CALGARY, AB, March 15, 2021 /CNW/ - AKITA Drilling Ltd.
(TSX: AKT.A)
AKITA Drilling Ltd. (the "Company") weathered the impact of the
severe economic slowdown, attributable to the COVID-19 global
pandemic that curtailed drilling activity over the last three
quarters of 2020 by implementing a cost cutting initiative across
the entire company and has emerged well positioned for what appears
to be the first signs of a recovery in drilling activity.
Despite operating days decreasing in both Canada and the US by 41% and 32% respectively
in 2020, AKITA achieved $10 million
of debt reduction over the course of the year, effectively reducing
its total debt from $84 million at
December 31, 2019 to $74 million at December
31, 2020. In the first quarter of 2021, the
Company operated nine of its 17 US based rigs and eight of its 20
based Canadian rigs and is looking forward to a potential recovery
in drilling activity over the balance of 2021. Karl Ruud, AKITA's President and Chief Executive
Officer stated: "Activity levels in 2020 were decimated by the end
of the first quarter. We responded by implementing a deep
cost cutting initiative across the entire Company and are now in
position to benefit from increased activity levels. Our aim
in 2021 remains debt reduction and I was pleased we accomplished
$10 million in debt reduction over
the course of 2020 despite the reduction in operating days."
Furthermore, the Company is pleased to announce that it has
recently been awarded two geothermal drilling projects: one in
Alberta and a second in
British Columbia, whereby a
portion of the revenue generated will benefit AKITA's First Nation
partner, Saulteau First Nations. AKITA will continue to
pursue opportunities aligned with its commitment to social
responsibility and welcomes an opportunity to establish
itself as an industry leader in geothermal drilling.
The Company announces annual results for the year ended
December 31, 2020. The Company
recorded a net loss of $93,274,000 in
2020, up from a loss of $19,875,000
in 2019. Included in the Company's net loss for 2020 is an
$80,000,000 asset impairment expense.
Adjusting for impairment, the Company's net loss for 2020 was
$20,674,000. Adjusted funds flow from
operations decreased to $10,321,000
in 2020 from $12,925,000 in 2019 and
adjusted EBITDA decreased to $15,617,000 from $19,130,000 over the same period.
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
$Thousands except per
share amounts
|
2020
|
2019
|
Change
|
%
Change
|
|
Revenue
|
119,664
|
175,890
|
(56,226)
|
(32%)
|
|
Operating
expenses
|
91,855
|
137,486
|
(45,631)
|
(33%)
|
|
Operating
margin(1)
|
27,809
|
38,404
|
(10,595)
|
(28%)
|
|
Margin
%(1)
|
23%
|
22%
|
1%
|
5%
|
|
|
|
|
|
|
Adjusted EBIDTA
(1)
|
15,617
|
19,130
|
(3,513)
|
(18%)
|
|
Per
share
|
0.39
|
0.48
|
(0.09)
|
(19%)
|
|
|
|
|
|
|
Adjusted funds flow
from operations(1)
|
10,321
|
12,925
|
(2,604)
|
(20%)
|
|
Per
share
|
0.26
|
0.33
|
(0.07)
|
(21%)
|
|
|
|
|
|
|
Net loss
|
93,274
|
19,875
|
73,399
|
369%
|
|
Per
share
|
2.35
|
0.50
|
1.85
|
370%
|
|
|
|
|
|
|
Capital
expenditures
|
7,593
|
15,238
|
(7,645)
|
(50%)
|
|
Dividend
declared
|
-
|
6,734
|
(6,734)
|
(100%)
|
|
Weighted average
shares outstanding
|
39,608
|
39,608
|
-
|
0%
|
|
|
|
|
|
|
Total
assets
|
251,521
|
369,116
|
(117,595)
|
(32%)
|
|
Total debt
|
74,303
|
84,019
|
(9,716)
|
(12%)
|
|
(1)
Non-GAAP Items
|
CONSOLIDATED OPERATIONAL HIGHLIGHTS
|
|
2020
|
2019
|
Change
|
% Change
|
|
Canada
|
|
|
|
|
|
Operating
days
|
945
|
1,606
|
(661)
|
(41%)
|
|
Revenue per operating
day(1)(2)
|
35,513
|
33,415
|
2,098
|
6%
|
|
Operating and
maintenance per operating day(1)(2)
|
26,779
|
25,166
|
1,613
|
6%
|
|
Operating margin per
operating day(1)(2)
|
8,734
|
8,249
|
485
|
6%
|
|
|
|
|
|
|
|
Utilization
|
13%
|
19%
|
(6%)
|
(32%)
|
|
|
|
|
|
|
|
United
States
|
|
|
|
|
|
Operating
days
|
2,555
|
3,747
|
(1,192)
|
(32%)
|
|
Revenue per operating
day(1)
|
35,694
|
34,031
|
1,663
|
5%
|
|
Operating and
maintenance per operating day(1)
|
27,750
|
27,000
|
750
|
3%
|
|
Operating margin per
operating day(1)
|
7,944
|
7,031
|
913
|
13%
|
|
|
|
|
|
|
|
Utilization
|
41%
|
60%
|
(19%)
|
(32%)
|
|
|
|
|
|
|
|
(1Non-GAAP
Items.
|
|
|
|
|
|
(2)Includes AKITA's share of joint venture
revenue and expenses.
|
United States Drilling Division
In the US, the activity decline that began in the latter part of
2019, due to the volatility in oil and gas prices and the pressure
on operators to operate within free cash flow, continued to impact
results in 2020. These pressures were exacerbated in late Q1 2020
by the combined effects of the Saudi
Arabia and Russia oil price
war and the effects of the COVID-19 global pandemic. Several of the
Company's drilling rigs operating in the first quarter shut down
drilling operations as prices dropped further, leaving five active
rigs at the end of September 2020,
down from 11 active rigs at the end of March
2020. The Company ended the year with 8 active rigs in
December of 2020. The total active rig count in the US
dropped 67% from 790 rigs at the start of 2020 to 261 rigs at the
end of September 2020 before
increasing to 341 rigs by year-end.
Revenue in the US was $91,198,000
for 2020, down from $127,514,000 in
2019. This 28% drop in revenue is attributable to the decrease in
operating days, which fell 32% to 2,555 operating days in 2020 from
3,747 operating days over the same period in 2019. Operating
margin per operating day increased to $7,944 in 2020 from $7,031 in 2019 due to standby revenue received on
two of the Company's rigs. Revenue in the US accounted for 76% of
the Company's total 2020 revenue, up from 72% in
2019.
Canadian Drilling Division
In Canada, industry utilization
was higher at the beginning of the first quarter of 2020 than at
the same point in 2019, but declined rapidly in March as the above
mentioned factors reduced demand for drilling services thereby
negatively impacting rig utilization. This decline in rig
utilization reached a low point in June of 2020 before it began to
slowly improve, however, demand over the year ended well below 2019
levels. By the end of December
2020, the Company's Canadian division had three active
rigs.
Revenue in Canada was
$33,560,000 for 2020, down from
$53,665,000 in 2019. This 37% drop in
revenue is attributable to the decrease in operating days, which
fell 41% to 945 operating days in 2020 from 1,606 operating days
over the same period in 2019. Operating margin per operating
day increased slightly to $8,734 in
2020 from $8,249 in 2019 due to the
mix of rigs operating in 2020. The federal government's CEWS
program provided the Company with $2,269,000 in Canadian Emergency Wage Subsidy
("CEWS") in 2020.
FURTHER INFORMATION
This news release shall be used as preparation for reading the
full disclosure documents. AKITA's audited consolidated financial
statements and management's discussion and analysis for the year
ended December 31, 2020 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
2020 December 31, 2020 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.
