Precision Drilling Corporation
 MANAGEMENTS REPORT TO THE SHAREHOLDERS
        (-s- KEVIN A. NEVEU)
    
    (-s- Robert j. mcnally)Kevin A. Neveu
    
    Robert J. McNallyPresident and Chief Executive Officer
    
    Executive Vice President and Chief Financial OfficerPrecision Drilling Corporation
    
    Precision Drilling CorporationMarch 15, 2011
    
    March 15, 2011




---



##### 



Precision Drilling Corporation
 INDEPENDENT AUDITORS REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM
 To the Shareholders and Board of Directors of Precision Drilling Corporation
  Managements Responsibility for the Consolidated Financial Statements
  Auditors Responsibility
    Opinion
  Other Matter
  Chartered
Accountants
Calgary, Alberta
March 15, 2011




---



##### 



Precision Drilling Corporation
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Shareholders and Board of Directors of Precision Drilling Corporation
       Chartered
Accountants
Calgary, Alberta
March 15, 2011




---



##### 



Precision Drilling Corporation
 CONSOLIDATED BALANCE SHEETS
 As at December 31,
 (Stated in thousands of Canadian dollars)
    
    
    
    
    
    2010
    
    
    
    2009ASSETSCurrent assets:Cash
    
    
    
    
    

    $
    256,831
    
    
    
    $
    130,799Accounts receivable
    
    (Note 24)
    
    
    414,901
    
    
    
    
    283,899Income tax recoverable
    
    
    
    
    
    
    
    
    
    
    
    25,753Inventory
    
    
    
    
    
    
    4,933
    
    
    
    
    9,008676,665
    
    
    
    
    449,459Income tax recoverable
    
    
    
    
    
    
    64,579
    
    
    
    
    64,579Property, plant and equipment
    
    (Note 3)
    
    
    2,812,281
    
    
    
    
    2,913,966Intangibles
    
    (Note 4)
    
    
    6,366
    
    
    
    
    3,156Goodwill
    
    (Note 5)
    
    
    736,897
    
    
    
    
    760,553$
    4,296,788
    
    
    
    $
    4,191,713LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    (Note 24)
    
    $
    215,653
    
    
    
    $
    128,376Income tax payable
    
    
    
    
    
    
    863
    
    
    
    
    Current portion of long-term debt
    
    (Note 9)
    
    
    
    
    
    
    
    223216,516
    
    
    
    
    128,599Long-term liabilities
    
    (Note 8)
    
    
    30,319
    
    
    
    
    26,693Long-term debt
    
    (Note 9)
    
    
    804,494
    
    
    
    
    748,725Future income taxes
    
    (Note 10)
    
    
    667,540
    
    
    
    
    703,1951,718,869
    
    
    
    
    1,607,212Commitments and contingencies
    
    (Notes 16 and 25)Subsequent events
    
    (Notes 9, 25 and 26)Shareholders equity:Shareholders capital
    
    (Note 11(b))
    
    
    2,771,023
    
    
    
    
    Unitholders capital
    
    (Note 11(b))
    
    
    
    
    
    
    
    2,770,708Contributed surplus
    
    (Note 11(d))
    
    
    10,471
    
    
    
    
    4,063Retained earnings
    
    
    
    
    
    
    169,318
    
    
    
    
    107,227Accumulated other comprehensive loss
    
    (Note 12)
    
    
    (372,893
    )
    
    
    
    (297,497
    )2,577,919
    
    
    
    
    2,584,501$
    4,296,788
    
    
    
    $
    4,191,713
 See accompanying notes to consolidated financial statements.
  (-s- Robert J.S. Gibson)
    
    (-s- Patrick M. Murray)Robert J.S. GibsonDirector
    
    Patrick M. MurrayDirector




---



##### 



Precision Drilling Corporation
 CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (DEFICIT)
 Years ended December 31,
 (Stated in thousands of Canadian dollars, except per share amounts)
    
    
    
    
    
    2010
    
    
    
    2009
    
    
    2008Revenue
    
    
    
    
    
    $
    1,429,653
    
    
    
    $
    1,197,446
    
    
    $
    1,101,891Expenses:Operating
    
    
    
    
    
    
    886,748
    
    
    
    
    692,243
    
    
    
    598,181General and administrative
    
    
    
    
    
    
    107,522
    
    
    
    
    98,202
    
    
    
    67,174Depreciation and amortization
    
    (Note 3)
    
    
    182,719
    
    
    
    
    138,000
    
    
    
    83,829Loss on asset decommissioning
    
    (Note 3)
    
    
    
    
    
    
    
    82,173
    
    
    
    Foreign exchange
    
    
    
    
    
    
    (12,712
    )
    
    
    
    (122,846
    )
    
    
    (2,041
    )Finance charges
    
    (Note 14)
    
    
    211,327
    
    
    
    
    147,401
    
    
    
    14,174Earnings before income taxes
    
    
    
    
    
    
    54,049
    
    
    
    
    162,273
    
    
    
    340,574Income taxes:
    
    (Note 10)Current
    
    
    
    
    
    
    7,634
    
    
    
    
    (14,901
    )
    
    
    6,102Future
    
    
    
    
    
    
    (15,676
    )
    
    
    
    15,471
    
    
    
    31,742(8,042
    )
    
    
    
    570
    
    
    
    37,844Net earnings
    
    
    
    
    
    
    62,091
    
    
    
    
    161,703
    
    
    
    302,730Retained earnings (deficit), beginning of year
    
    
    
    
    
    
    107,227
    
    
    
    
    (48,068
    )
    
    
    (126,110
    )Distributions declared
    
    (Note 7)
    
    
    
    
    
    
    
    (6,408
    )
    
    
    (224,688
    )Retained earnings (deficit), end of year
    
    
    
    
    
    $
    169,318
    
    
    
    $
    107,227
    
    
    $
    (48,068
    )Earnings per share:
    
    (Note 17)Basic
    
    
    
    
    
    $
    0.23
    
    
    
    $
    0.65
    
    
    $
    2.23Diluted
    
    
    
    
    
    $
    0.22
    
    
    
    $
    0.63
    
    
    $
    2.23
 See accompanying notes to consolidated financial statements.
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Years ended December 31,
 (Stated in thousands of Canadian dollars)
    
    
    
    
    
    2010
    
    
    
    2009
    
    
    2008Net earnings
    
    
    
    
    
    $
    62,091
    
    
    
    $
    161,703
    
    
    $
    302,730Unrealized gain (loss) on translation of assetsand liabilities of self-sustaining operationsdenominated in foreign currency
    
    (Note 12)
    
    
    (90,213
    )
    
    
    
    (312,856
    )
    
    
    11,222Foreign exchange gain on net investment hedgewith U.S. denominated debt, net of tax of $2,148
    
    
    
    
    
    
    14,817
    
    
    
    
    
    
    
    
    Comprehensive income (loss)
    
    
    
    
    
    $
    (13,305
    )
    
    
    $
    (151,153
    )
    
    $
    313,952
 See accompanying notes to consolidated financial statements.




---



##### 



Precision Drilling Corporation
 CONSOLIDATED STATEMENTS OF CASH FLOW
 Years ended December 31,
 (Stated in thousands of Canadian dollars)
    
    
    
    
    
    2010
    
    
    
    2009
    
    
    2008Cash provided by (used in):Operations:Net earnings
    
    
    
    
    
    $
    62,091
    
    
    
    $
    161,703
    
    
    $
    302,730Adjustments and other items not involving cash:Long-term compensation plans
    
    
    
    
    
    
    15,526
    
    
    
    
    3,310
    
    
    
    2,163Depreciation and amortization
    
    
    
    
    
    
    182,719
    
    
    
    
    138,000
    
    
    
    83,829Loss on asset decommissioning
    
    
    
    
    
    
    
    
    
    
    
    82,173
    
    
    
    Future income taxes
    
    
    
    
    
    
    (15,676
    )
    
    
    
    15,471
    
    
    
    31,742Foreign exchange on long-term monetary items
    
    
    
    
    
    
    (12,480
    )
    
    
    
    (113,649
    )
    
    
    7,219Amortization of debt issue costs and debt settlement
    
    (Note 14)
    
    
    143,593
    
    
    
    
    43,893
    
    
    
    798Other
    
    
    
    
    
    
    (1,075
    )
    
    
    
    655
    
    
    
    Changes in non-cash working capital balances
    
    (Note 24)
    
    
    (69,303
    )
    
    
    
    173,173
    
    
    
    (84,571
    )305,395
    
    
    
    
    504,729
    
    
    
    343,910Investments:Purchase of property, plant and equipment
    
    
    
    
    
    
    (175,901
    )
    
    
    
    (193,435
    )
    
    
    (229,579
    )Proceeds on sale of property, plant and equipment
    
    
    
    
    
    
    12,256
    
    
    
    
    15,978
    
    
    
    10,440Business acquisitions, net of cash acquired
    
    (Note 19)
    
    
    
    
    
    
    
    
    
    
    
    (768,392
    )Changes in income tax recoverable
    
    
    
    
    
    
    
    
    
    
    
    (6,524
    )
    
    
    (55,148
    )Changes in non-cash working capital balances
    
    (Note 24)
    
    
    45,532
    
    
    
    
    (26,250
    )
    
    
    22,583(118,113
    )
    
    
    
    (210,231
    )
    
    
    (1,020,096
    )Financing:Repayment of long-term debt
    
    
    
    
    
    
    (696,863
    )
    
    
    
    (974,271
    )
    
    
    (179,826
    )Debt issue costs
    
    
    
    
    
    
    (26,382
    )
    
    
    
    (21,628
    )
    
    
    (160,098
    )Re-purchase of trust units
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    Distributions paid
    
    (Note 7)
    
    
    
    
    
    
    
    (27,233
    )
    
    
    (216,304
    )Increase in long-term debt
    
    
    
    
    
    
    663,455
    
    
    
    
    408,893
    
    
    
    1,308,040Issuance of common shares on exercise of options
    
    
    
    
    
    
    122
    
    
    
    
    
    
    
    
    Issuance of Trust units, net of issuance costs
    
    
    
    
    
    
    
    
    
    
    
    413,223
    
    
    
    Change in bank indebtedness
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,115
    )Change in non-cash working capital balances
    
    (Note 24)
    
    
    985
    
    
    
    
    
    
    
    
    (58,689
    )
    
    
    
    (201,016
    )
    
    
    737,697Effect of exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    (2,561
    )
    
    
    
    (24,194
    )
    
    
    Increase in cash and cash equivalents
    
    
    
    
    
    
    126,032
    
    
    
    
    69,288
    
    
    
    61,511Cash and cash equivalents, beginning of year
    
    
    
    
    
    
    130,799
    
    
    
    
    61,511
    
    
    
    Cash and cash equivalents, end of year
    
    
    
    
    
    $
    256,831
    
    
    
    $
    130,799
    
    
    $
    61,511
 See accompanying notes to consolidated financial statements.




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular amounts are stated in thousands of Canadian dollars except share numbers and per
share amounts)
 NOTE 1. DESCRIPTION OF BUSINESS
    NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
 (a) Basis of presentation
   (b) Principles of consolidation
   (c) Cash and cash equivalents
  (d) Inventory




---



##### 



(e) Property, plant and equipment
   Expected life
    
    
    Salvage value
    
    Basis of depreciationDrilling rig equipment
    
    5,000 utilization days
    
    
    20
    %
    
    unit-of-productionDrill pipe and drill collars
    
    1,500 operating days
    
    
    
    
    
    unit-of-productionService rig equipment
    
    24,000 service hours
    
    
    20
    %
    
    unit-of-productionDrilling rig spare equipment
    
    15 years
    
    
    
    
    
    straight-lineService rig spare equipment
    
    10 years
    
    
    
    
    
    straight-lineRental equipment
    
    10 to 15 years
    
    
    
    
    
    straight-lineOther equipment
    
    3 to 10 years
    
    
    
    
    
    straight-lineLight duty vehicles
    
    4 years
    
    
    
    
    
    straight-lineHeavy duty vehicles
    
    7 to 10 years
    
    
    
    
    
    straight-lineBuildings
    
    10 to 20 years
    
    
    
    
    
    straight-line
 (f) Intangibles
  Customer relationships
    
    1 to 5 yearsPatents
    
    10 yearsLoan commitment fees on revolving credit facility
    
    3 years
 (g) Goodwill
    (h) Long-lived assets
  (i) Income taxes




---



##### 



(j) Revenue recognition
  (k) Employee benefit plans
   (l) Long-term incentive plan
  (m) Share-based compensation plans




---



##### 



(n) Foreign currency translation




---



##### 



(o) Exchangeable LP units
  (p) Per share amounts
  (q) Financial instruments
      (r) Hedge accounting




---



##### 



NOTE 3. PROPERTY, PLANT AND EQUIPMENT
 Accumulated
    
    
    Net Book2010
    
    Cost
    
    
    Depreciation
    
    
    ValueRig equipment
    
    $
    3,350,502
    
    
    $
    777,359
    
    
    $
    2,573,143Rental equipment
    
    
    89,895
    
    
    
    49,080
    
    
    
    40,815Other equipment
    
    
    114,451
    
    
    
    67,137
    
    
    
    47,314Vehicles
    
    
    81,223
    
    
    
    41,153
    
    
    
    40,070Buildings
    
    
    42,868
    
    
    
    17,623
    
    
    
    25,245Assets under construction
    
    
    66,721
    
    
    
    
    
    
    
    66,721Land
    
    
    18,973
    
    
    
    
    
    
    
    18,973$
    3,764,633
    
    
    $
    952,352
    
    
    $
    2,812,281
 Accumulated
    
    
    Net Book2009
    
    Cost
    
    
    Depreciation
    
    
    ValueRig equipment
    
    $
    3,308,987
    
    
    $
    612,826
    
    
    $
    2,696,161Rental equipment
    
    
    87,410
    
    
    
    47,357
    
    
    
    40,053Other equipment
    
    
    112,862
    
    
    
    78,403
    
    
    
    34,459Vehicles
    
    
    82,658
    
    
    
    36,032
    
    
    
    46,626Buildings
    
    
    43,312
    
    
    
    15,452
    
    
    
    27,860Assets under construction
    
    
    49,641
    
    
    
    
    
    
    
    49,641Land
    
    
    19,166
    
    
    
    
    
    
    
    19,166$
    3,704,036
    
    
    $
    790,070
    
    
    $
    2,913,966
   NOTE 4. INTANGIBLES
 Accumulated
    
    
    Net Book2010
    
    Cost
    
    
    Amortization
    
    
    ValueCustomer relationships
    
    $
    4,321
    
    
    $
    2,697
    
    
    $
    1,624Patents
    
    
    931
    
    
    
    892
    
    
    
    39Loan commitment fees related to the revolving credit facility
    
    
    4,905
    
    
    
    202
    
    
    
    4,703$
    10,157
    
    
    $
    3,791
    
    
    $
    6,366
 Accumulated
    
    
    Net Book2009
    
    Cost
    
    
    Depreciation
    
    
    ValueCustomer relationships
    
    $
    4,488
    
    
    $
    1,464
    
    
    $
    3,024Patents
    
    
    931
    
    
    
    799
    
    
    
    132$
    5,419
    
    
    $
    2,263
    
    
    $
    3,156




---



##### 



NOTE 5. GOODWILL
 Balance, December 31, 2008
    
    $
    841,529Exchange adjustment
    
    
    (80,976
    )Balance, December 31, 2009
    
    
    760,553Exchange adjustment
    
    
    (23,656
    )Balance, December 31, 2010
    
    $
    736,897
 NOTE 6. BANK INDEBTEDNESS
  NOTE 7. DISTRIBUTIONS
    2010
    
    
    
    2009Declared
    
    $
    
    
    
    
    $
    6,408Paid
    
    $
    
    
    
    
    $
    27,233Payable in cash at December 31
    
    $
    
    
    
    
    $
    Payable in units at December 31
    
    $
    
    
    
    
    $
    
   NOTE 8. LONGTERM LIABILITIES
 2010
    
    
    
    2009Long-term incentive plans (Note 13)
    
    $
    12,268
    
    
    
    $
    6,602Long-term workers compensation and other liabilities
    
    
    18,051
    
    
    
    
    20,091$
    30,319
    
    
    
    $
    26,693




---



##### 



NOTE 9. LONGTERM DEBT
 2010
    
    
    
    2009Revolving credit facility
    
    $
    
    
    
    
    $
    Unsecured senior notes:6.625% senior notes
    
    
    646,490
    
    
    
    
    10% senior notes
    
    
    175,000
    
    
    
    
    175,000Secured facility:Term Loan A
    
    
    
    
    
    
    
    288,887Term Loan B
    
    
    
    
    
    
    
    422,097Revolving credit facility
    
    
    
    
    
    
    
    821,490
    
    
    
    
    885,984Less net unamortized debt issue costs
    
    
    (16,996
    )
    
    
    
    (137,036
    )804,494
    
    
    
    
    748,948Less current portion
    
    
    
    
    
    
    
    (223
    )$
    804,494
    
    
    
    $
    748,725
 (a) Revolving credit facility:
     (b) Unsecured senior notes:




---



##### 



(c) Secured facility:




---



##### 



2011 to 2014
    
    $
    2015
    
    
    58,333Thereafter
    
    
    763,157
 NOTE 10. INCOME TAXES
  2010
    
    
    
    2009
    
    
    2008Earnings before income taxes
    
    $
    54,049
    
    
    
    $
    162,273
    
    
    $
    340,574Federal and provincial statutory rates
    
    
    28%
    
    
    
    
    29%
    
    
    
    30%Tax at statutory rates
    
    $
    15,134
    
    
    
    $
    47,059
    
    
    $
    102,172Adjusted for the effect of:Non-deductible expenses
    
    
    15,849
    
    
    
    
    7,562
    
    
    
    372Non-taxable capital gains
    
    
    (2,601
    )
    
    
    
    (20,136
    )
    
    
    Income taxed at lower rates
    
    
    (43,557
    )
    
    
    
    (30,983
    )
    
    
    Income to be distributed to unitholders, not subject to tax in the Trust
    
    
    
    
    
    
    
    (2,771
    )
    
    
    (67,463
    )Other
    
    
    7,133
    
    
    
    
    (161
    )
    
    
    2,763Income tax expense
    
    $
    (8,042
    )
    
    
    $
    570
    
    
    $
    37,844Effective income tax rate before enacted tax rate reductions
    
    
    (15%
    )
    
    
    
    0%
    
    
    
    11%
  2010
    
    
    
    2009Future income tax liability:Property, plant and equipment and intangibles
    
    $
    764,817
    
    
    
    $
    747,779Partnership deferrals
    
    
    55,819
    
    
    
    
    37,674Other
    
    
    2,094
    
    
    
    
    14,296822,730
    
    
    
    
    799,749Future income tax assets:Losses (expire from time to time up to 2030)
    
    
    136,056
    
    
    
    
    84,365Debt issue costs
    
    
    6,802
    
    
    
    
    3,769Long-term incentive plan
    
    
    7,559
    
    
    
    
    4,407Other
    
    
    4,773
    
    
    
    
    4,013Net future income tax liability
    
    $
    667,540
    
    
    
    $
    703,195




---



##### 



NOTE 11. SHAREHOLDERS CAPITAL
 (a) Authorized
  (b) Issued
 Common shares
    
    Number
    
    
    AmountBalance, May 31, 2010
    
    
    
    
    
    $
    Issued pursuant to the Arrangement
    
    
    275,663,344
    
    
    
    2,770,853Options exercised  cash consideration
    
    
    23,332
    
    
    
    122 reclassification from contributed surplus
    
    
    
    
    
    
    48Balance, December 31, 2010
    
    
    275,686,676
    
    
    $
    2,771,023
  Trust units
    
    Number
    
    
    AmountBalance, December 31, 2007
    
    
    125,587,919
    
    
    
    1,440,543Issued on the acquisition of Grey Wolf, Inc.
    
    
    34,435,724
    
    
    
    889,085Issued on retraction of exchangeable LP units
    
    
    18,422
    
    
    
    209Issued and consolidated pursuant to special distribution (Note 7)
    
    
    
    
    
    
    24,006Balance, December 31, 2008
    
    
    160,042,065
    
    
    
    2,353,843Issued for cash on February 18, 2009
    
    
    46,000,000
    
    
    
    217,281Issued for cash pursuant to private placement
    
    
    35,000,000
    
    
    
    70,181Issued upon exercise of rights on June 4, 2009
    
    
    34,441,950
    
    
    
    103,326Issued on retraction of exchangeable LP units
    
    
    32,763
    
    
    
    377Unit issue costs, net of related tax effect of $1.9 million
    
    
    
    
    
    
    (10,489
    )275,516,778
    
    
    
    2,734,519Warrants issued pursuant to private placement
    
    
    
    
    
    
    34,819Balance, December 31, 2009
    
    
    275,516,778
    
    
    $
    2,769,338Issued on redemption of non-management directors DSUs
    
    
    28,586
    
    
    
    154Cancellation of units owned by dissenting shareholders
    
    
    (840
    )
    
    
    (9
    )Balance, May 31, 2010
    
    
    275,544,524
    
    
    $
    2,769,483
 Exchangeable LP units
    
    Number
    
    
    AmountBalance, December 31, 2007
    
    
    170,005
    
    
    
    1,933Redeemed on retraction of exchangeable LP units
    
    
    (18,422
    )
    
    
    (209
    )Issued and consolidated pursuant to special distribution (Note 7)
    
    
    
    
    
    
    23Balance, December 31, 2008
    
    
    151,583
    
    
    
    1,747Redeemed on retraction of exchangeable LP units
    
    
    (32,763
    )
    
    
    (377
    )Balance, December 31, 2009 and May 31, 2010
    
    
    118,820
    
    
    $
    1,370
 2010
    
    
    
    2009Summary as at December 31, 2009 and May 31, 2010
    
    Number
    
    
    Amount
    
    
    
    Number
    
    
    AmountTrust units
    
    
    275,544,524
    
    
    $
    2,769,483
    
    
    
    
    275,516,778
    
    
    $
    2,769,338Exchangeable LP units
    
    
    118,820
    
    
    
    1,370
    
    
    
    
    118,820
    
    
    
    1,370Unitholders capital
    
    
    275,663,344
    
    
    $
    2,770,853
    
    
    
    
    275,635,598
    
    
    $
    2,770,708




---



##### 



(c) Warrants
  (d) Contributed surplus
 Balance, December 31, 2007
    
    $
    307Share based compensation expense (Note 13(c))
    
    
    691Balance, December 31, 2008
    
    
    998Share based compensation expense (Notes 13(c) and 13(d))
    
    
    3,065Balance, December 31, 2009
    
    
    4,063Share based compensation expense (Notes 13(c) and 13(d))
    
    
    6,607Reclassification to common shares on exercise of options
    
    
    (48
    )Redemption of non-management directors DSUs
    
    
    (154
    )Cancellation of units of dissenting unitholders
    
    
    3Balance, December 31, 2010
    
    $
    10,471
 NOTE 12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
 Balance, December 31, 2008
    
    $
    15,359Unrealized foreign currency translation gains
    
    
    (312,856
    )Balance, December 31, 2009
    
    
    (297,497
    )Unrealized foreign currency translation losses
    
    
    (90,213
    )Foreign exchange gain on net investment hedge with U.S. denominated debt, net of tax of $2,148
    
    
    14,817Balance, December 31, 2010
    
    $
    (372,893
    )
 NOTE 13. UNIT BASED COMPENSATION PLANS
 (a) Officers and employees




---



##### 



Deferred Share Units
    
    OutstandingBalance, December 31, 2007
    
    
    76,729Issued, including as a result of distributions
    
    
    31,006Redeemed on employee resignations and withdrawals
    
    
    (24,300
    )Balance, December 31, 2008
    
    
    83,435Issued, including as a result of distributions
    
    
    211,156Redeemed on employee resignations and withdrawals
    
    
    (48,675
    )Balance, December 31, 2009
    
    
    245,916Redeemed on employee resignations and withdrawals
    
    
    (78,474
    )Balance, December 31, 2010
    
    
    167,442
   WeightedRange of
    
    
    AverageExercise Price
    
    
    Exercise PriceShare Appreciation Rights
    
    Outstanding
    
    
    (US $)
    
    
    (US $)
    
    
    ExercisableOutstanding
at December 31, 2007
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    Granted
    
    
    925,746
    
    
    
    9.26  17.92
    
    
    
    14.86Outstanding at December 31, 2008
    
    
    925,746
    
    
    
    9.26  17.92
    
    
    
    14.86
    
    
    
    469,267Forfeitures
    
    
    (128,206
    )
    
    
    9.26  17.38
    
    
    
    15.31Outstanding at December 31, 2009
    
    
    797,540
    
    
    
    9.26  17.92
    
    
    
    14.79
    
    
    
    607,168Forfeitures
    
    
    (51,925
    )
    
    
    9.26  17.38
    
    
    
    14.81Outstanding at December 31, 2010
    
    
    745,615
    
    
    $
    9.26  17.92
    
    
    $
    14.79
    
    
    
    707,327
 Total SARs Outstanding
    
    
    Exercisable SARsWeightedWeighted
    
    
    Average
    
    
    
    
    
    
    WeightedAverage
    
    
    Remaining
    
    
    
    
    
    
    AverageExercise
    
    
    Contractual
    
    
    
    
    
    
    ExerciseRange of Exercise Prices (US $)
    
    Number
    
    
    Price (US $)
    
    
    Life (Years)
    
    
    Number
    
    
    Price (US $)$9.26  11.99
    
    
    71,380
    
    
    $
    9.26
    
    
    
    3.23
    
    
    
    71,380
    
    
    $
    9.2612.00  14.99
    
    
    115,478
    
    
    
    13.26
    
    
    
    4.10
    
    
    
    115,478
    
    
    
    13.2615.00  17.92
    
    
    558,757
    
    
    
    15.81
    
    
    
    6.42
    
    
    
    520,469
    
    
    
    15.86$9.26  17.92
    
    
    745,615
    
    
    $
    14.79
    
    
    
    5.76
    
    
    
    707,327
    
    
    $
    14.77
  (b) Executive




---



##### 



(c) Non-management directors
  Deferred Share Units
    
    OutstandingBalance, December 31, 2007
    
    
    18,280Granted
    
    
    33,058Issued as a result of distributions
    
    
    3,205Balance, December 31, 2008
    
    
    54,543Granted
    
    
    234,142Issued as a result of distributions
    
    
    2,047Balance, December 31, 2009
    
    
    290,732Granted
    
    
    131,571Redeemed
    
    
    (28,586
    )Balance, December 31, 2010
    
    
    393,717
  (d) Option plan
   WeightedOptions
    
    
    Range of
    
    
    average
    
    
    OptionsCanadian share options
    
    Outstanding
    
    
    exercise price
    
    
    exercise price
    
    
    exercisableOutstanding as at December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    1,199,625
    
    
    $
    5.22  7.26
    
    
    $
    5.85Forfeitures
    
    
    (10,000
    )
    
    
    5.85  5.85
    
    
    
    5.85Outstanding as at December 31, 2009
    
    
    1,189,625
    
    
    
    5.22  7.26
    
    
    
    5.85
    
    
    
    Granted
    
    
    1,236,310
    
    
    
    7.33  8.59
    
    
    
    8.56Exercised
    
    
    (5,666
    )
    
    
    5.85  5.85
    
    
    
    5.85Forfeitures
    
    
    (78,500
    )
    
    
    5.85  8.59
    
    
    
    7.12Outstanding as at December 31, 2010
    
    
    2,341,769
    
    
    $
    5.22  8.59
    
    
    $
    7.24
    
    
    
    386,013
 WeightedRange of
    
    
    averageOptions
    
    
    exercise price
    
    
    exercise price
    
    
    OptionsU.S. share options
    
    Outstanding
    
    
    (US $)
    
    
    (US $)
    
    
    exercisableOutstanding as at December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    729,575
    
    
    $
    4.95  7.02
    
    
    $
    4.96Forfeitures
    
    
    (131,500
    )
    
    
    4.95  4.95
    
    
    
    4.95Outstanding as at December 31, 2009
    
    
    598,075
    
    
    
    4.95  7.02
    
    
    
    4.97
    
    
    
    Granted
    
    
    882,445
    
    
    
    7.12  8.06
    
    
    
    7.82Exercised
    
    
    (17,666
    )
    
    
    4.95  4.95
    
    
    
    4.95Forfeitures
    
    
    (81,500
    )
    
    
    4.95  8.06
    
    
    
    5.37Outstanding as at December 31, 2010
    
    
    1,381,354
    
    
    $
    4.95  8.06
    
    
    $
    6.77
    
    
    
    158,177




---



##### 



Canadian share options
    
    Total Options Outstanding
    
    
    Exercisable OptionsWeightedWeighted
    
    
    Average
    
    
    
    
    
    
    WeightedAverage
    
    
    Remaining
    
    
    
    
    
    
    AverageExercise
    
    
    Contractual
    
    
    
    
    
    
    ExerciseRange of Exercise Prices
    
    Number
    
    
    Price
    
    
    Life (Years)
    
    
    Number
    
    
    Price$5.22  6.99
    
    
    1,140,034
    
    
    $
    5.85
    
    
    
    5.35
    
    
    
    379,872
    
    
    $
    5.857.00  8.59
    
    
    1,201,735
    
    
    
    8.56
    
    
    
    6.13
    
    
    
    6,141
    
    
    
    8.45$5.22  8.59
    
    
    2,341,769
    
    
    $
    7.24
    
    
    
    5.75
    
    
    
    386,013
    
    
    $
    5.89
 U.S. share options
    
    Total Options Outstanding
    
    
    Exercisable OptionsWeightedWeighted
    
    
    Average
    
    
    
    
    
    
    WeightedAverage
    
    
    Remaining
    
    
    
    
    
    
    AverageExercise
    
    
    Contractual
    
    
    
    
    
    
    ExerciseRange of Exercise Prices (US $)
    
    Number
    
    
    Price (US $)
    
    
    Life (Years)
    
    
    Number
    
    
    Price (US $)$4.95  5.99
    
    
    504,834
    
    
    $
    4.95
    
    
    
    5.30
    
    
    
    156,486
    
    
    $
    4.956.00  8.06
    
    
    876,520
    
    
    
    7.81
    
    
    
    6.24
    
    
    
    1,691
    
    
    
    7.02$4.95  8.06
    
    
    1,381,354
    
    
    $
    6.77
    
    
    
    5.89
    
    
    
    158,177
    
    
    $
    4.97
  NOTE 14. FINANCE CHARGES
 2010
    
    
    
    2009
    
    
    2008Interest:Long-term debt
    
    $
    67,570
    
    
    
    $
    101,108
    
    
    $
    13,680Other
    
    
    97
    
    
    
    
    2,883
    
    
    
    151Income
    
    
    (803
    )
    
    
    
    (483
    )
    
    
    (455
    )Amortization of debt issue costs
    
    
    27,097
    
    
    
    
    25,681
    
    
    
    798Accelerated amortization of debt issue costs
from voluntary debt repayments
    
    
    1,590
    
    
    
    
    8,313
    
    
    
    Loss on settlement of debt facilities (Note 9)
    
    
    115,776
    
    
    
    
    9,899
    
    
    
    $
    211,327
    
    
    
    $
    147,401
    
    
    $
    14,174
 NOTE 15. EMPLOYEE BENEFIT PLANS




---



##### 



NOTE 16. COMMITMENTS
  2011
    
    $
    29,6672012
    
    
    9,6482013
    
    
    9,7222014
    
    
    8,0402015
    
    
    7,227
  2010
    
    $
    7,5142009
    
    
    6,9372008
    
    
    3,636
 NOTE 17. PER SHARE AMOUNTS
  (Stated in thousands)
    
    2010
    
    
    
    2009
    
    
    2008Net earnings  basic
    
    $
    62,091
    
    
    
    $
    161,703
    
    
    $
    302,730Impact of assumed conversion of convertible debt, net of tax
    
    
    
    
    
    
    
    1,229
    
    
    
    164Net earnings  diluted
    
    $
    62,091
    
    
    
    $
    162,932
    
    
    $
    302,894
 (Stated in thousands)
    
    2010
    
    
    
    2009
    
    
    2008Weighted average shares outstanding  basic
    
    
    275,655
    
    
    
    
    243,748
    
    
    
    126,507Effect of rights offering
    
    
    
    
    
    
    
    6,177
    
    
    
    9,061Weighted average shares outstanding  basic
    
    
    275,655
    
    
    
    
    249,925
    
    
    
    135,568Effect of warrants
    
    
    8,787
    
    
    
    
    5,261
    
    
    
    Effect of stock options and other equity compensation plans
    
    
    619
    
    
    
    
    181
    
    
    
    33Effect of convertible debt
    
    
    
    
    
    
    
    3,896
    
    
    
    372Effect of rights offering
    
    
    
    
    
    
    
    342
    
    
    
    29Weighted average shares outstanding  diluted
    
    
    285,061
    
    
    
    
    259,605
    
    
    
    136,002
 NOTE 18. SIGNIFICANT CUSTOMERS
  NOTE 19. BUSINESS ACQUISITIONS




---



##### 



Grey Wolf
    
    
    RWS
    
    
    TotalNet assets at assigned values:Working capital
    
    $
    470,586
    (1)
    
    $
    19
    
    
    $
    470,605Property, plant and equipment
    
    
    1,869,875
    
    
    
    10,542
    
    
    
    1,880,417Intangible assets
    
    
    4,428
    
    
    
    1,128
    
    
    
    5,556Goodwill (no tax basis)
    
    
    553,335
    
    
    
    3,830
    
    
    
    557,165Long-term liabilities
    
    
    (23,308
    )
    
    
    
    
    
    
    (23,308
    )Long-term debt
    
    
    (319,115
    )
    
    
    
    
    
    
    (319,115
    )Future income taxes
    
    
    (553,682
    )
    
    
    
    
    
    
    (553,682
    )$
    2,002,119
    
    
    $
    15,519
    
    
    $
    2,017,638Consideration:Cash
    
    $
    1,113,034
    
    
    $
    15,519
    
    
    $
    1,128,553Trust units
    
    
    889,085
    
    
    
    
    
    
    
    889,085$
    2,002,119
    
    
    $
    15,519
    
    
    $
    2,017,638
 (1) Working capital includes cash of $360,161
 NOTE 20. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
  (a) Income taxes
  Reconciliation of unrecognized tax benefits
 Year ended December 31,
    
    2010
    
    
    
    2009Unrecognized tax benefits, beginning of year
    
    $
    48,652
    
    
    
    $
    56,563Additions:Prior years tax positions
    
    
    6,825
    
    
    
    
    2,514Reductions:Prior years tax positions
    
    
    (652
    )
    
    
    
    (10,425
    )Unrecognized tax benefits, end of year
    
    $
    54,825
    
    
    
    $
    48,652




---



##### 



(b) Equity settled share based compensation
    DirectorsAs at December 31, 2010
    
    Options
    
    
    DSUsNumber vested and expected to vest
    
    
    3,564,176
    
    
    
    393,717Weighted average exercise price (1)
    
    $
    7.07
    
    
    $
    Aggregate intrinsic value (2)
    
    $
    9,090
    
    
    $
    3,780Weighted average remaining life (years)
    
    
    5.6
    
    
    
    
 (1) No proceeds are received upon exercise of Directors DSUs.
 (2) Based on December 31, 2010 closing price for Precisions common shares on the Toronto Stock Exchange.
 DirectorsAs at December 31, 2009
    
    Options
    
    
    DSUsNumber vested and expected to vest
    
    
    1,698,315
    
    
    
    290,732Weighted average exercise price (1)
    
    $
    5.63
    
    
    $
    Aggregate intrinsic value (2)
    
    $
    3,425
    
    
    $
    2,224Weighted average remaining life (years)
    
    
    6.3
    
    
    
    
 (1) No proceeds are received upon exercise of Directors DSUs.
 (2) Based on December 31, 2010 closing price for Precisions common shares on the Toronto Stock Exchange.
  (c) Cash settled share based compensation
   As at December 31, 2010
    
    SARsNumber vested and expected to vest
    
    
    745,615Weighted average exercise price
    
    $
    14.71Aggregate intrinsic value (1)
    
    $
    30Weighted average remaining life (years)
    
    
    5.8Number exercisable
    
    
    707,327Weighted average exercise price
    
    $
    14.69Aggregate intrinsic value (1)
    
    $
    30Weighted average remaining life (years)
    
    
    5.7
 (1) Based on December 31, 2010 closing price for Precisions common shares on the Toronto Stock Exchange.




---



##### 



As at December 31, 2009
    
    SARsNumber vested and expected to vest
    
    
    757,663Weighted average exercise price
    
    $
    15.48Aggregate intrinsic value (1)
    
    $
    Weighted average remaining life (years)
    
    
    6.8Number exercisable
    
    
    607,168Weighted average exercise price
    
    $
    15.33Aggregate intrinsic value (1)
    
    $
    Weighted average remaining life (years)
    
    
    6.5
 (1) Based on December 31, 2009 closing price for Precisions Trust units on the Toronto Stock Exchange.
 (d) Redemption of Trust units
  (e) Debt issuance costs
  (f) Goodwill
  (g) New accounting policies adopted
  (h) Fair value disclosure




---



##### 



Consolidated Statements of Earnings
 Years ended December 31,
    
    2010
    
    
    
    2009
    
    
    2008Net earnings under Canadian GAAP
    
    $
    62,091
    
    
    
    $
    161,703
    
    
    $
    302,730Adjustments under U.S. GAAP:Equity-based compensation expense
    
    
    (135
    )
    
    
    
    (1,610
    )
    
    
    183Net earnings under U.S. GAAP
    
    $
    61,956
    
    
    
    $
    160,093
    
    
    $
    302,913Net earnings per share under U.S. GAAP:Basic
    
    $
    0.22
    
    
    
    $
    0.64
    
    
    $
    2.23Diluted
    
    $
    0.22
    
    
    
    $
    0.62
    
    
    $
    2.23
 Consolidated Statements of Comprehensive Income (Loss)
 Years ended December 31,
    
    2010
    
    
    
    2009
    
    
    2008Net earnings under U.S. GAAP
    
    $
    61,956
    
    
    
    $
    160,093
    
    
    $
    302,913Unrealized gain (loss) on translation of assets and liabilities of
selfsustaining operations denominated in foreign currency
    
    
    (90,213
    )
    
    
    
    (312,856
    )
    
    
    11,222Foreign exchange gain on net investment hedge
with U.S. denominated debt, net of tax of $2,148
    
    
    14,817
    
    
    
    
    
    
    
    
    Comprehensive income (loss) under U.S. GAAP
    
    $
    (13,440
    )
    
    
    $
    (152,763
    )
    
    $
    314,135
 Consolidated Statements of Retained Earnings (Deficit)
 Years ended December 31,
    
    
    2010
    
    
    2009
    
    
    2008Retained earnings (deficit) under U.S. GAAP, beginning of year
    
    
    $
    1,040,829
    
    
    $
    1,060,802
    
    
    $
    (350,898
    )Net earnings under U.S. GAAP
    
    
    
    61,956
    
    
    
    160,093
    
    
    
    302,913Distributions declared
    
    
    
    
    
    
    
    (6,408
    )
    
    
    (224,688
    )Change in redemption value of temporary equity
    
    
    
    268,890
    
    
    
    (173,658
    )
    
    
    1,333,475Retained earnings under U.S. GAAP, end of year
    
    
    $
    1,371,675
    
    
    $
    1,040,829
    
    
    $
    1,060,802
 Consolidated Balance Sheets
 2010
    
    
    
    2009As at December 31,
    
    As reported
    
    
    U.S. GAAP
    
    
    
    As reported
    
    
    U.S. GAAPCurrent assets
    
    $
    676,665
    
    
    $
    676,665
    
    
    
    $
    449,459
    
    
    $
    449,459Income taxes recoverable
    
    
    64,579
    
    
    
    64,579
    
    
    
    
    64,579
    
    
    
    64,579Other long-term assets
    
    
    
    
    
    
    16,996
    
    
    
    
    
    
    
    
    137,036Property, plant and equipment
    
    
    2,812,281
    
    
    
    2,812,281
    
    
    
    
    2,913,966
    
    
    
    2,913,966Intangibles
    
    
    6,366
    
    
    
    6,366
    
    
    
    
    3,156
    
    
    
    3,156Goodwill
    
    
    736,897
    
    
    
    799,926
    
    
    
    
    760,553
    
    
    
    823,582$
    4,296,788
    
    
    $
    4,376,813
    
    
    
    $
    4,191,713
    
    
    $
    4,391,778Current liabilities
    
    $
    216,516
    
    
    $
    243,095
    
    
    
    $
    128,599
    
    
    $
    158,482Long-term liabilities
    
    
    30,319
    
    
    
    30,319
    
    
    
    
    26,693
    
    
    
    26,693Long-term debt
    
    
    804,494
    
    
    
    821,490
    
    
    
    
    748,725
    
    
    
    885,761Future income taxes
    
    
    667,540
    
    
    
    611,899
    
    
    
    
    703,195
    
    
    
    654,056Other long-term liabilities
    
    
    
    
    
    
    30,422
    
    
    
    
    
    
    
    
    24,711Temporary equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,898,743Shareholders capital
    
    
    2,771,023
    
    
    
    1,630,167
    
    
    
    
    
    
    
    
    Unitholders capital
    
    
    
    
    
    
    
    
    
    
    
    2,770,708
    
    
    
    Contributed surplus
    
    
    10,471
    
    
    
    10,639
    
    
    
    
    4,063
    
    
    
    Accumulated other comprehensive loss
    
    
    (372,893
    )
    
    
    (372,893
    )
    
    
    
    (297,497
    )
    
    
    (297,497
    )Retained earnings
    
    
    169,318
    
    
    
    1,371,675
    
    
    
    
    107,227
    
    
    
    1,040,829$
    4,296,788
    
    
    $
    4,376,813
    
    
    
    $
    4,191,713
    
    
    $
    4,391,778




---



##### 



(i) Supplemental Guarantor Information
   NOTE 21. SEGMENTED INFORMATION
  Contract
    
    
    Completion andDrilling
    
    
    Production
    
    
    Corporate
    
    
    Inter-segment2010
    
    Services
    
    
    Services
    
    
    and Other
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    1,212,656
    
    
    $
    227,835
    
    
    $
    
    
    
    $
    (10,838
    )
    
    $
    1,429,653Segment profit (loss) (1)
    
    
    260,459
    
    
    
    37,667
    
    
    
    (45,462
    )
    
    
    
    
    
    
    252,664Depreciation and amortization
    
    
    156,179
    
    
    
    21,491
    
    
    
    5,049
    
    
    
    
    
    
    
    182,719Total assets
    
    
    3,550,844
    
    
    
    395,109
    
    
    
    350,835
    
    
    
    
    
    
    
    4,296,788Goodwill
    
    
    624,758
    
    
    
    112,139
    
    
    
    
    
    
    
    
    
    
    
    736,897Capital expenditures
    
    
    158,575
    
    
    
    12,134
    
    
    
    5,192
    
    
    
    
    
    
    
    175,901Contract
    
    
    Completion andDrilling
    
    
    Production
    
    
    Corporate
    
    
    Inter-segment2009
    
    Services
    
    
    Services
    
    
    and Other
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    1,030,852
    
    
    $
    176,422
    
    
    $
    
    
    
    $
    (9,828
    )
    
    $
    1,197,446Segment profit (loss) (1)
    
    
    210,784
    
    
    
    10,934
    
    
    
    (34,890
    )
    
    
    
    
    
    
    186,828Depreciation and amortization
    
    
    118,889
    
    
    
    17,186
    
    
    
    1,925
    
    
    
    
    
    
    
    138,000Total assets
    
    
    3,566,078
    
    
    
    388,245
    
    
    
    237,390
    
    
    
    
    
    
    
    4,191,713Goodwill
    
    
    648,414
    
    
    
    112,139
    
    
    
    
    
    
    
    
    
    
    
    760,553Capital expenditures
    
    
    182,855
    
    
    
    2,897
    
    
    
    7,683
    
    
    
    
    
    
    
    193,435Contract
    
    
    Completion andDrilling
    
    
    Production
    
    
    Corporate
    
    
    Inter-segment2008
    
    Services
    
    
    Services
    
    
    and Other
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    809,317
    
    
    $
    308,624
    
    
    $
    
    
    
    $
    (16,050
    )
    
    $
    1,101,891Segment profit (loss) (1)
    
    
    302,061
    
    
    
    86,088
    
    
    
    (35,442
    )
    
    
    
    
    
    
    352,707Depreciation and amortization
    
    
    57,076
    
    
    
    22,966
    
    
    
    3,787
    
    
    
    
    
    
    
    83,829Total assets
    
    
    4,289,517
    
    
    
    448,697
    
    
    
    95,488
    
    
    
    
    
    
    
    4,833,702Goodwill
    
    
    729,390
    
    
    
    112,139
    
    
    
    
    
    
    
    
    
    
    
    841,529Capital expenditures*
    
    
    202,863
    
    
    
    23,713
    
    
    
    3,003
    
    
    
    
    
    
    
    229,579
 * Excludes business acquisitions




---



##### 



2010
    
    
    
    2009
    
    
    2008Total segment profit (loss)
    
    $
    252,664
    
    
    
    $
    186,828
    
    
    $
    352,707Add (deduct):Foreign exchange
    
    
    12,712
    
    
    
    
    122,846
    
    
    
    2,041Finance charges
    
    
    (211,327
    )
    
    
    
    (147,401
    )
    
    
    (14,174
    )Earnings before income taxes
    
    $
    54,049
    
    
    
    $
    162,273
    
    
    $
    340,574
  Inter-segment2010
    
    Canada
    
    
    United States
    
    
    International
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    772,332
    
    
    $
    634,885
    
    
    $
    27,239
    
    
    $
    (4,803
    )
    
    $
    1,429,653Total assets
    
    
    1,818,875
    
    
    
    2,422,842
    
    
    
    55,071
    
    
    
    
    
    
    
    4,296,788Inter-segment2009
    
    Canada
    
    
    United States
    
    
    International
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    569,013
    
    
    $
    608,109
    
    
    $
    23,748
    
    
    $
    (3,424
    )
    
    $
    1,197,446Total assets
    
    
    1,639,046
    
    
    
    2,498,909
    
    
    
    53,758
    
    
    
    
    
    
    
    4,191,713Inter-segment2008
    
    Canada
    
    
    United States
    
    
    International
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    909,001
    
    
    $
    189,796
    
    
    $
    4,686
    
    
    $
    (1,592
    )
    
    $
    1,101,891Total assets
    
    
    1,741,462
    
    
    
    3,033,378
    
    
    
    58,862
    
    
    
    
    
    
    
    4,833,702
 NOTE 22. FINANCIAL INSTRUMENTS
 (a) Fair value




---



##### 



Fair Value Measurements at Reporting Date Using:Quoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantCarrying Amount
    
    
    Markets for
    
    
    Observable
    
    
    Unobservableof Asset at
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    December 31, 2009
    
    
    (Level I)
    
    
    (Level II)
    
    
    (Level III)Interest rate swap
    
    $
    2,378
    
    
    $
    
    
    
    $
    2,378
    
    
    $
    Interest rate cap
    
    
    493
    
    
    
    
    
    
    
    493
    
    
    
    
 (b) Credit risk
   (c) Interest rate risk
  (d) Foreign currency risk
   Canadian
    
    
    U.S.Operations (1)
    
    
    OperationsCash
    
    $
    144,094
    
    
    $
    41,887Accounts receivable
    
    
    189
    
    
    
    177,044Accounts payable and accrued liabilities
    
    
    (6,048
    )
    
    
    (109,804
    )Long-term liabilities, excluding long-term incentive plans
    
    
    
    
    
    
    (18,149
    )Net foreign currency exposure
    
    $
    138,235
    
    
    $
    90,978Impact of $0.01 change in the U.S. dollar to Canadian dollar
exchange rate on net earnings
    
    $
    1,382
    
    
    $
    Impact of $0.01 change in the U.S. dollar to Canadian dollar
exchange rate on comprehensive income
    
    $
    
    
    
    $
    910
 (1)
    
    Excludes US$650 million of long-term debt that has been designated as a hedge of the
Corporations net investment in certain self-sustaining foreign operations.




---



##### 



(e) Liquidity risk
  (Stated in thousands)
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    TotalLong-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    58,333
    
    
    $
    763,157
    
    
    $
    821,490Interest on long-term debt (1)
    
    
    60,330
    
    
    
    60,330
    
    
    
    60,330
    
    
    
    60,330
    
    
    
    56,441
    
    
    
    218,389
    
    
    
    516,150Commitments
    
    
    29,667
    
    
    
    9,648
    
    
    
    9,722
    
    
    
    8,040
    
    
    
    7,228
    
    
    
    30,415
    
    
    
    94,720Total
    
    $
    89,997
    
    
    $
    69,978
    
    
    $
    70,052
    
    
    $
    68,370
    
    
    $
    122,002
    
    
    $
    1,011,961
    
    
    $
    1,432,360
 (1)
    
    Interest has been calculated based upon debt balances, interest rates and foreign
exchange rates in effect as at December 31, 2010 and excludes amortization of long-term debt issue
costs.
 NOTE 23. CAPITAL MANAGEMENT
  2010
    
    
    
    2009Long-term debt
    
    $
    804,494
    
    
    
    $
    748,725Shareholders equity
    
    
    2,577,919
    
    
    
    
    2,584,501Total capitalization
    
    $
    3,382,413
    
    
    
    $
    3,333,226Long-term debt to long-term debt plus equity ratio
    
    
    0.24
    
    
    
    
    0.22
   NOTE 24. SUPPLEMENTAL INFORMATION
 2010
    
    
    
    2009
    
    
    2008Interest paid
    
    $
    62,976
    
    
    
    $
    103,109
    
    
    $
    13,394Income taxes paid
    
    $
    11,187
    
    
    
    $
    23,697
    
    
    $
    764Components of change in non-cash working capital balances:Accounts receivable
    
    $
    (141,978
    )
    
    
    $
    295,844
    
    
    $
    (114,444
    )Inventory
    
    
    4,028
    
    
    
    
    (467
    )
    
    
    603Accounts payable and accrued liabilities
    
    
    88,290
    
    
    
    
    (133,419
    )
    
    
    56,299Income taxes
    
    
    26,874
    
    
    
    
    (15,035
    )
    
    
    (4,446
    )$
    (22,786
    )
    
    
    $
    146,923
    
    
    $
    (61,988
    )Pertaining to:Operations
    
    $
    (69,303
    )
    
    
    $
    173,173
    
    
    $
    (84,571
    )Investments
    
    $
    45,532
    
    
    
    $
    (26,250
    )
    
    $
    22,583Financing
    
    $
    985
    
    
    
    $
    
    
    
    $
    




---



##### 



2010
    
    
    
    2009Trade
    
    $
    254,284
    
    
    
    $
    185,144Accrued trade
    
    
    123,170
    
    
    
    
    67,918Prepaids and other
    
    
    37,447
    
    
    
    
    30,837$
    414,901
    
    
    
    $
    283,899
  2010
    
    
    
    2009Accounts payable
    
    $
    127,708
    
    
    
    $
    53,546Accrued liabilities:Payroll
    
    
    43,876
    
    
    
    
    35,926Other
    
    
    44,069
    
    
    
    
    38,904$
    215,653
    
    
    
    $
    128,376
 NOTE 25. CONTINGENCIES, COMMITMENT AND GUARANTEES
    NOTE 26. SUBSEQUENT EVENT