AKITA Drilling Ltd. (TSX: AKT.A)
CALGARY, July 31, 2019 /CNW/ - AKITA's Board of
Directors has elected to suspend the Company's dividends on its
Class A Non-Voting and Class B Common Shares in light of the
Company's desire to pay down its debt.
The Company's debt repayment plan includes the suspension of
dividends as well as a continuing focus on cost cutting and other
monetization and cash generating strategies.
During the second quarter of 2019 AKITA achieved 1,008 operating
days in the US, compared to only 136 operating days in the US over
the same period in 2018. In Canada, however, results were
much weaker than in the prior year as operating days decreased by
50% to 274 days in 2019 compared to 548 in 2018. This
translated to a consolidated net loss for the three months
ended June 30, 2019 of $5,067,000 (or $0.13 per share) compared to a net loss of
$2,959,000 (or $0.16 per share) for the corresponding period in
2018.
In the second quarter of 2019, AKITA's fleet of 17 rigs in the
US generated the majority of the Company's revenue, 79% up from 19%
in the same period of 2018. Despite a reduction in activity in the
US for the industry and AKITA between the first quarter of 2019 and
the second quarter of 2019, demand and activity in the US remain
far stronger than in Canada.
Karl Ruud, AKITA's President and
Chief Executive Officer stated: "Given the current market
conditions in Canada, and
softening in the US, Akita's highest priority is debt reduction
through continuing our focus on cost controls and integration
benefits. This discipline will leave Akita ideally positioned to
take advantage of growth opportunities."
CONSOLIDATED FINANCIAL HIGHLIGHTS
($ thousands
except per share amounts)
|
For the three months
ended June 30,
|
|
For the six months
ended June 30,
|
|
2019
|
2018
|
Change
|
%
Change
|
2019
|
2018
|
Change
|
%
Change
|
Adjusted revenue
(1)
|
40,765
|
21,016
|
19,749
|
94%
|
93,971
|
55,487
|
38,484
|
69%
|
Adjusted operating
and
maintenance expenses (1)
|
28,820
|
15,200
|
13,620
|
90%
|
62,830
|
40,850
|
21,980
|
54%
|
Operating
margin(1)
|
11,945
|
5,816
|
6,129
|
105%
|
31,141
|
14,637
|
16,504
|
113%
|
Margin
%(1)
|
29%
|
28%
|
1%
|
4%
|
33%
|
26%
|
7%
|
27%
|
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
3,179
|
1,701
|
1,478
|
87%
|
12,301
|
6,139
|
6,162
|
100%
|
Per
share
|
0.08
|
0.09
|
(0.01)
|
(11%)
|
0.31
|
0.34
|
(0.03)
|
(9%)
|
|
|
|
|
|
|
|
|
|
Adjusted funds flow
from
operations(1)
|
1,559
|
1,638
|
(79)
|
(5%)
|
9,386
|
6,157
|
3,229
|
52%
|
Per
share
|
0.04
|
0.09
|
(0.05)
|
(56%)
|
0.24
|
0.34
|
(0.10)
|
(29%)
|
|
|
|
|
|
|
|
|
|
Net loss
|
(5,067)
|
(2,959)
|
(2,108)
|
(71%)
|
(6,536)
|
(4,870)
|
(1,666)
|
(34%)
|
Per
share
|
(0.13)
|
(0.16)
|
0.03
|
19%
|
(0.17)
|
(0.27)
|
0.10
|
37%
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
6,759
|
2,320
|
4,439
|
191%
|
7,782
|
4,005
|
3,777
|
94%
|
Dividend
declared
|
3,367
|
1,525
|
1,842
|
121%
|
6,734
|
3,050
|
3,684
|
121%
|
Weighted average
shares
outstanding
|
39,608
|
17,946
|
21,662
|
121%
|
39,608
|
17,946
|
21,662
|
121%
|
|
|
|
|
|
|
|
|
|
Total
assets
|
391,162
|
192,894
|
198,268
|
103%
|
391,162
|
192,894
|
198,268
|
103%
|
Total debt
|
84,271
|
-
|
84,271
|
n/a
|
84,271
|
-
|
84,271
|
n/a
|
(1)
See "Non-GAAP Items".
|
CONSOLIDATED OPERATIONAL HIGHLIGHTS
|
For the three months
ended June 30,
|
For the six months
ended June 30,
|
|
2019
|
2018
|
Change
|
% Change
|
2019
|
2018
|
Change
|
% Change
|
Operating
days(1)
|
|
|
|
|
|
|
|
|
Canada
|
274
|
548
|
(274)
|
(50%)
|
878
|
1,681
|
(803)
|
(48%)
|
United
States
|
1,008
|
136
|
872
|
641%
|
2,148
|
177
|
1,971
|
1114%
|
|
|
|
|
|
|
|
|
|
Revenue per
operating day(1)
|
|
|
|
|
|
|
|
Canada(2)
|
31,518
|
31,018
|
500
|
2%
|
31,141
|
29,935
|
1,206
|
4%
|
United
States
|
31,874
|
29,544
|
2,330
|
8%
|
31,019
|
29,192
|
1,827
|
6%
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance per operating day(1)
|
|
|
|
|
|
|
|
Canada(2)
|
21,515
|
22,071
|
(556)
|
(3%)
|
21,268
|
21,451
|
(183)
|
(1%)
|
United
States
|
22,743
|
22,831
|
(88)
|
(0%)
|
20,557
|
27,068
|
(6,511)
|
(24%)
|
|
|
|
|
|
|
|
|
|
Utilization
(1)
|
|
|
|
|
|
|
|
|
Canada
|
13%
|
24%
|
(11%)
|
(45%)
|
21%
|
37%
|
(16%)
|
(43%)
|
United
States(3)
|
65%
|
50%
|
15%
|
30%
|
70%
|
39%
|
31%
|
79%
|
(1) See
"Non-GAAP Items".
|
(2)
Includes AKITA's share of Joint Venture revenue and expenses. See
"Non-GAAP Items".
|
(3)
Utilization in the US is a weighted average for the year based on
the number of days each rig was physically in the US and owned by
the Company.
|
United States Drilling Division
AKITA's 1,008 operating days in the US equated to utilization of
65% in the second quarter of 2019 compared to 136 operating days
and 50% utilization in the same period of 2018. In the second
quarter of 2019, 15 of AKITA's 17 US based rigs operated, compared
to two rigs operating in 2018 in the same quarter. Revenue from
AKITA's US division increased to $32,129,000 in the second quarter of 2019 from
$4,018,000 in the same period of
2018. In the second half of 2019, the focus for the Company
in the US will be to consolidate operations into higher demand
basins, further cost rationalization, improving margins and
exploring additional opportunities.
Canadian Drilling Division
In Canada, results were much
weaker than in the prior year as utilization decreased to 13% (274
operating days) in the second quarter of 2019 from 24% (548
operating days) in the second quarter of 2018. Revenue in the
Canadian division decreased to $8,636,000 in the second quarter of 2019 from
$16,998,000 in the second quarter of
2018. Regulated production cuts, pipeline access and political and
regulatory uncertainty are all weighing heavily on the Canadian
energy industry, which in turn is negatively affecting drilling
activity. Activity levels in Canada declined sharply in the fourth quarter
of 2018 and this has persisted through the first half of
2019. AKITA does not anticipate a change to this low demand
environment without an improvement in the factors mentioned
above.
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,
2019 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 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 2019 first quarter
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, 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.