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.
