##### 



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 40-F
 (Check One)o
    
    Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934orþ
    
    Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
 December 31, 2006
 001-14534
 PRECISION DRILLING TRUST
  Alberta, Canada
(Province or other jurisdiction of
incorporation or organization)
    
    1381
(Primary Standard Industrial
Classification Code Number
(if applicable))
    
    Not applicable
(I.R.S. Employer
Identification Number (if applicable))
 4200-150 6th Avenue, S.W., Calgary, Alberta, Canada T2P 3Y7
(403) 716-4500
 CT Corporation System, 811 Dallas Avenue, Houston, Texas 77022
(713) 658-9486
  Title of each class
    
    Name of each exchange on which registeredTrust Units
    
    New York Stock Exchange
 None
 None
  þ   Annual Information Form
    
    þ   Audited Annual Financial Statements
 125,536,329 Trust Units
  Yes   o
    
    No   þ
  Yes   þ
    
    No   o




---



##### 



Principal Documents
  (a)
    
    Annual Information Form for the fiscal year ended December 31, 2006;(b)
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations for the
fiscal year ended December 31, 2006; and(c)
    
    Consolidated Financial Statements for the fiscal year ended December 31, 2006 (Note 16 to the
Consolidated Financial Statements relates to United States Generally Accepted Accounting
Principles (U.S. GAAP)).




---



##### 



PRECISION DRILLING TRUST
 ANNUAL INFORMATION FORM
 For the fiscal year ended December 31, 2006
 Dated March 29, 2007




---



##### 



TABLE OF CONTENTS
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
    
    
    1CORPORATE STRUCTURE
    
    
    3INCORPORATION INFORMATION AND ADDRESS
    
    
    3The Trust
    
    
    3Precision Drilling Limited Partnership
    
    
    3Precision Drilling Corporation
    
    
    3INTERCORPORATE RELATIONSHIPS
    
    
    3Organizational Structure of the Trust
    
    
    4GENERAL DEVELOPMENT OF THE BUSINESS
    
    
    4THREE YEAR HISTORY
    
    
    4Significant Acquisitions
    
    
    6Significant Dispositions
    
    
    6Significant Reorganizations
    
    
    6Cash Flow
    
    
    7Cash Distributions on Trust Units
    
    
    7Payments on Exchangeable Units
    
    
    8Distribution Reinvestment Plan
    
    
    8Board of Trustees
    
    
    9Administration Agreement
    
    
    9DESCRIPTION OF THE BUSINESS OF PRECISION
    
    
    10GENERAL
    
    
    10CONTRACT DRILLING SERVICES
    
    
    11COMPLETION AND PRODUCTION SERVICES
    
    
    15RISK FACTORS
    
    
    18THE TRUST
    
    
    18Nature of Trust Units
    
    
    18The Trust is Dependent on Precision for All Cash Available for Distributions
    
    
    18Possible Restriction on Growth
    
    
    19Potential Sales of Additional Trust Units
    
    
    19Nature of Distributions
    
    
    19Issuance of Additional Trust Units
    
    
    19Variability of Distributions
    
    
    19Changes in Legislation
    
    
    20Investment Eligibility
    
    
    20Risks Associated with Trust Units for Non-Resident Holders of Trust Units
    
    
    20Qualified Dividend Treatment for Individual U.S. Holders of Trust Units
    
    
    20Distribution of Assets on Redemption or Termination of the Trust
    
    
    20Debt Service
    
    
    21Taxation of the Trust
    
    
    21Taxation of Precision
    
    
    22Net Asset Value
    
    
    23Residual Liability of Precision
    
    
    23Unitholder Limited Liability
    
    
    23Deductibility of Expenses
    
    
    23Precision Drilling Limited Partnership
    
    
    23Risks Associated with Exchangeable Units
    
    
    23Indemnity of Limited Partners
    
    
    23RISKS RELATING TO THE BUSINESS CURRENTLY CONDUCTED BY PRECISION
    
    
    24Operations Dependent on the Price of Oil and Natural Gas
    
    
    24Competitive Industry
    
    
    24Capital Overbuild in the Drilling Industry
    
    
    24Workforce Availability
    
    
    25New Technology
    
    
    25Customer Merger and Acquisition Activity
    
    
    25Business Interruption and Casualty Losses
    
    
    25Environmental Legislation
    
    
    25Business is Seasonal
    
    
    26
 i




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##### 



Tax Consequences of Previous Transactions Completed by Precision
    
    
    26Credit Risk
    
    
    27Potential Unknown Liabilities
    
    
    27Capital Expenditures
    
    
    27Access to Additional Financing
    
    
    27RECORD OF CASH DISTRIBUTIONS/PAYMENTS
    
    
    28DESCRIPTION OF CAPITAL
    
    
    29GENERAL DESCRIPTION OF CAPITAL STRUCTURE
    
    
    29Trust Units
    
    
    29Special Voting Unit
    
    
    29Precision Drilling Limited Partnership
    
    
    30The General Partner
    
    
    31MARKET FOR SECURITIES
    
    
    31Trading Price and Volume of Trust Units
    
    
    31ESCROWED SECURITIES
    
    
    33TRUSTEES, DIRECTORS AND EXECUTIVE OFFICERS
    
    
    33CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS
    
    
    35AUDIT COMMITTEE INFORMATION
    
    
    35Audit Committee Charter
    
    
    35Composition of the Audit Committee
    
    
    35Relevant Education and Experience
    
    
    35Pre-approval Policies and Procedures
    
    
    36Audit Fees
    
    
    36LEGAL PROCEEDINGS AND REGULATORY ACTIONS
    
    
    37INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
    
    
    37TRANSFER AGENT, REGISTRAR AND VOTING AND EXCHANGE TRUSTEE
    
    
    37MATERIAL CONTRACTS
    
    
    37INTERESTS OF EXPERTS
    
    
    37EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
    
    
    38CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
    
    
    38MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    38ADDITIONAL INFORMATION
    
    
    38APPENDIX 1 AUDIT COMMITTEE CHARTER AND TERMS OF REFERENCE
    
    
    39
  ii




---



##### 



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
 United States Private Securities Litigation Reform Act of 1995
  
    
    2007 expected cash provided by continuing operations;
 
    
    2007 capital expenditures, including the amount and nature thereof;
 
    
    2007 distributions;
 
    
    performance of the oil and natural gas industry, including prices and supply and demand;
 
    
    expansion, consolidation and other development trends of the oil and natural gas industry;
 
    
    demand for and status of drilling rigs and other equipment in the oil and natural gas industry;
 
    
    costs and financial trends for companies operating in the oil and natural gas industry;
 
    
    world population and energy consumption trends;
 
    
    our business strategy, including the 2007 strategy and outlook for our business segments;
 
    
    expansion and growth of our business and operations, including diversification of our earnings base, the size and
capabilities of our drilling and service rig fleet, our market share and our position in the markets in which we
operate;
 
    
    demand for our products and services;
 
    
    our management strategy, including transitions in executive roles;
 
    
    labour shortages;
 
    
    the maintenance of existing customer, supplier and partner relationships;
 
    
    supply channels;
 
    
    accounting policies and tax liability;
 
    
    expected payments pursuant to contractual obligations;
 
    
    the prospective impact of recent or anticipated regulatory changes;
 
    
    financing strategy and compliance with debt covenants;
 
    
    credit risks; and
 
    
    other such matters.
  
    
    the impact of general economic conditions in Canada and the United States;
 
    
    world energy prices and government policies;
 
    
    industry conditions, including the adoption of new environmental, taxation and other laws and regulations and
changes in how they are interpreted and enforced;
 
    
    the impact of initiatives by the Organization of Petroleum Exporting Countries;
 
    
    the ability of oil and natural gas companies to access external sources of debt and equity capital;
 
    
    the effect of weather conditions on operations and facilities;
 1




---



##### 




    
    the existence of operating risks inherent in well servicing, contract drilling and ancillary oilfield services;
 
    
    volatility of oil and natural gas prices;
 
    
    oil and natural gas product supply and demand;
 
    
    risks inherent in the ability to generate sufficient cash flow from operations to meet current and future
obligations;
 
    
    increased competition;
 
    
    consolidation among our customers;
 
    
    risks associated with technology;
 
    
    political uncertainty, including risks of war, hostilities, civil insurrection, instability or acts of terrorism;
 
    
    the lack of availability of qualified personnel or management;
 
    
    credit risks;
 
    
    increased costs of operations, including costs of equipment;
 
    
    fluctuations in interest rates;
 
    
    stock market volatility;
 
    
    opportunities available to or pursued by us;
 
    
    and other factors, many of which are beyond our control.
   2




---



##### 



CORPORATE STRUCTURE
 
 INCORPORATION INFORMATION AND ADDRESS
 
 The Trust
    
 Precision Drilling Limited Partnership
  
 Precision Drilling Corporation
 Business Corporations Act
 
 INTERCORPORATE RELATIONSHIPS
  Jurisdiction ofIncorporation orName of Subsidiary or Partnership
    
    
    Percent or Interest Owned
    
    
    ContinuancePrecision Drilling Limited Partnership
    
    
    
    99.82
    %
    
    
    Manitoba1194312 Alberta Ltd.
    
    
    
    100
    %
    
    
    AlbertaPrecision Drilling Corporation
    
    
    
    99.82
    %
    
    
    Alberta
 3




---



##### 



Organizational Structure of the Trust
  
 
 NOTES:
 (1)
    
    As of December 31, 2006 there were 125,536,329 PDLP A Units outstanding.(2)
    
    As of December 31, 2006 there were 221,595 Exchangeable Units outstanding.(3)
    
    The interest of 1194312 Alberta Ltd. in PDLP is 0.001%.(4)
    
    Inter-company note owing by Precision to PDLP (the Promissory Note).
 
 GENERAL DEVELOPMENT OF THE BUSINESS
 
 THREE YEAR HISTORY
   4




---



##### 



5




---



##### 



Significant Acquisitions
 
    
    On August 17, 2006, Precision acquired Terra, a privately
owned wastewater treatment business operating at remote
worksite locations for an aggregate purchase price of $16
million. Terra had 41 treatment units at the time of the
acquisition and closed the year with 51 treatment units.
The service provided by Terra complements those provided
by the LRG Catering and Precision Rentals divisions and
expands the diversity of services Precision offers
customers.
 
    
    On May 21, 2004, Precision acquired all of the land
drilling business carried on by GlobalSantaFe Corporation
for an aggregate purchase price of US$316.5 million. That
land drilling business consisted of 31 drilling rigs, then
located in Kuwait, Saudi Arabia, Egypt, Oman and
Venezuela.
 
    
    Pursuant to an agreement dated May 8, 2004, Precision
purchased all of the issued and outstanding shares of
Reeves Oilfield Services Ltd. for an aggregate purchase
price of £92.4 million (Great Britain Pounds). Reeves
Oilfield Services Ltd. was an international provider of
open hole wireline logging services to the oil and natural
gas industry and carried out field operations in the
western and Appalachian regions of the United States,
western Canada, Australia, Great Britain, Colombia,
Europe, the Middle East and Africa.
 
 Significant Dispositions
 
    
    On August 31, 2005, Precision sold its Energy Services and
International Contract Drilling divisions to Weatherford
for a purchase price consisting of 26 million common shares of Weatherford and $1.13 billion cash pursuant to a
stock purchase agreement dated June 6, 2005 between
Precision and Weatherford (the Weatherford Sale
Agreement). The Energy Services division of Precision
consisted of three main business segments: wireline
logging services; drilling and evaluation services; and
production services. Wireline services included open hole
logging, cased hole logging and completion and slick line
services. Drilling and evaluation services included
measurement-while-drilling, logging-while-drilling,
directional drilling and rotary steerable services.
Production services included well testing and controlled
pressure drilling (which included under balanced drilling
services). Precisions International Contract Drilling
division was comprised of 48 land drilling rigs operating
in Kuwait, Saudi Arabia, Oman, Iran, Egypt, India, Mexico
and Venezuela.
 
    
    On September 13, 2005, Precision sold 100% of the shares
of CEDA International Corporation (CEDA) to an
investment entity of the Ontario Municipal Employees
Retirement System for approximately $274 million pursuant
to an agreement dated September 13, 2005 between Precision
and 1191678 Alberta Inc. (the CEDA Sale Agreement).
CEDA was a leading provider of industrial maintenance,
turnaround services and other specialized services to
various production industries in Canada and the United
States. Its main areas of operation included industrial
cleaning, catalyst handling and mechanical services
usually carried out in large facilities operating in the
oil and natural gas, petro-chemical and pulp and paper
industries.
 
 Significant Reorganizations
 
    
    On July 31, 2005, Precision Limited Partnership (which
carried on Precisions Canadian contract drilling, service
rig and snubbing businesses) completed a re-organization
whereby substantially all of the assets of the Precision
Drilling and Precision Well Servicing divisions of
Precision Limited Partnership were transferred to its
wholly-owned subsidiary Precision Drilling Ltd. Precision
Limited Partnership also transferred its ownership in LRG
Catering Ltd. (Precisions camp and catering business) to
Precision Drilling Ltd.
 
    
    On August 25, 2005, Precision Limited Partnership was
dissolved, with its partners Precision Diversified
Services Ltd. and Precision being allocated their pro rata
share of the net assets of Precision Limited Partnership.
Precision Diversified Services Ltd. and Precision
transferred those net assets to Live Well Service Ltd.
 
    
    On October 31, 2005, the shareholders of Precision
approved the Plan of Arrangement which became effective on
November 7, 2005. The Plan of Arrangement resulted in the
following:
 6




---



##### 




    
    the former holders of common shares of Precision received, for each share of Precision
they owned, at their option, either a Trust Unit or an Exchangeable Unit, in addition to
0.2089 of a Weatherford share and a special cash payment of $6.83;
    
    Precision amalgamated with the following wholly-owned subsidiaries: Columbia Oilfield
Supply Ltd., Rostel Industries Ltd., Precision Diversified Services Ltd., LRG Catering
Ltd., Precision Rentals Ltd., 1181177 Alberta Ltd. and Precision Drilling Ltd., to form
Precision Drilling Corporation;
    
    1195309 Alberta ULC, a wholly-owned subsidiary of PDLP, became indebted to PDLP;
    
    all of the issued and outstanding options issued pursuant to Precisions various stock
option plans were converted into New Options (as defined in the Plan of Arrangement) which
became fully vested and were exercisable up to and including November 22, 2005; and
    
    all of the PDLP A Units were issued to the Trust, representing 99.12% of the total
number of limited partnership units of PDLP (the Limited Partnership Units) outstanding,
0.88% of the Limited Partnership Units represented by Exchangeable Units were issued to
certain former shareholders of Precision, and 1194312 Alberta Ltd. (the General Partner)
became a nominal interest holder in PDLP.
 
    
    On November 23, 2005, Precision amalgamated with 1195309 Alberta ULC to form Precision Drilling Corporation.
 
    
    On January 1, 2006, Precision amalgamated with Live Well Service Ltd.
 
    
    On August 17, 2006, Terra transferred substantially all of its net assets to Terra Water Systems Limited Partnership.
 
    
    On January 1, 2007, Precision amalgamated with Terra.
 
 Cash Flow
  
 Cash Distributions on Trust Units
 th Certain Canadian Federal Income Tax Considerations  Taxation
of the Trust
  7




---



##### 



Risk Factors
  
 Payments on Exchangeable Units
     
 Distribution Reinvestment Plan
  8




---



##### 



Board of Trustees
     
 Administration Agreement
  
    
    ensure compliance by the Trust with continuous disclosure obligations under applicable securities legislation;
 
    
    provide investor relations services;
 
    
    provide or cause to be provided to Unitholders all information to which Unitholders are entitled under the Declaration
of Trust, including relevant information with respect to financial reporting and income taxes;
 
    
    call and hold meetings of Unitholders and distribute required materials, including notices of meetings and information
circulars, in respect of all such meetings;
 
    
    assist the Board of Trustees in calculating distributions to Unitholders;
 
    
    ensure compliance with the Trusts limitations on non-resident ownership, if applicable; and
 
    
    generally provide all other services as may be necessary or as may be requested by the Board of Trustees.
 9




---



##### 



DESCRIPTION OF THE BUSINESS OF PRECISION
 
 GENERAL
   (in thousands CDN$)
 Years ended December 31,
    
    
    2006
    
    
    2005
    
    
    2004Contract Drilling Services
    
    
    $
    1,009,821
    
    
    
    $
    916,221
    
    
    
    $
    727,710Completion and Production Services
    
    
    
    441,017
    
    
    
    
    369,667
    
    
    
    
    313,386Inter-segment Eliminations
    
    
    
    (13,254
    )
    
    
    
    (16,709
    )
    
    
    
    (12,608
    )Total Revenue
    
    
    $
    1,437,584
    
    
    
    $
    1,269,179
    
    
    
    $
    1,028,488
    10




---



##### 



CONTRACT DRILLING SERVICES
  
    
    Precision Drilling  240 drilling rigs  approximately 29% of the Canadian industry;
 
    
    LRG Catering (LRG)  101 drilling camps   approximately 16% of the industry;
 
    
    Rostel Industries (Rostel)  capabilities that include engineering, machining,
fabrication, component manufacturing and repair services for drilling and service
rigs; and
 
    
    Columbia Oilfield Supply (Columbia)  capabilities that include centralized
procurement, inventory and distribution of consumable supplies,
  
    
    Precision Drilling Oilfield Services, Inc.  one drilling rig was deployed to the
United States in 2006 and a second rig arrived in the United States in early 2007.
 Precision Drilling
   11




---



##### 



    
   
   12




---



##### 



Precision Fleet
    
    
    Industry Fleet(1)Maximum
    
    
    Number
    
    
    % of
    
    
    Market
    
    
    Number
    
    
    % ofType of Drilling Rig
    
    
    Depth Rating
    
    
    of Rigs
    
    
    Total
    
    
    Share %(3)
    
    
    of Rigs
    
    
    Total
    
    
    Change(4)Single
    
    
    
    1,200m
    
    
    
    
    14
    
    
    
    
    6
    
    
    
    
    10
    
    
    
    
    145
    
    
    
    
    17
    
    
    
    
    21Super Single (2)
    
    
    
    3,000m
    
    
    
    
    28
    
    
    
    
    12
    
    
    
    
    85
    
    
    
    
    33
    
    
    
    
    4
    
    
    
    
    9Double
    
    
    
    3,000m
    
    
    
    
    94
    
    
    
    
    39
    
    
    
    
    26
    
    
    
    
    364
    
    
    
    
    43
    
    
    
    
    20Light triple
    
    
    
    3,600m
    
    
    
    
    44
    
    
    
    
    18
    
    
    
    
    38
    
    
    
    
    117
    
    
    
    
    14
    
    
    
    
    3Heavy triple
    
    
    
    6,700m
    
    
    
    
    49
    
    
    
    
    20
    
    
    
    
    42
    
    
    
    
    118
    
    
    
    
    14
    
    
    
    
    11Coiled tubing
    
    
    
    1,500m
    
    
    
    
    11
    
    
    
    
    5
    
    
    
    
    17
    
    
    
    
    65
    
    
    
    
    8
    
    
    
    
    8TOTAL
    
    
    
    
    
    
    
    
    240
    
    
    
    
    100
    %
    
    
    
    29
    %
    
    
    
    842
    
    
    
    
    100
    %
    
    
    
    72
 NOTES:
 (1)
    
    Source: Daily Oil Bulletin  Rig Locator Report as of January 2007. Precision has allocated
the industry rig fleet by rig type.
 (2)
    
    Super Single excludes single rigs that do not have automated pipe handling
systems, do not have a self contained top drive, or cannot run range 3 drill pipe/casing.
 (3)
    
    Market share means Precisions rigs as a percentage of the industrys rigs.(4)
    
    Change in number of industry rigs as compared to the prior year.
    Utilization Rates (%)
    
    
    Metres Drilled (000s)
    
    
    Wells Drilled(1)% of
    
    
    
    
    
    
    
    
    
    
    
    
    % ofPrecision
    
    
    Industry(2)
    
    
    Precision
    
    
    Industry(2)
    
    
    Industry
    
    
    Precision
    
    
    Industry(2)
    
    
    Industry2006
    
    
    
    52.1
    
    
    
    
    55.1
    
    
    
    
    7,810
    
    
    
    
    27,373
    
    
    
    
    28.5
    
    
    
    
    6,180
    
    
    
    
    22,575
    
    
    
    
    27.42005
    
    
    
    56.1
    
    
    
    
    59.6
    
    
    
    
    8,901
    
    
    
    
    28,143
    
    
    
    
    31.6
    
    
    
    
    7,766
    
    
    
    
    24,351
    
    
    
    
    31.92004
    
    
    
    50.3
    
    
    
    
    52.9
    
    
    
    
    8,021
    
    
    
    
    23,526
    
    
    
    
    34.1
    
    
    
    
    7,525
    
    
    
    
    21,793
    
    
    
    
    34.52003
    
    
    
    52.0
    
    
    
    
    53.1
    
    
    
    
    8,604
    
    
    
    
    21,802
    
    
    
    
    39.5
    
    
    
    
    8,451
    
    
    
    
    20,694
    
    
    
    
    40.82002
    
    
    
    38.3
    
    
    
    
    39.4
    
    
    
    
    6,222
    
    
    
    
    15,708
    
    
    
    
    39.6
    
    
    
    
    6,315
    
    
    
    
    14,920
    
    
    
    
    42.3
 NOTES:
 (1)
    
    The number of wells drilled is reported on a rig release basis, compiled by Precision.(2)
    
    Industry numbers exclude drilling rigs not registered with the Canadian Association of
Oilwell Drilling Contractors (CAODC) and non-reporting CAODC member contractors.
  13




---



##### 



2
    Precision Drilling Oilfield Services, Inc.
 TM
  14




---



##### 



LRG Catering
  Rostel Industries
 . 
 Columbia Oilfield Supply
  
 COMPLETION AND PRODUCTION SERVICES
  
    
    Precision Well Servicing (PWS)  237 service rigs  approximately 23% of the industry;
    
    Live Well Service (Live Well)  26 snubbing units  approximately 30% of the industry;
    
    Precision Rentals  approximately 15,000 pieces of rental equipment items including
well-control equipment, surface equipment, specialty tubulars and wellsite accommodation
units  approximately 10% of the industry; and
    
    Terra Water Systems Limited Partnership (Terra Water)  is a wastewater treatment
business suited for oilfield camps and wellsite accommodation units in remote locations.
It operates 51 wastewater treatment units for the traditional drilling rig camp market in
western Canada  approximately 10% of the industry
 15




---



##### 



Precision Well Servicing
  TYPE OF SERVICE RIG
    
    
    2006
    
    
    2005
    
    
    2004Singles:Mobile single
    
    
    
    12
    
    
    
    
    17
    
    
    
    
    19Freestanding mobile
    
    
    
    92
    
    
    
    
    88
    
    
    
    
    86Doubles:Mobile
    
    
    
    44
    
    
    
    
    44
    
    
    
    
    42Freestanding mobile
    
    
    
    9
    
    
    
    
    8
    
    
    
    
    9Skid
    
    
    
    65
    
    
    
    
    65
    
    
    
    
    67Slants:Freestanding
    
    
    
    15
    
    
    
    
    15
    
    
    
    
    16TOTAL FLEET
    
    
    
    237
    
    
    
    
    237
    
    
    
    
    239
     16




---



##### 



Live Well Service
     Precision Rentals
   17




---



##### 



Terra Water
   
 RISK FACTORS
 
 THE TRUST
  
 Nature of Trust Units
  Canada Deposit Insurance
Corporation Act
 
 The Trust is Dependent on Precision for All Cash Available for Distributions
  18




---



##### 



Possible Restriction on Growth
  
 Potential Sales of Additional Trust Units
  
 Nature of Distributions
  
 Issuance of Additional Trust Units
 Certain Canadian Federal Income Tax Considerations 
Taxation of Trust Unitholders General Development of
the Business  Cash Distributions on Trust Units
 19




---



##### 



Variability of Distributions
  
 Changes in Legislation
   
 Investment Eligibility
 Income Tax Act
 
 Risks Associated with Trust Units for Non-Resident Holders of Trust Units
 Certain United States Federal
Income Tax Considerations
 
 Qualified Dividend Treatment for Individual U.S. Holders of Trust Units
  
 Distribution of Assets on Redemption or Termination of the Trust
  20




---



##### 



Debt Service
  
 Taxation of the Trust
 Certain
Canadian Federal Income Tax Considerations  Taxation of Trust Unitholders
    21




---



##### 



Taxation of Precision
  22




---



##### 



Net Asset Value
  
 Residual Liability of Precision
  
 Unitholder Limited Liability
 Income Trusts Liability Act
 
 Deductibility of Expenses
  
 Precision Drilling Limited Partnership
 Risk Factors  The Trust
 
 Risks Associated with Exchangeable Units
  
 Indemnity of Limited Partners
  23




---



##### 



RISKS RELATING TO THE BUSINESS CURRENTLY CONDUCTED BY PRECISION
  
 Operations Dependent on the Price of Oil and Natural Gas
   
 Competitive Industry
  
 Capital Overbuild in the Drilling Industry
  24




---



##### 



Workforce Availability
  
 New Technology
  
 Customer Merger and Acquisition Activity
  
 Business Interruption and Casualty Losses
  
 Environmental Legislation
  25




---



##### 



Business is Seasonal
  
 Tax Consequences of Previous Transactions Completed by Precision
  26




---



##### 



Credit Risk
  
 Potential Unknown Liabilities
  
 Capital Expenditures
  
 Access to Additional Financing
  27




---



##### 



RECORD OF CASH DISTRIBUTIONS/PAYMENTS
  Amount per TrustDistribution Type
    
    
    Record Date
    
    
    Payment Date
    
    
    Unit2005Regular Distribution
    
    
    November 30, 2005
    
    
    December 15, 2005
    
    
    $0.270Regular Distribution
    
    
    December 31, 2005
    
    
    January 17, 2006
    
    
    $0.270Special Distribution
    
    
    December 31, 2005
    
    
    January 17, 2006
    
    
    $0.0222006Regular Distribution
    
    
    January 31, 2006
    
    
    February 15, 2006
    
    
    $0.270Regular Distribution
    
    
    February 28, 2006
    
    
    March 15, 2006
    
    
    $0.270Regular Distribution
    
    
    March 31, 2006
    
    
    April 18, 2006
    
    
    $0.270Regular Distribution
    
    
    April 28, 2006
    
    
    May 16, 2006
    
    
    $0.270Regular Distribution
    
    
    May 31, 2006
    
    
    June 15, 2006
    
    
    $0.310Regular Distribution
    
    
    June 30, 2006
    
    
    July 18, 2006
    
    
    $0.310Regular Distribution
    
    
    July 31, 2006
    
    
    August 15, 2006
    
    
    $0.310Regular Distribution
    
    
    August 31, 2006
    
    
    September 15, 2006
    
    
    $0.310Regular Distribution
    
    
    September 29, 2006
    
    
    October 17, 2006
    
    
    $0.310Regular Distribution
    
    
    October 31, 2006
    
    
    November 15, 2006
    
    
    $0.310Regular Distribution
    
    
    November 30, 2006
    
    
    December 15, 2006
    
    
    $0.310Regular Distribution
    
    
    December 31, 2006
    
    
    January 16, 2007
    
    
    $0.310Special Year-end in-kind Distribution(1)
    
    
    December 31, 2006
    
    
    January 16, 2007
    
    
    $0.1952007Regular Distribution
    
    
    January 31, 2007
    
    
    February 15, 2007
    
    
    $0.190Regular Distribution
    
    
    February 28, 2007
    
    
    March 15, 2007
    
    
    $0.190Regular Distribution
    
    
    March 30, 2007
    
    
    April 17, 2007
    
    
    $0.190
 
 NOTE:
 (1)
    
    As referenced in the Trusts press release dated December 18, 2006, the special year-end
distribution of $0.195 per unit was not paid in cash and holders of Trust Units did not
receive additional Trust Units. The special year-end distribution was settled in-kind
through Trust Units rather than cash in order for Precision to minimize debt levels and retain
balance sheet strength to fund planned asset growth. Immediately after the special in-kind
distribution, the outstanding Trust Units were consolidated so that the number of Trust Units
outstanding remained unchanged from the number of Trust Units outstanding immediately before
the special in-kind distribution.
  Amountper ExchangeablePayment Type
    
    
    Record Date
    
    
    Payment Date
    
    
    Unit2005Regular Payment
    
    
    November 30, 2005
    
    
    December 15, 2005
    
    
    $0.270Regular Payment
    
    
    December 31, 2005
    
    
    January 17, 2006
    
    
    $0.270Special Payment
    
    
    December 31, 2005
    
    
    January 17, 2006
    
    
    $0.0222006Regular Payment
    
    
    January 31, 2006
    
    
    February 15, 2006
    
    
    $0.270Regular Payment
    
    
    February 28, 2006
    
    
    March 15, 2006
    
    
    $0.270Regular Payment
    
    
    March 31, 2006
    
    
    April 18, 2006
    
    
    $0.270Regular Payment
    
    
    April 28, 2006
    
    
    May 16, 2006
    
    
    $0.270Regular Payment
    
    
    May 31, 2006
    
    
    June 15, 2006
    
    
    $0.310Regular Payment
    
    
    June 30, 2006
    
    
    July 18, 2006
    
    
    $0.310
 28




---



##### 



Amountper ExchangeablePayment Type
    
    
    Record Date
    
    
    Payment Date
    
    
    UnitRegular Payment
    
    
    July 31, 2006
    
    
    August 15, 2006
    
    
    $0.310Regular Payment
    
    
    August 31, 2006
    
    
    September 15, 2006
    
    
    $0.310Regular Payment
    
    
    September 29, 2006
    
    
    October 17, 2006
    
    
    $0.310Regular Payment
    
    
    October 31, 2006
    
    
    November 15, 2006
    
    
    $0.310Regular Payment
    
    
    November 30, 2006
    
    
    December 15, 2006
    
    
    $0.310Regular Payment
    
    
    December 31, 2006
    
    
    January 16, 2007
    
    
    $0.310Special 2006
Year-end in-kind
Payment(1)
    
    
    December 31, 2006
    
    
    January 16, 2007
    
    
    $0.1952007Regular Distribution
    
    
    January 31, 2007
    
    
    February 15, 2007
    
    
    $0.190Regular Distribution
    
    
    February 28, 2007
    
    
    March 15, 2007
    
    
    $0.190Regular Distribution
    
    
    March 30, 2007
    
    
    April 17, 2007
    
    
    $0.190
 
 NOTE:
 (1)
    
    As referenced in the Trusts press release dated December 18th, 2006, the special year-end
distribution of $0.195 per unit was not paid in cash and holders of Exchangeable Units did not
receive additional Exchangeable Units of Precision Drilling Limited Partnership. The special
year-end distribution was settled in-kind through Exchangeable Units rather than cash in
order for Precision to minimize debt levels and retain balance sheet strength to fund planned
asset growth. Immediately after the special in-kind distribution, the outstanding Exchangeable
Units of PDLP were consolidated so that the number of Exchangeable Units of PDLP outstanding
remained unchanged from the number of Exchangeable Units of PDLP outstanding immediately
before the special in-kind distribution.
  
 DESCRIPTION OF CAPITAL
 
 GENERAL DESCRIPTION OF CAPITAL STRUCTURE
 
 Trust Units
  
 Special Voting Unit
  29




---



##### 



Declaration of
Trust and Description of Units
 
 Precision Drilling Limited Partnership
   
    
    they are exchangeable for Trust Units on a one-for-one basis at the option of the holder;
 
    
    each Exchangeable Unit entitles the holder thereof to receive (in the form of a non-interest bearing loan) cash
payments equal to cash distributions made by the Trust on a Trust Unit (and at the beginning of the next calendar year
a special distribution will be made on each Exchangeable Unit in an amount equal to the outstanding non-interest
bearing loan accumulated during the previous year which will be used to repay such accumulated debt);
 
    
    the holder of each Exchangeable Unit is entitled to direct the Voting and Exchange Trustee to vote the Special Voting
Unit at all meetings of Trust Unit holders;
 
    
    the holders of Exchangeable Units are not entitled, as such, to receive notice of or to attend any meeting of the
partners of PDLP or to vote at any such meeting, however, such holders of Exchangeable Units are entitled to vote
separately as a class in respect of proposals to add to, change or remove any right, privilege, restriction or
condition attaching to the Exchangeable Units or in respect of any other amendment to the applicable Partnership
Agreement which would have an adverse impact on the holders of such Exchangeable Units; and
 
    
    there are certain restrictions on the transfer of Exchangeable Units.
   
    
    issue or distribute Trust Units to the holders of all, or substantially all, of the then outstanding Trust Units by way
of distribution; or
 
    
    issue or distribute rights, options or warrants to the holders of all, or substantially all, of the then outstanding
Trust Units entitling them to subscribe for or purchase Trust Units (or securities exchangeable for or converting into
or carrying rights to acquire Trust Units); or
 30




---



##### 




    
    issue or distribute to the holders of all, or substantially all, of the then outstanding Trust Units;
 
    
    securities of the Trust or any class other than Trust Units (other than
securities exchangeable for or converting into or carrying rights to acquire Trust Units);
    
    rights, options or warrants other than those described in the second bullet above; or
    
    evidences of indebtedness of the Trust; or
    
    other assets of the Trust,
   
 The General Partner
  
 MARKET FOR SECURITIES
 
 Trading Price and Volume of Trust Units
  31




---



##### 



TSX PD.UN (1)
 Period
    
    
    High
    
    
    Low
    
    
    Close
    
    
    Volume TradedJanuary
    
    
    
    40.75
    
    
    
    
    38.00
    
    
    
    
    38.00
    
    
    
    
    13,417,702February
    
    
    
    38.95
    
    
    
    
    34.00
    
    
    
    
    35.53
    
    
    
    
    15,792,850March
    
    
    
    38.75
    
    
    
    
    33.56
    
    
    
    
    37.66
    
    
    
    
    19,600,919Q1 2006
    
    
    
    40.75
    
    
    
    
    33.56
    
    
    
    
    37.66
    
    
    
    
    48,834,244April
    
    
    
    43.40
    
    
    
    
    37.52
    
    
    
    
    39.70
    
    
    
    
    16,471,558May
    
    
    
    40.74
    
    
    
    
    35.88
    
    
    
    
    37.60
    
    
    
    
    11,463,735June
    
    
    
    39.27
    
    
    
    
    33.19
    
    
    
    
    37.10
    
    
    
    
    13,133,745Q2 2006
    
    
    
    43.40
    
    
    
    
    33.19
    
    
    
    
    37.10
    
    
    
    
    41,069,038July
    
    
    
    39.40
    
    
    
    
    34.90
    
    
    
    
    39.11
    
    
    
    
    8,174,315August
    
    
    
    41.80
    
    
    
    
    38.86
    
    
    
    
    40.24
    
    
    
    
    9,384,581September
    
    
    
    40.95
    
    
    
    
    33.21
    
    
    
    
    34.33
    
    
    
    
    9,903,090Q3 2006
    
    
    
    41.80
    
    
    
    
    33.21
    
    
    
    
    34.33
    
    
    
    
    27,461,986October
    
    
    
    34.65
    
    
    
    
    30.19
    
    
    
    
    31.94
    
    
    
    
    19,431,267November
    
    
    
    29.31
    
    
    
    
    24.40
    
    
    
    
    28.39
    
    
    
    
    30,123,804December
    
    
    
    29.30
    
    
    
    
    26.80
    
    
    
    
    27.00
    
    
    
    
    6,488,988Q4 2006
    
    
    
    34.65
    
    
    
    
    24.40
    
    
    
    
    27.00
    
    
    
    
    56,044,059January
    
    
    
    28.30
    
    
    
    
    25.30
    
    
    
    
    26.50
    
    
    
    
    9,384,691February
    
    
    
    27.90
    
    
    
    
    24.60
    
    
    
    
    27.43
    
    
    
    
    10,003,698March(2)
    
    
    
    27.33
    
    
    
    
    25.13
    
    
    
    
    27.13
    
    
    
    
    9,629,950Q1 2007
    
    
    
    28.30
    
    
    
    
    24.60
    
    
    
    
    27.13
    
    
    
    
    29,018,339
 NOTES:
 (1)
    
    Price and volume information is taken from the website maintained by the TSX.(2)
    
    For the period from March 1, 2007 to March 27, 2007.
 TSX  PD.U (1)
 Period
    
    
    High
    
    
    Low
    
    
    Close
    
    
    Volume TradedJanuary
    
    
    
    36.00
    
    
    
    
    32.50
    
    
    
    
    33.67
    
    
    
    
    34,281February
    
    
    
    34.00
    
    
    
    
    29.23
    
    
    
    
    31.38
    
    
    
    
    32,745March
    
    
    
    33.00
    
    
    
    
    28.48
    
    
    
    
    31.86
    
    
    
    
    33,631Q1 2006
    
    
    
    36.00
    
    
    
    
    28.48
    
    
    
    
    31.86
    
    
    
    
    100,657April
    
    
    
    37.06
    
    
    
    
    31.61
    
    
    
    
    35.61
    
    
    
    
    23,878May
    
    
    
    36.83
    
    
    
    
    32.00
    
    
    
    
    34.51
    
    
    
    
    26,386June
    
    
    
    34.97
    
    
    
    
    29.63
    
    
    
    
    33.02
    
    
    
    
    13,652Q2 2006
    
    
    
    37.06
    
    
    
    
    29.63
    
    
    
    
    33.02
    
    
    
    
    63,916July
    
    
    
    35.33
    
    
    
    
    29.50
    
    
    
    
    34.85
    
    
    
    
    21,675August
    
    
    
    37.28
    
    
    
    
    34.00
    
    
    
    
    35.97
    
    
    
    
    27,100September
    
    
    
    36.72
    
    
    
    
    29.57
    
    
    
    
    30.13
    
    
    
    
    42,794Q3 2006
    
    
    
    37.28
    
    
    
    
    29.50
    
    
    
    
    30.13
    
    
    
    
    91,569October
    
    
    
    31.00
    
    
    
    
    26.80
    
    
    
    
    28.75
    
    
    
    
    192,445November
    
    
    
    26.11
    
    
    
    
    21.25
    
    
    
    
    24.81
    
    
    
    
    104,698December(2)
    
    
    
    27.38
    
    
    
    
    23.12
    
    
    
    
    23.14
    
    
    
    
    60,909Q4 2006
    
    
    
    31.00
    
    
    
    
    21.25
    
    
    
    
    23.14
    
    
    
    
    358,052
 32




---



##### 



NOTES:
 (1)
    
    Price and volume information is taken from the website maintained by the TSX.(2)
    
    The listing of the Trust Units denominated in U.S. dollars under the symbol PD.U was
discontinued effective December 29, 2006.
 NYSE  PDS (1)
 Period
    
    
    High
    
    
    Low
    
    
    Close
    
    
    Volume TradedJanuary
    
    
    
    35.15
    
    
    
    
    33.05
    
    
    
    
    33.53
    
    
    
    
    9,731,600February
    
    
    
    34.12
    
    
    
    
    29.78
    
    
    
    
    31.49
    
    
    
    
    11,524,700March
    
    
    
    33.24
    
    
    
    
    28.83
    
    
    
    
    32.34
    
    
    
    
    17,474,000Q1 2006
    
    
    
    35.15
    
    
    
    
    28.83
    
    
    
    
    32.34
    
    
    
    
    38,730,300April
    
    
    
    38.20
    
    
    
    
    32.32
    
    
    
    
    35.54
    
    
    
    
    13,732,300May
    
    
    
    36.88
    
    
    
    
    31.77
    
    
    
    
    34.05
    
    
    
    
    14,176,400June
    
    
    
    35.63
    
    
    
    
    29.74
    
    
    
    
    33.20
    
    
    
    
    14,627,700Q2 2006
    
    
    
    38.20
    
    
    
    
    29.74
    
    
    
    
    33.20
    
    
    
    
    42,536,400July
    
    
    
    34.89
    
    
    
    
    30.73
    
    
    
    
    34.71
    
    
    
    
    10,921,100August
    
    
    
    37.78
    
    
    
    
    34.61
    
    
    
    
    36.66
    
    
    
    
    10,530,300September
    
    
    
    36.88
    
    
    
    
    29.76
    
    
    
    
    30.82
    
    
    
    
    12,028,700Q3 2006
    
    
    
    37.78
    
    
    
    
    29.76
    
    
    
    
    30.82
    
    
    
    
    33,480,100October
    
    
    
    31.48
    
    
    
    
    26.74
    
    
    
    
    28.66
    
    
    
    
    21,450,600November
    
    
    
    28.11
    
    
    
    
    21.46
    
    
    
    
    24.90
    
    
    
    
    39,824,500December
    
    
    
    25.48
    
    
    
    
    23.00
    
    
    
    
    23.16
    
    
    
    
    19,262,400Q4 2006
    
    
    
    31.48
    
    
    
    
    21.46
    
    
    
    
    23.16
    
    
    
    
    80,537,500January
    
    
    
    24.12
    
    
    
    
    21.50
    
    
    
    
    22.59
    
    
    
    
    20,949,100February
    
    
    
    24.02
    
    
    
    
    21.06
    
    
    
    
    23.41
    
    
    
    
    13,976,307March (2)
    
    
    
    23.57
    
    
    
    
    21.71
    
    
    
    
    23.49
    
    
    
    
    15,773,839Q1 2007
    
    
    
    24.12
    
    
    
    
    21.06
    
    
    
    
    23.49
    
    
    
    
    50,699,246
 NOTES:
 (1)
    
    Price and volume information is taken from the website maintained by the NYSE.(2)
    
    For the period from March 1, 2007 to March 27, 2007.
 
 ESCROWED SECURITIES
  
 TRUSTEES, DIRECTORS AND EXECUTIVE OFFICERS
  33




---



##### 



Trust Units /Exchangeable UnitsBeneficially Owned,Name, Municipality, Province or
    
    
    Position Presently
    
    
    Director/ Officer
    
    
    Principal Occupation
    
    
    Controlled orState & Country of Residence
    
    
    Held(1)
    
    
    Since
    
    
    During the Preceding 5 Years
    
    
    Directed(2)W.C. (Mickey) Dunn(3) (5)
Edmonton, Alberta, Canada
    
    
    Director
    
    
    September 1992
    
    
    Chairman, True Energy Trust
    
    
    15,600 / nil
0.012% / nilBrian A. Felesky, CM, Q.C.(3)
Calgary, Alberta, Canada
    
    
    Director
    
    
    December 2005
    
    
    Counsel, Felesky Flynn LLP
from April 1978 through
July 2006, Partner at
Felesky Flynn LLP.
    
    
    2,800 / nil
0.002% / nilRobert J.S. Gibson(3) (4)
Calgary, Alberta, Canada
    
    
    Trustee
Director
    
    
    June 1996
    
    
    President, Stuart & Company
Limited
    
    
    63,200(6) / nil
0.050% / nilAllen R. Hagerman
Cochrane, Alberta, Canada
    
    
    Director
    
    
    December 4, 2006
    
    
    Chief Financial Officer,
Canadian Oil Sands Limited
since 2003, Vice President
and Chief Financial Officer
of Fording Canadian Coal
Trust 2003, Vice President
and Chief Financial Officer
of Fording Inc. 2001-2003.
    
    
    1,000 / nil
0.001% / nilStephen J.J. Letwin
Houston, Texas, USA
    
    
    Director
    
    
    December 4, 2006
    
    
    Executive Vice President,
Enbridge Inc., Gas
Transportation and
International
    
    
    nil / nil
nil / nilPatrick M. Murray(4)
Dallas, Texas, USA
    
    
    Trustee
Director
    
    
    July 2002
    
    
    Chairman and Chief
Executive Officer, Dresser,
Inc.
    
    
    40,000 / nil
0.032% / nilFrederick W. Pheasey(5)
Edmonton, Alberta, Canada
    
    
    Director
    
    
    July 2002
    
    
    Director of Dreco Energy
Services Ltd.
    
    
    44,000 / nil
0.035% / nilRobert L. Phillips(3) (5)
Vancouver, British Columbia, Canada
    
    
    Director
    
    
    May 2004
    
    
    Corporate Director,
President and Chief
Executive Officer, BCR
Group of Companies,
2001-2004
    
    
    5,000(7) / nil
0.004% / nilHank B. Swartout
Calgary, Alberta, Canada
    
    
    Executive Chairman
Director
    
    
    July 1987
    
    
    Executive Chairman of
Precision since 2007,
Chairman and Chief
Executive Officer of
Precision 2005-2006,
Chairman, President and
Chief Executive Officer of
Precision 1985-2005
    
    
    64,888(8) / nil
0.052% / nilH. Garth Wiggins(4) (9)
Calgary, Alberta, Canada
    
    
    Trustee
Director
    
    
    September 1997
    
    
    Principal, Kenway, Mack,
Slusarchuk, Stewart,
Chartered Accountants
    
    
    17,000 / nil
0.014% / nilGene C. Stahl
Calgary, Alberta, Canada
    
    
    President &
Chief Operating
Officer
    
    
    November 2005
    
    
    Vice President, Precision
Rentals 2003  2005,
General Manager Ducharme
Rentals/Big D Rentals 2002
 2003, Investor Relations
Officer, Precision Drilling
Corporation 2001  2002
    
    
    30,091 / nil
0.024% / nilDoug J. Strong
Calgary, Alberta, Canada
    
    
    Chief Financial
Officer
    
    
    November 2005
    
    
    Chief Financial Officer,
Precision Diversified
Services Ltd. 2001  2005,
Group Controller, Precision
Drilling 2001  2005,
Senior Controller,
Precision Drilling 1997 
2001
    
    
    24,000 / nil
0.019% / nilDarren J. Ruhr
Calgary, Alberta, Canada
    
    
    Vice President,
Corporate Services
& Corporate
Secretary
    
    
    November 2005
    
    
    Director, Information
Technology, Real Estate &
Travel, Precision Drilling
Corporation 2003  2005,
Director, Information
Technology, Precision
Drilling Corporation 2000 -
2003
    
    
    10,000 / nil
0.008% / nil
 
 NOTES:
 
 (1)
    
    Each Directors term of office expires not later than the close of business at the next
annual meeting, or until successors are appointed or Directors vacate their office, and
Directors are normally not renominated following the earlier of their fifteenth term or
69th birthday. Mr. Wiggins will not be standing for re-election as a Trustee or
Director.(2)
    
    Percentage of Trust Units and Exchangeable Units beneficially owned is calculated based on an
aggregate of 125,757,924 Trust Units and Exchangeable Units outstanding as of the Effective
Date.(3)
    
    Member of the Corporate Governance and Nominating Committee.(4)
    
    Member of the Audit Committee.(5)
    
    Member of the Compensation Committee.(6)
    
    8,000 of the Trust Units are held by Stuart & Company Limited, a company controlled by Mr.
Gibson, and 10,000 Trust Units are held in a registered retirement savings plan for the
benefit of Mr. Gibson. 34




---



##### 



(7)
    
    2,000 Trust Units are held by R.L. Phillips Investments Inc., a company controlled by Mr.
Phillips.(8)
    
    The Trust Units are held by 1201112 Alberta Ltd., a company controlled by Mr. Swartout.(9)
    
    As Mr. Wiggins will not be standing for re-election at the Trusts Annual and Special
Meeting, it is proposed that Mr. Hagerman will replace him on the Audit Committee  
 CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS
  
 AUDIT COMMITTEE INFORMATION
 
 Audit Committee Charter
  
 Composition of the Audit Committee
 Audit Committees Sarbanes-Oxley Act of 2002
 
 Relevant Education and Experience
  35




---



##### 



Pre-approval Policies and Procedures
 de minimus
   
 Audit Fees
  (in thousands CDN$)Years ended December 31,
    
    
    2006
    
    
    2005Audit fees
    
    
    $
    1,813
    
    
    
    $
    2,108Audit-related fees
    
    
    
    
    
    
    
    
    Tax fees
    
    
    
    579
    
    
    
    
    753All other fees
    
    
    
    
    
    
    
    
    54Total
    
    
    $
    2,392
    
    
    
    $
    2,915
    36




---



##### 



LEGAL PROCEEDINGS AND REGULATORY ACTIONS
   
 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
  
 TRANSFER AGENT, REGISTRAR AND VOTING AND EXCHANGE TRUSTEE
  
 MATERIAL CONTRACTS
  1.
    
    Weatherford Sale Agreement;2.
    
    CEDA Sale Agreement;3.
    
    Declaration of Trust;4.
    
    Limited Partnership Agreement;5.
    
    Voting and Exchange Trust Agreement;6.
    
    Support Agreement; and7.
    
    Administration Agreement.
  
 INTERESTS OF EXPERTS
  37




---



##### 



EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
   
 CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
  
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  
 ADDITIONAL INFORMATION
   38




---



##### 



Appendix 1 Audit Committee Charter and Terms Of Reference
 General
   Business
Corporations Act Securities Act Securities Exchange Act of 1934
 Committee Structure and Authority
 (a)
    
    Composition
 1 2
 3 4
 5
 (b)
    
    Appointment and Replacement of Committee Members
  
 1
    
    NYSE s. 303A.07(a)2
    
    MI 52-110 ss. 1.4, 1.5, 3.1(2) and 3.1(3); SO s. 301; SEC Final Rule on Standards Relating to Listed Company Audit
Committees; NYSE s. 303A.02, s. 303A.06 and 303A.07(6)3
    
    MI 52-110 ss. 1.1 and 3.1(4); NYSE s. 303.01(B)(i)(b); NYSE s. 303A.07(a)4
    
    SO s. 407; NYSE s. 303.01; NYSE s. 303A.07(a)5
    
    NYSE s. 303A.07(a) 39




---



##### 



(c)
    
    Quorum
  (d)
    
    Review of Charter and Terms of Reference
 6
 (e)
    
    Delegation
  (f)
    
    Reporting to the Board of Directors
 7
 (g)
    
    Committee Chair Responsibilities
  (h)
    
    Other Authority
  8
 Purpose
  
 6
    
    NYSE s. 303A.07(c)(ii)7
    
    NYSE s. 303A.07 (c)(iii)(H)8
    
    MI 52-110 s. 4.1(a) and (b); SO s. 301(5) and
(6); NYSE s. 303A.07(c) (iii) 40




---



##### 




    
    the integrity of financial reporting to the holders of units of the Trust
(Unitholders) and the investment community; 9
    
    the integrity of the financial reporting process, including the audit
process; 10
    
    the Corporations and the Trusts compliance with legal and regulatory requirements as
they relate to financial reporting matters; 11
    
    the external auditors qualifications and independence; 12
    
    the integrity of the system of internal accounting and financial reporting controls
implemented by management; 13
    
    the work and performance of the Corporations and the Trusts financial management,
internal audit function and its external auditor; and 14
    
    any other matter specifically delegated to the Committee by the Board of Directors.
 Committee Responsibilities
  
    
    review the interim and annual financial statements of the Corporation and make any
comments or recommendations to the Board of Directors;
    
    review the annual financial statements of the Trust and related notes and managements
discussion and analysis (MD&A) components and make recommendations to the Board of
Directors, and ultimately, once approved by the Board of Directors, to the Board of
Trustees, for their approval;
    
    review the interim financial statements of the Trust and related notes and MD&A
components prepared for distribution to the Unitholders and the investment community;
    
    be satisfied that adequate procedures are in place for the review of the Trusts public
disclosure of financial information extracted or derived from the Trusts financial
statements, other than the public disclosure referred to above, and must periodically
assess the adequacy of those procedures 15;
    
    report, through the Chair of the Committee, to the Board of Directors following each
meeting of the Committee, including an outline of the nature of discussions, major
decisions reached by the Committee, and its activities and compliance with this Charter and
Terms of Reference;
    
    approve the terms of the external auditors engagement letter as agreed between the
external auditor and financial management of the Corporation, and the compensation to be
paid by the Corporation to the external auditor; 16
 
 9
    
    NYSE s. 303A.07(c)(i)(A)10
    
    NYSE s. 303A.07(c)(i)(A)11
    
    NYSE s. 303A.07(c)(i)(A)12
    
    NYSE s. 303A.07(c)(i)(A)13
    
    NYSE s. 303A.07(c)(i)(A)14
    
    NYSE s. 303A.07(c)(i)(A)15
    
    MI 52-110 s. 2.3(6)16
    
    SO s. 301(2); NYSE s. 303A.07(c)(iii) 41




---



##### 




    
    review the reasons for any proposed change in the external auditor which is not
initiated by the Committee or the Board of Directors and any other significant issues
related to the change, including the response of the incumbent external auditor, and
enquire as to the qualifications of the proposed external auditor before making its
recommendations to the Board of Directors; 17
    
    be directly responsible for overseeing the work of the external auditor engaged for
the purpose of preparing or issuing an auditors report or performing other audit or review
services for the Corporation or the Trust, including the resolution of disagreements
between management and the external auditor regarding financial
reporting 18 or the application of any accounting principles or
practices;
    
    require the external auditor and internal auditor to report directly to the
Committee; 19
    
    provide the external auditor with notice of every meeting of the Committee and, at
the expense of the Corporation, the opportunity to attend and be heard thereat, and if so
requested by a member of the Committee, shall attend every meeting of the Committee held
during the term of the office of the external auditor. The external auditor of the
Corporation or any member of the Committee may call a meeting of the Committee;
 20 21 de minimus
 
    
    review the disclosure with respect to its pre-approval of audit and non-audit services
provided by the external auditors; 22
    
    review and discuss with management and the external auditor, as applicable, (a) all
critical accounting policies and practices to be used in the annual audit, (b) major issues
regarding accounting principles and financial statement presentations, including any
significant changes in the Trusts or the Corporations selection or application of
accounting principles, and major issues as to the adequacy of the Trusts or the
Corporations respective internal controls and any special audit steps adopted in light of
material control deficiencies; (c) analyses prepared by management or the external auditor
setting forth significant financial reporting issues and judgments made in connection with
the preparation of the financial statements, including analyses of the effects of
alternative Canadian Generally Accepted Accounting Principles (GAAP) methods on the
financial statements 23 of the Trust and any other opinions sought by
management from an independent or other audit firm or advisor with respect to the
accounting treatment of a particular item; (d) any management letter or schedule of
unadjusted differences provided by the external auditor and
 
 17
    
    NI 51-102 s. 4.1118
    
    SO s.301; SEC Final Rule on Standards
Relating to Listed Company Audit Committees; MI 52-110 s.2.3(3)19
    
    NI 52-110 s. 2.220
    
    The following non-audit services are
prohibited under SO s.201(a), the SEC Final Rule on Strengthening the
Commissions Requirements Regarding Auditor Independence and the
CICAs proposed Auditor Independence Standards: 
    
    bookkeeping services and other services related to accounting records
or financial statements;
    
    financial information systems design and implementation;
    
    appraisal or valuation services, fairness opinions or
contribution-in-kind reports;
    
    actuarial services;
    
    internal audit outsourcing services;
    
    management functions or human resources;
    
    broker dealer, investment advisor or investment banking services;
    
    legal services and expert services unrelated to the audit.
  
 21
    
    SO s. 201 and 202; SEC Final Rule on
Strengthening the Commissions Requirements Regarding Independence; SEC
Regulation S-X 2-01(c)(7)22
    
    SO s. 202; SEC Final Rule on Strengthening
the Commissions Requirements Regarding Auditor Independence23
    
    SO s.204; NYSE s.303A.07(c) (General
Commentary) 42




---



##### 



24 25 26 27 28
 
    
    reviewing earnings press releases (paying particular attention to any use of pro
forma or adjusted non-GAAP information) as well as financial information and earnings
guidance provided to analysts and rating agencies, it being understood that such review may
in the discretion of the Committee, be done generally (i.e., by discussing the types of
information to be disclosed and the type of presentation to be made); 29
    
    review with the external auditor and management the general audit approach and
scope of proposed audits of the financial statements of the Trust, the objectives,
staffing, locations, co-ordination and reliance upon management in the audit, the overall
audit plans, the audit procedures to be used and the timing and estimated budgets of the
audits; 30
    
    review any legal matter, claim or contingency that could have a significant impact
on the financial statements of the Trust, the Corporations or the Trusts compliance
policies and any material reports, inquiries or other correspondence received from
regulators or governmental agencies and the manner in which any such legal matter, claim or
contingency has been disclosed in the Trusts financial statements;
    
    review the treatment for financial reporting purposes of any significant transactions
which are not a normal part of the Corporations operations;
    
    review the interim review engagement report of the external auditor before the release
of interim financial statements of the Trust;
    
    review and discuss with management the Corporations major financial risk exposures and
the steps management has taken to monitor and control such exposures, including the
Corporations risk assessment and risk management policies such as financial derivatives
and hedging activities; 31
    
    annually request and review a report from the external auditor regarding (a) the
external auditors quality-control procedures, (b) any material issues raised by the most
recent quality-control review or peer review of the external auditor, or by any inquiry or
investigation by governmental or professional authorities within the preceding five years
respecting one or more independent audits carried out by the firm, 32
and (c) any steps taken to deal with any such issues;
 
 24
    
    SO s. 204; SEC Final Rule on Strengthening
the Commissions Requirements Regarding Auditor Independence25
    
    NYSE s. 303A.07(c)(iii)(F); CICA Handbook
Section 5751.2326
    
    NYSR s. 303A.07(c)(General Commentary)27
    
    NYSE s.303A.07(c) (General Commentary); SO
s.401; SEC Final Rule on Disclosure in Managements Discussion and
Analysis About Off  Balance Sheet Arrangements and Aggregate Contractual
Obligations28
    
    SO s.401; SEC Regulation G; NYSE s.
303A.07(c); SEC Final Rule on Conditions for Use of Non-GAAP Financial
Measures; CSA Notice 52-30629
    
    NP 51-201 s.6.4; MI 52-110 s.2.3(5); NYSE
s.303A.07(c)(iii)(C) and 303A.07(c) (General Commentary)30
    
    CICA Handbook Section 5751.14; MI 52-110 s.
2.3(3)(c)(i)(A)31
    
    NYSE s. 303A.07(c)(iii)(D)32
    
    NYSE s. 303A.07(c)(iii)(A); CICA Handbook
Section 5751.31 43




---



##### 




    
    evaluate the qualifications and performance of the external auditor, including a written
review and evaluation of the lead partner of the external auditor 33,
review and approve hiring policies for partners, employees or former employees of the
external auditor 34 and make recommendations to the Board of Directors
as to the appointment or reappointment of the external auditor to be proposed for approval
by the Board of Trustees and Unitholders; 35
    
    review the independence of the external auditor, 36 annually
request and review a written report from the external auditor respecting its independence,
including a list of all relationships between the external auditor and each of the
Corporation and the Trust, 37 and consider applicable auditor
independence standards; 38
    
    ensure that the lead audit partner of the external auditor and the audit partner
responsible for reviewing the audit are rotated at least every five years as required by
the Sarbanes-Oxley Act of 2002, and further consider rotation of the external auditors
firm itself;
    
    discuss with management and the external auditors any accounting adjustments that were
noted or proposed by the external auditors but were not adopted (as immaterial or
otherwise);
    
    review the adequacy and effectiveness of the Corporations and the Trusts internal
accounting and financial controls based on recommendations from management and the external
auditor for the improvement of accounting practices and internal controls; 39
    
    establish and periodically review procedures for (a) the receipt, retention and
treatment of complaints received by the Corporation or the Trust regarding accounting,
internal controls or auditing matters, and (b) the confidential, anonymous submission by
employees of the Corporation of concerns regarding questionable accounting or auditing
matters or other matters that could negatively affect the Corporation or the Trust such as
violations of the Joint Code of Business Conduct and Ethics; 40
    
    review periodically with management and the external auditors any significant
complaints received;
    
    review other financial information included in the Trusts Annual Report to ensure that
it is consistent with the Board of Directors knowledge of the affairs of the Corporation
and the Trust and is unbiased and non-selective;
    
    if requested by the Board of Directors, receive from the Executive Chair or the Chief
Executive Officer and Chief Financial Officer of the Corporation a certificate certifying
in respect of each annual and interim report of the Trust the matters such officers are
required to certify in connection with the filing of such reports under applicable
securities laws and receive and review disclosures made by such officers about any
significant deficiencies in the design or operation of internal controls or material
weaknesses therein and any fraud involving management or persons who have a significant
role in the Corporations internal controls;
    
    prepare any report required by law, regulations or stock exchange requirement to be
included in the Trusts periodic reports;
 
 33
    
    Commentary to NYSE s. 303A.07(c)(iii)(A)34
    
    MI 52-110 s. 2.3(8); NYSE s.
303A.07(c)(iii)(G); SO s. 206; SEC Final Rule on Strengthening the
Commissions Requirements Regarding Auditor Independence; Independence
Standards Board Independence Standard No. 335
    
    SO s. 301(2); MI 52-110 s. 2.3(2); NYSE s.
303A.07(c)(i)(A) and 303A.07(c)(iii)36
    
    NYSE s. 303A.07(c)(i)(A)37
    
    NYSE s. 303A.07(c)(iii)(A); CICA Handbook
Section 5751.12, .25, .29 and .3238
    
    SO s. 203; NYSE s. 303A.07(c)(iii)(A); CICA
Proposed Independence Standards s. 204.4(20)39
    
    NYSE s. 303A.07(c)(General Commentary); CICA
Handbook Section 5751.1640
    
    SO s. 301; SEC Final Rule on Standards
Relating to Listed Company Audit Committees; MI 52-110 s. 2.3(7) 44




---



##### 




    
    meet at least four times a year on a quarterly basis or more frequently as circumstances
require, with the Chief Financial Officer of the Corporation, the head of the internal
audit function of the Corporation, if other than the Chief Financial Officer, and the
external auditor in separate executive sessions to discuss any matters that the Committee
or each of these groups believes should be discussed privately;
    
    review annually the Corporations insurance programs and pension plans, not including
the Directors and Officers insurance program;
    
    review the results of the annual external audit, including the audit report to the
Trusts Unitholders and any other reports prepared by the external auditors and the
informal reporting from the external auditor on accounting systems and internal controls,
including managements response;
    
    review and evaluate the scope, risk assessment, and nature of the internal audit plan
and any subsequent changes; 41
    
    consider and review the following issues with management and the head of the internal audit group:
 
    
    significant findings of the internal audit group as well as managements response to them;
    
    any difficulties encountered in the course of their internal
audits, including any restrictions on the scope of their work or access to
required information;
    
    the internal auditing budget and staffing;
    
    the internal Audit Services Charter; and
    
    compliance with The Institute of Internal Auditors Standards
for the Professional Practice of Internal Auditing;
 
    
    approve the appointment, replacement or dismissal of the head of the internal audit
group; and
    
    direct the head of the internal audit group to review any specific areas the Committee
deems necessary; and
    
    ensure that the obligations of the Corporation pursuant to the Administration Agreement
are met and that good corporate governance procedures are used in connection therewith.
   Limitation of Committees Role
  
 41
    
    NYSE s. 303A.07(c)(i)(A) and s.
303A.07(c)(iii)(E); s. 303A.07(d) 45




---



##### 



[Approved on July 26, 2006]
 46




---



##### 



Precision Drilling Trust
 MANAGEMENTS DISCUSSION AND ANALYSIS
   HIGHLIGHTS  (Stated in thousands of Canadian dollars, except per diluted unit/share amounts)
 % Increase
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    % IncreaseYears ended December 31,
    
    2006
    
    
    (Decrease)
    
    
    2005
    
    
    (Decrease)
    
    
    2004
    
    
    (Decrease)Revenue
    
    $
    1,437,584
    
    
    
    13
    
    
    $
    1,269,179
    
    
    
    23
    
    
    $
    1,028,488
    
    
    
    12Operating earnings (1)
    
    
    595,279
    
    
    
    28
    
    
    
    465,378
    
    
    
    40
    
    
    
    331,313
    
    
    
    31Earnings from continuing operations
    
    
    572,512
    
    
    
    159
    
    
    
    220,848
    
    
    
    17
    
    
    
    188,131
    
    
    
    31Discontinued operations, net of tax(2)
    
    
    7,077
    
    
    
    n/m
    
    
    
    1,409,715
    
    
    
    n/m
    
    
    
    59,273
    
    
    
    n/mNet earnings
    
    
    579,589
    
    
    
    (64
    )
    
    
    1,630,563
    
    
    
    559
    
    
    
    247,404
    
    
    
    37Cash provided by continuing operations
    
    
    609,744
    
    
    
    196
    
    
    
    206,013
    
    
    
    (28
    )
    
    
    286,437
    
    
    
    43Net capital spending from
continuing operations (3)
    
    
    233,693
    
    
    
    67
    
    
    
    140,077
    
    
    
    23
    
    
    
    113,897
    
    
    
    34Distributions declared  cash
    
    
    447,001
    
    
    
    n/m
    
    
    
    70,510
    
    
    
    n/m
    
    
    
    
    
    
    
    Distributions declared  in-kind
    
    
    24,523
    
    
    
    n/m
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Per diluted unit/share information:Earnings from continuing operations
    
    
    4.56
    
    
    
    159
    
    
    
    1.76
    
    
    
    9
    
    
    
    1.61
    
    
    
    23Net earnings
    
    
    4.62
    
    
    
    (64
    )
    
    
    13.00
    
    
    
    516
    
    
    
    2.11
    
    
    
    29Distributions declared  cash
    
    
    3.56
    
    
    
    n/m
    
    
    
    0.56
    
    
    
    n/m
    
    
    
    
    
    
    
    Distributions declared  in-kind
    
    
    0.195
    
    
    
    n/m
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    Non-GAAP measure. See page 66.(2)
    
    Includes gain on disposition of discontinued operations.(3)
    
    Excludes acquisitions and discontinued operations.n/m  calculation not meaningful.




---



##### 



FINANCIAL POSITION AND
RATIOS  (Stated in thousands of Canadian dollars, except ratios)
 Years ended December 31,
    
    2006
    
    
    2005
    
    
    2004Working capital
    
    $
    166,484
    
    
    $
    152,754
    
    
    $
    557,311Working capital ratio
    
    
    1.8
    
    
    
    1.4
    
    
    
    2.5Long-term debt (1)
    
    $
    140,880
    
    
    $
    96,838
    
    
    $
    718,850Total assets
    
    $
    1,761,186
    
    
    $
    1,718,882
    
    
    $
    3,852,049Long-term debt to long-term debt plus equity (1)
    
    
    0.10
    
    
    
    0.08
    
    
    
    0.24Long-term debt to cash provided by continuing operations (1)
    
    
    0.23
    
    
    
    0.47
    
    
    
    2.51Interest coverage (2)
    
    
    74.1
    
    
    
    15.9
    
    
    
    7.2
 (1)
    
    Excludes current portion of long-term debt which is included in working capital.(2)
    
    Operating earnings divided by net interest expense.
 OVERVIEW AND OUTLOOK
   
   Profitability
 
    
    Precision benefited from strong industry fundamentals carried over from a banner 2005 to
generate record earnings from continuing operations for 2006 of $573 million or $4.56 per unit.
    
    Precision generated operating earnings of $595 million, an increase of $130 million or 28% over
2005.
 Growth
 
    
    Net capital spending in 2006 for the purchase of property, plant and equipment increased
67% or $94 million over the prior year to $234 million. Before considering proceeds on asset
disposals of $29 million, Precision spent $92 million toward the productive capacity maintenance
of its existing asset base and $171 million on expansionary initiatives.
 
    
    Precision established a contract drilling operation in the United States and currently
operates two rigs.
    
    Precision added 13 new and decommissioned two drilling rigs in its Canadian fleet. By the
end of the first quarter of 2008, Precision expects to be operating a North American drilling
fleet of 260 rigs, 13% more than at the end of 2005.
    
    Precision commenced the construction of two service rigs under a long-term customer
arrangement, for deployment in the first half of 2007.
    
    The snubbing, camp and catering and rental divisions grew existing product lines in
response to market
conditions.




---



##### 



Augment Customer Services
 
    
    On August 17, 2006 Precision acquired a wastewater treatment business for remote work sites
which complements our camp and catering and wellsite rental businesses and enhances our level of
customer service.
 Passionately Pursue Target Zero Safety Vision
 
    
    Precision moved closer to its safety vision with a renewed focus on the basic elements of
its health, safety and environmental program. The improvement in safe work practices continued
for Precision, resulting in a 28% reduction in workplace injuries.
 Build Upon Our Core Group of People
 
    
    A North American shortage of skilled and experienced oilfield employees carried into 2006.
Precision focused on the retention of existing employees through initiatives that provide a safe
and productive work environment, opportunity for advancement and added wage security through
programs such as our Designated Driller Program.
    
    The Canadian drilling industry has taken an important step forward with the 2006 commencement
of a compulsory journeyman trade program through the Alberta government, the rig technician
designation, the first of its kind in the world. Precision has been involved in the development
of this initiative from the beginning.
    
    Precision continued to transition executive roles through a succession process that began in
September 2005. Precision announced in October 2006 that its founder, Hank Swartout, would
relinquish his position as Chief Executive Officer and assume the role of Executive Chairman
effective January 1, 2007. Precision has initiated and continues to develop a more involved
strategic planning process.
    
    Precision completed its internal control certification over financial reporting pursuant to
Canadian and United States securities regulations. The initiative was led through internal
efforts that sharpened our awareness of the joint code of business conduct and ethics policy and
provided numerous opportunities for Precisions management to build upon its skill in identifying
and managing risk.
 Cash Distributions to Unitholders
 
    
    With its conversion to an income trust on November 7, 2005 Precision converted from a cash
retention to a cash flow-through model. For 2006, Precisions first full year as an income trust,
Precision declared cash distributions of $447 million or $3.56 per unit.
    
    Distributable cash from operations of $495 million resulted in a cash distribution declared
payout ratio of 90% for 2006. This calculation starts with $610 million in cash provided from
operations less $92 million for productive capacity maintenance capital expenditures and $23
million for unfunded long-term incentive plan obligations. The remaining $48 million was retained
to fund other investing and financing activities.




---



##### 




    
    If the proposed measures are enacted into law, effective January 1, 2011, the current
underlying flow-through status of Precisions current income trust structure will be ended. The
proposed amendments have negative implications for certain unitholders of Precision commencing in
2011, particularly Canadian tax-exempt investors, foreign investors and tax-exempt entities.
    
    Nonetheless, Precisions operational business model remains intact.
    
    Precision originally converted to a trust because the tax rules of the day allowed the market
to place a higher value for unitholders on the flow-through structure than the traditional
corporate structure. In light of the proposed legislative changes, it is incumbent on the Board
of Trustees to examine whether changes in the current legal structure and capital structure are
appropriate and in the best interests of unitholders and, if so, when such changes should be
implemented.




---



##### 



SUMMARY OF CONSOLIDATED STATEMENTS OF EARNINGS  (Stated in thousands of Canadian dollars)
 Years ended December 31,
    
    2006
    
    
    2005
    
    
    2004Revenue:Contract Drilling Services
    
    $
    1,009,821
    
    
    $
    916,221
    
    
    $
    727,710Completion and Production Services
    
    
    441,017
    
    
    
    369,667
    
    
    
    313,386Inter-Segment Elimination
    
    
    (13,254
    )
    
    
    (16,709
    )
    
    
    (12,608
    )1,437,584
    
    
    
    1,269,179
    
    
    
    1,028,488Operating earnings (loss):Contract Drilling Services
    
    
    473,624
    
    
    
    404,385
    
    
    
    282,315Completion and Production Services
    
    
    163,119
    
    
    
    121,643
    
    
    
    77,074Corporate and Other
    
    
    (41,464
    )
    
    
    (60,650
    )
    
    
    (28,076
    )595,279
    
    
    
    465,378
    
    
    
    331,313Interest, net
    
    
    8,029
    
    
    
    29,270
    
    
    
    46,280Premium on redemption of bonds
    
    
    
    
    
    
    71,885
    
    
    
    Loss on disposal of short-term investments
    
    
    
    
    
    
    70,992
    
    
    
    Other
    
    
    (408
    )
    
    
    
    
    
    
    (4,899
    )Earnings from continuing operations before income taxes
    
    
    587,658
    
    
    
    293,231
    
    
    
    289,932Income taxes
    
    
    15,146
    
    
    
    72,383
    
    
    
    101,801Earnings from continuing operations
    
    
    572,512
    
    
    
    220,848
    
    
    
    188,131Discontinued operations, net of tax
    
    
    7,077
    
    
    
    1,409,715
    
    
    
    59,273Net earnings
    
    $
    579,589
    
    
    $
    1,630,563
    
    
    $
    247,404




---



##### 



OUTLOOK




---



##### 



DYNAMICS OF THE OILFIELD SERVICES INDUSTRY
  GLOBAL MARKETS
   
  NORTH AMERICAN MARKETS




---



##### 



ECONOMIC DRIVERS OF THE OILFIELD SERVICES BUSINESS




---



##### 








---



##### 



PRECISIONS DEVELOPMENT
 PRECISIONS HISTORY OF CONTINUING OPERATIONS
      
 STRATEGIC DIRECTION
  
    
    maintain a flexible business that is responsive to market conditions;
 
    
    exploit technological advances where markets dictate;
 
    
    focus on organic growth opportunities to enhance and diversify service offerings;
 
    
    capitalize on strategic and accretive acquisitions both geographically and operationally;
 
    
    develop and enhance employee safety, recruitment and retention initiatives;
 
    
    upgrade equipment with customer needs and regulatory requirements in mind; and
 
    
    apply operational and financial discipline throughout all areas of the business.
 KEY PERFORMANCE DRIVERS
  Commodity Prices:




---



##### 



Customer Demand:
 Workforce:
 Operating Efficiency:
 Financial Performance:
 Expansion Capital Spending:
 OPERATING SEGMENTS
   
    
    Precision Drilling which provides land drilling services utilizing 240 drilling rigs,
approximately 29% of the Canadian industry;
    
    Precision Drilling Oilfield Services, Inc. which provides land drilling services in the United
States and established operations in June 2006 with one rig;
    
    LRG Catering which supplies camp and catering services with 101 camps, approximately 16% of the
industry;
    
    Rostel Industries which provides engineering, machining, fabrication, component manufacturing
and repair services for drilling and service rigs; and
    
    Columbia Oilfield Supply which provides centralized procurement, standardized product
selection, and coordinated distribution of goods for Precisions operations.The Completion and Production Services segment is comprised of the following:
    
    Precision Well Servicing which provides well completions and workovers with 237 rigs,
approximately 23% of the industry service rigs;
    
    Live Well Service which performs well completions and workovers with 26 snubbing units,
approximately 30% of the industry;
    
    Precision Rentals which supplies approximately 15,000 rental equipment items including well
control equipment, surface equipment, specialty tubulars and wellsite accommodation units
representing approximately 10% of the
industry; and




---



##### 




    
    Terra Water Systems Limited Partnership which operates 51 wastewater treatment units,
representing approximately 10% of the industry.
 Precision Drilling
  Precision Fleet
    
    
    Industry Fleet(1)Maximum
    
    
    
    
    
    
    
    
    
    
    %Depth Rating
    
    
    Number
    
    
    % of
    
    
    Market
    
    
    Number
    
    
    % ofType of Drilling Rig
    
    (metres)
    
    
    of Rigs
    
    
    Total
    
    
    Share(3)
    
    
    of Rigs
    
    
    Total
    
    
    Change(4)Single
    
    
    1,200
    
    
    
    14
    
    
    
    6
    
    
    
    10
    
    
    
    145
    
    
    
    17
    
    
    
    21Super SingleTM(2)
    
    
    3,000
    
    
    
    28
    
    
    
    12
    
    
    
    85
    
    
    
    33
    
    
    
    4
    
    
    
    9Double
    
    
    3,000
    
    
    
    94
    
    
    
    39
    
    
    
    26
    
    
    
    364
    
    
    
    43
    
    
    
    20Light triple
    
    
    3,600
    
    
    
    44
    
    
    
    18
    
    
    
    38
    
    
    
    117
    
    
    
    14
    
    
    
    3Heavy triple
    
    
    6,700
    
    
    
    49
    
    
    
    20
    
    
    
    42
    
    
    
    118
    
    
    
    14
    
    
    
    11Coiled tubing
    
    
    1,500
    
    
    
    11
    
    
    
    5
    
    
    
    17
    
    
    
    65
    
    
    
    8
    
    
    
    8Total
    
    
    
    
    
    
    240
    
    
    
    100
    
    
    
    29
    
    
    
    842
    
    
    
    100
    
    
    
    72
 (1)
    
    Source: Daily Oil Bulletin  Rig Locator Report as of January 2007. Precision has
allocated the industry rig fleet by rig type.(2)
    
    Super SingleTM excludes single rigs that do not have automated pipe-handling systems, or do
not have a self-contained top drive, or cannot run range 3 drill pipe/casing.(3)
    
    Market share means Precisions rigs as a percent of the industrys rigs.(4)
    
    Change in number of industry rigs as compared to the prior year.
  Maximum Depth RatingType of Drilling Rig
    
    Metres
    
    
    Feet
    
    
    Horsepower
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Single
    
    
    1,200
    
    
    
    4,000
    
    
    
    250-300
    
    
    
    14
    
    
    
    17
    
    
    
    16
    
    
    
    18Super SingleTM
    
    
    3,000
    
    
    
    10,000
    
    
    
    400-600
    
    
    
    29
    
    
    
    21
    
    
    
    21
    
    
    
    15Double
    
    
    3,000
    
    
    
    10,000
    
    
    
    300-500
    
    
    
    94
    
    
    
    94
    
    
    
    95
    
    
    
    96Light triple
    
    
    3,600
    
    
    
    12,000
    
    
    
    500-750
    
    
    
    44
    
    
    
    44
    
    
    
    45
    
    
    
    47Heavy triple
    
    
    6,700
    
    
    
    22,000
    
    
    
    1,000-2,000
    
    
    
    49
    
    
    
    43
    
    
    
    41
    
    
    
    39Coiled tubing
    
    
    1,500
    
    
    
    5,000
    
    
    
    250-300
    
    
    
    11
    
    
    
    11
    
    
    
    11
    
    
    
    10Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    241
    
    
    
    230
    
    
    
    229
    
    
    
    225
 Precision Well Servicing
 Type of Service Rig
    
    Horsepower
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Singles:Mobile
    
    
    150-400
    
    
    
    12
    
    
    
    17
    
    
    
    19
    
    
    
    30Freestanding mobile
    
    
    150-400
    
    
    
    92
    
    
    
    88
    
    
    
    86
    
    
    
    75Doubles:Mobile
    
    
    250-550
    
    
    
    44
    
    
    
    44
    
    
    
    42
    
    
    
    46Freestanding mobile
    
    
    200-550
    
    
    
    9
    
    
    
    8
    
    
    
    9
    
    
    
    6Skid
    
    
    300-860
    
    
    
    65
    
    
    
    65
    
    
    
    67
    
    
    
    66Slants:Freestanding
    
    
    250-400
    
    
    
    15
    
    
    
    15
    
    
    
    16
    
    
    
    16Total
    
    
    
    
    
    
    237
    
    
    
    237
    
    
    
    239
    
    
    
    239




---



##### 



CAPACITY TO DELIVER
  Large Diversified Rig Fleets
  TM
   Inventory of Ancillary Equipment
   Industry-leading Safety Program
  Well-maintained Equipment




---



##### 



Employees
  Information Systems




---



##### 



FINANCIAL RESULTS
CONTRACT DRILLING SERVICES SEGMENT  (Stated in thousands of Canadian dollars, except where indicated)
 % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofYears ended December 31,
    
    2006
    
    
    Revenue
    
    
    2005
    
    
    Revenue
    
    
    2004
    
    
    RevenueRevenue
    
    $
    1,009,821
    
    
    
    
    
    
    $
    916,221
    
    
    
    
    
    
    $
    727,710Expenses:Operating
    
    
    470,713
    
    
    
    46.6
    
    
    
    448,930
    
    
    
    49.0
    
    
    
    382,886
    
    
    
    52.6General and administrative
    
    
    27,225
    
    
    
    2.7
    
    
    
    23,911
    
    
    
    2.6
    
    
    
    19,190
    
    
    
    2.6Depreciation
    
    
    38,573
    
    
    
    3.8
    
    
    
    39,233
    
    
    
    4.3
    
    
    
    42,245
    
    
    
    5.8Foreign exchange
    
    
    (314
    )
    
    
    
    
    
    
    (238
    )
    
    
    
    
    
    
    1,074
    
    
    
    0.2Operating earnings (1)
    
    $
    473,624
    
    
    
    46.9
    
    
    $
    404,385
    
    
    
    44.1
    
    
    $
    282,315
    
    
    
    38.8
 % Increase
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    % Increase2006
    
    
    (Decrease)
    
    
    2005
    
    
    (Decrease)
    
    
    2004
    
    
    (Decrease)Number of drilling rigs (end of year)
    
    
    241
    
    
    
    4.8
    
    
    
    230
    
    
    
    0.4
    
    
    
    229
    
    
    
    1.8Drilling operating days
    
    
    44,938
    
    
    
    (4.3
    )
    
    
    46,937
    
    
    
    12.8
    
    
    
    41,625
    
    
    
    (1.5
    )Drilling revenue per operating day ($/day)
    
    
    20,518
    
    
    
    13.8
    
    
    
    18,034
    
    
    
    9.3
    
    
    
    16,494
    
    
    
    11.5Drilling statistics: (2)Number of wells drilled
    
    
    6,180
    
    
    
    (20.4
    )
    
    
    7,766
    
    
    
    3.2
    
    
    
    7,525
    
    
    
    (11.0
    )Average days per well
    
    
    7.2
    
    
    
    20.0
    
    
    
    6.0
    
    
    
    9.1
    
    
    
    5.5
    
    
    
    10.0Number of metres drilled (000s)
    
    
    7,810
    
    
    
    (12.3
    )
    
    
    8,901
    
    
    
    11.0
    
    
    
    8,021
    
    
    
    (6.8
    )Average metres per well
    
    
    1,264
    
    
    
    10.3
    
    
    
    1,146
    
    
    
    7.5
    
    
    
    1,066
    
    
    
    4.7
 (1)
    
    Non-GAAP measure. See page 66.(2)
    
    Canadian operations only.
 2006 Compared to 2005
 The Contract Drilling Services segment,




---



##### 



The Precision Drilling division
      LRG Catering




---



##### 



Rostel Industries and Columbia Oilfield Supply divisions
 Precision Drilling Oilfield Services, Inc.
 2005 Compared to 2004
 The Contract Drilling Services segment
    For the Precision Drilling division
   TM
 LRG Catering




---



##### 



COMPLETION AND PRODUCTION SERVICES SEGMENT  (Stated in thousands of Canadian dollars, except where indicated)
 % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofYears ended December 31,
    
    2006
    
    
    Revenue
    
    
    2005
    
    
    Revenue
    
    
    2004
    
    
    RevenueRevenue
    
    $
    441,017
    
    
    
    
    
    
    $
    369,667
    
    
    
    
    
    
    $
    313,386Expenses:Operating
    
    
    231,602
    
    
    
    52.5
    
    
    
    209,657
    
    
    
    56.7
    
    
    
    196,113
    
    
    
    62.6General and administrative
    
    
    14,242
    
    
    
    3.2
    
    
    
    11,021
    
    
    
    3.0
    
    
    
    12,708
    
    
    
    4.0Depreciation
    
    
    32,013
    
    
    
    7.3
    
    
    
    27,402
    
    
    
    7.4
    
    
    
    27,508
    
    
    
    8.8Foreign exchange
    
    
    41
    
    
    
    
    
    
    
    (56
    )
    
    
    
    
    
    
    (17
    )
    
    
    Operating earnings (1)
    
    $
    163,119
    
    
    
    37.0
    
    
    $
    121,643
    
    
    
    32.9
    
    
    $
    77,074
    
    
    
    24.6
 % Increase
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    % Increase2006
    
    
    (Decrease)
    
    
    2005
    
    
    (Decrease)
    
    
    2004
    
    
    (Decrease)Number of service rigs (end of year)
    
    
    237
    
    
    
    
    
    
    
    237
    
    
    
    (0.8
    )
    
    
    239
    
    
    
    Service rig operating hours
    
    
    480,137
    
    
    
    0.6
    
    
    
    477,232
    
    
    
    1.1
    
    
    
    472,008
    
    
    
    7.4Revenue per operating hour ($/hour)
    
    
    712
    
    
    
    18.7
    
    
    
    600
    
    
    
    17.0
    
    
    
    513
    
    
    
    11.0
 (1)
    
    Non-GAAP measure. See page 66.
 2006 Compared to 2005
 The Completion and Production Services segment




---



##### 



The Precision Well Servicing division
    Live Well Services
 Precision Rentals
 Terra Water Systems
 2005 Compared to 2004
 The Completion and Production Services segment
   The Precision Well Servicing division




---



##### 



Live Well Services
 Precision Rentals
 OTHER ITEMS
 2006 Compared to 2005
 Corporate and Other Expenses
  Interest Expense
  Income Taxes




---



##### 



Discontinued Operations
  2005 Compared to 2004
 Corporate and Other Expenses
  Interest Expense
  Premium on Redemption of Bonds
  Loss on Disposal of Short-term Investments
  Discontinued Operations
  Income Taxes




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
      Payments Due by Period(Stated in thousands of Canadian dollars)
    
    Total
    
    
    Less Than 1 Year
    
    
    1  3 Years
    
    
    4  5 Years
    
    
    After 5 YearsLong-term debt
    
    $
    140,880
    
    
    $
    
    
    
    $
    140,880
    
    
    $
    
    
    
    $
    Operating leases
    
    
    26,538
    
    
    
    7,858
    
    
    
    11,371
    
    
    
    7,309
    
    
    
    Long-term incentive plan
    
    
    22,699
    
    
    
    
    
    
    
    22,699
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    190,117
    
    
    $
    7,858
    
    
    $
    174,950
    
    
    $
    7,309
    
    
    $
    




---



##### 



Outstanding Unit Data
 February 28
    
    
    December 31
    
    
    December 312007
    
    
    2006
    
    
    2005Trust units
    
    
    125,570,432
    
    
    
    125,536,329
    
    
    
    124,352,921Exchangeable LP units
    
    
    187,492
    
    
    
    221,595
    
    
    
    1,108,382Total units outstanding
    
    
    125,757,924
    
    
    
    125,757,924
    
    
    
    125,461,303
 DISTRIBUTIONS
    (Stated in thousands of Canadian dollars, except per unit amounts)
    
    2006
    
    
    
    2005
    

    
    2004Cash provided by continuing operations
    
    $
    609,744

    
    
    $
    206,013
    

    
    $
    286,437Less:Productive capacity maintenance capital expenditures
    
    
    (92,123
    )
    
    
    
    (92,214
    )

    
    
    (82,014
    )Unfunded long-term incentive plan obligation
    
    
    (22,699
    )
    
    
    
    
    

    
    
    Distributable cash from operations (A) (1)
    
    
    494,922

    
    
    $
    113,799
    

    
    $
    204,423Cash retained
    
    
    (47,921
    )Cash distributions declared (B)
    
    $
    447,001Payout ratio (B)/(A)
    
    
    90.3%Distributable cash from operations per basic and diluted unit
    
    $
    3.94
 (1)
    
    Non-GAAP measure. See page 66.




---



##### 



(Stated in thousands of Canadian dollars)
    
    2006
    
    
    2005Units outstanding
    
    
    125,757,924
    
    
    
    125,461,303Year end unit price
    
    $
    27.00
    
    
    $
    33.00Units at market
    
    $
    3,395,464
    
    
    $
    4,140,223Long-term debt
    
    
    140,880
    
    
    
    96,838Less: Working capital
    
    
    (166,484
    )
    
    
    (152,754
    )Enterprise value
    
    $
    3,369,860
    
    
    $
    4,084,307




---



##### 



QUARTERLY FINANCIAL SUMMARY
 (Stated in thousands of Canadian dollars except per diluted unit/share amounts)
 Year ended December 31, 2006
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    YearRevenue
    
    $
    536,408
    
    
    $
    223,569
    
    
    $
    349,558
    
    
    $
    328,049
    
    
    $
    1,437,584Operating earnings (1)
    
    
    245,909
    
    
    
    74,543
    
    
    
    142,431
    
    
    
    132,396
    
    
    
    595,279Earnings from continuing operations
    
    
    224,183
    
    
    
    88,303
    
    
    
    133,552
    
    
    
    126,474
    
    
    
    572,512Per diluted unit/share
    
    
    1.79
    
    
    
    0.70
    
    
    
    1.06
    
    
    
    1.01
    
    
    
    4.56Net earnings
    
    
    224,183
    
    
    
    88,303
    
    
    
    139,667
    
    
    
    127,436
    
    
    
    579,589Per diluted unit/share
    
    
    1.79
    
    
    
    0.70
    
    
    
    1.11
    
    
    
    1.01
    
    
    
    4.62Cash provided by (used in) continuing operations
    
    
    40,940
    
    
    
    339,619
    
    
    
    74,952
    
    
    
    154,233
    
    
    
    609,744Distributions to unitholders  declared
    
    $
    101,623
    
    
    $
    111,681
    
    
    $
    116,785
    
    
    $
    141,435
    
    
    $
    471,524
 Year ended December 31, 2005
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    YearRevenue
    
    $
    383,407
    
    
    $
    157,895
    
    
    $
    300,016
    
    
    $
    427,861
    
    
    $
    1,269,179Operating earnings (1)
    
    
    153,020
    
    
    
    24,505
    
    
    
    111,956
    
    
    
    175,897
    
    
    
    465,378Earnings from continuing operations
    
    
    88,281
    
    
    
    9,308
    
    
    
    2,382
    
    
    
    120,877
    
    
    
    220,848Per diluted unit/share
    
    
    0.71
    
    
    
    0.07
    
    
    
    0.08
    
    
    
    0.96
    
    
    
    1.76Net earnings
    
    
    138,518
    
    
    
    25,851
    
    
    
    1,382,648
    
    
    
    83,546
    
    
    
    1,630,563Per diluted unit/share
    
    
    1.11
    
    
    
    0.21
    
    
    
    11.00
    
    
    
    0.66
    
    
    
    13.00Cash provided by (used in) continuing operations
    
    
    95,902
    
    
    
    116,719
    
    
    
    46,978
    
    
    
    (53,587
    )
    
    
    206,013Distributions to unitholders  declared
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    70,510
    
    
    $
    70,510
 (1)
    
    Non-GAAP measure. See page 66.  FOURTH QUARTER DISCUSSION




---



##### 



CRITICAL ACCOUNTING ESTIMATES, NEW ACCOUNTING STANDARDS AND BUSINESS RISKS
 CRITICAL ACCOUNTING ESTIMATES




---



##### 



Allowance for Doubtful Accounts Receivable
  Impairment of Long-lived Assets
  Depreciation and Amortization
   Income Taxes




---



##### 



Long-term Incentive Plan Compensation
  NEW ACCOUNTING STANDARDS
      BUSINESS RISKS
   Crude Oil and Natural Gas Prices




---



##### 



Workforce Availability
   Business is Seasonal
   Technology




---



##### 



Customer Merger and Acquisition Activity
  Competitive Industry
  Capital Overbuild in the Drilling Industry
  Tax Consequences of Previous Transactions Completed by Precision
  Credit Risk
  Capital Expenditures
  Access to Additional Financing




---



##### 



Taxation of Distributions
  Environmental
  DISCLOSURE CONTROLS AND PROCEDURES
 EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
    NON-GAAP MEASURES




---



##### 



OPERATING EARNINGS
  DISTRIBUTABLE CASH FROM OPERATIONS




---



##### 



Precision Drilling Trust
 MANAGEMENTS REPORT TO THE UNITHOLDERS
        (Signed)
    
    (Signed)Gene C. Stahl
    
    Doug J. StrongPresident and Chief Operating Officer
    
    Chief Financial OfficerPrecision Drilling Corporation,
    
    Precision Drilling Corporation,Administrator to Precision Drilling Trust
    
    Administrator to Precision Drilling TrustMarch 9, 2007
    
    March 9, 2007




---



##### 



Precision Drilling Trust
 AUDITORS REPORT TO THE UNITHOLDERS
 To the Unitholders of Precision Drilling Trust
      Chartered Accountants
Calgary, Alberta
February 13, 2007




---



##### 



Precision Drilling Trust
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Board of Directors of Precision Drilling Corporation, as Administrator of Precision
Drilling Trust and the Unitholders of Precision Drilling Trust
        Chartered Accountants
Calgary, Alberta
February 13, 2007




---



##### 



Precision Drilling Trust
 CONSOLIDATED BALANCE SHEETS
 As at December 31,(Stated in thousands of Canadian dollars)
    
    
    
    
    
    2006
    
    
    2005ASSETSCurrent assets:Accounts receivable
    
    (Note 19)
    
    $
    354,671
    
    
    $
    500,655Income taxes recoverable
    
    
    
    
    
    
    8,701
    
    
    
    Inventory
    
    
    
    
    
    
    9,073
    
    
    
    7,035372,445
    
    
    
    507,690Property, plant and equipment, net of accumulated depreciation
    
    (Note 5)
    
    
    1,107,617
    
    
    
    943,900Intangibles, net of accumulated amortization of $503 (2005  $413)
    
    
    
    
    
    
    375
    
    
    
    465Goodwill
    
    
    
    
    
    
    280,749
    
    
    
    266,827$
    1,761,186
    
    
    $
    1,718,882LIABILITIES AND UNITHOLDERS EQUITYCurrent liabilities:Bank indebtedness
    
    (Note 6)
    
    $
    36,774
    
    
    $
    20,468Accounts payable and accrued liabilities
    
    (Note 19)
    
    
    130,202
    
    
    
    134,303Incomes taxes payable
    
    
    
    
    
    
    
    
    
    
    163,530Distributions payable
    
    (Note 7)
    
    
    38,985
    
    
    
    36,635205,961
    
    
    
    354,936Long-term incentive plan payable
    
    
    
    
    
    
    22,699
    
    
    
    Long-term debt
    
    (Note 8)
    
    
    140,880
    
    
    
    96,838Future income taxes
    
    (Note 9)
    
    
    174,571
    
    
    
    192,517544,111
    
    
    
    644,291Commitments and contingencies
    
    (Notes 12 and 20)Unitholders equity:Unitholders capital
    
    (Note 10)
    
    
    1,412,294
    
    
    
    1,377,875Deficit
    
    
    
    
    
    
    (195,219
    )
    
    
    (303,284
    )1,217,075
    
    
    
    1,074,591$
    1,761,186
    
    
    $
    1,718,882
 See accompanying notes to consolidated financial statements.
 (Signed)
    
    (Signed)Robert J.S. Gibson
    
    Patrick M. MurrayTrustee
    
    Trustee




---



##### 



Precision Drilling Trust
 CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (DEFICIT)
 Years ended December 31,(Stated in thousands of Canadian dollars, except per unit/share amounts)
    
    
    
    
    
    2006
    
    
    2005
    
    
    2004Revenue
    
    
    
    
    
    $
    1,437,584
    
    
    $
    1,269,179
    
    
    $
    1,028,488Expenses:Operating
    
    
    
    
    
    
    688,207
    
    
    
    641,805
    
    
    
    566,297General and administrative
    
    
    
    
    
    
    81,217
    
    
    
    76,397
    
    
    
    64,149Depreciation and amortization
    
    
    
    
    
    
    73,234
    
    
    
    71,561
    
    
    
    74,829Foreign exchange
    
    
    
    
    
    
    (353
    )
    
    
    (3,474
    )
    
    
    (8,100
    )Reorganization costs
    
    (Note 23)
    
    
    
    
    
    
    17,512
    
    
    
    842,305
    
    
    
    803,801
    
    
    
    697,175Operating earnings
    
    
    
    
    
    
    595,279
    
    
    
    465,378
    
    
    
    331,313Interest:Long-term debt
    
    
    
    
    
    
    8,800
    
    
    
    38,735
    
    
    
    46,575Other
    
    
    
    
    
    
    171
    
    
    
    558
    
    
    
    246Income
    
    
    
    
    
    
    (942
    )
    
    
    (10,023
    )
    
    
    (541
    )Premium on redemption of bonds
    
    (Note 8)
    
    
    
    
    
    
    71,885
    
    
    
    Loss on disposal of short-term investments
    
    (Note 24)
    
    
    
    
    
    
    70,992
    
    
    
    Other
    
    
    
    
    
    
    (408
    )
    
    
    
    
    
    
    (4,899
    )Earnings from continuing operations before income taxes
    
    
    
    
    
    
    587,658
    
    
    
    293,231
    
    
    
    289,932Income taxes:
    
    (Note 9)Current
    
    
    
    
    
    
    34,526
    
    
    
    241,402
    
    
    
    53,698Future
    
    
    
    
    
    
    (19,380
    )
    
    
    (169,019
    )
    
    
    48,10315,146
    
    
    
    72,383
    
    
    
    101,801Earnings from continuing operations
    
    
    
    
    
    
    572,512
    
    
    
    220,848
    
    
    
    188,131Gain (loss) on disposal of discontinued operations,
net of tax
    
    (Note 24)
    
    
    7,077
    
    
    
    1,335,382
    
    
    
    (616
    )Discontinued operations, net of tax
    
    (Note 24)
    
    
    
    
    
    
    74,333
    
    
    
    59,889Net earnings
    
    
    
    
    
    
    579,589
    
    
    
    1,630,563
    
    
    
    247,404Retained earnings (deficit), beginning of year
    
    (Note 4)
    
    
    (303,284
    )
    
    
    1,041,683
    
    
    
    794,279Adjustment on cash purchase of employee stock options,
net of tax of $22,060
    
    (Note 23(c))
    
    
    
    
    
    
    (42,087
    )
    
    
    Reclassification from contributed surplus on cash
buy-out of employee stock options
    
    (Note 23(c))
    
    
    
    
    
    
    23,215
    
    
    
    Distribution of disposal proceeds
    
    (Note 24)
    
    
    
    
    
    
    (2,851,784
    )
    
    
    Repurchase of common shares of
dissenting shareholders
    
    (Note 23(a))
    
    
    
    
    
    
    (34,364
    )
    
    
    Distributions declared
    
    (Note 7)
    
    
    (471,524
    )
    
    
    (70,510
    )
    
    
    Retained earnings (deficit), end of year
    
    
    
    
    
    $
    (195,219
    )
    
    $
    (303,284
    )
    
    $
    1,041,683Earnings per unit/share from continuing operations:
    
    (Note 13)Basic
    
    
    
    
    
    $
    4.56
    
    
    $
    1.79
    
    
    $
    1.63Diluted
    
    
    
    
    
    $
    4.56
    
    
    $
    1.76
    
    
    $
    1.61Earnings per unit/share:
    
    (Note 13)Basic
    
    
    
    
    
    $
    4.62
    
    
    $
    13.22
    
    
    $
    2.14Diluted
    
    
    
    
    
    $
    4.62
    
    
    $
    13.00
    
    
    $
    2.11
 See accompanying notes to consolidated financial statements.




---



##### 



Precision Drilling Trust
 CONSOLIDATED STATEMENTS OF CASH FLOW
 Years ended December 31,(Stated in thousands of Canadian dollars)
    
    
    
    
    
    2006
    
    
    2005
    
    
    2004Cash provided by (used in):Continuing operations:Earnings from continuing operations
    
    
    
    
    
    $
    572,512
    
    
    $
    220,848
    
    
    $
    188,131Adjustments and other items not involving cash:Long-term incentive plan compensation
    
    
    
    
    
    
    22,699
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    
    
    
    
    73,234
    
    
    
    71,561
    
    
    
    74,829Future income taxes
    
    
    
    
    
    
    (19,380
    )
    
    
    (169,019
    )
    
    
    48,103Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    11,229
    
    
    
    8,190Write-off of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    7,664
    
    
    
    Loss in market value of short-term investments
    
    
    
    
    
    
    
    
    
    
    70,992
    
    
    
    Amortization of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    1,453
    
    
    
    1,579Unrealized foreign exchange gain on long-term monetary items
    
    
    
    
    
    
    
    
    
    
    (4,740
    )
    
    
    (4,284
    )Other
    
    
    
    
    
    
    (408
    )
    
    
    
    
    
    
    (4,899
    )Changes in non-cash working capital balances
    
    (Note 19)
    
    
    (38,913
    )
    
    
    (3,975
    )
    
    
    (25,212
    )609,744
    
    
    
    206,013
    
    
    
    286,437Discontinued operations:
    
    (Note 24)Funds provided by discontinued operations
    
    
    
    
    
    
    
    
    
    
    183,330
    
    
    
    187,018Changes in non-cash working capital balances
of discontinued operations
    
    
    
    
    
    
    
    
    
    
    (86,310
    )
    
    
    (26,797
    )
    
    
    
    97,020
    
    
    
    160,221Investments:Business acquisitions, net of cash acquired
    
    (Notes 15 and 24)
    
    
    (16,428
    )
    
    
    (30,421
    )
    
    
    (679,814
    )Purchase of property, plant and equipment
    
    
    
    
    
    
    (263,030
    )
    
    
    (155,231
    )
    
    
    (122,692
    )Proceeds on sale of property, plant and equipment
    
    
    
    
    
    
    29,337
    
    
    
    15,174
    
    
    
    8,795Proceeds on disposal of discontinued operations
    
    (Note 24)
    
    
    7,337
    
    
    
    1,306,799
    
    
    
    49,299Proceeds on disposal of investments
    
    
    
    
    
    
    510
    
    
    
    14,569
    
    
    
    8,665Purchase of property, plant and equipment of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    (128,214
    )
    
    
    (159,532
    )Proceeds on sale of property, plant and equipment
of discontinued operations
    
    
    
    
    
    
    
    
    
    
    17,785
    
    
    
    21,145Purchase of intangibles
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    Purchase of intangibles of discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (320
    )Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90
    )Changes in non-cash working capital balances
    
    (Note 19)
    
    
    7,551
    
    
    
    (2,912
    )
    
    
    1,384(234,723
    )
    
    
    1,037,529
    
    
    
    (873,160
    )Financing:Distributions paid
    
    (Note 7)
    
    
    (444,651
    )
    
    
    (33,875
    )
    
    
    Repayment of long-term debt
    
    
    
    
    
    
    (204,910
    )
    
    
    (703,970
    )
    
    
    (173,260
    )Increase in long-term debt
    
    
    
    
    
    
    248,338
    
    
    
    96,826
    
    
    
    522,136Issuance of Trust units
    
    
    
    
    
    
    9,896
    
    
    
    
    
    
    
    Issuance of Trust units on exercise of options
    
    
    
    
    
    
    
    
    
    
    8,263
    
    
    
    Issuance of Trust units on purchase of options
    
    
    
    
    
    
    
    
    
    
    5,504
    
    
    
    Distribution of disposal proceeds
    
    (Note 24)
    
    
    
    
    
    
    (844,334
    )
    
    
    Cash buy-out of employee stock options
    
    
    
    
    
    
    
    
    
    
    (64,147
    )
    
    
    Repurchase of common shares of dissenting shareholders
    
    
    
    
    
    
    
    
    
    
    (43,299
    )
    
    
    Issuance of common shares on exercise of options
    
    
    
    
    
    
    
    
    
    
    73,930
    
    
    
    55,361Issuance of common shares, net of costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    276,428Deferred financing costs on long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,612
    )Changes in non-cash working capital balances
    
    
    
    
    
    
    
    
    
    
    22,060
    
    
    
    Change in bank indebtedness
    
    
    
    
    
    
    16,306
    
    
    
    20,468
    
    
    
    (147,909
    )(375,021
    )
    
    
    (1,462,574
    )
    
    
    527,144Increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (122,012
    )
    
    
    100,642Cash and cash equivalents, beginning of year
    
    
    
    
    
    
    
    
    
    
    122,012
    
    
    
    21,370Cash and cash equivalents, end of year
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    122,012
 See accompanying notes to consolidated financial statements.




---



##### 



Precision Drilling Trust  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Tabular amounts are stated in thousands of Canadian dollars except unit/share numbers and per unit/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(1) utilization days
    
    20%
    
    unit-of-productionDrill pipe and drill collars
    
    1,500(1) operating days
    
    
    
    unit-of-productionService rig equipment
    
    24,000 service hours
    
    20%
    
    unit-of-productionDrilling rig spare equipment
    
    15 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
 (1)
    
    See note 3.
 (f) Intangibles
  (g) Goodwill
    (h) Long-lived assets
  (i) Income taxes




---



##### 



(j) Revenue recognition
  (k) Employee benefit plans
   (l) Long-term incentive plan
  (m) Foreign currency translation
   (n) Stock-based compensation plans
 (o) Exchangeable LP units
  (p) Per unit amounts




---



##### 



NOTE 3. ACCOUNTING ESTIMATES
  NOTE 4. ACCOUNTING CHANGES
 Stock-based compensation plans
   NOTE 5. PROPERTY, PLANT AND EQUIPMENT
 Accumulated
    
    
    Net Book2006
    
    Cost
    
    
    Depreciation
    
    
    ValueRig equipment
    
    $
    1,294,289
    
    
    $
    434,491
    
    
    $
    859,798Rental equipment
    
    
    94,184
    
    
    
    40,658
    
    
    
    53,526Other equipment
    
    
    95,137
    
    
    
    61,317
    
    
    
    33,820Vehicles
    
    
    78,675
    
    
    
    24,461
    
    
    
    54,214Buildings
    
    
    29,583
    
    
    
    9,673
    
    
    
    19,910Assets under construction
    
    
    76,239
    
    
    
    
    
    
    
    76,239Land
    
    
    10,110
    
    
    
    
    
    
    
    10,110$
    1,678,217
    
    
    $
    570,600
    
    
    $
    1,107,617
 Accumulated
    
    
    Net Book2005
    
    Cost
    
    
    Depreciation
    
    
    ValueRig equipment
    
    $
    1,143,786
    
    
    $
    386,191
    
    
    $
    757,595Rental equipment
    
    
    81,099
    
    
    
    35,307
    
    
    
    45,792Other equipment
    
    
    102,727
    
    
    
    62,852
    
    
    
    39,875Vehicles
    
    
    68,911
    
    
    
    20,703
    
    
    
    48,208Buildings
    
    
    32,830
    
    
    
    9,580
    
    
    
    23,250Assets under construction
    
    
    20,184
    
    
    
    
    
    
    
    20,184Land
    
    
    8,996
    
    
    
    
    
    
    
    8,996$
    1,458,533
    
    
    $
    514,633
    
    
    $
    943,900




---



##### 



NOTE 6. BANK INDEBTEDNESS
  NOTE 7. DISTRIBUTIONS
     2006
    
    
    2005Declared
    
    $
    471,524
    
    
    $
    70,510Paid
    
    $
    444,651
    
    
    $
    33,875Payable in cash at December 31
    
    $
    38,985
    
    
    $
    36,635Payable in units at December 31
    
    $
    24,523
    
    
    $
    
  NOTE 8. LONG-TERM DEBT
 Extendible revolving unsecured facility:
  Unsecured debentures and notes:




---



##### 



NOTE 9. INCOME TAXES
  2006
    
    
    2005
    
    
    2004Earnings from continuing operations before income taxes
    
    $
    587,658
    
    
    $
    293,231
    
    
    $
    289,932Federal and provincial statutory rates
    
    
    33
    %
    
    
    34
    %
    
    
    36
    %Tax at statutory rates
    
    $
    193,927
    
    
    $
    99,699
    
    
    $
    104,375Adjusted for the effect of:Non-deductible expenses
    
    
    297
    
    
    
    2,795
    
    
    
    4,965Non-deductible stock-based compensation
    
    
    
    
    
    
    3,216
    
    
    
    2,948Income to be distributed to Unitholders, not subject to
tax in the Trust
    
    
    (155,354
    )
    
    
    (23,980
    )
    
    
    Utilization of losses and surcharge credits
    
    
    
    
    
    
    (10,550
    )
    
    
    Other
    
    
    (2,896
    )
    
    
    1,203
    
    
    
    (7,600
    )Income tax expense before tax rate reductions
    
    
    35,974
    
    
    
    72,383
    
    
    
    104,688Reduction of future income tax balances due to
enacted tax rate reductions
    
    
    (20,828
    )
    
    
    
    
    
    
    (2,887
    )Income tax expense
    
    $
    15,146
    
    
    $
    72,383
    
    
    $
    101,801Effective income tax rate before enacted tax rate reductions
    
    
    6
    %
    
    
    25
    %
    
    
    36
    %
   2006
    
    
    2005Future income tax liability:Property, plant and equipment and intangibles
    
    $
    213,281
    
    
    $
    232,277Future income tax assets:Bond redemption premium
    
    
    13,314
    
    
    
    20,820Losses carried forward
    
    
    9,884
    
    
    
    14,586Share issue costs
    
    
    1,966
    
    
    
    3,039Long-term incentive plan
    
    
    10,614
    
    
    
    Accrued liabilities
    
    
    2,937
    
    
    
    1,910Valuation allowance
    
    
    (5
    )
    
    
    (595
    )38,710
    
    
    
    39,760Net future income tax liability
    
    $
    174,571
    
    
    $
    192,517




---



##### 



NOTE 10. UNITHOLDERS CAPITAL
 (a) Authorized
 
 (b) Unitholders capital
 Trust units
    
    Number
    
    
    AmountBalance, November 7, 2005
    
    
    
    
    
    $
    Issued pursuant to the Plan
    
    
    122,512,799
    
    
    
    1,339,646Options
exercised  cash consideration
    
    
    1,676,616
    
    
    
    8,263 reclassification from contributed surplus
    
    
    
    
    
    
    12,342Issued for cash
    
    
    163,506
    
    
    
    5,504Balance, December 31, 2005
    
    
    124,352,921
    
    
    
    1,365,755Issued pursuant to distribution reinvestment plan (Note 7)
    
    
    296,621
    
    
    
    9,896Issued on retraction of exchangeable LP units
    
    
    886,787
    
    
    
    9,697Issued and
consolidated pursuant to special distribution(Note 7)
    
    
    
    
    
    
    24,480Balance, December 31, 2006
    
    
    125,536,329
    
    
    $
    1,409,828
  Exchangeable LP units
    
    Number
    
    
    AmountBalance, November 7, 2005
    
    
    
    
    
    $
    Issued pursuant to the Plan
    
    
    1,108,382
    
    
    
    12,120Balance, December 31, 2005
    
    
    1,108,382
    
    
    
    12,120Redeemed on retraction of exchangeable LP units
    
    
    (886,787
    )
    
    
    (9,697
    )Issued and consolidated pursuant to special distribution (Note 7)
    
    
    
    
    
    
    43Balance, December 31, 2006
    
    
    221,595
    
    
    $
    2,466
  2006
    
    
    2005Summary as at December 31,
    
    Number
    
    
    Amount
    
    
    Number
    
    
    AmountTrust units
    
    
    125,536,329
    
    
    $
    1,409,828
    
    
    
    124,352,921
    
    
    $
    1,365,755Exchangeable LP units
    
    
    221,595
    
    
    
    2,466
    
    
    
    1,108,382
    
    
    
    12,120Unitholders capital
    
    
    125,757,924
    
    
    $
    1,412,294
    
    
    
    125,461,303
    
    
    $
    1,377,875
 NOTE 11. EMPLOYEE BENEFIT PLANS
  (a) Defined contribution plan
  (b) Retirement allowance




---



##### 



NOTE 12. COMMITMENTS
  Total2007
    
    $
    7,8582008
    
    
    6,5512009
    
    
    4,8202010
    
    
    4,0442011
    
    
    3,265
  Continuing
    
    
    DiscontinuedOperations
    
    
    Operations
    
    
    Total2006
    
    $
    4,189
    
    
    $
    
    
    
    $
    4,1892005
    
    
    3,836
    
    
    
    11,983
    
    
    
    15,8192004
    
    
    5,874
    
    
    
    17,284
    
    
    
    23,158
 NOTE 13. PER UNIT/SHARE AMOUNTS
  (Stated in thousands)
    
    2006
    
    
    2005
    
    
    2004Weighted average units/shares outstanding  basic
    
    
    125,545
    
    
    
    123,304
    
    
    
    115,654Effect of stock options
    
    
    
    
    
    
    2,108
    
    
    
    1,556Weighted average units/shares outstanding  diluted
    
    
    125,545
    
    
    
    125,412
    
    
    
    117,210
 NOTE 14. SIGNIFICANT CUSTOMERS
  NOTE 15. BUSINESS ACQUISITIONS




---



##### 



Net assets acquired at assigned values:Working capital(1)
    
    $
    207Property, plant and equipment
    
    
    3,168Goodwill (no tax basis)
    
    
    13,922Long-term debt
    
    
    (614
    )Future income taxes
    
    
    (212
    )$
    16,471Consideration:Cash
    
    $
    16,471
 (1)
    
    Working capital includes cash of $43
 NOTE 16. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
  (a) Income taxes
  (b) Stock-based compensation
   Accounting
for Certain Transactions Involving Stock Compensation
 (c) Redemption of Trust units




---



##### 



(d) Acquisitions
  (e) Recently issued accounting pronouncements
 Fair Value Measurements.
 Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109.
 Accounting for Certain Hybrid Financial Instruments -
an amendment of FASB Statements no. 133 and 140.
  Consolidated Statements of Earnings
 Years ended December 31,
    
    2006
    
    
    2005
    
    
    2004Earnings from continuing operations under Canadian GAAP
    
    $
    572,512
    
    
    $
    220,848
    
    
    $
    188,131Adjustments under U.S. GAAP:Stock-based compensation expense
    
    
    
    
    
    
    11,229
    
    
    
    8,190Cash buy-out of options
    
    
    
    
    
    
    (22,119
    )
    
    
    Intrinsic value recognized on options exercised and/or repriced
    
    
    
    
    
    
    (2,270
    )
    
    
    Earnings from continuing operations under U.S. GAAP
    
    
    572,512
    
    
    
    207,688
    
    
    
    196,321Earnings from discontinued operations under Canadian GAAP
    
    
    7,077
    
    
    
    1,409,715
    
    
    
    59,273Adjustments under U.S. GAAP:Stock-based compensation expense
    
    
    
    
    
    
    10,109
    
    
    
    5,647Cash buy-out of options
    
    
    
    
    
    
    (19,968
    )
    
    
    Intrinsic value recognized on options exercised and/or repriced
    
    
    
    
    
    
    (11,796
    )
    
    
    Earnings from discontinued operations under U.S. GAAP
    
    
    7,077
    
    
    
    1,388,060
    
    
    
    64,920Net earnings under U.S. GAAP
    
    
    579,589
    
    
    
    1,595,748
    
    
    
    261,241Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    (20,933
    )Comprehensive income under U.S. GAAP
    
    $
    579,589
    
    
    $
    1,595,748
    
    
    $
    240,308




---



##### 



Years ended December 31,
    
    2006
    
    
    2005
    
    
    2004Earnings from continuing operations per unit/share under U.S. GAAP:Basic
    
    $
    4.56
    
    
    $
    1.68
    
    
    $
    1.70Diluted
    
    $
    4.56
    
    
    $
    1.66
    
    
    $
    1.67Earnings per unit/share under U.S. GAAP:Basic
    
    $
    4.62
    
    
    $
    12.94
    
    
    $
    2.26Diluted
    
    $
    4.62
    
    
    $
    12.72
    
    
    $
    2.23
 Consolidated Statements of Retained Earnings (Deficit)
 Years ended December 31,
    
    2006
    
    
    2005
    
    
    2004Retained earnings (deficit) under U.S. GAAP, beginning of year
    
    $
    (3,167,045
    )
    
    $
    1,133,030
    
    
    $
    871,789Net earnings under U.S. GAAP
    
    
    579,589
    
    
    
    1,595,748
    
    
    
    261,241Distributions declared
    
    
    (471,524
    )
    
    
    (70,510
    )
    
    
    Distribution of disposal proceeds
    
    
    
    
    
    
    (2,851,784
    )
    
    
    Repurchase of common shares of dissenting shareholders
    
    
    
    
    
    
    (34,364
    )
    
    
    Opening temporary equity on conversion to an income trust
    
    
    
    
    
    
    (2,560,709
    )
    
    
    Change in redemption value of temporary equity
    
    
    1,185,490
    
    
    
    (378,456
    )
    
    
    Retained earnings (deficit) under U.S. GAAP, end of year
    
    $
    (1,873,490
    )
    
    $
    (3,167,045
    )
    
    $
    1,133,030
 Consolidated Balance Sheets
 2006
    
    
    2005As at December 31,
    
    As reported
    
    
    U.S. GAAP
    
    
    As reported
    
    
    U.S. GAAPCurrent assets
    
    $
    372,445
    
    
    $
    372,445
    
    
    $
    507,690
    
    
    $
    507,690Property, plant and equipment
    
    
    1,107,617
    
    
    
    1,107,617
    
    
    
    943,900
    
    
    
    943,900Intangibles
    
    
    375
    
    
    
    375
    
    
    
    465
    
    
    
    465Goodwill
    
    
    280,749
    
    
    
    343,778
    
    
    
    266,827
    
    
    
    329,856$
    1,761,186
    
    
    $
    1,824,215
    
    
    $
    1,718,882
    
    
    $
    1,781,911Current liabilities
    
    $
    205,961
    
    
    $
    205,961
    
    
    $
    354,936
    
    
    $
    354,936Long-term incentive plan payable
    
    
    22,699
    
    
    
    22,699
    
    
    
    
    
    
    
    Long-term debt
    
    
    140,880
    
    
    
    140,880
    
    
    
    96,838
    
    
    
    96,838Future income taxes
    
    
    174,571
    
    
    
    174,571
    
    
    
    192,517
    
    
    
    192,517Temporary equity
    
    
    
    
    
    
    3,153,594
    
    
    
    
    
    
    
    4,304,665Unitholders capital
    
    
    1,412,294
    
    
    
    
    
    
    
    1,377,875
    
    
    
    Deficit
    
    
    (195,219
    )
    
    
    (1,873,490
    )
    
    
    (303,284
    )
    
    
    (3,167,045
    )$
    1,761,186
    
    
    $
    1,824,215
    
    
    $
    1,718,882
    
    
    $
    1,781,911
 NOTE 17. SEGMENTED INFORMATION
  Contract
    
    
    Completion andDrilling
    
    
    Production
    
    
    Corporate
    
    
    Inter-segment2006
    
    Services
    
    
    Services
    
    
    and Other
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    1,009,821
    
    
    $
    441,017
    
    
    $
    
    
    
    $
    (13,254
    )
    
    $
    1,437,584Operating earnings
    
    
    473,624
    
    
    
    163,119
    
    
    
    (41,464
    )
    
    
    
    
    
    
    595,279Depreciation and amortization
    
    
    38,573
    
    
    
    32,013
    
    
    
    2,648
    
    
    
    
    
    
    
    73,234Total assets
    
    
    1,198,284
    
    
    
    507,510
    
    
    
    55,392
    
    
    
    
    
    
    
    1,761,186Goodwill
    
    
    172,440
    
    
    
    108,309
    
    
    
    
    
    
    
    
    
    
    
    280,749Capital expenditures*
    
    
    220,397
    
    
    
    39,273
    
    
    
    3,360
    
    
    
    
    
    
    
    263,030




---



##### 



Contract
    
    
    Completion andDrilling
    
    
    Production
    
    
    Corporate
    
    
    Inter-segment2005
    
    Services
    
    
    Services
    
    
    and Other
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    916,221
    
    
    $
    369,667
    
    
    $
    
    
    
    $
    (16,709
    )
    
    $
    1,269,179Operating earnings
    
    
    404,385
    
    
    
    121,643
    
    
    
    (60,650
    )
    
    
    
    
    
    
    465,378Depreciation and amortization
    
    
    39,233
    
    
    
    27,402
    
    
    
    4,926
    
    
    
    
    
    
    
    71,561Total assets
    
    
    1,159,687
    
    
    
    486,701
    
    
    
    72,494
    
    
    
    
    
    
    
    1,718,882Goodwill
    
    
    172,440
    
    
    
    94,387
    
    
    
    
    
    
    
    
    
    
    
    266,827Capital expenditures*
    
    
    106,986
    
    
    
    34,576
    
    
    
    13,689
    
    
    
    
    
    
    
    155,251
 Contract
    
    
    Completion andDrilling
    
    
    Production
    
    
    Corporate
    
    
    Inter-segment2004
    
    Services
    
    
    Services
    
    
    and Other
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    727,710
    
    
    $
    313,386
    
    
    $
    
    
    
    $
    (12,608
    )
    
    $
    1,028,488Operating earnings
    
    
    282,315
    
    
    
    77,074
    
    
    
    (28,076
    )
    
    
    
    
    
    
    331,313Depreciation and amortization
    
    
    42,245
    
    
    
    27,508
    
    
    
    5,076
    
    
    
    
    
    
    
    74,829Total assets
    
    
    971,863
    
    
    
    461,191
    
    
    
    180,009
    
    
    
    
    
    
    
    1,613,063Goodwill
    
    
    172,440
    
    
    
    94,387
    
    
    
    
    
    
    
    
    
    
    
    266,827Capital expenditures*
    
    
    74,975
    
    
    
    31,759
    
    
    
    15,958
    
    
    
    
    
    
    
    122,692
  NOTE 18. FINANCIAL INSTRUMENTS
 (a) Fair value
 (b) Credit risk
 (c) Interest rate risk
 (d) Foreign currency risk




---



##### 



NOTE 19. SUPPLEMENTAL INFORMATION
 2006
    
    
    2005
    
    
    2004Interest paid: continuing operations
    
    $
    8,929
    
    
    $
    43,232
    
    
    $
    45,338 discontinued operations
    
    
    
    
    
    
    304
    
    
    
    997$
    8,929
    
    
    $
    43,536
    
    
    $
    46,335
 Income taxes paid: continuing operations
    
    $
    207,160
    
    
    $
    91,496
    
    
    $
    38,759 discontinued operations
    
    
    
    
    
    
    35,176
    
    
    
    35,935$
    207,160
    
    
    $
    126,672
    
    
    $
    74,694Components of change in non-cash working capital balances:Accounts receivable
    
    $
    148,046
    
    
    $
    (171,363
    )
    
    $
    (42,714
    )Inventory
    
    
    (2,038
    )
    
    
    699
    
    
    
    (2,017
    )Accounts payable and accrued liabilities
    
    
    (4,736
    )
    
    
    13,871
    
    
    
    5,964Income taxes
    
    
    (172,634
    )
    
    
    149,906
    
    
    
    14,939$
    (31,362
    )
    
    $
    (6,887
    )
    
    $
    (23,828
    )
  2006
    
    
    2005Trade
    
    $
    220,623
    
    
    $
    306,264Accrued trade
    
    
    93,308
    
    
    
    148,537Prepaids and other
    
    
    40,740
    
    
    
    45,854$
    354,671
    
    
    $
    500,655
  2006
    
    
    2005Accounts payable
    
    $
    60,650
    
    
    $
    71,027Accrued liabilities:Payroll
    
    
    47,001
    
    
    
    30,351Other
    
    
    22,551
    
    
    
    32,925$
    130,202
    
    
    $
    134,303
 NOTE 20. CONTINGENCIES
    NOTE 21. GUARANTEES




---



##### 



NOTE 22. RELATED PARTY TRANSACTIONS
  NOTE 23. REORGANIZATION INTO A TRUST
  Severance
    
    $
    12,600Legal, accounting, financial advisory services and other
    
    
    4,912$
    17,512
  (a) Common shares
 Number
    
    
    AmountBalance, December 31, 2003
    
    
    54,845,678
    
    
    $
    936,744Issuance of common shares, net of costs and related tax effect
    
    
    4,400,000
    
    
    
    280,783Options exercised  cash consideration
    
    
    1,544,534
    
    
    
    55,361 reclassification from contributed surplus
    
    
    
    
    
    
    2,079Balance, December 31, 2004
    
    
    60,790,212
    
    
    
    1,274,967Options exercised  cash consideration
    
    
    578,346
    
    
    
    24,516 reclassification from contributed surplus
    
    
    
    
    
    
    1,521Balance, May 18, 2005
    
    
    61,368,558
    
    
    
    1,301,004Issued on 2:1 stock split
    
    
    61,368,558
    
    
    
    Options exercised  cash consideration
    
    
    1,679,110
    
    
    
    49,414 reclassification from contributed surplus
    
    
    
    
    
    
    10,284Adjustment to number of shares outstanding
    
    
    21,960
    
    
    
    Cancellation of shares owned by dissenting shareholders
    
    
    (817,005
    )
    
    
    (8,936
    )Balance, November 7, 2005, before conversion to units
    
    
    123,621,181
    
    
    
    1,351,766Conversion to Trust units
    
    
    (122,512,799
    )
    
    
    (1,339,646
    )Conversion to exchangeable LP units
    
    
    (1,108,382
    )
    
    
    (12,120
    )Balance, November 7, 2005, after conversion to units
    
    
    
    
    
    $
    




---



##### 



(b) Contributed surplus:
 Balance, December 31, 2003
    
    $
    14,266Stock-based compensation expense
    
    
    13,837Reclassification to common shares on exercise of options
    
    
    (2,079
    )Balance, December 31, 2004
    
    
    26,024Stock-based compensation expense
    
    
    13,077Accelerated vesting of options on disposal of discontinued operations
    
    
    5,205Reclassification to common shares on exercise of options prior to the Plan
    
    
    (11,805
    )Accelerated vesting of options pursuant to the Plan
    
    
    3,056Reclassification to Trust units on exercise of options
    
    
    (12,342
    )Reclassification to retained earnings on cash buy-out of options
    
    
    (23,215
    )Balance, December 31, 2005
    
    $
    
 (c) Equity incentive plans
    WeightedOptions
    
    
    Range of
    
    
    Average
    
    
    OptionsCommon Share Purchase Options
    
    Outstanding
    
    
    Exercise Price
    
    
    Exercise Price
    
    
    ExercisableOutstanding at December 31, 2003
    
    
    6,786,388
    
    
    $
    6.75  32.95
    
    
    $
    20.85
    
    
    
    4,076,396Granted
    
    
    3,381,000
    
    
    
    20.13  36.32
    
    
    
    31.77Exercised
    
    
    (3,089,068
    )
    
    
    6.75  28.78
    
    
    
    17.92Cancelled
    
    
    (383,200
    )
    
    
    15.53  32.95
    
    
    
    25.68Outstanding at December 31, 2004
    
    
    6,695,120
    
    
    
    15.53  36.32
    
    
    
    27.44
    
    
    
    2,580,302Granted
    
    
    696,200
    
    
    
    37.76  48.29
    
    
    
    41.42Exercised
    
    
    (2,835,802
    )
    
    
    15.53  48.29
    
    
    
    26.07Cancelled
    
    
    (141,650
    )
    
    
    15.53  31.87
    
    
    
    30.26Purchased
    
    
    (1,105,018
    )
    
    
    15.53  45.25
    
    
    
    31.30Exchanged for Trust unit purchase options
    
    
    (3,308,850
    )
    
    
    15.53  48.29
    
    
    
    30.14Outstanding at December 31, 2005
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    
 WeightedOptions
    
    
    Range of
    
    
    Average
    
    
    OptionsTrust Unit Purchase Options
    
    Outstanding
    
    
    Exercise Price
    
    
    Exercise Price
    
    
    ExercisableOutstanding at November 7, 2005
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    Granted in exchange for common share
purchase options pursuant to the Plan
    
    
    3,308,850
    
    
    nil  27.25
    
    
    9.16
    
    
    
    3,308,850Granted on repricing of common share options
    
    
    5,600
    
    
    nil
    
    nilExercised
    
    
    (1,676,616
    )
    
    nil  27.25
    
    
    4.93Purchased
    
    
    (1,637,834
    )
    
    nil  27.25
    
    
    13.46Outstanding at December 31, 2005
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    




---



##### 



NOTE 24. DISCONTINUED OPERATIONS
   2006
   2005
   2004




---



##### 



2006
    
    
    2005
    
    
    2004Revenue:Energy services
    
    $
    
    
    
    $
    689,319
    
    
    $
    898,199International contract drilling
    
    
    
    
    
    
    204,987
    
    
    
    246,612Industrial plant maintenance (CEDA)
    
    
    
    
    
    
    149,371
    
    
    
    175,802$
    
    
    
    $
    1,043,677
    
    
    $
    1,320,613Gain (loss) on disposal:Loss on disposal of Fleet Cementers assets
    
    $
    
    
    
    $
    
    
    
    $
    (362
    )Gain (loss) on disposal of United Diamond
    
    
    2,070
    
    
    
    
    
    
    
    (254
    )Gain on disposal of Energy services and International contract drilling
    
    
    962
    
    
    
    1,203,309
    
    
    
    Gain on disposal of Industrial plant maintenance
    
    
    4,045
    
    
    
    132,073
    
    
    
    7,077
    
    
    
    1,335,382
    
    
    
    (616
    )Results of operations before income taxes:Energy services
    
    
    
    
    
    
    76,607
    
    
    
    33,060International contract drilling
    
    
    
    
    
    
    41,171
    
    
    
    65,043Industrial plant maintenance
    
    
    
    
    
    
    18,135
    
    
    
    19,658Other
    
    
    
    
    
    
    (22,298
    )
    
    
    (20,251
    )Writedown of assets held for sale
    
    
    
    
    
    
    
    
    
    
    (6,117
    )
    
    
    
    113,615
    
    
    
    91,393Income tax expense
    
    
    
    
    
    
    39,282
    
    
    
    28,824Results of operations, before non-controlling interest
    
    
    
    
    
    
    74,333
    
    
    
    62,569Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    2,680Results of operations
    
    
    
    
    
    
    74,333
    
    
    
    59,889Net earnings of discontinued operations
    
    $
    7,077
    
    
    $
    1,409,715
    
    
    $
    59,273
  2006
    
    
    2005
    
    
    2004Net earnings of discontinued operations
    
    $
    7,077
    
    
    $
    1,409,715
    
    
    $
    59,273Items not affecting cash:(Gain) loss on disposal of discontinued operations
    
    
    (7,077
    )
    
    
    (1,335,382
    )
    
    
    616Depreciation and amortization
    
    
    
    
    
    
    95,794
    
    
    
    130,163Writedown of assets of discontinued operations
    
    
    
    
    
    
    
    
    
    
    3,293Stock-based compensation
    
    
    
    
    
    
    10,109
    
    
    
    5,647Future income taxes
    
    
    
    
    
    
    (1,735
    )
    
    
    (17,383
    )Unrealized foreign exchange loss on long-term monetary items
    
    
    
    
    
    
    4,829
    
    
    
    2,729Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    2,680Funds provided by discontinued operations
    
    $
    
    
    
    $
    183,330
    
    
    $
    187,018
  2006
    
    
    2005
    
    
    2004Accounts receivable
    
    $
    
    
    
    $
    (60,912
    )
    
    $
    (93,743
    )Inventory
    
    
    
    
    
    
    (23,463
    )
    
    
    5,725Accounts payable and accrued liabilities
    
    
    
    
    
    
    1,688
    
    
    
    52,861Income taxes payable
    
    
    
    
    
    
    (3,623
    )
    
    
    8,360$
    
    
    
    $
    (86,310
    )
    
    $
    (26,797
    )




---



##### 



(a) Employee benefit plans
   (b) Foreign currency translation
   (c) Hedging relationships
  (d) Research and engineering
  2005
 2004




---



##### 



Reeves
    
    
    GlobalSantaFe
    
    
    Other
    
    
    TotalNet assets acquired at assigned values:Working capital
    
    $
    23,000
    (1)
    
    $
    12,463
    
    
    $
    60
    
    
    $
    35,523Intangible assets
    
    
    106,900
    
    
    
    33,138
    
    
    
    
    
    
    
    140,038Property, plant and equipment
    
    
    41,730
    
    
    
    296,655
    
    
    
    1,547
    
    
    
    339,932Goodwill (no tax basis)
    
    
    118,531
    
    
    
    103,956
    
    
    
    130
    
    
    
    222,617Non-controlling interest in earnings
of intervening period
    
    
    1,298
    
    
    
    
    
    
    
    
    
    
    
    1,298Future income taxes
    
    
    (37,732
    )
    
    
    (9,720
    )
    
    
    
    
    
    
    (47,452
    )$
    253,727
    
    
    $
    436,492
    
    
    $
    1,737
    
    
    $
    691,956Consideration:Cash
    
    $
    253,727
    
    
    $
    436,492
    
    
    $
    1,737
    
    
    $
    691,956




---



##### 



Precision Drilling Trust  CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (DEFICIT)
 Years ended December 31,
 (Stated in millions of Canadian dollars,except per unit/share amounts)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Revenue
    
    $
    1,437.6
    
    
    $
    1,269.2
    
    
    $
    1,028.5
    
    
    $
    915.2Expenses:Operating
    
    
    688.2
    
    
    
    641.8
    
    
    
    566.3
    
    
    
    544.2General and administrative
    
    
    81.2
    
    
    
    76.4
    
    
    
    64.2
    
    
    
    42.7Depreciation and amortization
    
    
    73.2
    
    
    
    71.6
    
    
    
    74.8
    
    
    
    78.1Foreign exchange
    
    
    (0.3
    )
    
    
    (3.5
    )
    
    
    (8.1
    )
    
    
    (2.2
    )Reorganization costs
    
    
    
    
    
    
    17.5
    
    
    
    
    
    
    
    Operating earnings
    
    
    595.3
    
    
    
    465.4
    
    
    
    331.3
    
    
    
    252.4Interest, net
    
    
    8.0
    
    
    
    29.3
    
    
    
    46.3
    
    
    
    34.0Premium on redemption of bonds
    
    
    
    
    
    
    71.9
    
    
    
    
    
    
    
    Loss on disposal of short-term investments
    
    
    
    
    
    
    71.0
    
    
    
    
    
    
    
    Other
    
    
    (0.4
    )
    
    
    
    
    
    
    (4.9
    )
    
    
    (1.5
    )Earnings from continuing operations
before income taxes
    
    
    587.7
    
    
    
    293.2
    
    
    
    289.9
    
    
    
    219.9Income taxes
    
    
    15.2
    
    
    
    72.4
    
    
    
    101.8
    
    
    
    75.7Earnings from continuing operations
    
    
    572.5
    
    
    
    220.8
    
    
    
    188.1
    
    
    
    144.2Discontinued operations, net of tax
    
    
    7.1
    
    
    
    1,409.8
    
    
    
    59.3
    
    
    
    36.3Net earnings
    
    
    579.6
    
    
    
    1,630.6
    
    
    
    247.4
    
    
    
    180.5Retained earnings (deficit), beginning of year
    
    
    (303.3
    )
    
    
    1,041.7
    
    
    
    794.3
    
    
    
    613.8Adjustment on cash purchase of employee
stock options, net of tax
    
    
    
    
    
    
    (42.1
    )
    
    
    
    
    
    
    Reclassification from contributed surplus
on cash buy-out of employee stock options
    
    
    
    
    
    
    23.2
    
    
    
    
    
    
    
    Distribution of disposal proceeds
    
    
    
    
    
    
    (2,851.8
    )
    
    
    
    
    
    
    Repurchase of common shares of
dissenting shareholders
    
    
    
    
    
    
    (34.4
    )
    
    
    
    
    
    
    Distributions declared
    
    
    (471.5
    )
    
    
    (70.5
    )
    
    
    
    
    
    
    Retained earnings (deficit), end of year
    
    $
    (195.2
    )
    
    $
    (303.3
    )
    
    $
    1,041.7
    
    
    $
    794.3Earnings per unit/share from continuing operations:Basic ($)
    
    
    4.56
    
    
    
    1.79
    
    
    
    1.63
    
    
    
    1.33Diluted ($)
    
    
    4.56
    
    
    
    1.76
    
    
    
    1.61
    
    
    
    1.31Earnings per unit/share:Basic ($)
    
    
    4.62
    
    
    
    13.22
    
    
    
    2.14
    
    
    
    1.66Diluted ($)
    
    
    4.62
    
    
    
    13.00
    
    
    
    2.11
    
    
    
    1.63




---



##### 



Precision Drilling Trust  ADDITIONAL SELECTED FINANCIAL INFORMATION
 Years ended December 31,
 (Stated in millions of Canadian dollars,except per unit/share amounts)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Return on sales % (1)
    
    
    39.8
    
    
    
    17.4
    
    
    
    18.3
    
    
    
    15.8Return on assets % (2)
    
    
    33.6
    
    
    
    43.3
    
    
    
    7.3
    
    
    
    6.3Return on equity % (3)
    
    
    49.4
    
    
    
    66.1
    
    
    
    12.3
    
    
    
    11.0Working capital
    
    $
    166.5
    
    
    $
    152.8
    
    
    $
    557.3
    
    
    $
    249.0Current ratio
    
    
    1.81
    
    
    
    1.43
    
    
    
    2.47
    
    
    
    1.57PP&E and intangibles
    
    $
    1,108.0
    
    
    $
    944.4
    
    
    $
    898.1
    
    
    $
    887.7Total assets
    
    $
    1,761.2
    
    
    $
    1,718.9
    
    
    $
    3,852.0
    
    
    $
    2,932.0Long-term debt
    
    $
    140.9
    
    
    $
    96.8
    
    
    $
    718.9
    
    
    $
    399.4Unitholders equity
    
    $
    1,217.1
    
    
    $
    1,074.6
    
    
    $
    2,321.7
    
    
    $
    1,745.3Long-term debt to long-term debt plus equity
    
    
    0.10
    
    
    
    0.08
    
    
    
    0.24
    
    
    
    0.19Interest coverage (4)
    
    
    74.1
    
    
    
    15.9
    
    
    
    7.2
    
    
    
    7.4Net capital expenditures from continuing
operations excluding business acquisitions
    
    $
    233.7
    
    
    $
    140.1
    
    
    $
    113.9
    
    
    $
    84.9EBITDA (5)
    
    $
    668.5
    
    
    $
    536.9
    
    
    $
    406.1
    
    
    $
    330.6EBITDA % of revenue
    
    
    46.5
    
    
    
    42.3
    
    
    
    39.5
    
    
    
    36.1Operating earnings
    
    $
    595.3
    
    
    $
    465.4
    
    
    $
    331.3
    
    
    $
    252.4Operating earnings % of revenue
    
    
    41.4
    
    
    
    36.7
    
    
    
    32.2
    
    
    
    27.6Cash flow from continuing operations
    
    $
    609.7
    
    
    $
    206.0
    
    
    $
    286.4
    
    
    $
    200.9Cash flow from continuing operations per unit/shareBasic
    
    $
    4.86
    
    
    $
    1.67
    
    
    $
    2.48
    
    
    $
    1.85Diluted
    
    $
    4.86
    
    
    $
    1.64
    
    
    $
    2.44
    
    
    $
    1.82Book value per unit/share (6)
    
    $
    9.68
    
    
    $
    8.57
    
    
    $
    19.10
    
    
    $
    15.91Price earnings ratio (7)
    
    
    5.84
    
    
    
    2.90
    
    
    
    17.6
    
    
    
    17.1Basic
weighted average units/shares outstanding(000s)
    
    
    125,545
    
    
    
    123,304
    
    
    
    115,654
    
    
    
    108,860




---



##### 



ADDITIONAL DISCLOSURE
 Certifications and Disclosure Regarding Controls and Procedures.
 (a)
    
    Certifications. See Exhibits 99.1 and 99.2 to this Annual Report on Form 40-F.(b)
    
    Disclosure Controls and Procedures. As of the end of the Registrants fiscal year
ended December 31, 2006, an evaluation of the effectiveness of the registrants disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the
Securities Exchange Act of 1934, as amended (the Exchange Act)) was carried out by
the registrants management with the participation of the principal executive officer and
principal financial officer. Based upon that evaluation, the Registrants principal executive
officer and principal financial officer have concluded that as of the end of that fiscal year,
the registrants disclosure controls and procedures are effective to ensure that information
required to be disclosed by the registrant in reports that it files or submits under the
Exchange Act is (i) recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms and (ii) accumulated and
communicated to the Registrants management, including its principal executive officer and
principal financial officer, to allow timely decisions regarding required disclosure.It should be noted that while the Registrants principal executive officer and principal
financial officer believe that the Registrants disclosure controls and procedures provide a
reasonable level of assurance that they are effective, they do not expect that the
Registrants disclosure controls and procedures or internal control over financial reporting
will prevent all errors and fraud. A control system, no matter how well conceived or
operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met.(c)
    
    Managements Annual Report on Internal Control Over Financial Reporting. The required
disclosure is included in the Management Report that accompanies the registrants
Consolidated Financial Statements for the fiscal year ended December 31, 2006, filed as part
of this Annual Report on Form 40-F.(d)
    
    Attestation Report of the Registered Public Accounting Firm. The required disclosure
is included in the Auditors Report that accompanies the registrants Consolidated Financial
Statements for the fiscal year ended December 31, 2006, filed as part of this Annual Report on
Form 40-F.(e)
    
    Changes in Internal Control Over Financial Reporting. During the fiscal year ended
December 31, 2006, there were no changes in the Registrants internal control over financial
reporting that have materially affected, or are reasonably likely to materially affect, the
Registrants internal control over financial reporting.
 Notices Pursuant to Regulation BTR.
  Audit Committee Financial Expert.
 Precision NYSE




---



##### 



Code of Ethics.
 Code of Ethics
  Principal Accountant Fees and Services.
  (CANADIAN $000)
    
    2006
    
    
    2005Audit Fees
    
    $
    1,813
    
    
    $
    2,108Audit-Related Fees
    
    
    
    
    
    
    Tax Fees
    
    $
    579
    
    
    $
    753All Other Fees
    
    
    
    
    
    $
    54TOTAL
    
    $
    2,392
    
    
    $
    2,915
 Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees




---



##### 



Pre-Approval Policies and Procedures
    Off-Balance Sheet Arrangements.
  Tabular Disclosure of Contractual Obligations.
  Identification of the Audit Committee.
   Presiding Director at Meetings of Non-Management Directors
 Presiding Director




---



##### 



Communication with Non-Management Directors
 th
 Corporate Governance Guidelines
  Board Committee Mandates




---



##### 



UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
 A.
    
    Undertaking.The Registrant undertakes to make available, in person or by telephone, representatives to
respond to inquiries made by the Securities and Exchange Commission (the Commission)
staff, and to furnish promptly, when requested to do so by the Commission staff,
information relating to: the securities registered pursuant to Form 40-F; the securities
in relation to which the obligation to file an annual report on Form 40-F arises; or
transactions in said securities.B.
    
    Consent to Service of Process.The Registrant has previously filed a Form F-X in connection with the class of securities
in relation to which the obligation to file this report arises.Any change to the name or address of the agent for service of process of the Registrant
shall be communicated promptly to the Commission by an amendment to the Form F-X
referencing the file number of the relevant registration statement.
 SIGNATURES
  Precision Drilling Corporation, as agent for
and on behalf of Precision Drilling TrustBy:
    /s/  Gene C. StahlName:
    Gene C. StahlTitle:
    President and Chief Operating Officer




---



##### 



EXHIBIT INDEX
 Exhibit
    
    Description99.1
    
    Certification of President and Chief Operating Officer pursuant to Rule
13a-14 or 15d-14 of the Securities Exchange Act of 193499.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14 or 15d-14 of
the Securities Exchange Act of 193499.3
    
    Certification of President and Chief Operating Officer pursuant to 18 U.S.C. 135099.4
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. 135099.5
    
    Consent of KPMG LLP