CALGARY, AB, Nov. 3, 2022 /CNW/ - AKITA Drilling
Ltd. (TSX: AKT.A)
AKITA Drilling Ltd. (the "Company") announces results for the
nine months ended September 30,
2022.
The Company's net income improved to $2,660,000 (0.07 per Class A Non-Voting and Class
B Common Shares) in the third quarter of 2022 from a net loss of
$6,443,000 (0.16 per Class A
Non-Voting and Class B Common Shares) in the same period of 2021.
Generating positive earnings in the third quarter of 2022 is a
significant achievement for the Company. Strong results in the
Company's US division were the primary driver for the improved
results. The Company was more active in both Canada with 644 operating days in the third
quarter of 2022, compared to 446 operating days in the same period
of 2021 and the US with 1,032 operating days in the third quarter
of 2022, compared to 723 operating days in the third quarter of
2021. More operating days had a positive impact on results,
however, the most significant driver for improved results was the
145% increase in the Company's adjusted operating margin in
the United States. Funds flow from
operations increased to $8,957,000 in
the third quarter of 2022, the highest quarterly funds flow from
operations since the first quarter of 2020, which was the last
quarter before the pandemic. In the third quarter of 2022,
the Company spent $3,020,000 on
routine capital, compared to $4,130,000 in the same period of 2021. Quarter
end debt balances remained unchanged at $95,000,000 over the first three quarters of
2022.
Linda Southern-Heathcott, AKITA's
Executive Chair and Chief Executive Officer stated: "A return to
positive earnings marks a milestone that we are very proud of. I
would like to thank all of AKITA's employees whose hard work and
dedication resulted in this achievement. With fourteen rigs
currently operating in the US and nine in Canada, we are preparing for a busy winter
drilling season as we continue our efforts to further increase our
rig count in Canada".
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
($Thousands except per
share amounts)
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
2022
|
2021
|
Change
|
%
Change
|
2022
|
2021
|
Change
|
%
Change
|
|
Revenue
|
|
|
53,526
|
29,906
|
23,620
|
79 %
|
141,471
|
75,728
|
65,743
|
87 %
|
|
Operating and
maintenance expenses
|
|
40,755
|
25,354
|
15,401
|
61 %
|
111,218
|
59,267
|
51,951
|
88 %
|
|
Operating
margin
|
|
|
12,771
|
4,552
|
8,219
|
181 %
|
30,253
|
16,461
|
13,792
|
84 %
|
|
Margin %
|
|
|
24 %
|
15 %
|
9 %
|
60 %
|
21 %
|
22 %
|
(1 %)
|
(5 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from (used in)
operating activities
|
|
3,727
|
(1,560)
|
5,287
|
339 %
|
10,163
|
2,866
|
7,297
|
255 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted funds flow
from operations(1)
|
|
8,957
|
252
|
8,705
|
3454 %
|
18,669
|
5,027
|
13,642
|
271 %
|
|
Per
share
|
|
|
0.23
|
0.01
|
0.22
|
2200 %
|
0.47
|
0.13
|
0.34
|
262 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
2,660
|
(6,433)
|
9,093
|
141 %
|
(4,525)
|
(16,192)
|
11,667
|
72 %
|
|
Per
share
|
|
|
0.07
|
(0.16)
|
0.23
|
144 %
|
(0.11)
|
(0.41)
|
0.30
|
73 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
3,020
|
4,130
|
(1,110)
|
(27 %)
|
13,065
|
8,872
|
4,193
|
47 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
39,624
|
39,608
|
16
|
0 %
|
39,614
|
39,608
|
6
|
0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
262,576
|
241,333
|
21,243
|
9 %
|
262,576
|
241,333
|
21,243
|
9 %
|
|
Total debt
|
|
|
94,436
|
74,549
|
19,887
|
27 %
|
94,436
|
74,549
|
19,887
|
27 %
|
|
(1)
See "Non-GAAP and Supplementary Financial
Measures" near the end of this news release for further
detail.
|
|
United States Drilling Division
|
$Thousands except per
day amounts
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
|
|
2022
|
2021
|
Change
|
% Change
|
2022
|
2021
|
Change
|
% Change
|
|
Revenue US
|
|
|
40,537
|
21,801
|
18,736
|
86 %
|
100,878
|
57,565
|
43,313
|
75 %
|
|
Flow through
charges(1)
|
|
(4,215)
|
(3,627)
|
588
|
16 %
|
(9,536)
|
(7,097)
|
2,439
|
34 %
|
|
Adjusted revenue
US(1)
|
|
36,322
|
18,174
|
18,148
|
100 %
|
91,342
|
50,468
|
40,874
|
81 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance expenses US
|
30,691
|
18,990
|
11,701
|
62 %
|
80,225
|
46,912
|
33,313
|
71 %
|
|
Flow through
charges(1)
|
|
(4,215)
|
(3,627)
|
588
|
16 %
|
(9,536)
|
(7,097)
|
2,439
|
34 %
|
|
Adjusted operating
and maintenance expenses US(1)
|
26,476
|
15,363
|
11,113
|
72 %
|
70,689
|
39,815
|
30,874
|
78 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
margin US(1)
|
9,846
|
2,811
|
7,035
|
250 %
|
20,653
|
10,653
|
10,000
|
94 %
|
|
Margin
%(1)
|
|
|
27 %
|
15 %
|
12 %
|
80 %
|
23 %
|
21 %
|
2 %
|
10 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
days
|
|
|
1,032
|
723
|
309
|
43 %
|
3,042
|
2,042
|
1,000
|
49 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted revenue per
operating day(1)
|
35,196
|
25,137
|
10,059
|
40 %
|
30,027
|
24,715
|
5,312
|
21 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating and
maintenance expenses per operating day(1)
|
25,655
|
21,249
|
4,406
|
21 %
|
23,238
|
19,498
|
3,740
|
19 %
|
|
Adjusted operating
margin per operating day(1)
|
9,541
|
3,888
|
5,653
|
145 %
|
6,789
|
5,217
|
1,572
|
30 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization(1)
|
|
|
70 %
|
46 %
|
24 %
|
52 %
|
70 %
|
44 %
|
26 %
|
59 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Rig count
|
|
|
16
|
17
|
(1)
|
(6 %)
|
16
|
17
|
(1)
|
(6 %)
|
|
(1)
See "Non-GAAP and Supplementary Financial
Measures" near the end of this news release for further
detail.
|
|
|
|
|
|
|
|
Results in the Company's US operating segment improved
significantly in the third quarter of 2022 when compared to the
same period of 2021. Activity increased 43% in the third quarter of
2022 to 1,032 operating days compared to 723 in the third quarter
of 2021. With the rig count in the US above 750 active rigs,
drilling contractors have significantly more pricing power. This
increased pricing power has allowed the Company to increase day
rates, translating to a 40% increase in adjusted revenue per day up
to $35,196 in the third quarter of
2022 from $25,137 in the same period
of 2021. Costs have also increased, with prices rising in all
categories including labour costs. Adjusted operating and
maintenance expenses per day increased 21%. The large increase in
revenue per day more than offset the increase in operating and
maintenance expenses per day, resulting in the US division's
operating margin per day increasing 145% to $9,541 for the third quarter of 2022 and adjusted
operating margin increasing to $9,846,000 in the third quarter of 2022 from
$2,811,000 in the same period of
2021. At the end of the third quarter, AKITA's US division was
operating 14 of its 16 rigs and 100% of the AC rigs in the
Company's US fleet.
Canadian Drilling Division
|
$Thousands except per
day amounts
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
|
|
2022
|
2021
|
Change
|
% Change
|
2022
|
2021
|
Change
|
% Change
|
|
Revenue
Canada
|
|
|
12,988
|
8,105
|
4,883
|
60 %
|
40,594
|
18,163
|
22,431
|
123 %
|
|
Revenue from joint
venture drilling rigs
|
8,458
|
3,193
|
5,265
|
165 %
|
19,412
|
11,462
|
7,950
|
69 %
|
|
Flow through
charges(1)
|
|
(1,447)
|
(990)
|
457
|
46 %
|
(3,088)
|
(2,047)
|
1,041
|
51 %
|
|
Adjusted revenue
Canada(1)
|
|
19,999
|
10,308
|
9,691
|
94 %
|
56,918
|
27,578
|
29,340
|
106 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance
expenses Canada
|
10,064
|
6,364
|
3,700
|
58 %
|
30,993
|
12,355
|
18,638
|
151 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance expenses from joint venture drilling rigs
|
6,647
|
2,896
|
3,751
|
130 %
|
15,165
|
10,198
|
4,967
|
49 %
|
|
Flow through
charges(1)
|
|
(1,447)
|
(990)
|
457
|
46 %
|
(3,088)
|
(2,047)
|
1,041
|
51 %
|
|
Adjusted operating
and maintenance expenses Canada(1)
|
15,264
|
8,270
|
6,994
|
85 %
|
43,070
|
20,506
|
22,564
|
110 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
margin Canada(1)
|
4,735
|
2,038
|
2,697
|
132 %
|
13,848
|
7,072
|
6,776
|
96 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin
%(1)
|
|
|
24 %
|
20 %
|
4 %
|
20 %
|
24 %
|
26 %
|
(2 %)
|
(8 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
days
|
|
|
644
|
446
|
198
|
44 %
|
1,935
|
1,093
|
842
|
77 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted revenue per
operating day(1)
|
31,054
|
23,112
|
7,942
|
34 %
|
29,415
|
25,231
|
4,184
|
17 %
|
|
Adjusted operating and
maintenance
expenses per operating day(1)
|
23,702
|
18,543
|
5,159
|
28 %
|
22,258
|
18,761
|
3,497
|
19 %
|
|
Adjusted operating
margin per operating day(1)
|
7,352
|
4,569
|
2,783
|
61 %
|
7,157
|
6,470
|
687
|
11 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization(1)
|
|
|
35 %
|
24 %
|
11 %
|
46 %
|
35 %
|
20 %
|
15 %
|
75 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Rig count
|
|
|
20
|
20
|
-
|
0 %
|
20
|
20
|
-
|
0 %
|
|
(1)
See "Non-GAAP and Supplementary Financial Measures" near the
end of this news release for further detail.
|
|
|
|
|
|
|
|
During the third quarter of 2022, AKITA achieved 644 operating
days in Canada, which corresponds
to a utilization rate of 35%, compared to 24% (446 days) in the
third quarter of 2021 and compared to an industry average of 40% in
the third quarter of 2022. This increase in activity had a positive
impact on day rates, which in turn improved the Company's adjusted
operating margin per operating day by 61% in the third quarter of
2022 over the same period in 2021.
The combination of more operating days and higher revenue per
day resulted in a significant increase in adjusted revenue in
Canada, which increased to
$19,999,000 in the third quarter of
2022, up from $10,308,000 in the
third quarter of 2021, a 94% increase. This increase was offset in
part by higher adjusted operating and maintenance expenses, which
increased to $15,264,000 in the third
quarter of 2022 from $8,270,000 in
the third quarter of 2021. In the third quarter of 2021 adjusted
operating and maintenance costs were reduced by $910,000 (2022 - nil) due to receipt of the
Canada Emergency Wage Subsidy
(CEWS).
FURTHER INFORMATION
This news release shall be used as preparation for reading the
full disclosure documents. AKITA's unaudited interim condensed
consolidated financial statements and management's discussion and
analysis for the quarter ended September 30,
2022 will be available on the AKITA website
(www.akita-drilling.com) or via SEDAR (www.sedar.com) or can be
requested in print from the Company.
NON-GAAP ITEMS
This news release references Non-GAAP (Generally
Accepted Accounting Principles) items. Revenue per operating day,
operating and maintenance expense per operating day, adjusted
revenue, adjusted operating and maintenance expense, EBITDA and
adjusted funds flow from operations are all considered Non-GAAP
items. Management feels that these Non-GAAP items are useful in
assessing the Company's performance. These terms do not have
standardized meanings prescribed under International Financial
Reporting Standards (IFRS) and may not be comparable to similar
measures used by other companies. For further information, see
"Basis of Analysis in this MD&A and Non-GAAP Items" in AKITA's
September 30, 2022 Management's
Discussion & Analysis.
FORWARD-LOOKING
INFORMATION:
Certain statements contained in this news release may
constitute forward-looking information. Forward-looking information
is often, but not always, identified by the use of words such as
"anticipate", "plan", "estimate", "expect", "may", "will",
"intend", "should", and similar expressions.
Forward-looking information involves known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking information.
The Company's actual results could differ materially from
those anticipated in this forward-looking information as a result
of regulatory decisions, competitive factors in the industries in
which the Company operates, prevailing economic conditions
(including as may be affected by the COVID-19
pandemic), and other factors, many of which are beyond the
control of the Company.
The Company believes that the expectations reflected in the
forward-looking information are reasonable, but no assurance can be
given that these expectations will prove to be correct and such
forward-looking information should not be unduly relied
upon.
Any forward-looking information contained in this news
release represents the Company's expectations as of the date
hereof, and is subject to change after such date. The Company
disclaims any intention or obligation to update or revise any
forward-looking information whether as a result of new information,
future events or otherwise, except as required by applicable
securities legislation.
SOURCE AKITA Drilling Ltd.