CALGARY, AB , Nov. 4, 2024
/CNW/ - AKITA Drilling Ltd. (TSX: AKT.A)
AKITA Drilling Ltd. ("AKITA" or the "Company") announces results
for the nine months ended September 30,
2024.
The Company's net income decreased to $1,106,000 in the third quarter of 2024 from
$3,880,000 during the same period of
2023. Adjusted funds flow from operations decreased to $8,435,000 in the third quarter of 2024, from
$10,566,000 in the same period of
2023. Results in the third quarter of 2024 were down compared to
the same period of 2023 due to reduced operating margin per day in
the Company's Canadian division due to rig mix and reduced activity
in the US division.
Net cash from operations increased to $6,458,000 for the three months ended
September 30, 2024, compared to
$2,308,000 in the same period of
2023, due to the positive change in non-cash working capital. Total
debt decreased to $55,551,000 at the
end of the third quarter of 2024 from $79,223,000 at the same time in 2023.
In contrast to the continuing decrease in the US industry active
rig count, AKITA's US active rig count increased through the
quarter, from 8 rigs at the start of July to 12 active rigs at the
end of September, equivalent to 80% utilization compared to a
utilization rate of 40% for the industry as a whole at the end of
the quarter. A similar increase occurred in Canada where AKITA's active rig count
increased from 9 rigs at the start of the quarter to 12 rigs at the
end of the quarter, equivalent to 71% utilization compared to 57%
in the Canadian industry at quarter end.
Colin Dease, AKITA's Chief
Executive Officer stated: "We are extremely proud of the
debt repayment we have achieved year to date and of our
success in reactivating rigs in the US despite challenging
market conditions. With 12 active rigs in each division, our
activity is now strong and balanced between Canada and the US, and we anticipate a strong
fourth quarter for the Company."
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
($Thousands except per
share amounts)
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
2024
|
2023
|
Change
|
%
Change
|
2024
|
2023
|
Change
|
%
Change
|
|
Revenue
|
|
|
45,828
|
54,813
|
(8,985)
|
(16 %)
|
130,469
|
178,162
|
(47,693)
|
(27 %)
|
|
Operating and
maintenance expenses
|
|
35,727
|
41,387
|
(5,660)
|
(14 %)
|
99,044
|
128,801
|
(29,757)
|
(23 %)
|
|
Operating
margin
|
|
|
10,101
|
13,426
|
(3,325)
|
(25 %)
|
31,425
|
49,361
|
(17,936)
|
(36 %)
|
|
Margin %
|
|
|
22 %
|
24 %
|
(2 %)
|
(8 %)
|
24 %
|
28 %
|
(4 %)
|
(14 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from operating
activities
|
|
6,458
|
2,308
|
4,150
|
180 %
|
24,318
|
18,044
|
6,274
|
35 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted funds flow
from operations(1)
|
|
8,435
|
10,566
|
(2,131)
|
(20 %)
|
26,080
|
38,346
|
(12,266)
|
(32 %)
|
|
Per
share
|
|
|
0.21
|
0.27
|
(0.06)
|
(22 %)
|
0.66
|
0.97
|
(0.31)
|
(32 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
1,106
|
3,880
|
(2,774)
|
(71 %)
|
3,254
|
19,580
|
(16,326)
|
(83 %)
|
|
Per
share
|
|
|
0.03
|
0.10
|
(0.07)
|
(70 %)
|
0.08
|
0.49
|
(0.41)
|
(84 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
7,378
|
4,566
|
2,812
|
62 %
|
18,439
|
11,770
|
6,669
|
57 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
39,734
|
39,650
|
84
|
0 %
|
39,728
|
39,650
|
78
|
0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
251,486
|
267,061
|
(15,575)
|
(6 %)
|
251,486
|
267,061
|
(15,575)
|
(6 %)
|
|
Total debt
|
|
|
55,551
|
79,223
|
(23,672)
|
(30 %)
|
55,551
|
79,223
|
(23,672)
|
(30 %)
|
|
(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
|
2024
|
2023
|
Change
|
% Change
|
2024
|
2023
|
Change
|
% Change
|
|
Revenue
Canada
|
|
|
14,842
|
15,104
|
(262)
|
(2 %)
|
40,211
|
44,237
|
(4,026)
|
(9 %)
|
|
Revenue from joint
venture drilling rigs
|
11,038
|
11,099
|
(61)
|
(1 %)
|
33,185
|
27,990
|
5,195
|
19 %
|
|
Flow through
charges(1)
|
|
(855)
|
(3,117)
|
2,262
|
73 %
|
(2,539)
|
(5,126)
|
2,587
|
50 %
|
|
Adjusted revenue
Canada(1)
|
|
25,025
|
23,086
|
1,939
|
8 %
|
70,857
|
67,101
|
3,756
|
6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance
expenses Canada
|
11,577
|
10,226
|
1,351
|
13 %
|
30,057
|
32,621
|
(2,564)
|
(8 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance expenses from joint venture drilling rigs
|
7,989
|
8,641
|
(652)
|
(8 %)
|
23,250
|
21,015
|
2,235
|
11 %
|
|
Flow through
charges(1)
|
|
(855)
|
(3,117)
|
2,262
|
73 %
|
(2,539)
|
(5,126)
|
2,587
|
50 %
|
|
Adjusted operating
and maintenance expenses Canada(1)
|
18,711
|
15,750
|
2,961
|
19 %
|
50,768
|
48,510
|
2,258
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
margin Canada(1)
|
6,314
|
7,336
|
(1,022)
|
(14 %)
|
20,089
|
18,591
|
1,498
|
8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin
%(1)
|
|
|
25 %
|
32 %
|
(7 %)
|
(22 %)
|
28 %
|
28 %
|
0 %
|
0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
days
|
|
|
698
|
583
|
115
|
20 %
|
1,819
|
1,774
|
45
|
3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted revenue per
operating day(1)
|
35,852
|
39,599
|
(3,747)
|
(9 %)
|
38,954
|
37,825
|
1,129
|
3 %
|
|
Adjusted operating and
maintenance
expenses per operating day(1)
|
26,807
|
27,015
|
(208)
|
(1 %)
|
27,910
|
27,345
|
565
|
2 %
|
|
Adjusted operating
margin per operating day(1)
|
9,045
|
12,584
|
(3,539)
|
(28 %)
|
11,044
|
10,480
|
564
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization(1)
|
|
|
38 %
|
32 %
|
6 %
|
19 %
|
33 %
|
32 %
|
1 %
|
3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Rig count
|
|
|
17
|
20
|
(3)
|
(15 %)
|
17
|
20
|
(3)
|
(15 %)
|
|
(1)
See "Non-GAAP and Supplementary Financial Measures" near the end of
this release for further detail.
|
|
During the third quarter of 2024, AKITA achieved 698
operating days in Canada, which
corresponds to a utilization rate of 38%, compared to 32% (583
days) in the third quarter of 2023, and compared to an industry
average of 49%. AKITA's single and double rigs had a combined
increase of 184 operating days in the third quarter of 2024 when
compared to the same period in 2023. This was offset by fewer
operating days for AKITA's oilsands triple rigs in the quarter.
AKITA lagged industry utilization in the quarter as the Company's
ramp up after spring breakup was pushed further into the quarter
than expected due to operator delays. At the end of the third
quarter 2024, AKITA was at 71% utilization compared to industry
utilization of 57%. Although activity increased in the quarter when
compared to the prior year, the adjusted operating margin in
Canada decreased to $6,314,000 in 2024 compared to $7,336,000 in the same period of 2023.
Adjusted revenue per operating day led to the decrease in
adjusted operating margin in Canada, despite increased activity. In the
third quarter of 2024, adjusted revenue per day decreased to
$35,852 from $39,599 in the third quarter of 2023. This
decline resulted from a change in the mix of rigs operating, with a
higher concentration of high-margin rigs working in the third
quarter of 2023. Adjusted operating and maintenance expenses per
operating day decreased slightly to $26,807 in the third quarter of 2024, from
$27,015 in the same period of 2023.
This decrease, similar to the change in revenue per day, is the
result of the change in rig mix but is offset by escalating costs
including labour, maintenance and other ancillary costs.
United States Drilling Division
|
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
$Thousands except per
day amounts
|
2024
|
2023
|
Change
|
% Change
|
2024
|
2023
|
Change
|
% Change
|
|
Revenue US
|
|
|
30,986
|
39,709
|
(8,723)
|
(22 %)
|
90,258
|
133,925
|
(43,667)
|
(33 %)
|
|
Flow through
charges(1)
|
|
(3,310)
|
(4,355)
|
1,045
|
24 %
|
(10,652)
|
(13,427)
|
2,775
|
21 %
|
|
Adjusted revenue
US(1)
|
|
27,676
|
35,354
|
(7,678)
|
(22 %)
|
79,606
|
120,498
|
(40,892)
|
(34 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance expenses US
|
24,150
|
31,161
|
(7,011)
|
(22 %)
|
68,987
|
96,180
|
(27,193)
|
(28 %)
|
|
Flow through
charges(1)
|
|
(3,310)
|
(4,355)
|
1,045
|
24 %
|
(10,652)
|
(13,427)
|
2,775
|
21 %
|
|
Adjusted operating
and maintenance expenses US(1)
|
20,840
|
26,806
|
(5,966)
|
(22 %)
|
58,335
|
82,753
|
(24,418)
|
(30 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
margin US(1)
|
6,836
|
8,548
|
(1,712)
|
(20 %)
|
21,271
|
37,745
|
(16,474)
|
(44 %)
|
|
Margin
%(1)
|
|
|
25 %
|
24 %
|
1 %
|
4 %
|
27 %
|
31 %
|
(4 %)
|
(13 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
days
|
|
|
713
|
908
|
(195)
|
(21 %)
|
2,056
|
3,041
|
(985)
|
(32 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted revenue per
operating day(1)
|
38,816
|
38,936
|
(120)
|
(0 %)
|
38,719
|
39,624
|
(905)
|
(2 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating and
maintenance expenses per operating day(1)
|
29,229
|
29,522
|
(293)
|
(1 %)
|
28,373
|
27,212
|
1,161
|
4 %
|
|
Adjusted operating
margin per operating day(1)
|
9,587
|
9,414
|
173
|
2 %
|
10,346
|
12,412
|
(2,066)
|
(17 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization(1)
|
|
|
52 %
|
66 %
|
(14 %)
|
(21 %)
|
50 %
|
74 %
|
(24 %)
|
(32 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Rig count
|
|
|
15
|
15
|
-
|
0 %
|
15
|
15
|
-
|
0 %
|
|
(1)
See "Non-GAAP and Supplementary Financial Measures" near the end of
this release for further detail.
|
|
In the US, the active rig count declined from 650 average active
rigs in the third quarter of 2023, to 601 active rigs at the start
of 2024 and then further declined to 566 active rigs at the end of
the third quarter of 2024. AKITA's active rig count initially
followed a similar pattern, dropping from an average of 12 active
rigs in the third quarter of 2023 to an average of 9.5 active rigs
in the third quarter of 2024, however ending the quarter at 12
active rigs. Operating days decreased from 908 operating days
in the third quarter of 2023 to 713 operating days in the third
quarter of 2024.
This reduction in activity resulted in adjusted operating margin
decreasing to $6,836,000 in the third
quarter of 2024, from $8,548,000 in
the same period of 2023.
Adjusted operating and maintenance expense per operating day
decreased slightly to $29,229 per day
in the third quarter of 2024, from $29,522 in the third quarter of 2023, changing 1%
quarter-over-quarter despite increasing costs throughout the
industry.
Adjusted operating margin per operating day increased 2% for
third quarter of 2024, compared to the same period for 2023.
This is a combination of a slight decrease in adjusted revenue per
operating day, offset by a larger decrease in adjusted operating
margin per operating day.
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,
2024 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,
|
|
2024
|
2023
|
2024
|
2023
|
|
Net cash from operating
activities
|
6,458
|
2,308
|
24,318
|
18,044
|
|
Interest
paid
|
935
|
1,340
|
3,320
|
5,049
|
|
Interest
expense
|
(984)
|
(1,393)
|
(3,467)
|
(5,208)
|
|
Post-employment
benefits paid
|
78
|
78
|
236
|
243
|
|
Equity income from
joint ventures
|
2,918
|
2,361
|
9,592
|
6,696
|
|
Change in non-cash
working capital
|
(970)
|
5,872
|
(7,919)
|
13,522
|
|
Adjusted funds flow
from operations
|
8,435
|
10,566
|
26,080
|
38,346
|
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.