Precision Drilling : 2023 Annual Information Form

ABOUT PRECISION

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry- leading digital technology portfolio known as AlphaTM technologies that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel. Our drilling services are enhanced by our EverGreenTM suite of environmental solutions, which bolsters our commitment to reducing the environmental impact on our operations.

From our founding as a private drilling contractor in 1951, Precision has grown to become one of the most active drillers in North America. Our High Performance, High Value competitive advantage is underpinned by four distinguishing features:

• a high-quality land drilling rig fleet, with AC Super Triple rigs enabled with our AlphaTM technologies and supported by our EverGreenTM suite of environmental solutions to deliver consistent, repeatable, high-quality wellbores while improving safety, performance, operational efficiency and reducing environmental impact
• size and scale of our vertically integrated operations that provide higher margins and better service capabilities
• a diverse culture focused on operational excellence, which includes corporate responsibility, safety and field performance, and
• a capital structure that provides long-term stability, flexibility and liquidity, allowing us to take advantage of business cycle opportunities.

CORPORATE GOVERNANCE

At Precision, we integrate financial, environmental, and social responsibility seamlessly into our operations, adhering closely to our core values and corporate governance principles. Guided by these principles and with the support and oversight of our Board of Directors (Board), we are committed to upholding our elevated standards of ethics and integrity. We recognize that governance practices such as board independence, proactive shareholder engagement and risk management help us sustain the trust we have built with our stakeholders.

To deliver results, we focus on operational excellence, top-tier environmental, social and governance (ESG) performance and productive stakeholder engagement. We integrate our health, safety and environmental (HSE) commitment into our operations and incorporate HSE and ESG performance goals in our compensation program.

In 2023, we transitioned our ESG performance data to our interactive web page, which serves as the primary platform that highlights the Company's ESG progress, and provides recurring updates on our ESG performance. We also expanded our reporting to include additional elements from the Sustainability Accounting Standards Board (SASB) and Task Force on Climate- Related Financial Disclosures (TCFD) guidelines. We invite you to review some of our ESG highlights beginning on page 14 or, for more fulsome information, you can explore our ESG initiatives by visiting our website at www.precisiondrilling.com/esg/.

We remain committed to achieving and maintaining at least 30% of female representation on our Board. We are actively working to incorporate another female nominee candidate to the Board at the 2024 Annual Meeting of Shareholders and we anticipate that this new member will enhance the Board's existing skill set, if elected. To learn more about our diversity efforts, please read our Management Information Circular for our 2024 Annual Meeting of Shareholders, which will be released in April 2024, or visit our website.

Our directors have a history of achievement and an effective mix of skills, knowledge and business experience. The directors continue to provide oversight in support of future operations and monitor regulatory developments and governance best practices in Canada, the United States (U.S.) and internationally. As part of their oversight, our Board has established three standing committees, comprised of independent directors, to help carry out its responsibilities effectively:

• Audit Committee
• Corporate Governance, Nominating and Risk Committee (CGNRC), and
• Human Resources and Compensation Committee (HRCC).

The Board may also create special ad hoc committees from time to time to deal with important matters that arise.

Management has also established internal committees, including the Enterprise Risk Management Committee, the Compliance Committee, the Disclosure Committee and the Health, Safety, Environment and Corporate Responsibility Council (HSE and Corporate Responsibility Council). Two of our directors, Mr. Culbert and Mr. Williams, are active members of the HSE and Corporate Responsibility Council and attend quarterly meetings.

CORPORATE STRUCTURE

Precision was formed by amalgamation under the Business Corporations Act (Alberta). We previously operated as an income trust, known as Precision Drilling Trust, and converted to a corporate entity on June 1, 2010, under a statutory plan of arrangement.

On March 8, 2013, we repealed our old by-laws and adopted new by-laws to provide for, among other things, an advance notice requirement for Precision shareholders nominating directors for election to the Board and an increase in the quorum requirement for our shareholder meetings to 25% from 5%. The amendments were confirmed by our shareholders on May 8, 2013.

Our common shares trade on the Toronto Stock Exchange (TSX), under the symbol PD, and on the New York Stock Exchange (NYSE), under the symbol PDS.

The chart below shows our organizational structure and material subsidiaries or partnerships, including the jurisdiction where each was incorporated, formed or continued and whether we hold the voting securities directly or indirectly. For simplification, non-material subsidiaries are excluded.

RECENT DEVELOPMENTS AND THREE-YEAR HISTORY

In recent years, North American crude oil and and natural gas producers have undergone a noteworthy shift in priorities, transitioning from a primary focus on production growth to a heightened emphasis on delivering value and returning capital to shareholders. We have strategically aligned with this priority by maintaining strict capital discipline. Even with strong customer demand and high utilization of Super Series rigs, we only allocate capital to the most attractive investment opportunities. We are focused on increasing our margins and growing capital returns to shareholders versus gaining market share. This strategic orientation underscores our leadership and commitment to delivering sustained value to Precision's shareholders.

In 2023, Precision delivered one of our most profitable years in the past decade and exceeded our cash flow expectations. During the year, we not only met our debt reduction and shareholder capital return targets but also funded two accretive acquisitions. Our High Performance, High Value strategy along with our Super Series rigs, AlphaTM technologies, and EvergreenTM suite of environmental solutions continue to differentiate our services.

During the year, we reduced our debt by $152 million and allocated 15% of our free cash flow to share repurchases. In 2024, we plan to increase our shareholder capital return program by allocating 25% to 35% of our free cash flow, before debt repayments, to share repurchases. Our focus on our debt reduction strategy remains firmly in place and in 2024, we plan to reduce debt by another $150 million to $200 million. This positions us to achieve our sustained Net Debt to Adjusted EBITDA ratio(1) target of below 1.0 times by the end of 2025 and meet our long-term debt reduction target of $500 million between 2022 and 2025. In 2026, we plan to reduce debt by an additional $100 million and increase our shareholder capital return program towards 50% of free cash flow.

Notes:

(1) Non-GAAP measure - see Financial Measures and Ratios on page 48.

Accomplishments and Highlights

We consistently establish annual strategic priorities. As part of our management approach, we hold ourselves accountable by preparing quarterly updates on the progress made towards these priorities, culminating in a comprehensive year-end report highlighting the achieved results. Our enduring commitment is underscored by a robust multi-year track record, showcasing our ability to deliver tangible outcomes in alignment with our stated priorities.

2023 Accomplishments

Notes:

1. Non-GAAPmeasure - see Financial Measures and Ratios on page 48.
2. Revenue per utilization day less operating costs per utilization day.

(3) Available liquidity is defined as cash plus unused credit facility capacity.

2023 Highlights

Industry Conditions

In 2023, even though demand for global energy increased, economic uncertainty and geopolitical instability caused energy prices to compress. In the U.S., WTI averaged US$77.62 per barrel, a decrease of 18% from the prior year, and Henry Hub natural gas prices decreased 59% to average US$2.67 per MMBtu. U.S. producers continued to show capital discipline and, with lower prices, moderating but continued-inflation, and climbing interest rates, reduced their drilling activity 21% throughout the year. In Canada, drilling activity was relatively flat year-over-year as imminent hydrocarbon export capacity and favorable oil pricing, due to a weaker Canadian dollar exchange rate and improving heavy oil differentials, supported activity.

Capital Expenditures and Asset Decommissioning

Our capital spending for the year totaled $227 million, including $164 million for maintenance and infrastructure and $63 million for expansion and upgrades. We decommissioned 20 Canadian and seven U.S. legacy drilling rigs, recognizing an asset decommissioning charge of $10 million.

See Financial Measures and Ratios on page 48.

CWC Energy Services Corp. Acquisition

On November 8, 2023, Precision acquired all of the issued and outstanding common shares of CWC for consideration of $14 million in cash and the issuance of 947,807 Precision common shares. Precision expects to deliver approximately $20 million in annual operating synergies. As of March 4, 2024, Precision has achieved headcount and operational annual run-rate synergies of approximately $13 million.

International Drilling Contracts

In 2023, Precision recertified and reactivated a total of four rigs in the Middle East, exited the year with eight active rigs, three in the Kingdom of Saudi Arabia and five in Kuwait. The majority of these rigs are under five-year term contracts that stretch into 2027 and 2028.

Technology Initiatives

As of December 31, 2023, Precision had 75 AlphaTM rigs throughout North America compared to 70 at the beginning of the year. Our AlphaTM rigs are fully digitally-enabled,pad-walking AC Super Triples equipped with AlphaAutomationTM and a platform to deploy AlphaAppsTM and AlphaAnalyticsTM. To date, Precision's AlphaTM rigs have drilled over 3,800 wells in the U.S. and Canada and have been fully commercialized in numerous basins since November 2019.

• Predictive Maintenance: In 2023, Precision developed, piloted and scaled an industry-leading asset health platform with the first phase focused on mud pump health. This platform leverages operational digital twin technology and Machine Learning models to support field operations.
• Rig Floor Robotics: The incorporation of a modular fully automated pipe handling system represents a pioneering achievement in the industry, positioning our land drilling rig at the forefront of technological advancement. By collaborating with AlphaAutomationTM, our rig floor robotics offer a comprehensive and seamless automation solution, optimizing operational efficiency and increasing safety standards.

EverGreenTM Suite of Environmental Solutions

Precision's EverGreenTM suite of environmental solutions encompasses the development and implementation of multiple technologies aimed at quantifying and reducing greenhouse gas emissions at the wellsite. As of December 31, 2023, approximately 65% of our AC Super Triple rigs were equipped with at least one EverGreenTM product, including 13 BESS compared to seven at the beginning of the year. As of December 31, 2023, Precision also had over 60 rigs equipped with dual- fuel engines, natural gas engines and/or grid tie-in technology.

See Environmental - EverGreenTM Suite of Environmental Solutions on page 15.

Debt Repayments

In 2023, we repaid $152 million of debt, meeting our debt reduction target of at least $150 million for the year. In 2023, we agreed with the lenders of our Senior Credit Facility to remove certain non-extending lenders from our facility, thereby reducing the total commitment from US$500 million to US$447 million.

See Capital Structure - Material Debt on page 25.

Normal Course Issuer Bid

On September 19, 2023, we renewed our NCIB through the facilities of the TSX and NYSE. The NCIB allows us to buyback up to 1,326,321 common shares, or approximately 10% of the public float as of September 5, 2023 for cancellation. For the year ended December 31, 2023, we repurchased and cancelled 412,623 common shares for approximately $30 million. These repurchases were funded from cash flow and accounted for approximately 3% of our available public float.

Board of Directors

In 2023, the Board initiated a search to nominate a third female director to achieve 30% female representation on the Board, as set out in our Diversity Policy. We believe this is an important step to increasing diversity on our Board.

2022 Accomplishments

2022 Highlights

Industry Conditions

With positive supply-demand fundamentals for energy, oil and natural gas commodity prices were strong in 2022 but dynamic as geopolitical issues, supply chain disruptions, inflation and climbing interest rates increased economic uncertainty. In the U.S., WTI averaged US$94.23 per barrel, an increase of 39% from 2021, and Henry Hub natural gas prices increased 75% to average US$6.51 per MMBtu.

Capital Expenditures

Our capital spending for 2022 totaled $184 million and by spend category included $121 million for maintenance and infrastructure and $63 million for expansion and upgrades.

High Arctic Energy Services, Inc. Acquisition

On July 27, 2022, we acquired the well servicing business and associated rental assets of High Arctic for an aggregate purchase price of $38 million, payable in cash. The transaction provided Precision with well servicing rigs, related rental assets, ancillary support equipment, inventories and spares, and six additional operating facilities in key basins, four of which are owned.

International Drilling Contracts

On October 19, 2022, we announced Precision was awarded four drilling contracts in Kuwait, each with a five-year term and an optional one-year renewal. The contract awards are for our AC Super Triple 3000 HP rigs. During the year, Precision also signed three rig contracts in the Kingdom of Saudi Arabia to five-year contract extensions.

Technology Initiatives

As of December 31, 2022, Precision had 70 AlphaTM rigs throughout North America, a 49% increase from the beginning of 2022. Our AlphaTM rigs are fully digitally-enabled,pad-walking AC Super Triples equipped with AlphaAutomationTM and a platform to deploy AlphaAppsTM and AlphaAnalyticsTM. Up to December 31, 2022, Precision's AlphaTM rigs drilled over 2,600 wells in the U.S. and Canada and have been fully commercialized in numerous basins since November 2019.

EverGreenTM Suite of Environmental Solutions

Precision's EverGreenTM suite of environmental solutions encompasses the development and implementation of multiple technologies aimed at quantifying and reducing greenhouse gas emissions at the wellsite. As of December 31, 2022, Precision had seven BESS, 15 Integrated Power and Emissions Monitoring Systems and 21 high mast LED lighting systems deployed throughout North America. As of December 31, 2022, Precision also had over 60 rigs equipped with dual-fuel engines, natural gas engines and/or grid tie-in technology.

Debt Repayments

In 2022, we repaid $106 million of debt, exceeding our debt reduction target of $75 million for the year. There were no changes to our Senior Credit Facility in 2022, with the covenant relief period for the Senior Credit Facility ceasing September 30, 2022.

Normal Course Issuer Bid

On August 29, 2022, we renewed our normal course issuer bid through the facilities of the TSX and NYSE. For the year ended December 31, 2022, we repurchased and cancelled 130,395 common shares for approximately $10 million. These repurchases were funded from cash flow and accounted for approximately 1.1% of our available public float.

Board of Directors

On October 4, 2022, Lori A. Lancaster was appointed to the Board of Directors.

2021 Accomplishments

2021 Highlights

Industry Conditions

In 2021, the return of global energy demand, sustained periods of strong commodity prices and the multi-year period of upstream underinvestment provided a positive backdrop for the oilfield services industry. In Canada, industry activity surpassed pre- pandemic levels as takeaway capacity continued to improve, price differentials shrank and the startup of liquified natural gas (LNG) exports progressed. In the U.S., the active rig count steadily rose throughout the year as producers looked to replenish declining drilled but uncompleted well inventories.

Environmental, Social and Governance

On July 14, 2021, we published our second annual Corporate Responsibility Report that documented our progress in ESG efforts and provided an outline of our ESG strategies, focus areas and performance.

EverGreenTM Suite of Environmental Solutions

On July 14, 2021, we announced the brand launch of our EverGreenTM suite of environmental solutions, bolstering our commitment to reduce the environmental impact of oilfield operations.

Technology Initiatives

As of December 31, 2021, Precision had 47 AlphaTM rigs throughout North America, a 21% increase from the beginning of 2021.

Capital Expenditures

Our capital spending for 2021 totaled $76 million. Our capital spending by spend category included $57 million for maintenance and infrastructure and $19 million for expansion and upgrades.

Debt Repayment and U.S. Senior Note Offering

Our 2021 targeted debt reduction range was $100 million to $125 million. We ended 2021 with a total of $115 million of debt reduction. During 2021, we redeemed and retired the outstanding amounts of our 7.75% senior notes due 2023 (2023 Notes) and 5.25% senior notes due 2024 (2024 Notes) using net proceeds from our 2029 Notes that were issued in June 2021 along with drawings on our syndicated senior credit facility (Senior Credit Facility). In June 2021, we completed a US$400 million offering of 6.875% senior unsecured notes due in 2029 (2029 Notes) in a private placement.

Directional Drilling

On July 23, 2021, we divested our directional drilling business to Cathedral for $6 million. The transaction included the sale of operating assets and personnel from our directional drilling business, including our operations facility in Nisku, Alberta.

Normal Course Issuer Bid

On August 27, 2021, we renewed our NCIB through the facilities of the TSX and NYSE. For the year ended December 31, 2021, we repurchased and cancelled 155,168 common shares for $4 million. These repurchases were funded from cash flow and accounted for approximately 1.2% of our available public float.

Canadian Emergency Wage Subsidy

On April 1, 2020, the Government of Canada announced the Canadian Emergency Wage Subsidy (CEWS) program, which subsidized a portion of employee wages for Canadian employers whose businesses had been adversely affected by the COVID- 19 pandemic. The CEWS program benefited Precision and our employees throughout 2021 as it allowed us to retain a higher employment level for Canadian positions within our organization. In 2021, we recognized $24 million of CEWS program assistance that was presented as a reduction to operating and general and administrative expense of $21 million and $3 million, respectively.

Extensions and Amendments to the Senior Credit Facility

On June 18, 2021, we extended the maturity of our Senior Credit Facility's to June 18, 2025, with US$53 million expiring on November 21, 2023. We also extended and amended certain financial covenants during the covenant relief period for the Senior Credit Facility.

OUR BUSINESS

BUSINESS SEGMENTS OVERVIEW

We have two business segments - Contract Drilling Services and Completion and Production Services, which share business support systems and corporate and administrative services.

The following tables summarize our two business segments and the scope of our services: