Effect of exchange rate changes on cash | 442 | (280 | ) | |||||
| Decrease in cash | (44,319 | ) | (45,526 | ) | ||||
| Cash, beginning of period | 85,781 | 73,771 | ||||||
| Cash, end of period | $ | 41,462 | $ | 28,245 | ||||
See accompanying notes to condensed interim consolidated financial statements.
| 3 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
| Attributable to shareholders of the Corporation | ||||||||||||||||||||||||||||
| (Stated in thousands of Canadian dollars) | Shareholders’ Capital | Contributed Surplus | Accumulated Other Comprehensive Income | Deficit | Total | Non- Controlling Interest | Total Equity | |||||||||||||||||||||
| Balance at January 1, 2026 | $ | 2,238,766 | $ | 79,270 | $ | 165,020 | $ | (898,992 | ) | $ | 1,584,064 | $ | 4,819 | $ | 1,588,883 | |||||||||||||
| Net earnings for the period | — | — | — | 17,376 | 17,376 | 469 | 17,845 | |||||||||||||||||||||
| Other comprehensive income for the period | — | — | 9,330 | — | 9,330 | — | 9,330 | |||||||||||||||||||||
| Share options exercised | 279 | (84 | ) | — | — | 195 | — | 195 | ||||||||||||||||||||
| Settlement of Executive Performance and Restricted Share Units | 4,095 | (4,095 | ) | — | — | — | — | — | ||||||||||||||||||||
| Distributions to non-controlling interest | — | — | — | — | — | (172 | ) | (172 | ) | |||||||||||||||||||
| Share repurchases (Note 8) | (6,378 | ) | — | — | 2,363 | (4,015 | ) | — | (4,015 | ) | ||||||||||||||||||
| Liability reversal for automated share purchase plan (Note 8) | 10,000 | — | — | — | 10,000 | — | 10,000 | |||||||||||||||||||||
| Liability for automated share purchase plan (Note 8) | (1,700 | ) | — | — | — | (1,700 | ) | — | (1,700 | ) | ||||||||||||||||||
| Redemption of non-management directors share units | 172 | (172 | ) | — | — | — | — | — | ||||||||||||||||||||
| Share-based compensation expense | — | 2,912 | — | — | 2,912 | — | 2,912 | |||||||||||||||||||||
| Balance at March 31, 2026 | $ | 2,245,234 | $ | 77,831 | $ | 174,350 | $ | (879,253 | ) | $ | 1,618,162 | $ | 5,116 | $ | 1,623,278 | |||||||||||||
| Attributable to shareholders of the Corporation | ||||||||||||||||||||||||||||
| (Stated in thousands of Canadian dollars) | Shareholders’ Capital | Contributed Surplus | Accumulated Other Comprehensive Income | Deficit | Total | Non- Controlling Interest | Total Equity | |||||||||||||||||||||
| Balance at January 1, 2025 | $ | 2,301,729 | $ | 77,557 | $ | 199,020 | $ | (900,834 | ) | $ | 1,677,472 | $ | 4,527 | $ | 1,681,999 | |||||||||||||
| Net earnings for the period | — | — | — | 34,511 | 34,511 | 436 | 34,947 | |||||||||||||||||||||
| Other comprehensive income for the period | — | — | (1,193 | ) | — | (1,193 | ) | — | (1,193 | ) | ||||||||||||||||||
| Settlement of Executive Performance and Restricted Share Units | 11,651 | (2,790 | ) | — | — | 8,861 | — | 8,861 | ||||||||||||||||||||
| Share repurchases | (31,141 | ) | — | — | — | (31,141 | ) | — | (31,141 | ) | ||||||||||||||||||
| Liability reversal for automated share purchase plan | 10,000 | — | — | — | 10,000 | — | 10,000 | |||||||||||||||||||||
| Liability for automated share purchase plan | (5,000 | ) | — | — | — | (5,000 | ) | — | (5,000 | ) | ||||||||||||||||||
| Redemption of non-management directors share units | 183 | (183 | ) | — | — | — | — | — | ||||||||||||||||||||
| Share-based compensation expense | — | 2,427 | — | — | 2,427 | — | 2,427 | |||||||||||||||||||||
| Balance at March 31, 2025 | $ | 2,287,422 | $ | 77,011 | $ | 197,827 | $ | (866,323 | ) | $ | 1,695,937 | $ | 4,963 | $ | 1,700,900 | |||||||||||||
See accompanying notes to condensed interim consolidated financial statements.
| 4 |
NOTES TO CONDENSED 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 and geothermal exploration and production companies in Canada, the United States and certain international locations.
NOTE 2. BASIS OF PRESENTATION
(a) Statement of Compliance
These condensed interim consolidated financial statements have been prepared based on International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.
These condensed interim consolidated financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated annual financial statements of the Corporation as at and for the year ended December 31, 2025.
These condensed interim consolidated financial statements were prepared using accounting policies and application methods consistent with those used in the preparation of the Corporation’s consolidated annual financial statements for the year ended December 31, 2025, except as described in Note 2(c).
These condensed interim consolidated financial statements were approved by the Board of Directors on April 29, 2026.
(b) Use of Estimates and Judgements
The preparation of the condensed interim consolidated financial statements requires management to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingencies. These estimates and judgements are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The estimation of anticipated future events involves uncertainty and, consequently, the estimates used in preparation of the condensed interim consolidated financial statements may change as future events unfold, more experience is acquired, or the Corporation’s operating environment changes.
Significant estimates and judgements used in the preparation of these condensed interim consolidated financial statements remained unchanged from those disclosed in the Corporation’s consolidated annual financial statements for the year ended December 31, 2025.
The impacts of geopolitical events, such as the imposed tariffs between Canada and the U.S., regional conflicts, especially in oil producing areas, can materially impact energy markets, interest and inflation rates, and supply chains, resulting in higher levels of volatility and uncertainty. Ongoing U.S. military operations involving Iran and the resulting conflict in the Middle East have impacted global oil supply and increased volatility in global oil prices. Management has, to the extent reasonable, incorporated known facts and circumstances into the estimates made, however, actual results could differ from those estimates and those differences could be material.
(c) Change in Accounting Policy
Effective January 1, 2026, the Corporation has prospectively adopted Amendments to the Classification and Measurement of Financial Instruments, as issued May 2024. The amendments relate to IFRS 7 Financial Instruments: Disclosures and IFRS 9 Financial Instruments. The amendments clarify the timing of recognition and derecognition of financial assets and liabilities. The amendments require opening balances of financial assets, financial liabilities, and retained earnings be adjusted to recognize the effect of the initial application if retrospective application is not selected. The initial application did not result in a material impact to the financial statements. The Corporation has applied the election related to electronic payment systems.
| 5 |
NOTE 3. Revenue
| (a) | Disaggregation of revenue |
The following table includes a reconciliation of disaggregated revenue by reportable segment. Revenue has been disaggregated by primary geographical market and type of service provided.
| Three Months Ended March 31, 2026 | Contract Drilling Services | Completion and Production Services | Corporate and Other | Inter- Segment Eliminations | Total | |||||||||||||||
| Canada | $ | 251,833 | $ | 79,931 | $ | — | $ | (2,889 | ) | $ | 328,875 | |||||||||
| United States | 153,936 | — | — | — | 153,936 | |||||||||||||||
| International | 43,240 | — | — | — | 43,240 | |||||||||||||||
| $ | 449,009 | $ | 79,931 | $ | — | $ | (2,889 | ) | $ | 526,051 | ||||||||||
| Day rate/hourly services | $ | 437,939 | $ | 79,931 | $ | — | $ | (900 | ) | $ | 516,970 | |||||||||
| Shortfall payments/idle but contracted | — | — | — | — | — | |||||||||||||||
| Turnkey drilling services | 8,453 | — | — | — | 8,453 | |||||||||||||||
| Other | 2,617 | — | — | (1,989 | ) | 628 | ||||||||||||||
| $ | 449,009 | $ | 79,931 | $ | — | $ | (2,889 | ) | $ | 526,051 | ||||||||||
| Three Months Ended March 31, 2025 | Contract Drilling Services | Completion and Production Services | Corporate and Other | Inter- Segment Eliminations | Total | |||||||||||||||
| Canada | $ | 240,437 | $ | 77,681 | $ | — | $ | (2,456 | ) | $ | 315,662 | |||||||||
| United States | 127,933 | 1,649 | — | — | 129,582 | |||||||||||||||
| International | 51,087 | — | — | — | 51,087 | |||||||||||||||
| $ | 419,457 | $ | 79,330 | $ | — | $ | (2,456 | ) | $ | 496,331 | ||||||||||
| Day rate/hourly services | $ | 411,935 | $ | 79,330 | $ | — | $ | (628 | ) | $ | 490,637 | |||||||||
| Shortfall payments/idle but contracted | 4,896 | — | — | — | 4,896 | |||||||||||||||
| Turnkey drilling services | — | — | — | — | — | |||||||||||||||
| Other | 2,626 | — | — | (1,828 | ) | 798 | ||||||||||||||
| $ | 419,457 | $ | 79,330 | $ | — | $ | (2,456 | ) | $ | 496,331 | ||||||||||
| (b) | Seasonality |
Precision has operations that are carried on in Canada which represent approximately 63% (2025 – 64%) of consolidated revenue for the three months ended March 31, 2026 and 44% (March 31, 2025 – 42%) of consolidated total assets as at March 31, 2026. 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.
| 6 |
NOTE 4. SEGMENTED INFORMATION
The Corporation has two reportable operating segments; Contract Drilling Services and Completion and Production Services. Contract Drilling Services includes drilling rigs, procurement and distribution of oilfield supplies, and manufacture, sale and repair of drilling equipment. Completion and Production Services includes service rigs, oilfield equipment rental and camp services. The Corporation provides services primarily in Canada, the United States and certain international locations.
| Three Months Ended March 31, 2026 | Contract Drilling Services | Completion and Production Services | Corporate and Other | Inter- Segment Eliminations | Total | |||||||||||||||
| Revenue | $ | 449,009 | $ | 79,931 | $ | — | $ | (2,889 | ) | $ | 526,051 | |||||||||
| Earnings before income taxes, (gain) loss on investments and other assets, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization | 132,995 | 17,612 | (26,660 | ) | — | 123,947 | ||||||||||||||
| Depreciation and amortization | 76,213 | 5,805 | 2,312 | — | 84,330 | |||||||||||||||
| (Gain) loss on asset disposals | (1,389 | ) | (333 | ) | 9 | — | (1,713 | ) | ||||||||||||
| Foreign exchange | 189 | (4 | ) | 263 | — | 448 | ||||||||||||||
| Finance charges | (141 | ) | 114 | 12,383 | — | 12,356 | ||||||||||||||
| Loss on investments and other assets | 644 | — | 823 | — | 1,467 | |||||||||||||||
| Income taxes (recovery) | (8,348 | ) | (176 | ) | 17,738 | — | 9,214 | |||||||||||||
| Net earnings (loss) for reportable segments | 65,827 | 12,206 | (60,188 | ) | — | 17,845 | ||||||||||||||
| Total assets | 2,403,332 | 246,662 | 98,160 | — | 2,748,154 | |||||||||||||||
| Capital expenditures | 61,838 | 2,375 | 787 | — | 65,000 | |||||||||||||||
| Three Months Ended March 31, 2025 | Contract Drilling Services | Completion and Production Services | Corporate and Other | Inter- Segment Eliminations | Total | |||||||||||||||
| Revenue | $ | 419,457 | $ | 79,330 | $ | — | $ | (2,456 | ) | $ | 496,331 | |||||||||
| Earnings before income taxes, (gain) loss on investments and other assets, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization | 136,016 | 17,546 | (16,065 | ) | — | 137,497 | ||||||||||||||
| Depreciation and amortization | 67,021 | 5,565 | 2,450 | — | 75,036 | |||||||||||||||
| Gain on asset disposals | (1,289 | ) | (1,583 | ) | — | — | (2,872 | ) | ||||||||||||
| Foreign exchange | 155 | 34 | 178 | — | 367 | |||||||||||||||
| Finance charges | 100 | 101 | 15,559 | — | 15,760 | |||||||||||||||
| Gain on investments and other assets | — | — | (49 | ) | — | (49 | ) | |||||||||||||
| Income taxes (recovery) | (5,359 | ) | (159 | ) | 19,826 | — | 14,308 | |||||||||||||
| Net earnings for reportable segments | 75,388 | 13,588 | (54,029 | ) | — | 34,947 | ||||||||||||||
| Total assets | 2,534,573 | 247,807 | 133,604 | — | 2,915,984 | |||||||||||||||
| Capital expenditures | 56,863 | 2,986 | 116 | — | 59,965 | |||||||||||||||
| 7 |
NOTE 5. LONG-TERM DEBT
| U.S. Denominated Facilities | Canadian Facilities and Translated U.S. Facilities | |||||||||||||||
| March 31, | December 31, | March 31, | December 31, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Long-Term Debt | ||||||||||||||||
| Senior Credit Facility: | ||||||||||||||||
| U.S. Denominated Borrowings | US$ | 80,000 | US$ | 80,000 | $ | 111,295 | $ | 109,809 | ||||||||
| Canadian Denominated Borrowings | — | — | 3,000 | 28,000 | ||||||||||||
| Unsecured Senior Notes: | ||||||||||||||||
| 6.875% senior notes due 2029 | 400,000 | 400,000 | 556,472 | 549,044 | ||||||||||||
| US$ | 480,000 | US$ | 480,000 | 670,767 | 686,853 | |||||||||||
| Less net unamortized debt issue costs | (6,908 | ) | (7,562 | ) | ||||||||||||
| $ | 663,859 | $ | 679,291 | |||||||||||||
| Senior Credit Facility | Unsecured Senior Notes | Debt Issue Costs and Original Issue Discount | Total | |||||||||||||
| Long-term debt December 31, 2025 | 137,809 | 549,044 | (7,562 | ) | 679,291 | |||||||||||
| Changes from financing cash flows: | ||||||||||||||||
| Proceeds from Senior Credit Facility | 3,000 | — | — | 3,000 | ||||||||||||
| Repayment of Senior Credit Facility | (28,000 | ) | — | — | (28,000 | ) | ||||||||||
| 112,809 | 549,044 | (7,562 | ) | 654,291 | ||||||||||||
| Amortization of debt issue costs | — | — | 654 | 654 | ||||||||||||
| Foreign exchange adjustment | 1,486 | 7,428 | — | 8,914 | ||||||||||||
| Long-term debt March 31, 2026 | $ | 114,295 | $ | 556,472 | $ | (6,908 | ) | $ | 663,859 | |||||||
(a) Covenants
As at March 31, 2026, Precision was in compliance with the covenants of the Senior Credit Facility.
| Covenant | As at March 31, 2026 | |||||
| Senior Credit Facility | ||||||
| Consolidated senior debt to consolidated covenant EBITDA(1) | < 2.50 | 0.23 | ||||
| Consolidated covenant EBITDA to consolidated interest expense | > 2.50 | 9.87 | ||||
| (1) | For purposes of calculating the leverage ratio consolidated senior debt only includes secured indebtedness. |
NOTE 6. FINANCE CHARGES
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Interest: | ||||||||
| Long-term debt | $ | 11,372 | $ | 14,490 | ||||
| Lease obligations | 973 | 1,031 | ||||||
| Other | 140 | 17 | ||||||
| Income | (783 | ) | (499 | ) | ||||
| Amortization of debt issue costs, loan commitment fees and original issue discount | 654 | 721 | ||||||
| Finance charges | $ | 12,356 | $ | 15,760 | ||||
| 8 |
NOTE 7. SHARE-BASED COMPENSATION PLANS
(a) Liability Classified Plans
| Restricted Share Units | Performance Share Units | Non-Management Directors’ DSUs | Total | |||||||||||||
| December 31, 2025 | $ | 9,220 | $ | 17,513 | $ | 10,321 | $ | 37,054 | ||||||||
| Expensed during period(1) | 3,690 | 8,199 | 4,072 | 15,961 | ||||||||||||
| Payments and redemptions | (7,055 | ) | (7,965 | ) | — | (15,020 | ) | |||||||||
| Foreign exchange | (20 | ) | (2 | ) | — | (22 | ) | |||||||||
| March 31, 2026 | $ | 5,835 | $ | 17,745 | $ | 14,393 | $ | 37,973 | ||||||||
| Current(2) | $ | 4,486 | $ | 11,060 | $ | 14,393 | $ | 29,939 | ||||||||
| Long-term | 1,349 | 6,685 | — | 8,034 | ||||||||||||
| $ | 5,835 | $ | 17,745 | $ | 14,393 | $ | 37,973 | |||||||||
| (1) | For the three months ended March 31, 2026, $12,198 is included in General and administrative expenses and $3,763 in Operating expenses. |
| (2) | The current portion of the share-based compensation liability is included in Accounts payable and accrued liabilities. |
Restricted Share Units and Performance Share Units
A summary of the activity under the Restricted Share Unit (RSU) and the Performance Share Unit (PSU) plans are presented below:
| RSUs Outstanding | PSUs Outstanding | |||||||
| December 31, 2025 | 132,279 | 310,932 | ||||||
| Granted | 46,810 | 95,741 | ||||||
| Redeemed | (63,411 | ) | (83,416 | ) | ||||
| Forfeited | (2,833 | ) | (2,370 | ) | ||||
| March 31, 2026 | 112,845 | 320,887 | ||||||
Non-Management Directors – Deferred Share Units Plan
A summary of the activity under the non-management director Deferred Share Unit (DSU) plan is presented below:
| DSUs Outstanding | ||||
| December 31, 2025 | 104,799 | |||
| Granted | 340 | |||
| March 31, 2026 | 105,139 | |||
(b) Equity Settled Plans
Executive Restricted Share Units Plan
Precision granted Executive RSUs to certain senior executives with the intention of settling them in voting shares of the Corporation either issued from treasury or purchased in the open market. Granted units vest annually over a three-year term.
| Executive RSUs Outstanding | Weighted Average Fair Value | |||||||
| December 31, 2025 | 128,430 | $ | 81.63 | |||||
| Granted | 70,205 | 122.22 | ||||||
| Redeemed | (48,865 | ) | 84.21 | |||||
| Forfeited | (693 | ) | 80.09 | |||||
| March 31, 2026 | 149,077 | $ | 99.91 | |||||
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Included in net earnings for the three months ended March 31, 2026 were expenses of $2 million (2025 – $2 million).
Non-Management Directors – Deferred Share Unit Plans
A summary of the activity under the non-management director DSU plans is presented below:
| Deferred share units | Outstanding- 2012 Plan | Outstanding- 2024 Plan | ||||||
| December 31, 2025 | 1,470 | 7,343 | ||||||
| Granted | — | 2,284 | ||||||
| Redeemed | — | (1,360 | ) | |||||
| March 31, 2026 | 1,470 | 8,267 | ||||||
Included in net earnings for the three months ended March 31, 2026 were expenses of $1 million (2025 – $1 million).
NOTE 8. SHAREHOLDERS’ CAPITAL
| Common shares | Shares | Amount | ||||||
| December 31, 2025 | 12,932,399 | $ | 2,238,766 | |||||
| Reversal of share repurchase liability — December 31, 2025 | — | 10,000 | ||||||
| Share repurchase liability — March 31, 2026 | — | (1,700 | ) | |||||
| Settlement of PSUs and RSUs | 48,865 | 4,095 | ||||||
| Share options exercised | 2,725 | 279 | ||||||
| Share repurchases | (36,874 | ) | (6,378 | ) | ||||
| Redemption of non-management directors share units | 1,360 | 172 | ||||||
| March 31, 2026 | 12,948,475 | $ | 2,245,234 | |||||
(a) Normal Course Issuer Bid
For the quarter ended March 31, 2026, Precision repurchased and cancelled a total of 36,874 (2025 – 408,973) common shares for $4 million (2025 – $31 million) and recorded nil (2025 - $0.4 million) Canadian share buy back tax. During the first quarter of 2026, Precision revised its year end estimate of share repurchase activity based on actual repurchases completed in the quarter. Repurchases are dependent on share price during the period. The change in accounting estimate has been applied prospectively. As a result of the difference between the original estimated liability and actual share repurchase activity during the quarter, share capital increased by $6 million in the quarter.
(b) Automated Share Purchase Plan
Prior to March 31, 2026, Precision entered into an Automated Share Purchase Plan (ASPP) with an independent broker to permit the repurchase of common shares during its internal blackout period. The volume of purchases is determined by the broker in its sole discretion based on purchase price and maximum volume parameters established by the Corporation under the ASPP. The Corporation accrues a liability for purchases estimated to occur during the blackout period based on the parameters of the NCIB and the ASPP. As at March 31, 2026, Precision accrued a liability in accounts payable with a corresponding decrease to share capital of $2 million.
NOTE 9. PER SHARE AMOUNTS
The following tables reconcile net earnings and weighted average shares outstanding used in computing basic and diluted net earnings per share:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net earnings attributable to shareholders – basic | $ | 17,376 | $ | 34,511 | ||||
| Effect of share options and other equity compensation plans | — | (3,068 | ) | |||||
| Net earnings attributable to shareholders – diluted | $ | 17,376 | $ | 31,443 | ||||
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| Three Months Ended March 31, | ||||||||
| (Stated in thousands) | 2026 | 2025 | ||||||
| Weighted average shares outstanding – basic | 12,932 | 13,683 | ||||||
| Effect of share options and other equity compensation plans(1) | 9 | 604 | ||||||
| Weighted average shares outstanding – diluted | 12,941 | 14,287 | ||||||
| (1) | For the three months ended March 31, 2026, 104,858 DSUs (2025 - nil) and all outstanding PSUs (2025 - nil) and RSUs (2025 - nil) were excluded from the calculation as their effect was anti-dilutive. |
NOTE 10. FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximates their fair value due to the relatively short period to maturity of the instruments. At the end of each reporting period, investments and other assets are measured at their estimated fair value, with changes in fair value recognized in profit or loss. Amounts drawn on the Senior Credit Facility, measured at amortized cost, approximate fair value as this indebtedness is subject to floating rates of interest and the interest rate swap is classified as a derivative fair valued through profit or loss. The fair value of the unsecured senior notes at March 31, 2026 was approximately $561 million (December 31, 2025 – $555 million).
Financial assets and liabilities recorded or disclosed at fair value in the consolidated statement of financial position are categorized based upon the level of judgement 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 value 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 and interest rate swap 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.
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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 and NYSE Texas, Inc., under the trading symbol PDS.
TRANSFER AGENT AND REGISTRAR Computershare Trust Company of Canada Calgary, Alberta
TRANSFER POINT Computershare Trust Company NA Canton, Massachusetts
Q1 2026 TRADING PROFILE Toronto (TSX: PD) High: $143.81 Low: $96.95 Close: $136.90 Volume Traded: 5,789,428 New York (NYSE: PDS) High: US$103.80 Low: US$70.00 Close: US$98.40 Volume Traded: 8,056,167
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.sedarplus.ca and on the EDGAR website www.sec.gov |
CORPORATE INFORMATION
DIRECTORS William T. Donovan Carey T. Ford Steven W. Krablin Lori A. Lancaster Susan M. MacKenzie Kevin O. Meyers David W. Williams Alice L. Wong
OFFICERS Carey T. Ford President and Chief Executive Officer
Dustin D. Honing Chief Financial Officer
Thomas M. Alford President, Well Servicing
Veronica H. Foley Chief Legal & Compliance Officer
Shuja U. Goraya Chief Technology Officer
Darren J. Ruhr Chief Administrative Officer
Gene C. Stahl Chief Operating Officer
AUDITORS PricewaterhouseCoopers LLP Calgary, Alberta
HEAD OFFICE Suite 800, 525 8th Avenue SW Calgary, Alberta, T2P 1G1 Canada Telephone: 403-716-4500 Facsimile: 403-264-0251 Email: info@precisiondrilling.com www.precisiondrilling.com |
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