MANAGEMENT’S DISCUSSION AND ANALYSIS Management’s Discussion & Analysis The following sets out management’s discussion and analysis (“MD&A”) of the consolidated financial position as  at December 31, 2013 and 2012, consolidated results of operations, cash flows and changes in shareholders’  equity for AKITA Drilling Ltd. and its subsidiaries (collectively referred to as “AKITA” or the “Company”) for the  years ended December 31, 2013 and 2012. The information included in this MD&A is intended to assist  readers in analyzing the financial affairs of the Company. In addition to the information in this section, AKITA’s  audited consolidated financial statements for 2013 and 2012, including the notes thereto, found on pages  32-64 of this Annual Report, provide information on the Company’s financial position, results of its operations,  cash flows and changes in shareholders’ equity. Certain 2012 comparative numbers have been restated to  conform with IFRS 11 “Joint Arrangements” and IAS 19 “Employee Benefits.” Financial Statement Note 22  contains a reconciliation of the restatements. The information in this MD&A was approved by AKITA’s Board of  Directors on March 5, 2014 and incorporates all relevant considerations to that date. Management has prepared this MD&A as well as the accompanying consolidated financial statements and the  notes thereto. All financial information is reported in Canadian dollars. Introduction and General Overview AKITA is a premier Canadian oil and gas drilling contractor. During 2013, the Company conducted operations  in British Columbia, Alberta, Saskatchewan, and the Northwest Territories. The Company strives to be the  industry leader in customer relations, employee expertise, safety, equipment quality and drilling performance. In addition to conventional drilling, the Company specializes in purpose-built drilling rigs, including self-moving  pad rigs, and is active in directional, horizontal and underbalanced drilling, providing specialized drilling  services to a broad range of independent and multinational oil and gas companies and potash producers. All  of the Company’s 38 rigs were located in Western Canada at December 31, 2013. AKITA’s growth strategy has focused on constructing new rigs and retrofitting existing rigs in response to specific  customer requirements. This strategy enables AKITA to secure long-term drilling contracts with customers who  request specific rig configurations, and at the same time to either expand or upgrade its fleet. The Company  utilizes this strategy to enhance its development of pad rigs designed for both heavy oil and natural gas located  in shale formations as well as for other specialty applications. In 2013, the Company constructed one pad  rig to drill for heavy oil. Additionally, the Company completed the conversion of one conventional rig into a  pad rig, commenced the conversion of a conventional rig into a rig with slant drilling capability and began the  construction of a new ultra-deep pad rig under a long-term contract. These latest two rigs are expected to  become operational during the second and third quarters of 2014, respectively. Oil and gas contract drilling activity is cyclical and is subject to numerous factors including world crude oil  prices and North American natural gas prices. Overall demand for AKITA’s drilling services declined somewhat  in 2013 compared to 2012 as presented in the accompanying chart of rig utilization rates. However, this  decline in rig utilization was due to a decline in conventional drilling services only. By contrast, drilling activity  increased for AKITA’s pad rigs in 2013. 6 AKITA DRILLING LTD.  ANNUAL REPORT