CALGARY, AB, Nov. 3, 2022 /CNW/ - AKITA Drilling Ltd. (TSX: AKT.A)

AKITA Drilling Ltd. Logo (CNW Group/AKITA Drilling Ltd.)

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.

Copyright 2022 Canada NewsWire

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