CALGARY,
AB, Nov. 1, 2023 /CNW/ - AKITA Drilling
Ltd. (TSX: AKT.A)
AKITA Drilling Ltd. ("AKITA" or the "Company") announces results
for the nine months ended September 30,
2023.
The Company's net income increased to $3,880,000 in the third quarter of 2023 up from
$2,660,000 during the same period of
2022. With a fifth consecutive quarter of positive earnings, the
Company has returned to a positive retained earnings balance
($3,672,000) which has been in a
deficit position since the asset impairment recorded in the first
quarter of 2021. Higher day rates drove the improved earnings as
activity levels fell between the two quarters (1,491 operating days
in the third quarter of 2023 versus 1,676 in the same period of
2022). Adjusted funds flow from operations increased 18% to
$10,566,000 in the third quarter of
2023, from $8,957,000 in the same
period of 2022, also driven by improved rates. Net cash from
operations decreased to $2,308,000
for the three months ended September 30,
2023, compared to $3,727,000
in the same period of 2022, due to a third quarter working capital
build in 2023. Total debt decreased to $79,233,000 at the end of the third quarter of
2023 from $94,436,000 at the same
time in 2022. In Canada, the
Company began the quarter operating 10 rigs which declined to five
at the end of the quarter primarily due to timing of operator
programs which will reverse in the fourth quarter. In the US the
active rigs for the Company went from 14 at the start of the
quarter and down to 8 active rigs at the end of the third quarter
of 2023 as the active rig count continued to fall for the US
industry as a whole. AKITA anticipates the active rig count for the
Company will partially rebound in the fourth quarter of 2023.
The Company spent $4,566,000 on
routine capital items in the third quarter of 2023, up from
$3,020,000 over the same period in
2022. In addition to routine capital items the Company commenced an
upgrade to one of its oil sands designed rigs to enable the rig to
be competitive in the deep gas market in Canada. This upgrade is anticipated to be done
mid fourth quarter of 2023 at a cost of approximately $4,000,000.
Colin Dease, AKITA's Chief
Executive Officer stated: "AKITA's US active rig count stayed
constant at 14 rigs until the third quarter of 2023 despite broader
market declines in the industry, highlighting the marketability of
our US fleet. We are confident our lull in activity will be short
lived and we are looking forward to 2024 and increased activity in
both Canada and the US.
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
($Thousands except per
share amounts)
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
2023
|
2022
|
Change
|
%
Change
|
2023
|
2022
|
Change
|
%
Change
|
|
Revenue
|
|
|
54,813
|
53,526
|
1,287
|
2 %
|
178,162
|
141,471
|
36,691
|
26 %
|
|
Operating and
maintenance expenses
|
|
41,387
|
40,755
|
632
|
2 %
|
128,801
|
111,218
|
17,583
|
16 %
|
|
Operating
margin
|
|
|
13,426
|
12,771
|
655
|
5 %
|
49,361
|
30,253
|
19,108
|
63 %
|
|
Margin %
|
|
|
24 %
|
24 %
|
0 %
|
0 %
|
28 %
|
21 %
|
7 %
|
33 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from operating
activities
|
|
2,308
|
3,727
|
(1,419)
|
(38 %)
|
18,044
|
10,163
|
7,881
|
78 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted funds flow
from operations(1)
|
|
10,566
|
8,957
|
1,609
|
18 %
|
38,346
|
18,669
|
19,677
|
105 %
|
|
Per
share
|
|
|
0.27
|
0.23
|
0.04
|
17 %
|
0.97
|
0.47
|
0.50
|
106 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
3,880
|
2,660
|
1,220
|
46 %
|
19,580
|
(4,525)
|
24,105
|
533 %
|
|
Per
share
|
|
|
0.10
|
0.07
|
0.03
|
43 %
|
0.49
|
(0.11)
|
0.60
|
545 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
4,566
|
3,020
|
1,546
|
51 %
|
11,770
|
13,065
|
(1,295)
|
(10 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
39,650
|
39,624
|
26
|
0 %
|
39,650
|
39,614
|
36
|
0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
267,061
|
262,576
|
4,485
|
2 %
|
267,061
|
262,576
|
4,485
|
2 %
|
|
Total debt
|
|
|
79,223
|
94,436
|
(15,213)
|
(16 %)
|
79,223
|
94,436
|
(15,213)
|
(16 %)
|
|
(1)
See "Non-GAAP and Supplementary Financial
Measures" near the end of this release for further
detail.
|
|
Canadian Drilling Division
|
$Thousands except per
day amounts
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
|
|
2023
|
2022
|
Change
|
% Change
|
2023
|
2022
|
Change
|
% Change
|
|
Revenue
Canada
|
|
|
15,104
|
12,988
|
2,116
|
16 %
|
44,237
|
40,593
|
3,644
|
9 %
|
|
Revenue from joint
venture drilling rigs
|
11,099
|
8,458
|
2,641
|
31 %
|
27,990
|
19,412
|
8,578
|
44 %
|
|
Flow through
charges(1)
|
|
(3,117)
|
(1,447)
|
(1,670)
|
(115 %)
|
(5,126)
|
(3,088)
|
(2,038)
|
(66 %)
|
|
Adjusted revenue
Canada(1)
|
|
23,086
|
19,999
|
3,087
|
15 %
|
67,101
|
56,917
|
10,184
|
18 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance
expenses Canada
|
10,226
|
10,064
|
162
|
2 %
|
32,621
|
30,993
|
1,628
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance expenses from joint venture drilling rigs
|
8,641
|
6,647
|
1,994
|
30 %
|
21,015
|
15,165
|
5,850
|
39 %
|
|
Flow through
charges(1)
|
|
(3,117)
|
(1,447)
|
(1,670)
|
(115 %)
|
(5,126)
|
(3,088)
|
(2,038)
|
(66 %)
|
|
Adjusted operating
and maintenance expenses Canada(1)
|
15,750
|
15,264
|
486
|
3 %
|
48,510
|
43,070
|
5,440
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
margin Canada(1)
|
7,336
|
4,735
|
2,601
|
55 %
|
18,591
|
13,847
|
4,744
|
34 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin
%(1)
|
|
|
32 %
|
24 %
|
8 %
|
33 %
|
28 %
|
24 %
|
4 %
|
17 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
days
|
|
|
583
|
644
|
(61)
|
(9 %)
|
1,774
|
1,935
|
(161)
|
(8 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted revenue per
operating day(1)
|
39,599
|
31,054
|
8,545
|
28 %
|
37,825
|
29,414
|
8,411
|
29 %
|
|
Adjusted operating and
maintenance
expenses per operating day(1)
|
27,015
|
23,702
|
3,313
|
14 %
|
27,345
|
22,258
|
5,087
|
23 %
|
|
Adjusted operating
margin per operating day(1)
|
12,584
|
7,352
|
5,232
|
71 %
|
10,480
|
7,156
|
3,324
|
46 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization(1)
|
|
|
32 %
|
35 %
|
(3 %)
|
(9 %)
|
32 %
|
35 %
|
(3 %)
|
(9 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Rig count
|
|
|
20
|
20
|
-
|
0 %
|
20
|
20
|
-
|
0 %
|
|
(1)
See "Non-GAAP and Supplementary Financial Measures" near the end of
this release for further detail.
|
|
|
|
|
|
|
|
During the third quarter of 2023, AKITA achieved 583 operating
days in Canada, which corresponds
to a utilization rate of 32%, compared to 35% (644 days) in the
third quarter of 2023 and compared to an industry average of 38% in
the third quarter of 2023. The decrease in activity for AKITA was a
result of a lull in the demand for the Company's oil sands rigs, as
programs ended during the quarter and the effect of one of the
Company's customers being acquired. This decrease in activity for
the Company was mitigated by increased day rates which resulted in
the adjusted operating margin in Canada increasing to $7,336,000 in the third quarter of 2023, up from
$4,735,000 in the same period of
2022.
Adjusted revenue per operating day was the key driver for
improved results in Canada in the
quarter, increasing 28% quarter over quarter to $39,599 in the third quarter of 2023.
Corresponding to this increase in revenue per day is a 14% increase
in adjusted operating and maintenance expense per day between the
third quarter of 2022 and 2023. Together, these two factors
resulted in a 71% increase in adjusted operating margin per
operating day, increasing to $12,584
per day in the third quarter of 2023, up from $7,352 in the same period of 2022.
United States Drilling Division
|
$Thousands except per
day amounts
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
|
|
2023
|
2022
|
Change
|
% Change
|
2023
|
2022
|
Change
|
% Change
|
|
Revenue US
|
|
|
39,709
|
40,537
|
(828)
|
(2 %)
|
133,925
|
100,878
|
33,047
|
33 %
|
|
Flow through
charges(1)
|
|
(4,355)
|
(4,215)
|
(140)
|
(3 %)
|
(13,427)
|
(9,536)
|
(3,891)
|
(41 %)
|
|
Adjusted revenue
US(1)
|
|
35,354
|
36,322
|
(968)
|
(3 %)
|
120,498
|
91,342
|
29,156
|
32 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance expenses US
|
31,161
|
30,691
|
470
|
2 %
|
96,180
|
80,225
|
15,955
|
20 %
|
|
Flow through
charges(1)
|
|
(4,355)
|
(4,215)
|
(140)
|
(3 %)
|
(13,427)
|
(9,536)
|
(3,891)
|
(41 %)
|
|
Adjusted operating
and maintenance expenses US(1)
|
26,806
|
26,476
|
330
|
1 %
|
82,753
|
70,689
|
12,064
|
17 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
margin US(1)
|
8,548
|
9,846
|
(1,298)
|
(13 %)
|
37,745
|
20,653
|
17,092
|
83 %
|
|
Margin
%(1)
|
|
|
24 %
|
27 %
|
(3 %)
|
(11 %)
|
31 %
|
23 %
|
8 %
|
35 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
days
|
|
|
908
|
1,032
|
(124)
|
(12 %)
|
3,041
|
3,042
|
(1)
|
(0 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted revenue per
operating day(1)
|
38,936
|
35,196
|
3,740
|
11 %
|
39,624
|
30,027
|
9,597
|
32 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating and
maintenance expenses per operating day(1)
|
29,522
|
25,655
|
3,867
|
15 %
|
27,212
|
23,238
|
3,974
|
17 %
|
|
Adjusted operating
margin per operating day(1)
|
9,414
|
9,541
|
(127)
|
(1 %)
|
12,412
|
6,789
|
5,623
|
83 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization(1)
|
|
|
66 %
|
70 %
|
(4 %)
|
(6 %)
|
74 %
|
70 %
|
4 %
|
6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Rig count
|
|
|
15
|
16
|
(1)
|
(6 %)
|
15
|
16
|
(1)
|
(6 %)
|
|
(1)
See "Non-GAAP and Supplementary Financial Measures" near the end of
this release for further detail.
|
|
|
|
|
|
|
|
Results in the Company's US operating segment
declined in the third quarter of 2023 when compared to the same
period of 2022. Activity decreased 12% in the third quarter of 2023
to 908 operating days compared to 1,032 in the third quarter of
2022. This reduction in activity for the Company combined with a
slight reduction in adjusted operating margin per day of
$127 resulted in a decrease in the
adjusted operating margin in the US to $8,548,000 in the third quarter of 2023, down
from $9,846,000 in the third quarter
of 2022. Although this decrease does not appear significant when
comparing the third quarter of 2023 to the third quarter of 2022,
the decrease is more significant when compared to the second
quarter of 2023. In the second quarter of 2023, the Company's
adjusted operating margin per operating day was $13,742, the 20% decrease in adjusted operating
margin per operating day between the second and third quarters of
2023 was a result of adjusted revenue per operating day decreasing
4% as some higher margin contacts ended in the quarter and adjusted
operating and maintenance expense per day increasing 3% between the
two quarters as maintenance costs increased. At the end of the
third quarter, AKITA's US division was operating eight rigs, down
from 14 at the start of the quarter.
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,
2023 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 and Supplementary Financial Measures
Non-GAAP Financial Measures
Adjusted Revenue and Adjusted Operating and Maintenance
Expenses
Revenue and operating and maintenance expenses in AKITA's
Canadian operating segment include revenue and expenses from
AKITA's wholly-owned drilling rigs as well as its share of joint
venture revenue and expenses.
Excluded from the revenue and expenses in AKITA's Canadian and
US operating segment are flow through charges that are billed to
operators and repaid to the Company. The volume and timing of the
flow through charges can artificially impact the operational per
day analysis and as a result management and certain investors may
find the comparability between periods is improved when these flow
through charges are excluded from revenue per day and operating and
maintenance expense per day. The flow through charges do not have
any impact on the Company's net earnings as the amounts offset each
other.
Adjusted Funds Flow from Operations
Adjusted funds flow from operations is not a recognized GAAP
measure under IFRS and readers should note that AKITA's method of
determining adjusted funds flow from operations may differ from
methods used by other companies, and includes cash flow from
operating activities before working capital changes, equity income
from joint ventures, and income tax amounts paid or recovered
during the period. Nonetheless, management and certain
investors may find adjusted funds flow from operations to be a
useful measurement to evaluate the Company's operating results at
year-end and within each year, since the seasonal nature of the
business affects the comparability of non-cash working capital
changes both between and within periods.
|
$Thousands
|
For the three months
ended
September 30,
|
For the nine months
ended
September 30,
|
|
2023
|
2022
|
2023
|
2022
|
|
Net cash from operating
activities
|
2,308
|
3,727
|
18,044
|
10,163
|
|
Interest
paid
|
1,340
|
2,044
|
5,049
|
4,480
|
|
Interest
expense
|
(1,393)
|
(2,019)
|
(5,208)
|
(4,596)
|
|
Post-employment
benefits paid
|
77
|
70
|
243
|
206
|
|
Equity income from
joint ventures
|
2,362
|
1,687
|
6,696
|
3,953
|
|
Change in non-cash
working capital
|
5,872
|
3,448
|
13,522
|
4,463
|
|
Adjusted funds flow
from operations
|
10,566
|
8,957
|
38,346
|
18,669
|
Non-GAAP Ratios
"Adjusted funds flow from
operations per share" is calculated on the same basis as
net loss per class A and class B share basic and diluted, utilizing
the basic and diluted weighted average number of class A and class
B shares outstanding during the periods presented.
"Adjusted revenue per operating day" may be useful
to analysts, investors, other interested parties and management as
a measure of pricing strength and is calculated by dividing
adjusted revenue by the number of operating days for the
period.
"Adjusted operating and maintenance expenses per operating
day" may be useful to analysts, investors, other
interested parties and management as it demonstrates a degree of
cost control and provides a proxy for specific inflation rates
incurred by the Company
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. In particular,
forward-looking information in this news release includes, but is
not limited to, references to the outlook for the drilling industry
(including activity levels and day rates), the Company's
relationships and customers and vendors, advantages associated with
the percentage of pad drilling rigs in the Company's Canadian
drilling fleet, the renewal of drilling contracts, and debt
repayment.
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.
Although the Company believes that the expectations reflected
in the forward-looking information are reasonable based on the
information available on the date such statements are made and
processes used to prepare the information, such statements are not
guarantees of future performance and no assurance can be given that
these expectations will prove to be correct. By their nature, these
forward-looking statements involve numerous assumptions, inherent
risks and uncertainties, both general and specific, and therefore
carry the risk that the predictions and other forward-looking
statements will not be realized. Readers of this news release
are cautioned not to place undue reliance on these statements as a
number of important factors could cause actual future results to
differ materially from the plans, objectives, estimates and
intentions expressed in such forward-looking statements.
The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result
of, among other things, prevailing economic conditions; the level
of exploration and development activity carried on by AKITA's
customers, world crude oil prices and North American natural gas
prices; global liquefied natural gas (LNG) demand, weather, access
to capital markets; and government policies. We caution that
the foregoing list of factors is not exhaustive and that while
relying on forward-looking statements to make decisions with
respect to AKITA, investors and others should carefully consider
the foregoing factors, as well as other uncertainties and events,
prior to making a decision to invest in AKITA. Except where
required by law, the Company does not undertake to update any
forward-looking statement, whether written or oral, that may be
made from time to time by it or on its behalf
SOURCE AKITA Drilling Ltd.