MANAGEMENT’S DISCUSSION AND ANALYSIS Revenue and Operating & Maintenance Expenses Adjusted revenue of $216,374,000 in 2013 was 10% lower than the 2012 adjusted revenue of $241,232,000  largely as a result of weaker demand for the Company’s conventional triple and double sized rigs. This drop  in demand for conventional rigs was partially offset by continuing strong demand for the Company’s pad  rigs throughout 2013. In addition to contract drilling, annual results were also affected by a reduction in rig  construction revenue from $17,940,000 in 2012 to $1,074,000 in 2013 as the Company’s rig construction  project was completed in the first quarter of 2013 and the rig was sold to a third party. During 2013, average  revenue per operating day decreased marginally to $35,629 per day compared to $35,844 in 2012 as the  loss of construction revenue noted above (which was factored into these “per operating day” statistics) was  generally offset by the shift in rig mix to a higher proportion of pad rigs. Such rigs typically obtain higher day  rates than conventional rigs. (1) Revenue, operating & maintenance expenses and adjusted operating margin include the Company’s  rig construction for third parties. AKITA does not disclose its operating margin on rig construction activity  separately for competitive reasons. (2) Proportionate share of revenue from joint ventures, adjusted revenue, proportionate share of operating &  maintenance expenses from joint ventures, adjusted operating & maintenance expenses, adjusted operating  margin, adjusted revenue per operating day, adjusted operating & maintenance expenses per operating day  and adjusted operating margin per operating day are non-standard accounting measures. See commentary in  “Basis of Analysis in this MD&A, Non-Standard and Additional GAAP Items”. (3) Adjusted operating margin is the difference between adjusted revenue and adjusted operating & maintenance  expenses. 9 AKITA DRILLING LTD.  ANNUAL REPORT $Millions 2013 2012 Change % Change Revenue per financial statements  (1) 167.5 203.4 (35.9) (18%) Proportionate share of revenue from joint ventures  (2) 48.9 37.8 11.1 29% Adjusted revenue  (2) 216.4 241.2 (24.8) (10%) $Millions 2013 2012 Change % Change Operating & maintenance expenses per financial  statements  (1) 106.3 137.9 (31.6) (23%) Proportionate share of operating & maintenance  expenses from joint ventures  (2) 29.5 23.1 6.4 28% Adjusted operating & maintenance expenses  (2) 135.8 161.0 (25.2) (16%) $Millions 2013 2012 Change % Change Adjusted revenue  (2) 216.4 241.2 (24.8) (10%) Adjusted operating & maintenance expenses  (2) 135.8 161.0 (25.2) (16%) Adjusted operating margin  (1) (2) (3) 80.6 80.2 0.4 0% $Dollars 2013 2012 Change % Change Adjusted revenue per operating day  (2) 35,629 35,844 (215) (1%) Adjusted operating & maintenance expenses per  operating day  (2) 22,366 23,928 (1,562) (7%) Adjusted operating margin per operating day  (2) (3) 13,263 11,916 1,347 11%