September 21, 2021

AKITA announces second quarter results

CALGARY, AB, July 29, 2021 /CNW/ – AKITA Drilling Ltd. (TSX: AKT.A)
AKITA Drilling Ltd….

CALGARY, AB, July 29, 2021 /CNW/ – AKITA Drilling Ltd. (TSX: AKT.A)

AKITA Drilling Ltd. (the “Company”) announces results for the six months ended June 30, 2021.

Improvements in demand for drilling services in both Canada and the United States continue as demand for oil increases with countries beginning to open up and economies starting to  recover from the COVID-19 pandemic. Activity for AKITA increased 20% in the second quarter of 2021 compared to the second quarter of 2020, which is a positive sign. In the second quarter of 2021, the company recorded a net loss of $6,108,000, compared to a net loss of $5,221,000 in the second quarter of 2020. Adjusted funds flow from operations decreased to $1,056,000 in the second quarter of 2021 from $2,099,000 in the same period of 2020 and adjusted EBITDA decreased to $1,559,000 from $2,985,000 over the same period in 2020.

While the Company was more active in both Canada (159 operating days compared to 99) and the US (615 operating days compared to 544), lower day rates in the US, the mix of rigs working in Canada and increased selling and administrative costs had a negative effect on overall results in the second quarter of 2021 compared to the second quarter of 2020. 

Activity for AKITA’s joint venture rigs improved to 112 operating days in the second quarter of 2021 compared to no operating days in the second quarter of 2020. These joint venture rigs are important to AKITA and our First Nations partners and we expect this to continue through the second half of the year.

Linda Southern-Heathcott, AKITA’s Executive Chair and Chief Executive Officer stated: “The industry is entering a period of increased activity and at AKITA we are focused on balancing continued cost control with readying the fleet and our crews for increased demand. We expect the second half of the year to be busier in both Canada and the United States for AKITA”

CONSOLIDATED FINANCIAL HIGHLIGHTS

($Thousands except per share


For the three months ended June 30, 

For the six months ended June 30, 

amounts)


2021

2020

Change

 % Change

2021

2020

Change

 % Change

Revenue




18,651

26,359

(7,708)

(29%)

45,822

79,931

(34,109)

(43%)

Operating and maintenance


13,900

20,874

(6,974)

(33%)

33,912

62,066

(28,154)

(45%)

expenses

Operating margin



4,751

5,485

(734)

(13%)

11,910

17,865

(5,955)

(33%)

Margin %




25%

21%

4%

19%

26%

22%

4%

18%













Adjusted EBITDA(1)



1,599

2,985

(1,386)

(46%)

6,133

14,622

(8,489)

(58%)

Per share




0.04

0.08

(0.04)

(50%)

0.15

0.37

(0.22)

(59%)













Adjusted funds flow from


1,056

2,099

(1,043)

(50%)

4,775

12,253

(7,478)

(61%)

operations(1)

Per share




0.03

0.04

(0.01)

(25%)

0.12

0.31

(0.19)

(61%)













Net loss




(6,108)

(5,221)

(887)

(17%)

(9,759)

(57,478)

47,719

83%

Per share




(0.15)

(0.13)

(0.02)

(15%)

(0.25)

(1.45)

1.20

83%













Capital expenditures



3,138

1,612

1,526

95%

4,742

5,139

(397)

(8%)













Weighted average shares


39,608

39,608

0%

39,608

39,608

0%

outstanding













Total assets



240,306

292,819

(52,513)

(18%)

240,306

292,819

(52,513)

(18%)

Total debt




74,467

79,650

(5,183)

(7%)

74,467

79,650

(5,183)

(7%)

(1)Non-GAAP Items






CONSOLIDATED OPERATIONAL HIGHLIGHTS




For the three months ended June 30, 

For the six months ended June 30, 






2021

2020

Change 

% Change

2021

2020

Change 

% Change

Canada












Operating days


159

99

60

61%

650

712

(62)

(9%)


Utilization 


9%

5%

4%

80%

18%

17%

1%

6%


Revenue per operating day(1)(2)

26,453

50,505

(24,052)

(48%)

28,194

33,239

(5,045)

(15%)












Operating and maintenance

18,629

41,061

(22,432)

(55%)

20,442

25,538

(5,096)

(20%)

expenses per operating day(1)(2)


Operating margin per operating

7,824

9,444

(1,620)

(17%)

7,752

7,701

51

1%

day

United States












Operating days


615

544

71

13%

1,319

1,652

(333)

(20%)


Utilization 


40%

33%

7%

21%

43%

51%

(8%)

(16%)


Revenue per operating day(1)

27,374

39,342

(11,968)

(30%)

27,114

37,097

(9,983)

(27%)


Operating and maintenance

21,502

31,031

(9,529)

(31%)

21,169

29,007

(7,838)

(27%)

expenses per operating day(1)


Operating margin per operating

5,872

8,311

(2,439)

(29%)

5,945

8,090

(2,145)

(27%)

day

(1)Non-GAAP Items










(2)Includes AKITA’s share of Joint Venture revenue and expenses. 




United States Drilling Division

The active rig count in the US has continued to increase from the low of 244 rigs in August of 2020, to 470 rigs active at the end of June 2021. This increase has allowed the Company to get more rigs operating, however, industry activity is still very low when compared to historical averages.

Revenue in the US dropped to $16,835,000 for the second quarter of 2021, down from $21,402,000 in the same period in 2020. This drop in revenue is attributable to the decrease in revenue per day, which fell 30% between the two quarters. Demand in the US has not recovered enough to allow for day rate increases, as there is still an oversupply of premium drilling rigs in the US for the current demand. Operators are reluctant to increase capital budgets given the uncertainty around current oil prices and therefore demand for drilling services and the rates contractors are able to charge remain low.  

Canadian Drilling Division

Activity in Canada, for AKITA and the industry, has begun to increase from the low seen in the second quarter of 2020. Higher oil prices and the expectation of increased demand for oil as the global economy reopens, have increased the demand for drilling services in Canada. Strong natural gas prices, averaging $3.001 in June of 2021 compared to $1.80 in June of 2020 and $0.70 in June of 2019, are also contributing to the increased demand for drilling services in Canada.

Canadian revenue of $4,206,000 in the second quarter of 2021 was 16% lower than in the second quarter of 2020 ($5,000,000), due to the mix of rigs operating in 2021 compared to 2020, with higher margin rigs working in the second quarter of 2020. Operating margin per operating day decreased to $7,824 in the second quarter of 2021 from $9,444 in the same period of 2020, due the mix of rigs working as already noted. Day rates have not increased materially since 2020 and demand will have to increase above current levels to allow for day rate increases. During the quarter, the Company received $927,000 from the Canadian Emergency Wage Subsidy, a Federal government program that has greatly assisted the Company through these challenging times.  

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 June 30, 2021 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.

____________________________

1 Alberta Natural Gas Prices (CAD)

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 June 30, 2021 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.