TSX: PD NYSE: PDS TSX: PD NYSE: PDS *Rig 576, Loving County TX, Permian Basin PRECISION DRILLING CORPORATION July 2020 | 1
Forward-looking 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: our strategic priorities for 2020; our capital expenditure plans for 2020; anticipated activity levels in 2020 and our scheduled infrastructure projects; anticipated demand for Tier 1 rigs; the average number of term contracts in place for 2020 and 2021; our future debt reduction plans beyond 2020. Certain of the information in this presentation is “financial outlook” within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding our reasonable expectations as to the anticipated results of its proposed business activities. Readers are cautioned that this financial outlook may not be appropriate for other purposes. 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, expected future developments and other factors we believe are appropriate under the circumstances. These include, among other things: the fluctuation in oil prices may pressure customers into reducing or limiting their drilling budgets; the impact of the COVID-19 global pandemic on our operations; the status of current negotiations with our customers and vendors; customer focus on safety performance; existing term contracts are neither renewed nor terminated prematurely; our ability to deliver rigs to customers on a timely basis; and the general stability of the economic and political environments 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; our customers’ inability to obtain adequate credit or financing to support their drilling and production activity; the success of our response to the COVID-19 global pandemic; changes in drilling and well servicing technology which could reduce demand for certain rigs or put us at a competitive disadvantage; 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; a decline in our safety performance which could result in lower demand for our services; changes in environmental laws and regulations such as increased regulation of hydraulic fracturing or restrictions on the burning of fossil fuels and greenhouse gas emissions, which could have an adverse impact on the demand for oil and gas; 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, 2019, 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 information and 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 result of new information, future events or otherwise, except as required by law. | | 2 2
Creating Shareholder Value GENERATING STRONG FREE CASH FLOW FROM LONG-LIFE ASSETS WITH AGGRESSIVE COST MANAGEMENT MAINTAINING STRONG LIQUIDITY POSITION OPERATIONAL EXCELLENCE IN LAND DRILLING DIGITAL TECHNOLOGY LEADERSHIP AS GROWTH ENGINE HIGHER EQUITY VALUATION THROUGH DELEVERAGING | | 3 3
Precision At A Glance PRECISION DRILLING HIGH PERFORMANCE ▪ Modern & Standardized Fleet LAND DRILLER ▪ Diversified Customer Base STRONG GLOBAL SCALE ▪ Digital Technology Leadership 227 Drilling Rigs: DRILLING INDUSTRY Canada (109) ▪ Scale is Critical U.S. (105) International (13) ▪ Long-life Assets 198 Service Rigs: Canada (189) 1 ▪ Variable Cost Structure U.S. (9) Complementary Services: ▪ High Barriers to Entry Camps & Catering Rentals ▪ Differentiated Services – Pricing Power ▪ High Performance Segment is Consolidated U.S. & INTERNATIONAL OPERATIONS ~76% of 2019 DRILLING REVENUE 1. Well Servicing has registered 114 rigs in Cda – 75 rigs were not registered and are not included in our active count. On April 15, 2019 we completed sale of our 12 snubbing units. | 4
Precision’s Proven Track Record Delivering on Strategic Priorities | | 5 5
Precision’s 2020 Strategic Priorities – Creating Shareholder Value REDUCE DEBT WITH FREE CASH FLOW 1. Generate strong free cash flow and utilize $100 million to $150 million to reduce debt in 2020. OPERATIONAL EXCELLENCE 2 . Demonstrate operational excellence in all aspects of our business including operational, financial and ESG (environmental, social and governance) metrics. TECHNOLOGY AS A DIFFERENTIATOR 3 . Leverage our Alpha technology platform as a competitive differentiator and source of financial returns for Precision. | | 6 6
2020 STRATEGIC PRIORITY #1 GENERATE STRONG FREE CASH FLOW TO REDUCE DEBT Generate strong free cash flow and utilize $100 million to $150 million to reduce debt in 2020 Q2 2020 UPDATE ▪ 2020 debt reduction at $45 million. ▪ Strong liquidity position of approximately $900 million. ▪ 2020 cash savings expected to be up to $150 million. (previous guidance of over $100 million) ▪ RCF covenant amendments through to Q1 2022. ▪ 2020 capital expenditure of $48 million, down 50%. ▪ 35% fixed cost reduction, including over $30 million G&A. (previous guidance of 30%, including up to $30 million G&A) | 7
Cash Preservation Remains a Top Priority 2020 COST REDUCTIONS $150 C$ millions $100 ~$40M Interest Savings Since 2016 $50 $0 Capital Expenditures G&A Interest Expense 2016-2019 Average 2020 Original Guidance 2020 Current Consensus ▪ Preserving strong liquidity position of nearly $900 million o Extended undrawn revolver to November 2023 – achieved covenant amendments o Potential for over $100 million of released working capital this year (previous guidance of $80 million to $100) o Debt targets intact, however liquidity remains top priority ▪ Reducing cash spending by up to $150 million o 2020 capital spending plan reduced to $48 million – down 50% o 35% reduction in annualized fixed costs, includes over $30 million reduction of G&A 1. 2020 Consensus numbers from Nasdaq IR as of July 27, 2020. | 8
Free Cash Flow Generation SUPER SERIES RIGS ADDED FREE CASH FLOW TRANSITION 1 115 SUPER SERIES $300 RIGS ADDED 227 222 224 221 217 2011 – 2016: CRITICAL Int’l 201 INVESTMENT PERIOD 182 169 U.S. FCF (MILLIONS) $0 112 Canada 2017-FORWARD: CASH HARVEST PERIOD $65 (300) 2014 2015 2016 2017 2018 2019 2020E 2011 2012 2013 2014 2015 2016 2017 2018 2019 7.125% $661 5.25% ▪ Super Series investment enabled free cash flow harvesting ▪ Strong free cash flow outlook for 2020 ▪ Have decommissioned over 220 rigs from 2010 to 2019 1. Calculation: Cash from Operations less CapEx. 2011 to 2015 saw extensive investment in U.S. and Middle East fleet. Slight Y/Y decrease in 2019 FCF due to deployment of new build rig in Kuwait mid-year. 2020 FCF Consensus numbers from Nasdaq IR as of July 27, 2020. | | 9 9
2020 Capital Plan 2020 PLAN PREVIOUSLY SET AT $95 MILLION MAINTENANCE & EXPANSION & UPGRADES INFRASTRUCTURE $14 MILLION $34 MILLION 2020 PLAN: ▪ AlphaAutomation systems $48 MILLION ▪ Activity dependent ▪ Contract-secured upgrades 2019 CAPITAL EXPENDITURES TOTALLED $162 MILLION | 10
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