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Precision Drilling Corporation Announces 2017 First Quarter Financial Results – Part 4


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These translations are done via Google Translate

Adjusted EBITDA

We believe that adjusted EBITDA (earnings before income taxes, gain on repurchase of unsecured senior notes, financing charges, foreign exchange and depreciation and amortization), as reported in the Interim Consolidated Statement of Loss, is a useful measure, because it gives an indication of the results from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and non-cash impairment, decommissioning, depreciation and amortization charges.

Operating Earnings (Loss)

We believe that operating earnings (loss), as reported in the Interim Consolidated Statements of Loss, is a useful measure because it provides an indication of the results of our principal business activities before consideration of how those activities are financed and the impact of foreign exchange and taxation.

Funds Provided by Operations

We believe that funds provided by operations, as reported in the Interim Consolidated Statements of Cash Flow, is a useful measure because it provides an indication of the funds our principal business activities generate prior to consideration of working capital, which is primarily made up of highly liquid balances.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND 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:

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-- our strategic priorities for 2017;
-- our capital expenditure plans for 2017;
-- anticipated activity levels in 2017 and our scheduled infrastructure

projects;
-- anticipated demand for Tier 1 rigs; and
-- the average number of term contracts in place for 2017 and 2018.

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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:

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-- the fluctuation in oil prices may pressure customers into reducing or

limiting their drilling budgets; -- 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.

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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:

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-- 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; -- 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.

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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, 2016, 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 results of new information, future events or otherwise, except as required by law.

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

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March 31, December 31, (Stated in thousands of Canadian dollars) 2017 2016 ASSETS Current assets: Cash $ 120,580 $ 115,705 Accounts receivable 319,349 293,682 Income tax recoverable 38,732 38,087 Inventory 25,577 24,136 ---------------------------------------------------------------------------- Total current assets 504,238 471,610 Non-current assets: Property, plant and equipment 3,546,913 3,641,889 Intangibles 3,260 3,316 Goodwill 207,125 207,399 ---------------------------------------------------------------------------- Total non-current assets 3,757,298 3,852,604 ---------------------------------------------------------------------------- Total assets $ 4,261,536 $ 4,324,214 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

LIABILITIES AND EQUITY
Current liabilities:

Accounts payable and accrued liabilities $ 255,346 $ 240,736 ---------------------------------------------------------------------------- Total current liabilities 255,346 240,736 Non-current liabilities: Share based compensation 13,640 27,387 Provisions and other 12,257 12,421 Long-term debt 1,892,739 1,906,934 Deferred tax liabilities 150,347 174,618 ---------------------------------------------------------------------------- Total non-current liabilities 2,068,983 2,121,360 Shareholders' equity: Shareholders' capital 2,319,293 2,319,293 Contributed surplus 40,070 38,937 Deficit (575,182) (552,568) Accumulated other comprehensive income 153,026 156,456 ---------------------------------------------------------------------------- Total shareholders' equity 1,937,207 1,962,118 ---------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 4,261,536 $ 4,324,214 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

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INTERIM CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)

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Three months ended March 31, ------------------------- (Stated in thousands of Canadian dollars, except per share amounts) 2017 2016 ---------------------------------------------------------------------------- Revenue $ 345,800 $ 301,727

Expenses:

Operating 236,206 171,837 General and administrative 25,286 27,187 Restructuring - 3,439 ---------------------------------------------------------------------------- Earnings before income taxes, gain on repurchase of unsecured senior notes, finance charges, foreign exchange and depreciation and amortization 84,308 99,264 Depreciation and amortization 97,163 95,249 ---------------------------------------------------------------------------- Operating earnings (loss) (12,855) 4,015 Foreign exchange 47 7,581 Finance charges 32,982 36,237 Gain on repurchase of unsecured senior notes - (4,873) ---------------------------------------------------------------------------- Loss before income taxes (45,884) (34,930) Income taxes: Current 890 (2,964) Deferred (24,160) (12,083) ---------------------------------------------------------------------------- (23,270) (15,047) ---------------------------------------------------------------------------- Net loss $ (22,614) $ (19,883) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net loss per share: Basic $ (0.08) $ (0.07) Diluted $ (0.08) $ (0.07) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

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INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

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Three months ended March 31, ------------------------- (Stated in thousands of Canadian dollars) 2017 2016 ---------------------------------------------------------------------------- Net loss $ (22,614) $ (19,883) Unrealized loss on translation of assets and liabilities of operations denominated in foreign currency (18,554) (154,098) Foreign exchange gain on net investment hedge with U.S. denominated debt, net of tax 15,124 125,473 ---------------------------------------------------------------------------- Comprehensive loss $ (26,044) $ (48,508) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

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INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

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Three months ended March 31, ------------------------- (Stated in thousands of Canadian dollars) 2017 2016 ---------------------------------------------------------------------------- Cash provided by (used in): Operations: Net loss $ (22,614) $ (19,883) Adjustments for: Long-term compensation plans 2,933 7,524 Depreciation and amortization 97,163 95,249 Gain on repurchase of unsecured senior notes - (4,873) Foreign exchange 48 7,983 Finance charges 32,982 36,237 Income taxes (23,270) (15,047) Other (170) (378) Income taxes paid (1,050) (5,767) Income taxes recovered 332 - Interest paid (1,908) (8,031) Interest received 1,213 579 ---------------------------------------------------------------------------- Funds provided by operations 85,659 93,593 Changes in non-cash working capital balances (51,889) 18,581 ---------------------------------------------------------------------------- 33,770 112,174 Investments: Purchase of property, plant and equipment (22,092) (27,161) Proceeds on sale of property, plant and equipment 2,218 2,157 Changes in non-cash working capital balances (8,391) (26,109) ---------------------------------------------------------------------------- (28,265) (51,113) Financing: Repurchase of unsecured senior notes - (8,409) Debt issue costs (341) - Issuance of common shares on the exercise of options - 190 ---------------------------------------------------------------------------- (341) (8,219) ---------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents (289) (21,245) ---------------------------------------------------------------------------- Increase in cash and cash equivalents 4,875 31,597 Cash and cash equivalents, beginning of period 115,705 444,759 ---------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 120,580 $ 476,356 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

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