PRECISION DRILLING TRUST EMPLOYEE TRUST UNIT OPTION PLAN

1.

The Plan

A trust unit option plan pursuant to which Options to purchase Trust Units may be granted to the officers and key employees of the Precision Group is hereby established on the terms set forth below.

2.

Purpose

The purpose of this Plan is to advance the interests of the Precision Group by encouraging the officers and key employees of the Precision Group to acquire Trust Units, thereby (i) increasing the proprietary interests of such persons in the Trust, (ii) aligning the interests of such persons with the interests of the unitholders of the Trust generally, (iii) encouraging such persons to remain associated with the Precision Group and (iv) furnishing such persons with an additional incentive in their efforts on behalf of the Precision Group.

3.

Defined Terms

3.1

Where used herein, the following terms shall have the following meanings, respectively:

“ Black-Out Period ” means the period of time when, pursuant to any policies of the Trust, any securities of the Trust may not be traded by certain Persons as designated by the Trust, including any holder of an Option;

“ Board ” means the board of directors of the Corporation;

“ Canadian Option ” means an Option pursuant to which the Option Price is stated and payable in Canadian dollars;

“ Canadian SIFT Rules ” means the rules provided for by the ITA concerning “Specified Investment Flow-Through” or “SIFT” entities;

“ Cause ” means, unless otherwise defined in the applicable agreement evidencing the grant of an Option hereunder, any act or omission that would entitle the Employer to terminate the Participant’s employment without notice or compensation under the common law for just cause, including, without in any way limiting its meaning under the common law:

(i)

any transaction at any time and by whatever means pursuant to which any Person or any group of two or more Persons acting jointly or in concert (other than the Trust or the Corporation or any wholly-owned subsidiary of the Trust or the Corporation) hereafter acquires the direct or indirect “beneficial ownership” (as defined in the Business Corporations Act (Alberta)) of, or acquires the right to exercise control or direction over, securities of the Trust or the Corporation representing 50% or more of the then issued and outstanding voting securities of the Trust or the Corporation, as the case may be, in any manner whatsoever, including, without limitation, as a result of a takeover bid, an issuance or exchange of securities, an amalgamation of the Trust or the Corporation with any other entity, an arrangement, a capital reorganization or any other business combination or reorganization;

(ii)

the sale, assignment or other transfer of all or substantially all of the assets of the Trust or the Corporation to a Person or any group of two or more Persons acting jointly or in concert (other than a wholly-owned subsidiary of the Trust or the Corporation or in connection with an income or royalty trust reorganization);

(iii)

the dissolution or liquidation of the Corporation or the Trust, as the case may be, except in connection with the distribution of assets of the Trust or the Corporation to one or more Persons which were wholly-owned subsidiaries of the Trust or the Corporation prior to such event or in connection with an income trust or royalty trust reorganization;

(iv)

the occurrence of a transaction requiring approval of the Trust’s unitholders whereby the Trust or the Corporation is acquired through consolidation, merger, exchange of securities, purchase of assets, amalgamation, statutory arrangement or otherwise by any Person or any group of two or more Persons acting jointly or in concert (other than an exchange of securities with a wholly-owned subsidiary of the Trust or the Corporation or an income or royalty trust reorganization); or

(v)

the Board passes a resolution to the effect that an event comparable to an event set forth in this definition has occurred;

compensation except where such reduction is applicable to all officers, if the Participant is an officer, or all employees, if the Participant is an employee, of the Employer;

“ Continuing Entity ” has the meaning set out in Section 10.1;

“ Continuing Entity Options ” has the meaning set out in Section 10.1;

“ Control Period ” means the period commencing on the date of the Change of Control and ending 180 days after the date of the Change of Control;

“ Corporation ” means Precision Drilling Corporation and includes any successor corporation thereto;

“ Date of Grant ” of an Option means the date an Option is granted to a Participant under the Plan;

“ Disability ” means where the Participant:

" Employer ” means with respect to a Participant, the entity in the Precision Group that employs the Participant or that employed the Participant immediately prior to his or her Termination Date;

“ Fair Market Value ” means, on any particular date, the fair market value of a Trust Unit as determined by the Board in accordance with the following:

then listed and posted for trading during the last five trading days prior to that particular date (and, if in United States dollars, converted to Canadian dollars using the Noon Buying Rate) or, if the Trust Units are not then listed and posted for trading on any stock exchange in Canada or the United States, then the Fair Market Value shall mean the fair market value per Trust Unit (in Canadian dollars) as determined by the Board in its sole discretion and to the extent applicable, in accordance with Section 409A of the Code;

(ii)

in respect of a Trust Unit issuable upon the exercise of a U.S. Option, the Fair Market Value shall mean the weighted average trading price of a Trust Unit on the NYSE during the last five trading days prior to that particular date on which at least a board lot of Trust Units has so traded or, if a board lot has not traded on a particular day, the average of the bid and asked prices; provided, however, that if the Trust Units are not then listed and posted for trading on the NYSE, then the Fair Market Value shall mean the weighted average trading price of a Trust Unit on the TSX during the last five trading days prior to that particular date on which at least a board lot of Trust Units has so traded or, if a board lot has not traded on a particular day, the average of the bid and asked prices converted to United States dollars using the Noon Buying Rate; and provided further, that if the Trust Units are not then listed and posted for trading on the TSX, then the Fair Market Value shall mean the weighted average trading price of a Trust Unit on such stock exchange in Canada or the United States on which the Trust Units are then listed and posted for trading during the last five trading days prior to that particular date (and, if in Canadian dollars, converted to United States dollars using the Noon Buying Rate) or, if the Trust Units are not then listed and posted for trading on any stock exchange in Canada or the United States, then the Fair Market Value shall mean the fair market value per Trust Unit (in United States dollars) as determined by the Board in its sole discretion and to the extent applicable, in accordance with Section 409A of the Code; and

(iii)

the Fair Market Value of a Trust Unit shall be rounded up to the nearest whole cent;

“ Option ” means an option to purchase Trust Units granted in accordance with the Plan by the Trust to an officer or other key employee of the Precision Group, subject to the provisions contained herein;

“ Option Price ” means, in respect of any particular Option, the price per Trust Unit at which Trust Units may be purchased under that Option, as the same may be adjusted in accordance with Article 8 hereof;

“ Participant ” means an officer or other key employee of the Precision Group to whom an Option has been granted and which Option, or portion thereof, remains unexercised and has not been surrendered;

“ Permitted Reorganization ” means a reorganization of the Precision Group in circumstances where the unitholdings, shareholdings or ultimate ownership remains substantially the same upon completion of the reorganization, and includes a reorganization, in a transaction or series of related transactions, of the Trust for the purposes of avoiding the application of the Canadian SIFT Rules and any related tax or trust, corporate or partnership reorganization or restructuring including, without limitation, the contemporaneous or, to the extent entered into in connection with such reorganization or restructuring, subsequent termination or winding-up of the Trust;

“ Person ” means any individual, sole proprietorship, partnership, firm, entity, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, agency and, where the context requires, any of the foregoing when they are acting as trustee, executor, administrator or other legal representative;

“ Plan ” means this Trust Unit Option Plan of the Trust, as set out herein, as the same may be amended or varied from time to time;

“ Precision Group ” means the Trust and any corporations which the Trust controls, within the meaning of the ITA, and includes, for greater certainty, the Corporation;

“ Restricted Options ” has the meaning set out in Section 5.9;

” Retirement ” means the normal retirement of the Participant from employment with the Employer or the early retirement of the Participant pursuant to any applicable retirement plan of the Employer;

“ Substitution Event ” means a Change of Control pursuant to which the Trust Units are converted into, or exchanged for, other property, whether in the form of securities of another entity, cash or otherwise;

“ Termination Date ” means the Participant’s last day of active employment with the Employer, regardless of the reason for the termination of employment;

“ Trust ” means Precision Drilling Trust, a mutual fund trust within the meaning of the ITA, and includes any successor mutual fund trust thereto, and any reference in this Plan to action by the Trust means action by or under the authority delegated to the Corporation

or the Board or any Person or committee that has been designated for the purpose by the Corporation;

“ Trust Units ” means the trust units of the Trust as presently constituted, each of which represents an equal undivided beneficial interest in the Trust and any distributions from the Trust, or any trust units into which such trust units are changed, reclassified, subdivided, consolidated or converted or which are substituted for such trust units, or as such trust units may further be changed, reclassified, subdivided, consolidated, converted or substituted;

“ TSX ” means The Toronto Stock Exchange;

“ U.S. Option ” means an Option pursuant to which the Option Price is stated and payable in United States dollars; and

“ U.S. Taxpayer ” means a person who is a citizen or permanent resident of the United States for the purposes of the Code or for whom Options granted under the Plan would otherwise be subject to United States federal income taxation under the Code.

4.

Administration of the Plan

4.1

The Plan shall be administered by the Corporation. The Trust shall effect the grant of Options under the Plan, in accordance with determinations made by the Board pursuant to the provisions of the Plan, including as to: