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UBH Barclays CEO Energy Conference
New York, NY
September 9th, 2015
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Forward-looking statements
Statements that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and forward looking information within the meaning of applicable Canadian legislation. These forward-looking statements are based on current expectations, estimates and assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside Precision's control, which could cause actual results to differ materially from those anticipated by Precision and described in the forward looking statements. These forward-looking statements are also affected by the risk factors, challenges and uncertainties described in Precision's Annual Report on Form 40-F (Annual Information Form in Canada) for the fiscal year ended December 31, 2014, and those set forth from time to time in Precision's filings with the Securities and Exchange Commission and the securities regulatory authorities in each of the Provinces of Canada, which are available through Precision's website at www.precisiondrilling.com.
No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do so, what benefits will be derived therefrom. Security holders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements which speak only as of the date made. Except as may be required by law, Precision expressly disclaims any intention or obligation to revise or update any forward-looking statements and information whether as a result of new information, future events or otherwise.
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Historical North American Drilling Activity
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Jan, 2012
Jan, 2014
Aug, 2015
Jan, 2008
Jan, 2006
Jan, 2010
U.S. Land Rig Count 10 Year History
0
100
200
300
400
500
600
700
800
January
Febru
ary
Marc
h
April
May
June
July
August
Septe
mber
Oct
ober
Novem
ber
Dece
mber
5 Year Range 2010 - 2014 2009 2015
Canadian Land Rig Count 5 Year History
Source: Baker Hughes land rig count
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Lessons from 2009 Downturn
Rig Capability _____
Liquidity _____
Revenue Security __
143 Tier 1 Rigs Added with Tier 1 Crews Trained
Strong Balance Sheet with $434 million Cash
104 Contracts for 2015
Precision Strategy
Creates Shareholder Value
Diverse customer base
Geographical diversification
Concentration Risk
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High Performance Rig Fleet 1
129
101
93
International 6
U.S.
23 July, 2015
236
1 Jan, 2009
Canada
143 Tier 1 Rigs Added
1) As of July 23rd 2015 - Includes 1 newbuild for Canada to be delivered in Q4 2015. Does not include prospective tier upgrades.
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6,987 employees completed training through Precision Tech centres in 2013 & 2014
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Balance Sheet Strength
$1.3 billion in available liquidity
Staggered long-term maturities starting 2019 to 2024
Average interest rate of 6.2%
Long track record of maintaining financial flexibility
Available liquidity as of 6/30/2015 1
Revolver / Operating Facilities Availability
Cash
$1,259
$825
$434
1.Calculated as undrawn portion of revolver (adjusted for LCs outstanding) and cash
using CAD/USD exchange rate and balance sheet numbers as at 6/30/2015.
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Average market cap. of $21billion (median $15 billion).2
Accounts for 77% of total revenue.
Strong Contract Book backed by Well Capitalized Customers
5% Private
Public 8% National Oil
Companies
87%
1 Includes Canada, U.S. and International operations. 2 As of August 21st 2015.
2014 Top 50 Customers 1
9
11
63
4645
4743
104
2015 Average
2016 Average
97
Q3’15
Average Term Contracts
International Canada US
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Focused International Footprint
Middle East 4 rigs in Saudi Arabia
2 rigs in Kurdistan
3 rigs in Kuwait
1 rig in Georgia
Focus on deep high pressure drilling
Specialized customer needs
Mexico 6 rigs in Mexico
Focus on IPM support
North America 129 Tier 1 Rigs in Canada
101 Tier 1 Rigs in U.S.
Focused on development drilling
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Positioned In Most Active North American Regions Comprehensive North American Coverage
Dots representative of areas where Precision has had operations within the past two years
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Key Financial Metrics
Key Operational
Metrics
• Operating Earnings
• Return on Capital Employed
• Total Shareholder Return
• Safety Performance
• Mechanical Downtime
• Employee Retention
Delivers Shareholder Value
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PEOPLE
SYSTEMS & SCALE
DRILLING TECHNOLOGY
LOWER RISK
MAXIMUM EFFICIENCY
ATTRACTIVE RETURNS
PRODUCES
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Career Path Management
Field Training
Investments
Structured Promotion
Programs
Long-term
Compensation
Programs
Permanent Training
Facilities with Fully
Functioning Rigs
Leadership Development Programs
World-Class
Safety Culture
and Processes
Tier 1 Assets
EXPERIENCED,
HIGHLY SKILLED
PRECISION CREWS
Precision HR Training and Processes
Structured Competency Standards
Structured Measured Retention Programs for Key Personnel
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Global recruitment
7 Countries
10 Provinces
50 States
Toughnecks program processed 44,461 applications and hired 4,013 people in 2014
90% retention target of key field positions
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SYSTEMS &
SCALE
IT Infrastructure and ERP
Supply Chain Management • Leverage Procurement • Vendor Management • Centralized Support
Technical Support centres • Asset Integrity • Maintenance Standard • Centralized Support • In House Repair & Rebuild
Manufacturing + Capital Projects • Engineering • Project Management • Equipment Manufacturing (Rostel)
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Safety & Operations
Training
Rig Build & Construction
Repair & Maintenance
Nisku Drilling Support Centre
17 Precision Super Triple rigs operating in Duvernay, 2015.
Fully Industrialized Development Drilling
Maximum Efficiency
Repeatability + Predictability
Risk Minimization
Technology Deployment
Long-term Economic Mindset
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Completion & Production Segment: Full Well Cycle Exposure
Largest well service provider in Canada and established presence in U.S.
Over 170 Well Service, Snubbing and Coil Tubing rigs
Large fleet of high value rental equipment
Camps and Catering
Excellent footprint in Canada and Northern U.S.
Existing asset base supports solid cash flow generation
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Increasing Diversification of Revenue Contribution
7%
44% 49%
International U.S. Canada
3%
46% 51%
2012 2013
8%
46% 46%
2014
International revenue was 8% of total in 2014, up from 3% in 2012.
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Historical Annual Revenue and EBITDA
Annual Revenue (millions)
Annual EBITDA (millions)
2014
$800
2013
$639
2012
$671
2011
$695
2010
$435
2009
$407
$1,430
2009
$1,197
2010 2014 2013
$2,351
$2,030
2012
$2,041
2011
$1,951
YTD 2015 Revenue – $847 million EBITDA – $252 million
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International Revenue Growth
Inte
rna
tio
na
l R
eve
nu
e (
mil
lio
ns) $60
$70
‘$50
‘$40
‘$30
‘$20
‘$10
‘$0
+22%
Q1’15 Q4’14 Q3’14 Q2’14 Q1’14 Q4’13 Q3’13 Q2’13 Q1’13 Q4’12 Q3’12 Q2’12 Q1’12 Q2’15
Initiated Saudi with 3 Rigs
Deployed additional 3 Rigs to Mexico
Initiated Kurdistan with 2 Rigs
Revenue
Late Q2 2014 - Initiated Kuwait with 2 Rigs
Deployed additional 1 rig
to Saudi
Initiated Georgia with 1 rig
Compounded Quarterly Growth Rate
Deployed additional 1 rig to
Kuwait
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Capital Spending Highlights 1
2015 Planned Capital Spending
1) Canadian dollar amount in millions. As of July 23, 2015
Total: $546 million
$320
$195
$187
$721
Construction and delivery of 18 newbuild Super Series rigs
13 to U.S. (all delivered)
4 to Canada (3 delivered)
1 to Kuwait (delivered)
$339 million spent in first half of 2015
$78
$468
Maintenance & Infrastructure
Expansion & Upgrades
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Downturn Initiatives
Variable Cost Structure Reduced Maintenance Capex
Limited Growth Capex
Variable Field Cost
Overhead Reductions of $25 million Annualized
Positioned for Prolonged Downturn
Six facilities closed and consolidated in Canada & U.S.
Operating Centre Consolidation
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Precision Drilling Investment Merits
Leading North American driller with global diversification
High Performance Tier 1 fleet of rigs with Tier 1 crews
Strong balance sheet with $434 million of cash
Contract position backed by excellent customer base
Experienced organization and management team
Dividend yield ≈ 4.5%
TSX: PD NYSE: PDS
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Appendix
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Canadian Activity Update
Source: BHI
0
100
200
300
400
500
600
700
800
Ca
na
dia
n A
cti
ve
La
nd
Rig
Co
un
t
5 Year Range 2010 - 2014 2013 2014 2015
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0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
U.S
. A
cti
ve
La
nd
Rig
Co
un
t
Oil GasSource: BHI
Oil Drilling Dominates Activity
Total rig count has dropped
55% from Peak
Oil rig count has dropped
59% from Peak
Source: BHI, as of August 21st, 2015
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Commodity • Vertical gas • Vertical gas • Vertical oil • Horizontal gas emerges
• Horizontal gas, development mode • Horizontal oil/liquids growth • Vertical oil • Vertical gas declining
Customers • Small independents • Highly cyclic customer
demand
• Large cap independents • Mid cap independents • Small cap independents
• Integrated oil companies • National oil companies • Large cap independents • Mid cap independents • More stable demand
Unconventional Basins
• Oil Sands • U.S. focused • 3 to 5 basins
• U.S. and Canada • Emerging Internationally • 20+ basins
Barriers to Entry & Competitive Advantage
• Low barriers • No differentiation
• Rig ownership • Capital • Technology bifurcation
emerging • High performance contractors
emerge • Shortage of Tier 1 rigs
• Technology bifurcation complete • Rig efficiency dominates • Scale benefits apparent • Capital needs large • Established track record • Robust support systems • Tier 1 rigs in demand
North American Market Has Transitioned To Industrialized Resource Drilling
1985-2005 Reservoir Drilling
2005-2010 Resource Drilling Emergence
2010-PRESENT Industrial Resource Drilling
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Precision Commands Leadership In Canadian LNG Opportunity
Approved export capacity of 26Bcf/day 1
Opportunity for 20 to 25 rigs per Bcf of export capacity
Longer-term demand source
Require deeper Tier 1 rigs
ST-1200 and ST-1500 rigs ideal for type of development Pad walking Potential year around operations
Well capitalized players funding projects
Want long-term partners with proven
track record
Precision has won approximately half of the awarded LNG related new builds
ST-1500 deployed in Northwestern Alberta in February 2014
1. Source: Risky Business: This issue of timing, entry and performance in the Asia-Pacific LNG Market, The School of Public Policy SPP Research Papers, University of Calgary
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PD Tier 1 + Tier 2 & PSST 1
109 120144
188200
217236
140 126
126
108103 74
73
103 109 67 26 2422
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2015E
331
2014
313
2013
327
2012
322
2011
337
2010
355
2009
352
PSST
Tier 1
Tier 2
1) As of July 23rd 2015 - Includes 1 newbuild for Canada to be delivered in Q4 2015. Does not include prospective tier upgrades.
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High Performance Horizontal Drilling Machines
Precision’s Tier 1 Super Series Fleet
Super Triple 1500 1 Super Triple 1200 2 Super Single
1) ST1500 – requires as few as 42 truck loads in addition to 12 loads of tubular and any operator rental loads 2) ST1200 – requires as few as 36 truck loads in addition to 10 loads of tubular and any operator rental loads
Rapid mobility: ● Walking/skidding system ● Location to location ● Sophisticated connections
Smart design: ● Small footprint ● Integrated components ● Cold weather operations
Automation & safety features:
● Pipe handling ● Electronics and hydraulics ● Advanced control systems
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Balance Sheet Strength
1) Statistics refer to balance sheet and annual income statement as of 6/30/2015. Debt to total capital equals long-term debt to long-term debt plus equity. Interest coverage equals EBITDA divided by interest.
2) Calculated as undrawn portion of revolver (adjusted for LCs outstanding) and cash using CAD/USD exchange rate and balance sheet numbers as at 6/30/2015.
3) Current blended cash interest cost of our debt is approximately 6.2%.
Attractive Capital Structure (1)
Total debt to total capital: 45% Net debt to total capital: 35% Interest coverage: 5.6x
Long maturity, low cost debt Average interest rate of 6.2%
First Principal Payment due 2019 (3)
2019: $200 million 2020: US$650 million 2021: US$400 million 2024: US$400 million
Flexibility to react to market upturn or downturn
Available liquidity as of 6/30/2015 1
Revolver / operating facilities Availability
Cash
$1,259
$825
$434
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800, 525-8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Telephone: 403.716.4500
Facsimile: 403.264.0251
www.precisiondrilling.com