Day: October 29, 2024

 

Strong All-in Sustaining Costs Drive Increasing Margins and Record Free Cash Flow Generation, Provides 2024 Operational Outlook Update

(All amounts are in U.S. dollars unless otherwise indicated)

TORONTO, Oct. 29, 2024 /PRNewswire/ – New Gold Inc. (“New Gold” or the “Company”) NGD NGD reports third quarter results for the Company as of September 30, 2024.  Third quarter 2024 production was 78,369 gold ounces and 12.6 million pounds of copper, at operating expenses of $1,021 per gold ounce sold (co-product basis)³ and all-in sustaining costs¹ of $1,195 per gold ounce sold (by-product basis). The strong cost performance allows the Company to leverage higher metal prices, resulting in record cash flow from operations of $128 million and record free cash flow¹ of $57 million.

Third Quarter Delivers Highest Production and Lowest Costs This Year, Trends Expected to Continue into the Fourth Quarter

“New Afton delivered a strong operating quarter and completed critical C-Zone milestones ahead of schedule, while Rainy River delivered costs as planned, with all-in sustaining costs 29% lower quarter-over-quarter,” stated Patrick Godin, President and CEO. “The Company continues to expect the fourth quarter of 2024 to be its strongest quarter of the year, concluding a successful year that has seen New Gold reach its free cash flow inflection point and deliver on key project milestones in pursuit of our objective to target a sustainable production platform of approximately 600,000 gold equivalent ounces per year until at least 2030.” 

• Third quarter consolidated production was 78,369 ounces of gold and 12.6 million pounds of copper at all-in sustaining costs¹ of $1,195 per gold ounce sold (by-product basis).
  
  
• New Afton third quarter production was 16,477 ounces of gold and 12.6 million pounds of copper at all-in sustaining costs¹ of ($408) per gold ounce sold (by-product basis). The B3 cave continues to perform as planned, and C-Zone ore production is ramping up concurrently with construction of the cave footprint. Commercial production from C-Zone and crusher commissioning occurred early in the fourth quarter, two months ahead of schedule.
  
  
• Rainy River third quarter production was 61,892 ounces of gold at all-in sustaining costs¹ of $1,327 per gold ounce sold (by-product basis). Although Rainy River achieved the highest production quarter year-to-date, operations were impacted by a voluntary suspension following a fatality in July, after which open pit production gradually returned to full capacity.

New Gold Achieves Record Quarterly Free Cash Flow, Further Strengthening the Balance Sheet

“Financially, the third quarter was excellent for New Gold, highlighted by record quarterly free cash flow generation of $57 million,” added Mr. Godin. “Similarly, financial discipline allowed the Company to maintain an excellent liquidity position and strong balance sheet while making the $43 million payment to Ontario Teachers and repaying $50 million on the credit facility.”

• The Company delivered record quarterly revenue of $252 million, record cash flow from operations of $128 million, and record free cash flow¹ of $57 million, driven by higher metal prices, operational discipline and efficient capital management.
  
  
• During the third quarter, the Company made a payment of $43 million to the Ontario Teachers’ Pension Plan (“Ontario Teachers”) as part of the minimum cash guarantee under the terms of the original 2020 New Afton strategic partnership. The Company also repaid $50 million of the $100 million drawn on its credit facility to fund the payment under the amending agreement with Ontario Teachers pursuant to which the strategic partnership was amended to reduce the free cash flow interest from 46.0% to 19.9% (the “Amending Agreement”).
  
  
• New Gold exits the third quarter with a strong financial position, with cash and cash equivalents of $133 million, and a liquidity position of $459 million as at September 30, 2024.

2024 Operational Outlook Update, Highlighted by Strong Cost Performance

“Although we expect consolidated gold production to be slightly below the original guidance range, copper production, cash costs, all-in sustaining costs and capital spending are all trending in-line with or better than the outlook presented at the beginning of this year,” stated Mr. Godin. “On an asset basis, New Afton full-year gold production is expected to be at the top end of the guidance range and Rainy River gold production is expected to be lower than planned, mainly due to less high-grade tonnes on two open pit benches, and our decision to voluntarily suspend operations in July and gradually return to full production.”

“Considering the performance to date, and after reviewing the open pit ore blocks planned at Rainy River in the fourth quarter, together with the excellent performance at New Afton, we are confident in our updated consolidated production forecasts to the end of this year and our previously provided 2025 and 2026 outlook. Furthermore, through operational discipline and capital management, we continue to successfully manage costs to generate significant free cash flow and offset the financial impact of lower production at Rainy River. Following the free cash flow inflection point, achieved in the middle of this year, and with the completion of key growth project milestones, the Company is well positioned to continue delivering on our targets and leverage the current metal price environment,” added Mr. Godin.

• Gold production is expected to be in the range of 300,000 to 310,000 ounces (previously 310,000 to 350,000 ounces). New Afton gold production is expected to be at the top end of the guidance range of 60,000 to 70,000 ounces. Rainy River gold production is expected to be in the range of 230,000 to 240,000 ounces (previously 250,000 to 280,000 ounces).
  
  
• Copper production is expected to be at the mid-point of the guidance range of 50 to 60 million pounds.
  
  
• Cash costs¹ are trending in-line with the mid-point of the guidance range of $725 to $825 per gold ounce sold, on a by-product basis, despite the slightly lower gold production outlook and lower capitalized waste stripping, as a result of lower mining and processing costs, achieved through operational discipline at both operations, and higher by-product revenues from higher copper prices. Overall, the unit mining cost per tonne is lower than plan due to operational efficiency improvements and cost reduction initiatives.
  
  
• All-in sustaining costs¹ are expected to be at the low end of the guidance range of $1,240 to $1,340 per gold ounce sold, on a by-product basis, as a result of strong cash costs and lower sustaining capital spend. Rainy River’s all-in sustaining costs are expected to be at the top end of its guidance range as lower mining and processing costs offset the lower expected production. All-in sustaining costs at New Afton are expected to be below the low end of its guidance range.
  
  
• Operating expenses per gold ounce (co-product) are now tracking to the high end or slightly above the top end of the guidance range of $965 to $1,065 per gold ounce sold as a result of lower capitalized waste stripping and slightly lower gold production, which offset the impact of lower mining and processing costs. Operating expenses per copper pound (co-product) are trending in-line with the mid-point of the guidance range of $1.90 to $2.40 per copper pound sold.
  
  
• Sustaining capital¹ is tracking approximately $20 million below the low end of the guidance range of $115 million to $130 million, due to efficient capital management, savings related to execution of the Rainy River tailings dam raise, lower capitalized waste stripping and timing of capital spend at New Afton. 
  
  
• Growth capital¹ is tracking to the low end of the guidance range of $175 million to $200 million, due to efficient capital management and early commissioning of the materials handling system at New Afton.

Notable Exploration Successes With a Focus on Near Mine Targets

“Our exploration strategy continued to advance during the third quarter, with positive exploration results released on both assets earlier in September. With the previously announced increased exploration budgets at both Rainy River and New Afton, the fourth quarter is expected to have the most metres drilled in 2024, as we work towards updating our Mineral Reserves and Resources early in 2025,” stated Mr. Godin.

• At Rainy River, exploration drilling continues to advance on underground targets. During the third quarter, the Company provided an update on the ongoing Rainy River exploration program (see September 11, 2024 news release), highlighting successful expansion of gold mineralized zones. These results are expected to have a positive impact on Rainy River’s Mineral Resource estimate at year-end 2024 and form the basis of additional exploration opportunities in the coming years. Exploration drilling in the fourth quarter will continue testing the down-dip continuity of existing underground zones while exploring for potential new mining zones.
  
  
• At New Afton, the Company continues to prioritize exploration drilling from the underground drift previously completed in the second quarter. During the third quarter, the Company provided an additional update on the ongoing exploration program at New Afton (see September 16, 2024 news release), highlighting positive exploration results in the eastern part of the mine where high-grade copper-gold porphyry mineralization was intersected. Exploration efforts during the fourth quarter will remain focused on potential near-mine copper-gold zones located above the C-Zone extraction level.

Consolidated Financial Highlights

 

• Revenue in the third quarter increased over the prior-year period primarily due to higher metal prices and gold sales volume, partially offset by lower copper sales volume. For the nine months ended September 30, 2024, the increase in revenue relative to the prior-year period was primarily due to higher metal prices, partially offset by lower gold sales volume.
  
  
• Operating expenses in the third quarter and for the nine months ended September 30, 2024 were in-line with the prior year periods.
  
  
• Depreciation expense in the third quarter was in-line compared to the prior-year period as the higher depreciable cost basis at Rainy River was offset by the lower depreciable cost basis at New Afton due to the disposition of mineral interest properties as a result of the accounting for the Amending Agreement with Ontario Teachers. For the nine months ended September 30, 2024, depreciation and depletion increased due to a higher depreciable cost basis when compared to the prior-year period, partially offset by an inventory write-up at Rainy River. Depreciation expense in the fourth quarter is expected to increase as C-Zone has reached commercial production and increases the depreciable cost basis.
  
  
• Net earnings increased over the prior-year periods due to higher revenue. For the nine months ended September 30, 2024, the increase in net earnings was also attributable to a net gain on the derecognition of the New Afton free cash flow obligation.
  
  
• Adjusted net earnings¹ increased over the prior-year periods due to higher revenue, partially offset by higher depreciation in the nine months ended September 30, 2024.
  
  
• Cash generated from operations and free cash flow¹ increased over the prior-year periods primarily due to higher revenue, lower sustaining capital spend, and positive working capital movements. The Company delivered record quarterly free cash flow of $57 million.
  
  
• September 30, 2024 cash and cash equivalents were $133 million.

Consolidated Operational Highlights

Rainy River Mine

Operational Highlights

Operating Key Performance Indicators

 

• Third quarter gold production was 61,892 ounces. For the nine months ended September 30, 2024, gold production was 164,908 ounces. The decrease over the prior year periods was primarily due to increased mill feed from low-grade stockpiles.
  
  
• Operating expenses per gold ounce sold for the third quarter was in-line with the prior-year period. Operating expenses per gold ounce sold for the nine months ended September 30, 2024, increased over the prior-year period primarily due to lower sales volumes.
  
  
• All-in sustaining costs¹ per gold ounce sold (by-product basis) for the third quarter decreased over the prior-year period due to higher sales volumes and lower sustaining capital spend. All-in sustaining costs per gold ounce sold (by-product basis) for the nine months ended September 30, 2024, increased over the prior-year period due to lower sales volumes, partially offset by lower sustaining capital spend.
  
  
• Total capital for the third quarter is in-line with the prior-year period, and higher for the nine months ended September 30, 2024. The increase over the prior-year period is due to higher growth capital spend, partially offset by lower sustaining capital spend. Sustaining capital¹ is primarily related to capitalized waste, capital components, and tailings management. Growth capital¹ is related to underground development as the Underground Main and Intrepid zones continue to advance.
  
  
• Free cash flow for the third quarter and nine months ended September 30, 2024, was $44 million and $53 million (net of stream payments) respectively, an increase compared to the prior-year periods primarily due to an increase in revenue from higher gold prices, partially offset by higher growth capital spend.
  
  
• At Rainy River, first development ore was mined from Underground Main in late September, ahead of schedule. Underground Main contains the majority of underground mineral reserves at Rainy River and will be an important source of higher-grade production in the coming years to supplement mill feed from the open pit and the Intrepid underground zone. Mining of first ore follows the completion of the main fresh air raise and in-pit portal in the third quarter. With these important milestones completed, the Underground Main project is on track to commence stoping in the first half of 2025 and ramp up to an underground production rate of approximately 5,500 tonnes per day by 2027.

New Afton Mine

Operational Highlights

Operating Key Performance Indicators

 

• Third quarter production was 16,477 ounces of gold (inclusive of ore purchase agreements) and 12.6 million pounds of copper. For the nine months ended September 30, 2024, gold production was 52,957 ounces (inclusive of ore purchase agreements) and copper production was 39.5 million pounds. Third quarter production decreased over the prior year period due to lower grade and recovery. For the nine months ended September 30, 2024, the increase in gold and copper production over the prior-year period is due to higher tonnes processed, partially offset by lower grade and recovery.
  
  
• Operating expenses per gold ounce sold and per copper pound sold for the third quarter decreased over the prior-year period due to lower underground mining cost in the third quarter. Operating expenses per gold ounce sold and per copper pound sold for the nine months ended September 30, 2024, decreased over the prior-year period due to lower underground mining cost and higher gold and copper sales volumes.
  
  
• All-in sustaining costs¹ per gold ounce sold (by-product basis) for the third quarter and nine months ended September 30, 2024, decreased over the prior-year periods due to the benefit of higher by-product revenues, lower operating expenses, and lower sustaining capital spend.
  
  
• Total capital decreased over the prior-year periods, primarily due to lower sustaining and growth capital¹ spend. Sustaining capital¹ primarily related to tailings management and stabilization activities. Growth capital primarily related to the C-Zone underground mine development and cave construction.
  
  
• Free cash flow¹ for the third quarter and nine months ended September 30, 2024, was $19 million and $31 million, respectively, a significant improvement over the prior-year periods primarily due to higher revenue and lower overall capital spend.
  
  
• C-Zone, New Afton’s fourth block cave, has achieved commercial production ahead of schedule with the materials handling system coming online in October and the cave footprint reaching the targeted hydraulic radius for self-cave propagation. Installation of the gyratory crusher and conveyor system was completed ahead of schedule and C-Zone is now set up for high capacity, low-cost, low-emission ore transportation for the life-of-mine. Additionally, construction of the C-Zone cave footprint has reached the targeted 18 draw bells for hydraulic radius. These two milestones are expected to have an immediate positive impact on unit operating costs and ultimately facilitate a ramp-up to previously achieved processing rates of more than 14,500 tonnes per day by 2026.

Third Quarter 2024 Conference Call and Webcast

The Company will host a webcast and conference call tomorrow, Wednesday, October 30, 2024 at 8:30 am Eastern Time to discuss the Company’s third quarter consolidated results.

• Participants may listen to the webcast by registering on our website at www.newgold.com or via the following link https://app.webinar.net/xPwpa23nj6B
• Participants may also listen to the conference call by calling North American toll free 1-888-510-2154, or 1-437-900-0527 outside of the U.S. and Canada, passcode 45265.
• To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/3TCTEZb to receive an instant automated call back.
• A recorded playback of the conference call will be available until November 30, 2024 by calling North American toll free 1-888-660-6345, or 1-289-819-1450 outside of the U.S. and Canada, passcode 45265. An archived webcast will also be available at www.newgold.com.

About New Gold 
New Gold is a Canadian-focused intermediate mining Company with a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New Afton copper-gold mine. New Gold’s vision is to build a leading diversified intermediate gold company based in Canada that is committed to the environment and social responsibility. For further information on the Company, visit www.newgold.com.

Non-GAAP Financial Performance Measures

Cash Costs per Gold Ounce Sold

“Cash costs per gold ounce sold” is a common non-GAAP financial performance measure used in the gold mining industry but does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold reports cash costs on a sales basis and not on a production basis. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, this measure, along with sales, is a key indicator of the Company’s ability to generate operating earnings and cash flow from its mining operations. This measure allows investors to better evaluate corporate performance and the Company’s ability to generate liquidity through operating cash flow to fund future capital exploration and working capital needs.

This measure is intended to provide additional information only and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of cash generated from operations under IFRS or operating costs presented under IFRS.

Cash cost figures are calculated in accordance with a standard developed by The Gold Institute, a worldwide association of suppliers of gold and gold products that ceased operations in 2002. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measures of other companies. Cash costs include mine site operating costs such as mining, processing and administration costs, royalties, and production taxes, but are exclusive of amortization, reclamation, capital and exploration costs and net of by-product revenue. Cash costs are then divided by gold ounces sold to arrive at the cash costs per gold ounce sold.

The Company produces copper and silver as by-products of its gold production. The calculation of total cash costs per gold ounce for Rainy River is net of by-product silver sales revenue, and the calculation of total cash costs per gold ounce sold for New Afton is net of by-product copper sales revenue. New Gold notes that in connection with New Afton, the copper by-product revenue is sufficiently large to result in a negative total cash cost on a single mine basis. Notwithstanding this by-product contribution, as a Company focused on gold production, New Gold aims to assess the economic results of its operations in relation to gold, which is the primary driver of New Gold’s business. New Gold believes this metric is of interest to its investors, who invest in the Company primarily as a gold mining Company. To determine the relevant costs associated with gold only, New Gold believes it is appropriate to reflect all operating costs, as well as any revenue related to metals other than gold that are extracted in its operations.

To provide additional information to investors, New Gold has also calculated total cash costs on a co-product basis, which removes the impact of other metal sales that are produced as a by-product of gold production and apportions the cash costs to each metal produced on a percentage of revenue basis, and subsequently divides the amount by the total gold ounces, silver ounces or pounds of copper sold, as the case may be, to arrive at per ounce or per pound figures. Unless indicated otherwise, all total cash cost information is net of by-product sales.

Sustaining Capital and Sustaining Leases

“Sustaining capital” and “sustaining lease” are non-GAAP financial performance measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold defines “sustaining capital” as net capital expenditures that are intended to maintain operation of its gold producing assets. Similarly, a “sustaining lease” is a lease payment that is sustaining in nature. To determine “sustaining capital” expenditures, New Gold uses cash flow related to mining interests from its unaudited condensed interim consolidated statement of cash flows and deducts any expenditures that are capital expenditures to develop new operations or capital expenditures related to major projects at existing operations where these projects will materially increase production. Management uses “sustaining capital” and “sustaining lease” to understand the aggregate net result of the drivers of all-in sustaining costs other than cash costs. These measures are intended to provide additional information only and should not be considered in isolation or as substitutes for measures of performance prepared in accordance with IFRS.

Growth Capital

“Growth capital” is a non-GAAP financial performance measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold considers non-sustaining capital costs to be “growth capital”, which are capital expenditures to develop new operations or capital expenditures related to major projects at existing operations where these projects will materially increase production. To determine “growth capital” expenditures, New Gold uses cash flow related to mining interests from its unaudited condensed interim consolidated statement of cash flows and deducts any expenditures that are capital expenditures that are intended to maintain operation of its gold producing assets. Management uses “growth capital” to understand the cost to develop new operations or related to major projects at existing operations where these projects will materially increase production. This measure is intended to provide additional information only and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

All-In Sustaining Costs (AISC) per Gold Ounce Sold

“All-in sustaining costs per gold ounce sold” (“AISC”) is a non-GAAP financial performance measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold calculates “all-in sustaining costs per gold ounce sold” based on guidance announced by the World Gold Council (“WGC”) in September 2013. The WGC is a non-profit association of the world’s leading gold mining companies established in 1987 to promote the use of gold to industry, consumers and investors. The WGC is not a regulatory body and does not have the authority to develop accounting standards or disclosure requirements.  The WGC has worked with its member companies to develop a measure that expands on IFRS measures to provide visibility into the economics of a gold mining company. Current IFRS measures used in the gold industry, such as operating expenses, do not capture all of the expenditures incurred to discover, develop and sustain gold production. New Gold believes that “all-in sustaining costs per gold ounce sold” provides further transparency into costs associated with producing gold and will assist analysts, investors, and other stakeholders of the Company in assessing its operating performance, its ability to generate free cash flow from current operations and its overall value. In addition, the Human Resources and Compensation Committee of the Board of Directors uses “all-in sustaining costs”, together with other measures, in its Company scorecard to set incentive compensation goals and assess performance.

“All-in sustaining costs per gold ounce sold” is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.

New Gold defines all-in sustaining costs per gold ounce sold as the sum of cash costs, net capital expenditures that are sustaining in nature, corporate general and administrative costs, sustaining leases, capitalized and expensed exploration costs that are sustaining in nature, and environmental reclamation costs, all divided by the total gold ounces sold to arrive at a per ounce figure. To determine sustaining capital expenditures, New Gold uses cash flow related to mining interests from its unaudited condensed interim consolidated statement of cash flows and deducts any expenditures that are non-sustaining (growth). Capital expenditures to develop new operations or capital expenditures related to major projects at existing operations where these projects will materially benefit the operation are classified as growth and are excluded. The definition of sustaining versus non-sustaining is similarly applied to capitalized and expensed exploration costs. Exploration costs to develop new operations or that relate to major projects at existing operations where these projects are expected to materially benefit the operation are classified as non-sustaining and are excluded.

Costs excluded from all-in sustaining costs per gold ounce sold are non-sustaining capital expenditures, non-sustaining lease payments and exploration costs, financing costs, tax expense, and transaction costs associated with mergers, acquisitions and divestitures, and any items that are deducted for the purposes of adjusted earnings. 

To provide additional information to investors, the Company has also calculated all-in sustaining costs per gold ounce sold on a co-product basis for New Afton, which removes the impact of other metal sales that are produced as a by-product of gold production and apportions the all-in sustaining costs to each metal produced on a percentage of revenue basis, and subsequently divides the amount by the total gold ounces,  or pounds of copper sold, as the case may be, to arrive at per ounce or per pound figures. By including cash costs as a component of all-in sustaining costs, the measure deducts by-product revenue from gross cash costs.

The following tables reconcile the above non-GAAP measures to the most directly comparable IFRS measure on an aggregate and mine-by-mine basis.

Cash Costs and All-in Sustaining Costs per Gold Ounce Reconciliation Tables

 

                                                                                                                                                                          

 

 

 

 

Sustaining Capital Expenditures Reconciliation Table

Adjusted Net Earnings/(Loss) and Adjusted Net Earnings per Share

“Adjusted net earnings” and “adjusted net earnings per share” are non-GAAP financial performance measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. “Adjusted net earnings” and “adjusted net earnings per share” exclude “other gains and losses” as per Note 3 of the Company’s unaudited condensed interim consolidated financial statements; and loss on redemption of long-term debt. Net earnings have been adjusted, including the associated tax impact, for the group of costs in “Other gains and losses” on the unaudited condensed interim consolidated income statements. Key entries in this grouping are:  fair value changes for the Rainy River gold stream obligation, fair value changes and gain on the disposal of the New Afton free cash flow interest obligation, foreign exchange gains/loss and fair value changes in investments. The income tax adjustments reflect the tax impact of the above adjustments and is referred to as “adjusted tax expense”.

The Company uses “adjusted net earnings” for its own internal purposes. Management’s internal budgets and forecasts and public guidance do not reflect the items which have been excluded from the determination of “adjusted net earnings”. Consequently, the presentation of “adjusted net earnings” enables investors to better understand the underlying operating performance of the Company’s core mining business through the eyes of management. Management periodically evaluates the components of “adjusted net earnings” based on an internal assessment of performance measures that are useful for evaluating the operating performance of New Gold’s business and a review of the non-GAAP financial performance measures used by mining industry analysts and other mining companies. “Adjusted net earnings” and “adjusted net earnings per share” are intended to provide additional information only and should not be considered in isolation or as substitutes for measures of performance prepared in accordance with IFRS. These measures are not necessarily indicative of operating profit or cash flows from operations as determined under IFRS. The following table reconciles these non-GAAP financial performance measures to the most directly comparable IFRS measure.

Cash Generated from Operations, before Changes in Non-Cash Operating Working Capital

“Cash generated from operations, before changes in non-cash operating working capital” is a non-GAAP financial performance measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. Other companies may calculate this measure differently and this measure is unlikely to be comparable to similar measures presented by other companies. “Cash generated from operations, before changes in non-cash operating working capital” excludes changes in non-cash operating working capital. New Gold believes this non-GAAP financial measure provides further transparency and assists analysts, investors and other stakeholders of the Company in assessing the Company’s ability to generate cash from its operations before temporary working capital changes.

Cash generated from operations, before non-cash changes in working capital is intended to provide additional information only and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of operating profit or cash flows from operations as determined under IFRS. The following table reconciles this non-GAAP financial performance measure to the most directly comparable IFRS measure.

Free Cash Flow

“Free cash flow” is a non-GAAP financial performance measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold defines “free cash flow” as cash generated from operations and proceeds of sale of other assets less capital expenditures on mining interests, lease payments, and settlement of non-current derivative financial liabilities which include the Rainy River gold stream obligation and the New Afton free cash flow interest obligation. New Gold believes this non-GAAP financial performance measure provides further transparency and assists analysts, investors and other stakeholders of the Company in assessing the Company’s ability to generate cash flow from current operations. “Free cash flow” is intended to provide additional information only and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of operating profit or cash flows from operations as determined under IFRS. The following tables reconcile this non-GAAP financial performance measure to the most directly comparable IFRS measure on an aggregate and mine-by-mine basis.

 

 

 

Average Realized Price

“Average realized price per gold ounce or per copper pound sold” is a non-GAAP financial performance measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. Other companies may calculate this measure differently and this measure is unlikely to be comparable to similar measures presented by other companies. Management uses this measure to better understand the price realized for gold sales in each reporting period. “Average realized price per ounce of gold sold or copper pound sold” is intended to provide additional information only and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The following tables reconcile this non-GAAP financial performance measure to the most directly comparable IFRS measure on an aggregate and mine-by-mine basis.

 

 

For additional information with respect to the non-GAAP measures used by the Company, refer to the detailed “Non-GAAP Financial Performance Measure” section disclosure in the MD&A for the three and nine months ended September 30, 2024 filed on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this news release, including any information relating to New Gold’s future financial or operating performance are “forward-looking”. All statements in this news release, other than statements of historical fact, which address events, results, outcomes or developments that New Gold expects to occur are “forward-looking statements”. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the use of forward-looking terminology such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “targeted”, “estimates”, “forecasts”, “intends”, “anticipates”, “projects”, “potential”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will be taken”, “occur” or “be achieved” or the negative connotation of such terms. Forward-looking statements in this news release include, among others, statements with respect to: the Company’s expectations and guidance with respect to production, costs, capital investment and expenses on a mine-by-mine and consolidated basis, associated timing and successfully accomplishing the factors contributing to those expectations; expectations regarding the fourth quarter of 2024 being the strongest quarter of the year; successfully generating sustaining free cash flow beyond 2030; successfully delivering on the Company’s guidance targets, consolidated operational outlook and operational objectives and continuing to leverage the current metal price environment; continuing to successfully manage costs and offset the lower production financial impact at Rainy River; expectations regarding the fourth quarter having the most exploration metres drilled in 2024; successfully updating the Company’s Mineral Reserves and Resources in early 2025; expectations regarding exploration results having a positive impact on Rainy River’s mineral resource estimate at year-end and successfully forming the basis of additional exploration opportunities in the coming years; planned activities in 2024 and future years at the Rainy River Mine and New Afton Mine, including planned development and exploration activities, and projected accuracy of timing and related expenses; expectations regarding depreciation expenses in the fourth quarter being in-line with the first half of 2024; expectations regarding Underground Main being an important source of higher-grade production in the coming years; successfully commencing stoping in the first half of 2025 for the Underground Main project and ramping up underground production rate to approximately 5,500 tonnes per day by 2027; successfully achieving high-capacity, low-cost, low-emission ore transportation for the life-of-mine at C-Zone; successfully achieving the expected immediate positive impacts on unit operating costs, production and processing rates resulting from achieving the noted C-Zone milestones; and successfully achieving processing rates of more than 14,500 tonnes per day by 2026 at New Afton.

All forward-looking statements in this news release are based on the opinions and estimates of management as of the date such statements are made and are subject to important risk factors and uncertainties, many of which are beyond New Gold’s ability to control or predict. Certain material assumptions regarding such forward-looking statements are discussed in this news release, its most recent Annual Information Form and NI 43-101 Technical Reports on the Rainy River Mine and New Afton Mine filed on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. In addition to, and subject to, such assumptions discussed in more detail elsewhere, the forward-looking statements in this news release are also subject to the following assumptions: (1) there being no significant disruptions affecting New Gold’s operations, including material disruptions to the Company’s supply chain, workforce or otherwise; (2) political and legal developments in jurisdictions where New Gold operates, or may in the future operate, being consistent with New Gold’s current expectations; (3) the accuracy of New Gold’s current Mineral Reserve and Mineral Resource estimates and the grade of gold, silver and copper expected to be mined; (4) the exchange rate between the Canadian dollar and U.S. dollar, and commodity prices being approximately consistent with current levels and expectations for the purposes of 2024 guidance and otherwise; (5) prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; (6) equipment, labour and materials costs increasing on a basis consistent with New Gold’s current expectations; (7) arrangements with First Nations and other Indigenous groups in respect of the New Afton Mine and Rainy River Mine being consistent with New Gold’s current expectations; (8) all required permits, licenses and authorizations being obtained from the relevant governments and other relevant stakeholders within the expected timelines and the absence of material negative comments or obstacles during the applicable regulatory processes; and (9) the results of the life of mine plans for the Rainy River Mine and the New Afton Mine being realized.

Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such factors include, without limitation: price volatility in the spot and forward markets for metals and other commodities; discrepancies between actual and estimated production, between actual and estimated costs, between actual and estimated Mineral Reserves and Mineral Resources and between actual and estimated metallurgical recoveries; equipment malfunction, failure or unavailability; accidents; risks related to early production at the Rainy River Mine, including failure of equipment, machinery, the process circuit or other processes to perform as designed or intended; the speculative nature of mineral exploration and development, including the risks of obtaining and maintaining the validity and enforceability of the necessary licenses and permits and complying with the permitting requirements of each jurisdiction in which New Gold operates, including, but not limited to: uncertainties and unanticipated delays associated with obtaining and maintaining necessary licenses, permits and authorizations and complying with permitting requirements; changes in project parameters as plans continue to be refined; changing costs, timelines and development schedules as it relates to construction; the Company not being able to complete its construction projects at the Rainy River Mine or the New Afton Mine on the anticipated timeline or at all; volatility in the market price of the Company’s securities; changes in national and local government legislation in the countries in which New Gold does or may in the future carry on business; compliance with public company disclosure obligations; controls, regulations and political or economic developments in the countries in which New Gold does or may in the future carry on business; the Company’s dependence on the Rainy River Mine and New Afton Mine; the Company not being able to complete its exploration drilling programs on the anticipated timeline or at all; inadequate water management and stewardship; tailings storage facilities and structure failures; failing to complete stabilization projects according to plan; geotechnical instability and conditions; disruptions to the Company’s workforce at either the Rainy River Mine or the New Afton Mine, or both; significant capital requirements and the availability and management of capital resources; additional funding requirements; diminishing quantities or grades of Mineral Reserves and Mineral Resources; actual results of current exploration or reclamation activities; uncertainties inherent to mining economic studies including the Technical Reports for the Rainy River Mine and New Afton Mine; impairment; unexpected delays and costs inherent to consulting and accommodating rights of First Nations and other Indigenous groups; climate change, environmental risks and hazards and the Company’s response thereto; ability to obtain and maintain sufficient insurance; actual results of current exploration or reclamation activities; fluctuations in the international currency markets and in the rates of exchange of the currencies of Canada, the United States and, to a lesser extent, Mexico; global economic and financial conditions and any global or local natural events that may impede the economy or New Gold’s ability to carry on business in the normal course; inflation; compliance with debt obligations and maintaining sufficient liquidity; the responses of the relevant governments to any disease, epidemic or pandemic outbreak not being sufficient to contain the impact of such outbreak; disruptions to the Company’s supply chain and workforce due to any disease, epidemic or pandemic outbreak; an economic recession or downturn as a result of any disease, epidemic or pandemic outbreak that materially adversely affects the Company’s operations or liquidity position; taxation; fluctuation in treatment and refining charges; transportation and processing of unrefined products; rising costs or availability of labour, supplies, fuel and equipment; adequate infrastructure; relationships with communities, governments and other stakeholders; labour disputes; effectiveness of supply chain due diligence; the uncertainties inherent in current and future legal challenges to which New Gold is or may become a party; defective title to mineral claims or property or contests over claims to mineral properties; competition; loss of, or inability to attract, key employees; use of derivative products and hedging transactions; reliance on third-party contractors; counterparty risk and the performance of third party service providers; investment risks and uncertainty relating to the value of equity investments in public companies held by the Company from time to time; the adequacy of internal and disclosure controls; conflicts of interest; the lack of certainty with respect to foreign operations and legal systems, which may not be immune from the influence of political pressure, corruption or other factors that are inconsistent with the rule of law; the successful acquisitions and integration of business arrangements and realizing the intended benefits therefrom; and information systems security threats. In addition, there are risks and hazards associated with the business of mineral exploration, development, construction, operation and mining, including environmental events and hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance or inability to obtain insurance to cover these risks) as well as “Risk Factors” included in New Gold’s Annual Information Form and other disclosure documents filed on and available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. Forward-looking statements are not guarantees of future performance, and actual results and future events could materially differ from those anticipated in such statements. All of the forward-looking statements contained in this news release are qualified by these cautionary statements. New Gold expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, events or otherwise, except in accordance with applicable securities laws.

Technical Information

All scientific and technical information contained in this news release has been reviewed and approved by Yohann Bouchard, Executive Vice President and Chief Operating Officer of New Gold. Mr. Bouchard is a Professional Engineer and a member of the Professional Engineers of Ontario. Mr. Bouchard is a “Qualified Person” for the purposes of NI 43-101 Standards of Disclosure for Mineral Projects.

 

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CALGARY, Alberta, Oct. 29, 2024 (GLOBE NEWSWIRE) — This news release contains “forward-looking information and statements” within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the “Cautionary Statement Regarding Forward-Looking Information and Statements” later in this news release. This news release contains references to certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending, Working Capital and Total Long-term Financial Liabilities. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) Accounting Standards and may not be comparable to similar measures used by other companies. See “Financial Measures and Ratios” later in this news release.

Precision Drilling Corporation (“Precision” or the “Company”) PDPDS delivered strong third quarter financial results, demonstrating the resilience of the business and its robust cash flow potential. Year to date, Precision has already achieved the low end of its debt reduction target range and is well on track to allocate 25% to 35% of its free cash flow to share buybacks in 2024.

Financial Highlights

• Revenue was $477 million and exceeded the $447 million realized in the third quarter of 2023 as activity increased in Canada and internationally, which more than offset lower activity in the U.S.
• Adjusted EBITDA⁽¹⁾ was $142 million, including a share-based compensation recovery of $0.2 million. In 2023, third quarter Adjusted EBITDA was $115 million and included share-based compensation charges of $31 million.
• Net earnings was $39 million or $2.77 per share, nearly doubling the $20 million or $1.45 per share in 2023.
• Completion and Production Services revenue increased 27% over the same period last year to $73 million, while Adjusted EBITDA rose 40% to $20 million, reflecting the successful integration of the CWC Energy Services (CWC) acquisition in late 2023.
• Internationally, revenue increased 21% over the third quarter of last year as the Company realized US$35 million of contract drilling revenue versus US$29 million in 2023. Revenue for the third quarter of 2024 was negatively impacted by fewer rig moves and planned rig recertifications that accounted for 44 non-billable utilization days.
• Debt reduction during the quarter was $49 million and total $152 million year to date. Share repurchases during the quarter were $17 million and total $50 million year to date.
• Increased our 2024 planned capital expenditures from $195 million to $210 million to fund multiple contracted rig upgrades and the strategic purchase of drill pipe for use in 2025.

Operational Highlights

• Canada’s activity increased 25%, averaging 72 active drilling rigs versus 57 in the third quarter of 2023. Our Super Triple and Super Single rigs are in high demand and approaching full utilization.
• Canadian revenue per utilization day was $32,325 and comparable to the $32,224 in the same period last year.
• U.S. activity averaged 35 drilling rigs compared to 41 for the third quarter of 2023.
• U.S. revenue per utilization day was US$32,949 versus US$35,135 in the same quarter last year.
• International activity increased 33% compared to the third quarter of 2023, with eight drilling rigs fully contracted this year following rig reactivations in 2023. International revenue per utilization day was US$47,223 compared to US$51,570 in the third quarter of 2023 due to fewer rig moves and planned rig recertifications completed in 2024.
• Service rig operating hours increased 34% over the same quarter last year totaling 62,835 hours driven by the CWC acquisition.
• Formed a strategic Joint Partnership (Partnership) with Indigenous partners to provide well servicing operations in northeast British Columbia.

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

MANAGEMENT COMMENTARY

“Precision’s international and Canadian businesses led our third quarter results, with revenue, Adjusted EBITDA, and net income all improving over the same period last year, demonstrating the resilience of our High Performance, High Value strategy and geographic exposure. Our cash flow conversion this quarter enabled us to repay debt, buy back shares, and continue to invest in our Super Series fleet. We have already achieved the low end of our debt repayment target range for this year and expect to be less than a year away from meeting our long-term target of a Net Debt to Adjusted EBITDA ratio⁽¹⁾ of less than one time.

“Canadian fundamentals for heavy oil, condensate, and LNG remain strong due to the additional takeaway capacity. The Trans Mountain oil pipeline expansion is driving higher and stable returns for producers, who are accelerating heavy oil and condensate targeted drilling plans, while Canada’s first LNG project is expected to stabilize natural gas pricing and further stimulate activity in the Montney in 2025. As the leading provider of high-quality and reliable services in Canada, demand for our Super Series fleet remains high. Today, we have 75 rigs operating, with our Super Triple and Super Single rigs nearly fully utilized. We expect strong customer demand and utilization to continue well beyond 2025.

“In the U.S., our rig count has been range-bound for the last several months, with 35 rigs operating today. Volatile commodity prices, customer consolidation, and budget exhaustion are all headwinds that we expect will continue to suppress activity for the remainder of the year. We are encouraged by recent momentum in our contract book with seven new contracts secured for oil and natural gas drilling projects that are expected to begin late this year for 2025 drilling programs. Looking ahead, we anticipate that the next wave of additional Gulf Coast LNG export facilities, coal plant retirements, and a build-out of AI data centers should drive further natural gas drilling and support sustained natural gas demand.

“Precision’s international operations provide a stable foundation for earnings and cash flow as our rigs are under long-term contracts that extend into 2028. Our well servicing business further complements our stability as we remain the premier well service provider in Canada where demand continues to outpace manned service rigs. In 2023, we repositioned these businesses with rig reactivations and our CWC acquisition and as a result, each business is on track to increase its 2024 Adjusted EBITDA by approximately 50% over the prior year.

“I am proud of the discipline Precision continues to show throughout the organization and we remain focused on our strategic priorities, which include generating free cash flow, improving capital returns to shareholders, and delivering operational excellence. With robust Canadian market fundamentals, an improving long-term outlook for the U.S., and a focused strategy, I am confident we will continue to drive higher total shareholder returns. I would like to thank our team for executing at the highest operating levels and generating strong financial performance and value for our customers,” stated Kevin Neveu, Precision’s President and CEO.

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

	For the three months ended September 30,												For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except per share amounts)		2024				2023			% Change					2024				2023			% Change
Revenue		477,155				446,754				6.8				1,434,157				1,430,983				0.2
Adjusted EBITDA(1)		142,425				114,575				24.3				400,695				459,887				(12.9	)
Net earnings		39,183				19,792				98.0				96,400				142,522				(32.4	)
Cash provided by operations		79,674				88,500				(10.0	)			319,292				330,316				(3.3	)
Funds provided by operations(1)		113,322				91,608				23.7				342,837				388,220				(11.7	)
Cash used in investing activities		38,852				34,278				13.3				141,032				157,157				(10.3	)
Capital spending by spend category(1)
Expansion and upgrade		7,709				13,479				(42.8	)			30,501				39,439				(22.7	)
Maintenance and infrastructure		56,139				38,914				44.3				127,297				108,463				17.4
Proceeds on sale		(5,647	)			(6,698	)			(15.7	)			(21,825	)			(20,724	)			5.3
Net capital spending(1)		58,201				45,695				27.4				135,973				127,178				6.9
Net earnings per share:
Basic		2.77				1.45				91.0				6.74				10.45				(35.5	)
Diluted		2.31				1.45				59.3				6.73				9.84				(31.6	)
Weighted average shares outstanding:
Basic		14,142				13,607				3.9				14,312				13,643				4.9
Diluted		14,890				13,610				9.4				14,317				14,858				(3.6	)

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

Operating Highlights

	For the three months ended September 30,												For the nine months ended September 30,
	2024				2023				% Change				2024				2023				% Change
Contract drilling rig fleet		214				224				(4.5	)			214				224				(4.5	)
Drilling rig utilization days:
U.S.		3,196				3,815				(16.2	)			9,885				13,823				(28.5	)
Canada		6,586				5,284				24.6				17,667				15,247				15.9
International		736				554				32.9				2,192				1,439				52.3
Revenue per utilization day:
U.S. (US$)		32,949				35,135				(6.2	)			33,011				35,216				(6.3	)
Canada (Cdn$)		32,325				32,224				0.3				34,497				32,583				5.9
International (US$)		47,223				51,570				(8.4	)			51,761				51,306				0.9
Operating costs per utilization day:
U.S. (US$)		22,207				21,655				2.5				22,113				20,217				9.4
Canada (Cdn$)		19,448				18,311				6.2				20,196				19,239				5.0
Service rig fleet		165				121				36.4				165				121				36.4
Service rig operating hours		62,835				46,894				34.0				194,390				144,944				34.1

Drilling Activity

	Average for the quarter ended 2023															Average for the quarter ended 2024
	Mar. 31				June 30				Sept. 30				Dec. 31				Mar. 31				June 30				Sept. 30
Average Precision active rig count(1):
U.S.		60				51				41				45				38				36				35
Canada		69				42				57				64				73				49				72
International		5				5				6				8				8				8				8
Total		134				98				104				117				119				93				115

^{(1) Average number of drilling rigs working or moving.}

Financial Position

(Stated in thousands of Canadian dollars, except ratios)	September 30, 2024				December 31, 2023(2)
Working capital(1)		166,473				136,872
Cash		24,304				54,182
Long-term debt		787,008				914,830
Total long-term financial liabilities(1)		858,765				995,849
Total assets		2,887,996				3,019,035
Long-term debt to long-term debt plus equity ratio (1)		0.32				0.37

^{(1) See “FINANCIAL MEASURES AND RATIOS.”
(2) Comparative period figures were restated due to a change in accounting policy. See “CHANGE IN ACCOUNTING POLICY.”}

Summary for the three months ended September 30, 2024:

• Revenue increased to $477 million compared with $447 million in the third quarter of 2023 as a result of higher Canadian and international activity, partially offset by lower U.S. activity, day rates and lower idle but contract rig revenue.
• Adjusted EBITDA was $142 million as compared with $115 million in 2023, primarily due to increased Canadian and international results and lower share-based compensation. Please refer to “Other Items” later in this news release for additional information on share-based compensation.
• Adjusted EBITDA as a percentage of revenue was 30% as compared with 26% in 2023.
• Generated cash from operations of $80 million, reduced debt by $49 million, repurchased $17 million of shares, and ended the quarter with $24 million of cash and more than $500 million of available liquidity.
• Revenue per utilization day, excluding the impact of idle but contracted rigs was US$32,949 compared with US$33,543 in 2023, a decrease of 2%. Sequentially, revenue per utilization day, excluding idle but contracted rigs, was largely consistent with the second quarter of 2024. U.S. revenue per utilization day was US$32,949 compared with US$35,135 in 2023. The decrease was primarily the result of lower fleet average day rates and idle but contracted rig revenue, partially offset by higher recoverable costs. We did not recognize revenue from idle but contracted rigs in the quarter as compared with US$6 million in 2023.
• U.S. operating costs per utilization day increased to US$22,207 compared with US$21,655 in 2023. The increase is mainly due to higher recoverable costs and fixed costs being spread over fewer activity days, partially offset by lower repairs and maintenance. Sequentially, operating costs per utilization day were largely consistent with the second quarter of 2024.
• Canadian revenue per utilization day was $32,325, largely consistent with the $32,224 realized in 2023. Sequentially, revenue per utilization day decreased $3,750 due to our rig mix, partially offset by higher fleet-wide average day rates.
• Canadian operating costs per utilization day increased to $19,448, compared with $18,311 in 2023, resulting from higher repairs and maintenance and rig reactivation costs. Sequentially, daily operating costs decreased $2,204 due to lower labour expenses due to rig mix, recoverable expenses and repairs and maintenance.
• Internationally, third quarter revenue increased 21% over 2023 as we realized revenue of US$35 million versus US$29 million in the prior year. Our higher revenue was primarily the result of a 33% increase in activity, partially offset by lower average revenue per utilization day. International revenue per utilization day was US$47,223 compared with US$51,570 in 2023 due to fewer rig moves and planned rig recertifications that accounted for 44 non-billable utilization days.
• Completion and Production Services revenue was $73 million, an increase of $16 million from 2023, as our third quarter service rig operating hours increased 34%.
• General and administrative expenses were $23 million as compared with $44 million in 2023 primarily due to lower share-based compensation charges.
• Net finance charges were $17 million, a decrease of $3 million compared with 2023 as a result of lower interest expense on our outstanding debt balance.
• Capital expenditures were $64 million compared with $52 million in 2023 and by spend category included $8 million for expansion and upgrades and $56 million for the maintenance of existing assets, infrastructure, and intangible assets.
• Increased expected capital spending in 2024 to $210 million, an increase of $15 million, due to the strategic purchase of drill pipe before new import tariffs take effect and additional customer-backed upgrades.
• Income tax expense for the quarter was $14 million as compared with $8 million in 2023. During the third quarter, we continue to not recognize deferred tax assets on certain international operating losses.
• Reduced debt by $49 million from the redemption of US$33 million of 2026 unsecured senior notes and US$3 million repayment of our U.S. Real Estate Credit Facility.
• Renewed our Normal Course Issuer Bid (NCIB) and repurchased $17 million of common shares during the third quarter.

Summary for the nine months ended September 30, 2024:

• Revenue for the first nine months of 2024 was $1,434 million, consistent 2023.
• Adjusted EBITDA for the period was $401 million as compared with $460 million in 2023. Our lower Adjusted EBITDA was primarily attributed to decreased U.S. drilling results and higher share-based compensation, partially offset by the strengthening of Canadian and international results.
• Cash provided by operations was $319 million as compared with $330 million in 2023. Funds provided by operations were $343 million, a decrease of $45 million from the comparative period.
• General and administrative costs were $97 million, an increase of $14 million from 2023 primarily due to higher share-based compensation charges.
• Net finance charges were $53 million, $10 million lower than 2023 due to our lower interest expense on our outstanding debt balance.
• Capital expenditures were $158 million in 2024, an increase of $10 million from 2023. Capital spending by spend category included $31 million for expansion and upgrades and $127 million for the maintenance of existing assets, infrastructure, and intangible assets.
• Reduced debt by $152 million from the redemption of US$89 million of 2026 unsecured senior notes and $31 million repayment of our Canadian and U.S. Real Estate Credit Facilities.
• Repurchased $50 million of common shares under our NCIB.

STRATEGY

Precision’s vision is to be globally recognized as the High Performance, High Value provider of land drilling services. Our strategic priorities for 2024 are focused on increasing our capital returns to shareholders by delivering best-in-class service and generating free cash flow.

Precision’s 2024 strategic priorities and the progress made during the third quarter are as follows:

1. Concentrate organizational efforts on leveraging our scale and generating free cash flow.
   • Generated cash from operations of $80 million, bringing our year to date total to $319 million.
   • Increased utilization of our Super Single and Double rigs in the third quarter, driving Canadian drilling activity up 25% year over year.
   • Increased our third quarter Completion and Production Services operating hours and Adjusted EBITDA 34% and 40%, respectively, year over year. Achieved our $20 million annual synergies target from the CWC acquisition, which closed in November 2023.
   • Internationally, we realized US$35 million of contract drilling revenue versus US$29 million in 2023. Revenue for the third quarter of 2024 was negatively impacted by fewer rig moves and planned rig recertifications that accounted for 44 non-billable utilization days.
2. Reduce debt by between $150 million and $200 million and allocate 25% to 35% of free cash flow before debt repayments for share repurchases.
   • Reduced debt by redeeming US$33 million of our 2026 unsecured senior notes and repaying US$3 million of our U.S. Real Estate Credit Facility. For the first nine months of the year, we have reduced debt by $152 million and already achieved the low end of our debt repayment target range.
   • Returned $17 million of capital to shareholders through share repurchases. Year to date we allocated $50 million of our free cash flow to share buybacks, which represents over 25% of free cash flow for the first nine months of the year and within our annual target range of 25% to 35%.
   • Remain firmly committed to our long-term debt reduction target of $600 million between 2022 and 2026 ($410 million achieved as of September 30, 2024), while moving direct shareholder capital returns towards 50% of free cash flow.
3. Continue to deliver operational excellence in drilling and service rig operations to strengthen our competitive position and extend market penetration of our Alpha™ and EverGreen™ products.
   • Increased our Canadian drilling rig utilization days and well servicing rig operating hours over the third quarter of 2023, maintaining our position as the leading provider of high-quality and reliable services in Canada.
   • Nearly doubled our EverGreen™ revenue from the third quarter of 2023.
   • Continued to expand our EverGreen™ product offering on our Super Single rigs with hydrogen injection systems. EverGreenHydrogen™ reduces diesel consumption resulting in lower operating costs and greenhouse gas emissions for our customers.

OUTLOOK

The long-term outlook for global energy demand remains positive with rising demand for all types of energy including oil and natural gas driven by economic growth, increasing demand from third-world regions, and emerging energy sources of power demand. Oil prices are constructive, and producers remain disciplined with their production plans while geopolitical issues continue to threaten supply. In Canada, the recent commissioning of the Trans Mountain pipeline expansion and the startup of LNG Canada projected in 2025 are expected to provide significant tidewater access for Canadian crude oil and natural gas, supporting additional Canadian drilling activity. In the U.S., the next wave of LNG projects is expected to add approximately 11 bcf/d of export capacity from 2025 to 2028, supporting additional U.S. natural gas drilling activity. Coal retirements and a build-out of AI data centers could provide further support for natural gas drilling.

In Canada, we currently have 75 rigs operating and expect this activity level to continue until spring breakup, except for the traditional slowdown over Christmas. Our Canadian drilling activity continues to outpace 2023 due to increased heavy oil drilling activity and strong Montney activity driven by robust condensate demand and pricing. Since the startup of the Trans Mountain pipeline expansion in May, customer activity in heavy oil targeted areas has exceeded expectations, resulting in near full utilization of our Super Single fleet. Customers are benefiting from improved commodity pricing and a weak Canadian dollar. Our Super Triple fleet, the preferred rig for Montney drilling, is also nearly fully utilized and with the expected startup of LNG Canada in mid-2025, demand could exceed supply.

In recent years, the Canadian market has witnessed stronger second quarter drilling activity due to the higher percentage of wells drilled on pads in both the Montney and in heavy oil developments. Once a pad-equipped drilling rig is mobilized to site, it can walk from well to well and avoid spring break up road restrictions. We expect this higher activity trend to continue in the second quarter of 2025.

In the U.S., we currently have 35 rigs operating as drilling activity remains constrained by volatile commodity prices, customer consolidation and budget exhaustion. We view these headwinds as short-term in nature, which will continue to suppress activity for the remainder of the year and into 2025. However, looking further ahead, we expect that a new budget cycle, the next wave of Gulf Coast LNG export facilities, and new sources of domestic power demand should begin to stimulate drilling.

Internationally, we expect to have eight rigs running for the remainder of 2024, representing an approximate 40% increase in activity compared to 2023. All eight rigs are contracted through 2025 as well. We continue to bid our remaining idle rigs within the region and remain optimistic about our ability to secure additional rig activations.

As the premier well service provider in Canada, the outlook for this business remains positive. We expect the Trans Mountain pipeline expansion and LNG Canada to drive more service-related activity, while increased regulatory spending requirements are expected to result in more abandonment work. Customer demand should remain strong, and with continued labor constraints, we expect firm pricing into the foreseeable future.

We believe cost inflation is largely behind us and will continue to look for opportunities to lower costs.

Contracts

The following chart outlines the average number of drilling rigs under term contract by quarter as at October 29, 2024. For those quarters ending after September 30, 2024, this chart represents the minimum number of term contracts from which we will earn revenue. We expect the actual number of contracted rigs to vary in future periods as we sign additional term contracts.

As at October 29, 2024		Average for the quarter ended 2023																Average				Average for the quarter ended 2024																Average
		Mar. 31				June 30				Sept. 30				Dec. 31				2023				Mar. 31				June 30				Sept. 30				Dec. 31				2024
Average rigs under term contract:
U.S.			40				37				32				28				34				20				17				17				16				18
Canada			19				23				23				23				22				24				22				23				24				23
International			4				5				7				7				6				8				8				8				8				8
Total			63				65				62				58				62				52				47				48				48				49

SEGMENTED FINANCIAL RESULTS

Precision’s operations are reported in two segments: Contract Drilling Services, which includes our drilling rig, oilfield supply and manufacturing divisions; and Completion and Production Services, which includes our service rig, rental and camp and catering divisions.

	For the three months ended September 30,												For the nine months ended September 30,
(Stated in thousands of Canadian dollars)		2024			2023				% Change					2024			2023				% Change
Revenue:
Contract Drilling Services		406,155				390,728				3.9				1,215,125				1,257,762				(3.4	)
Completion and Production Services		73,074				57,573				26.9				225,987				178,257				26.8
Inter-segment eliminations		(2,074	)			(1,547	)			34.1				(6,955	)			(5,036	)			38.1
		477,155				446,754				6.8				1,434,157				1,430,983				0.2
Adjusted EBITDA:(1)
Contract Drilling Services		133,235				131,701				1.2				406,662				468,302				(13.2	)
Completion and Production Services		19,741				14,118				39.8				50,786				39,031				30.1
Corporate and Other		(10,551	)			(31,244	)			(66.2	)			(56,753	)			(47,446	)			19.6
		142,425				114,575				24.3				400,695				459,887				(12.9	)

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

	For the three months ended September 30,												For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except where noted)		2024				2023			% Change					2024				2023			% Change
Revenue		406,155				390,728				3.9				1,215,125				1,257,762				(3.4	)
Expenses:
Operating		262,933				247,937				6.0				776,210				759,750				2.2
General and administrative		9,987				11,090				(9.9	)			32,253				29,710				8.6
Adjusted EBITDA(1)		133,235				131,701				1.2				406,662				468,302				(13.2	)
Adjusted EBITDA as a percentage of revenue(1)		32.8	%			33.7	%							33.5	%			37.2	%

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

United States onshore drilling statistics:(1)	2024								2023
	Precision				Industry(2)				Precision				Industry(2)
Average number of active land rigs for quarters ended:
March 31		38				602				60				744
June 30		36				583				51				700
September 30		35				565				41				631
Year to date average		36				583				51				692

^{(1) United States lower 48 operations only.
(2) Baker Hughes rig counts.}

Canadian onshore drilling statistics:(1)	2024								2023
	Precision				Industry(2)				Precision				Industry(2)
Average number of active land rigs for quarters ended:
March 31		73				208				69				221
June 30		49				134				42				117
September 30		72				207				57				188
Year to date average		65				183				56				175

^{(1) Canadian operations only.
(2) Baker Hughes rig counts.}

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

	For the three months ended September 30,												For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except where noted)		2024				2023			% Change					2024				2023
Revenue		73,074				57,573				26.9				225,987				178,257				26.8
Expenses:
Operating		50,608				41,612				21.6				167,128				133,325				25.4
General and administrative		2,725				1,843				47.9				8,073				5,901				36.8
Adjusted EBITDA(1)		19,741				14,118				39.8				50,786				39,031				30.1
Adjusted EBITDA as a percentage of revenue(1)		27.0	%			24.5	%							22.5	%			21.9	%
Well servicing statistics:
Number of service rigs (end of period)		165				121				36.4				165				121				36.4
Service rig operating hours		62,835				46,894				34.0				194,390				144,944				34.1
Service rig operating hour utilization		41	%			42	%							43	%			44	%

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

OTHER ITEMS

Share-based Incentive Compensation Plans

We have several cash and equity-settled share-based incentive plans for non-management directors, officers, and other eligible employees. Our accounting policies for each share-based incentive plan can be found in our 2023 Annual Report.

A summary of expense amounts under these plans during the reporting periods are as follows:

	For the three months ended September 30,								For the nine months ended September 30,
(Stated in thousands of Canadian dollars)	2024				2023				2024				2023
Cash settled share-based incentive plans		(1,626	)			30,105				28,810				20,091
Equity settled share-based incentive plans		1,440				701				3,517				1,834
Total share-based incentive compensation plan expense		(186	)			30,806				32,327				21,925
Allocated:
Operating		221				7,692				8,159				6,732
General and Administrative		(407	)			23,114				24,168				15,193
		(186	)			30,806				32,327				21,925

CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

Because of the nature of our business, we are required to make judgements and estimates in preparing our Condensed Consolidated Interim Financial Statements that could materially affect the amounts recognized. Our judgements and estimates are based on our past experiences and assumptions we believe are reasonable in the circumstances. The critical judgements and estimates used in preparing the Condensed Consolidated Interim Financial Statements are described in our 2023 Annual Report.

EVALUATION OF CONTROLS AND PROCEDURES

Based on their evaluation as at September 30, 2024, Precision’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the United States Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective to ensure that information required to be disclosed by the Corporation in reports that are filed or submitted to Canadian and U.S. securities authorities is recorded, processed, summarized and reported within the time periods specified in Canadian and U.S. securities laws. In addition, as at September 30, 2024, there were no changes in the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting. Management will continue to periodically evaluate the Corporation’s disclosure controls and procedures and internal control over financial reporting and will make any modifications from time to time as deemed necessary.

Based on their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect misstatements, and even those controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

FINANCIAL MEASURES AND RATIOS

Non-GAAP Financial Measures
We reference certain additional Non-Generally Accepted Accounting Principles (Non-GAAP) measures that are not defined terms under IFRS Accounting Standards to assess performance because we believe they provide useful supplemental information to investors.
Adjusted EBITDA	We believe Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), as reported in our Condensed Interim Consolidated Statements of Net Earnings and our reportable operating segment disclosures, 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 depreciation and amortization charges. The most directly comparable financial measure is net earnings.

	For the three months ended September 30,								For the nine months ended September 30,
(Stated in thousands of Canadian dollars)		2024				2023				2024				2023
Adjusted EBITDA by segment:
Contract Drilling Services		133,235				131,701				406,662				468,302
Completion and Production Services		19,741				14,118				50,786				39,031
Corporate and Other		(10,551	)			(31,244	)			(56,753	)			(47,446	)
Adjusted EBITDA		142,425				114,575				400,695				459,887
Depreciation and amortization		75,073				73,192				227,104				218,823
Gain on asset disposals		(3,323	)			(2,438	)			(14,235	)			(15,586	)
Foreign exchange		849				363				772				(894	)
Finance charges		16,914				19,618				53,472				63,946
Gain on repurchase of unsecured notes		—				(37	)			—				(137	)
Loss (gain) on investments and other assets		(150	)			(3,813	)			(330	)			6,075
Incomes taxes		13,879				7,898				37,512				45,138
Net earnings		39,183				19,792				96,400				142,522

Funds Provided by (Used in) Operations

We believe funds provided by (used in) operations, as reported in our Condensed Interim Consolidated Statements of Cash Flows, is a useful measure because it provides an indication of the funds our principal business activities generate prior to consideration of working capital changes, which is primarily made up of highly liquid balances. The most directly comparable financial measure is cash provided by (used in) operations.

Net Capital Spending

We believe net capital spending is a useful measure as it provides an indication of our primary investment activities. The most directly comparable financial measure is cash provided by (used in) investing activities. Net capital spending is calculated as follows:

		For the three months ended September 30,								For the nine months ended September 30,
(Stated in thousands of Canadian dollars)			2024				2023				2024				2023
Capital spending by spend category
Expansion and upgrade			7,709				13,479				30,501				39,439
Maintenance, infrastructure and intangibles			56,139				38,914				127,297				108,463
			63,848				52,393				157,798				147,902
Proceeds on sale of property, plant and equipment			(5,647	)			(6,698	)			(21,825	)			(20,724	)
Net capital spending			58,201				45,695				135,973				127,178
Business acquisitions			—				—				—				28,000
Proceeds from sale of investments and other assets			—				(10,013	)			(3,623	)			(10,013	)
Purchase of investments and other assets			7				3,211				7				5,282
Receipt of finance lease payments			(207	)			(64	)			(591	)			(64	)
Changes in non-cash working capital balances			(19,149	)			(4,551	)			9,266				6,774
Cash used in investing activities			38,852				34,278				141,032				157,157

Working Capital

We define working capital as current assets less current liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position. Working capital is calculated as follows:

	September 30,				December 31,
(Stated in thousands of Canadian dollars)		2024				2023
Current assets		472,557				510,881
Current liabilities		306,084				374,009
Working capital		166,473				136,872

Total Long-term Financial Liabilities

We define total long-term financial liabilities as total non-current liabilities less deferred tax liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position. Total long-term financial liabilities is calculated as follows:

	September 30,				December 31,
(Stated in thousands of Canadian dollars)		2024				2023
Total non-current liabilities		920,812				1,069,364
Deferred tax liabilities		62,047				73,515
Total long-term financial liabilities		858,765				995,849

Non-GAAP Ratios
We reference certain additional Non-GAAP ratios that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors.
Adjusted EBITDA % of Revenue	We believe Adjusted EBITDA as a percentage of consolidated revenue, as reported in our Condensed Interim Consolidated Statements of Net Earnings, provides an indication of our profitability from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges.
Long-term debt to long-term debt plus equity	We believe that long-term debt (as reported in our Condensed Interim Consolidated Statements of Financial Position) to long-term debt plus equity (total shareholders’ equity as reported in our Condensed Interim Consolidated Statements of Financial Position) provides an indication of our debt leverage.
Net Debt to Adjusted EBITDA	We believe that the Net Debt (long-term debt less cash, as reported in our Condensed Interim Consolidated Statements of Financial Position) to Adjusted EBITDA ratio provides an indication of the number of years it would take for us to repay our debt obligations.
Supplementary Financial Measures
We reference certain supplementary financial measures that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors.
Capital Spending by Spend Category	We provide additional disclosure to better depict the nature of our capital spending. Our capital spending is categorized as expansion and upgrade, maintenance and infrastructure, or intangibles.

CHANGE IN ACCOUNTING POLICY

Precision adopted Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants – Amendments to IAS 1, as issued in 2020 and 2022. These amendments apply retrospectively for annual reporting periods beginning on or after January 1, 2024 and clarify requirements for determining whether a liability should be classified as current or non-current. Due to this change in accounting policy, there was a retrospective impact on the comparative Statement of Financial Position pertaining to the Corporation’s Deferred Share Unit (DSU) plan for non-management directors which are redeemable in cash or for an equal number of common shares upon the director’s retirement. In the case of a director retiring, the director’s respective DSU liability would become payable and the Corporation would not have the right to defer settlement of the liability for at least twelve months. As such, the liability is impacted by the revised policy. The following changes were made to the Statement of Financial Position:

• As at January 1, 2023, accounts payable and accrued liabilities increased by $12 million and non-current share-based compensation liability decreased by $12 million.
• As at December 31, 2023, accounts payable and accrued liabilities increased by $8 million and non-current share-based compensation liability decreased by $8 million.

The Corporation’s other liabilities were not impacted by the amendments. The change in accounting policy will also be reflected in the Corporation’s consolidated financial statements as at and for the year ending December 31, 2024.

JOINT PARTNERSHIP

On September 26, 2024, Precision formed a strategic Partnership with two Indigenous partners to provide well servicing operations in northeast British Columbia. Precision contributed $4 million in assets to the Partnership. Precision holds a controlling interest in the Partnership and the portions of the net earnings and equity not attributable to Precision’s controlling interest are shown separately as Non-Controlling Interests (NCI) in the consolidated statements of net earnings and consolidated statements of financial position.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements contained in this release, 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 2024;
• our capital expenditures, free cash flow allocation and debt reduction plans for 2024 through to 2026;
• anticipated activity levels, demand for our drilling rigs, day rates and daily operating margins in 2024;
• the average number of term contracts in place for 2024;
• customer adoption of Alpha™ technologies and EverGreen™ suite of environmental solutions;
• timing and amount of synergies realized from acquired drilling and well servicing assets;
• potential commercial opportunities and rig contract renewals; and
• our future debt reduction plans.

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:

• our ability to react to customer spending plans as a result of changes in oil and natural gas prices;
• 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;
• the impact of an increase/decrease in capital spending; 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 level of oil and natural gas exploration and development activities;
• 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 advantage;
• shortages, delays and interruptions in the delivery of equipment supplies and other key inputs;
• liquidity of the capital markets to fund customer drilling programs;
• availability of cash flow, debt and equity sources to fund our capital and operating requirements, as needed;
• the impact of weather and seasonal conditions on operations and facilities;
• competitive operating risks inherent in contract drilling, well servicing and ancillary oilfield services;
• ability to improve our rig technology to improve drilling efficiency;
• general economic, market or business conditions;
• the availability of qualified personnel and management;
• a decline in our safety performance which could result in lower demand for our services;
• changes in laws or regulations, including 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 natural 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, 2023, which may be accessed on Precision’s SEDAR+ profile at www.sedarplus.ca or under Precision’s EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this 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.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(Stated in thousands of Canadian dollars)		September 30, 2024				December 31, 2023(1)				January 1, 2023(1)
ASSETS
Current assets:
Cash		$	24,304			$	54,182			$	21,587
Accounts receivable			401,652				421,427				413,925
Inventory			41,398				35,272				35,158
Assets held for sale			5,203				—				—
Total current assets			472,557				510,881				470,670
Non-current assets:
Income tax recoverable			696				682				1,602
Deferred tax assets			27,767				73,662				455
Property, plant and equipment			2,296,079				2,338,088				2,303,338
Intangibles			15,566				17,310				19,575
Right-of-use assets			63,708				63,438				60,032
Finance lease receivables			4,938				5,003				—
Investments and other assets			6,685				9,971				20,451
Total non-current assets			2,415,439				2,508,154				2,405,453
Total assets		$	2,887,996			$	3,019,035			$	2,876,123
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	282,810			$	350,749			$	404,350
Income taxes payable			3,059				3,026				2,991
Current portion of lease obligations			19,263				17,386				12,698
Current portion of long-term debt			952				2,848				2,287
Total current liabilities			306,084				374,009				422,326
Non-current liabilities:
Share-based compensation			10,339				16,755				47,836
Provisions and other			7,408				7,140				7,538
Lease obligations			54,010				57,124				52,978
Long-term debt			787,008				914,830				1,085,970
Deferred tax liabilities			62,047				73,515				28,946
Total non-current liabilities			920,812				1,069,364				1,223,268
Equity:
Shareholders’ capital			2,337,079				2,365,129				2,299,533
Contributed surplus			76,656				75,086				72,555
Deficit			(915,629	)			(1,012,029	)			(1,301,273	)
Accumulated other comprehensive income			158,602				147,476				159,714
Total equity attributable to shareholders			1,656,708				1,575,662				1,230,529
Non-controlling interest			4,392				—				—
Total equity			1,661,100				1,575,662				1,230,529
Total liabilities and equity		$	2,887,996			$	3,019,035			$	2,876,123

^{(1) Comparative period figures were restated due to a change in accounting policy. See “CHANGE IN ACCOUNTING POLICY.”}

^{(2) See “JOINT PARTNERSHIP” for additional information.}

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) (UNAUDITED)

		Three Months Ended September 30,								Nine Months Ended September 30,
(Stated in thousands of Canadian dollars, except per share amounts)		2024				2023				2024				2023
Revenue		$	477,155			$	446,754			$	1,434,157			$	1,430,983
Expenses:
Operating			311,467				288,002				936,383				888,039
General and administrative			23,263				44,177				97,079				83,057
Earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization			142,425				114,575				400,695				459,887
Depreciation and amortization			75,073				73,192				227,104				218,823
Gain on asset disposals			(3,323	)			(2,438	)			(14,235	)			(15,586	)
Foreign exchange			849				363				772				(894	)
Finance charges			16,914				19,618				53,472				63,946
Gain on repurchase of unsecured senior notes			—				(37	)			—				(137	)
Loss (gain) on investments and other assets			(150	)			(3,813	)			(330	)			6,075
Earnings before income taxes			53,062				27,690				133,912				187,660
Income taxes:
Current			2,297				2,047				4,659				4,008
Deferred			11,582				5,851				32,853				41,130
			13,879				7,898				37,512				45,138
Net earnings		$	39,183			$	19,792			$	96,400			$	142,522
Net earnings per share attributable to shareholders:
Basic		$	2.77			$	1.45			$	6.74			$	10.45
Diluted		$	2.31			$	1.45			$	6.73			$	9.84

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

		Three Months Ended September 30,								Nine Months Ended September 30,
(Stated in thousands of Canadian dollars)		2024				2023				2024				2023
Net earnings		$	39,183			$	19,792			$	96,400			$	142,522
Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency			(16,104	)			39,180				30,409				3,322
Foreign exchange gain (loss) on net investment hedge with U.S. denominated debt			9,536				(24,616	)			(19,283	)			(1,484	)
Comprehensive income		$	32,615			$	34,356			$	107,526			$	144,360

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

		Three Months Ended September 30,								Nine Months Ended September 30,
(Stated in thousands of Canadian dollars)		2024				2023				2024				2023
Cash provided by (used in):
Operations:
Net earnings		$	39,183			$	19,792			$	96,400			$	142,522
Adjustments for:
Long-term compensation plans			2,620				11,577				14,490				9,200
Depreciation and amortization			75,073				73,192				227,104				218,823
Gain on asset disposals			(3,323	)			(2,438	)			(14,235	)			(15,586	)
Foreign exchange			815				1,275				965				(13	)
Finance charges			16,914				19,618				53,472				63,946
Income taxes			13,879				7,898				37,512				45,138
Other			27				—				120				(220	)
Loss (gain) on investments and other assets			(150	)			(3,813	)			(330	)			6,075
Gain on repurchase of unsecured senior notes			—				(37	)			—				(137	)
Income taxes paid			(508	)			(187	)			(4,842	)			(2,395	)
Income taxes recovered			58				4				58				7
Interest paid			(31,692	)			(35,500	)			(69,435	)			(79,702	)
Interest received			426				227				1,558				562
Funds provided by operations			113,322				91,608				342,837				388,220
Changes in non-cash working capital balances			(33,648	)			(3,108	)			(23,545	)			(57,904	)
Cash provided by operations			79,674				88,500				319,292				330,316
Investments:
Purchase of property, plant and equipment			(63,797	)			(51,546	)			(157,747	)			(146,378	)
Purchase of intangibles			(51	)			(847	)			(51	)			(1,524	)
Proceeds on sale of property, plant and equipment			5,647				6,698				21,825				20,724
Proceeds from sale of investments and other assets			—				10,013				3,623				10,013
Business acquisitions			—				—				—				(28,000	)
Purchase of investments and other assets			(7	)			(3,211	)			(7	)			(5,282	)
Receipt of finance lease payments			207				64				591				64
Changes in non-cash working capital balances			19,149				4,551				(9,266	)			(6,774	)
Cash used in investing activities			(38,852	)			(34,278	)			(141,032	)			(157,157	)
Financing:
Issuance of long-term debt			10,900				23,600				10,900				162,649
Repayments of long-term debt			(59,658	)			(49,517	)			(162,506	)			(288,538	)
Repurchase of share capital			(16,891	)			—				(50,465	)			(12,951	)
Issuance of common shares from the exercise of options			495				—				686				—
Debt amendment fees			—				—				(1,317	)			—
Lease payments			(3,586	)			(2,410	)			(10,005	)			(6,413	)
Funding from non-controlling interest			4,392				—				4,392				—
Cash used in financing activities			(64,348	)			(28,327	)			(208,315	)			(145,253	)
Effect of exchange rate changes on cash			(403	)			251				177				(428	)
Increase (decrease) in cash			(23,929	)			26,146				(29,878	)			27,478
Cash, beginning of period			48,233				22,919				54,182				21,587
Cash, end of period		$	24,304			$	49,065			$	24,304			$	49,065

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, 2024		$	2,365,129			$	75,086			$	147,476			$	(1,012,029	)		$	1,575,662			$	—			$	1,575,662
Net earnings for the period			—				—				—				96,400				96,400				—				96,400
Other comprehensive income for the period			—				—				11,126				—				11,126				—				11,126
Share options exercised			978				(292	)			—				—				686				—				686
Settlement of Executive Performance and Restricted Share Units			21,846				(1,479	)			—				—				20,367				—				20,367
Share repurchases			(51,050	)			—				—				—				(51,050	)			—				(51,050	)
Redemption of non-management directors share units			176				(176	)			—				—				—				—				–
Share-based compensation expense			—				3,517				—				—				3,517				—				3,517
Funding from non-controlling interest			—				—				—				—				—				4,392				4,392
Balance at September 30, 2024		$	2,337,079			$	76,656			$	158,602			$	(915,629	)		$	1,656,708			$	4,392			$	1,661,100

		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, 2023		$	2,299,533			$	72,555			$	159,714			$	(1,301,273	)		$	1,230,529			$	—			$	1,230,529
Net earnings for the period			—				—				—				142,522				142,522				—				142,522
Other comprehensive income for the period			—				—				1,838				—				1,838				—				1,838
Settlement of Executive Performance and Restricted Share Units			19,206				—				—				—				19,206				—				19,206
Share repurchases			(12,951	)			—				—				—				(12,951	)			—				(12,951	)
Redemption of non-management directors share units			757				—				—				—				757				—				757
Share-based compensation expense			—				1,834				—				—				1,834				—				1,834
Balance at September 30, 2023		$	2,306,545			$	74,389			$	161,552			$	(1,158,751	)		$	1,383,735			$	—			$	1,383,735

2024 THIRD QUARTER RESULTS CONFERENCE CALL AND WEBCAST

Precision Drilling Corporation has scheduled a conference call and webcast to begin promptly at 11:00 a.m. MT (1:00 p.m. ET) on Wednesday, October 30, 2024.

To participate in the conference call please register at the URL link below. Once registered, you will receive a dial-in number and a unique PIN, which will allow you to ask questions.

https://register.vevent.com/register/BI4cb3a3db88084e66ad528ebb2bdb81e4

The call will also be webcast and can be accessed through the link below. A replay of the webcast call will be available on Precision’s website for 12 months.

https://edge.media-server.com/mmc/p/mov2xb4k

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 Alpha™ that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreen™ suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

Additional Information

For further information, please contact:

Lavonne Zdunich, CPA, CA
Vice President, Investor Relations
403.716.4500

800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com