M ANAGEMENT ’ S DISCUSSION AND ANALYSIS (continued) 30 Orbit G arant 2012 annual rep O rt Customer contracts The Company’s surface drilling customer contracts are typically for a term of six (6) to twelve (12) months and its underground drilling customer contracts are typically for a term of one to two years and can be cancelled by the customer on short notice in prescri bed circumstances with limited or no amounts payable to the Company. There is a risk that existing contracts may not be renewed or replaced. The failure to renew or replace some or all of these existing contracts and cancellation of existing contracts could have a mat erial adverse effect on the Company’s fnancial performance, fnancial condition, cash fows and growth prospects. In addition, consolidation by the Company’s customers could materially adversely affect the Company’s results of operations and fnancial condition. International expansion and instability Expansion internationally entails additional political and economic risk. Some of the countries and areas targeted by the Company for expansion are undergoing industrialization and urbanization and do not have the economic, political or social stability that many developed nations now possess. Other countries have experienced political or economic instability in the past and may be subject to risks beyond the Company’s control, such as war or civil disturbances, political, soci al and economic instability, corruption, nationalization, terrorism, expropriation without fair compensation or cancellation of contract rights , signifcant changes in government policies, breakdown of the rule of law and regulations and new tariffs, taxes and other barriers. There is a risk that the Company’s operations, assets , employees or repatriation of revenue could be impaired or adversely affected by factors related to the Company’s international expansi on and have a material adverse effect on the fnancial performance, fnancial condition, cash fow and growth prospects of the Company. Operational risks and liability Risks associated with drilling include, in the case of employees, personal injury and loss of life and, in the cas e of the Company, damage and destruction to property, equipment, release of hazardous substances to the environment and interruption or suspensi on of drill site operation due to unsafe drill operations. The occurrence of any of these events may have an adverse effect on the Company, incl uding fnancial loss, key personnel loss, legal proceedings and damage to the Company’s reputation. In addition, poor or failed internal processes, people or systems, along with external events could negatively impac t the Company’s operational and fnancial performance. The risk of this loss, known as operational risk, is present in all aspects of the busi ness of the Company, including, but not limited to, business disruptions, technology failures, theft and fraud, damage to assets, employ ee safety, regulatory compliance issues or business integration issues. The number and signifcance of the changes and the possibility that the Company may not be able to successfully implement the changes made, may adversely affect the performance of the business and i ts fnancial condition, cash fows and growth prospects of the Company. Currency exposure The Company currently has approximately $13.0 million of US dollar revenue exposure related to international activities. There can be no assurance that this exposure will not change in the future and that a signifcant portion of the Company’s revenue coul d potentially be denominated in a currency or currencies other than the Canadian dollar, fuctuations of which could cause a negative impac t on the Company’s fnancial performance and condition and cash fows performance. Business interruptions Business interruptions as a result of a variety of factors, including; reg ulatory intervention, delays in necessary approvals and permits, health and safety issues or product input supply bottlenecks. In addition, the Company operates in a variety of geographic locations , some of which are prone to inclement weather conditions, natural or other disasters. The occurrence of such conditions or any business interruption could have a material adverse effect on the Company’s fnancial performance, fnancial condition, cash fows and growth prospects. Risk to the Company’s reputation Risks to the Company’s reputation could include any negative publicity, whether true or not, and could cause a decline i n the Company’s customer base and have a material adverse impact on the Company’s fnancial performance, fnancial condition, cash fows and growth prospects. All risks have an impact on reputation, and as such, reputational risk cannot be managed in isolation from other ty pes of risk. Every employee and representative of the Company is charged with upholding its strong reputation by complying with all applic able policies, legislation and regulations as well as creating positive experiences with the Company’s customers, stakeholders and the public. Environment, health and safety requirements and related considerations The Company’s operations are subject to a broad range of federal, provincial, state and local laws and regulations as well as permits and other approvals, including those relating to the protection of the environment and workers ’ health and safety governing, among other things, air emissions, water discharges, non-hazardous and hazardous waste (including waste water), storage, handling, disposal and cl ean-up of dangerous goods and hazardous materials such as chemicals, remediation of releases and workers’ health and safety i n Canada and elsewhere (the ‘‘Environment, Health and Safety Requirements’’). As a result of the Company’s operations, it may be invol ved from time to