CALGARY,
AB, May 4, 2023 /CNW/ - AKITA Drilling
Ltd. (TSX: AKT.A)
AKITA Drilling Ltd. ("AKITA" or the "Company") announces results
for the three months ended March 31,
2023.
The Company's net income increased to $9,523,000 in the first quarter of 2023 from a
loss of $2,933,000 during the same
period of 2022. Higher day rates drove the improved earnings as
activity levels remained constant between the two quarters (1,764
operating days in the first quarter of 2023 versus 1,739 in the
same period of 2022). Adjusted funds flow from operations increased
203% to $15,159,000 in the first
quarter of 2023 from $4,996,000, also
driven by improved rates. Net cash from operations decreased to a
loss of $414,000 for the three months
ended March 31, 2023, compared to a
gain of $247,000 in the same period
of 2022, due to the continued build of the Company's working
capital balances which typically peak at the end of the first
quarter. Debt decreased to $91,212,000 at the end of the first quarter of
2023 from $94,521,000 at the same
time in 2022. In Canada, the
Company operated 12 rigs in the first quarter of 2023 (11 rigs in
the same period of 2022) and 14 rigs in the US (13 rigs in the
first quarter of 2022). The Company spent $2,504,000 on routine capital items in the first
quarter of 2023, down from $6,412,000
over the same period in 2022.
Colin Dease, AKITA's Chief
Executive Officer stated: "We are pleased with our first quarter
results and our focus for the balance of the year will be on
meaningful debt repayments while we work to increase our active rig
count in Canada."
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
|
|
|
For the Three Months
Ended March 31,
|
|
($ thousands except per
share amounts)
|
|
2023
|
2022
|
Change
|
%
Change
|
|
Revenue
|
|
|
|
65,000
|
44,986
|
20,014
|
44 %
|
|
Operating and
maintenance expenses
|
45,426
|
36,254
|
9,172
|
25 %
|
|
Operating
margin
|
|
|
19,574
|
8,732
|
10,842
|
124 %
|
|
Margin %
|
|
|
|
30 %
|
19 %
|
11 %
|
58 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from (used in)
operating activities
|
(414)
|
247
|
(661)
|
(268 %)
|
|
|
|
|
|
|
|
|
|
Operating
Days
|
|
|
1,764
|
1,739
|
25
|
1 %
|
|
|
|
|
|
|
|
|
|
Adjusted funds flow
from operations(1)
|
15,159
|
4,996
|
10,163
|
203 %
|
|
Per
share
|
|
|
0.38
|
0.13
|
0.25
|
192 %
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
9,523
|
(2,933)
|
12,456
|
425 %
|
|
Per
share
|
|
|
0.24
|
(0.07)
|
0.31
|
443 %
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
2,504
|
6,412
|
(3,908)
|
(61 %)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
39,650
|
39,608
|
42
|
0 %
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
270,169
|
261,348
|
8,821
|
3 %
|
|
Total debt
|
|
|
91,212
|
94,521
|
(3,309)
|
(4 %)
|
|
(1) See
"Non-GAAP and Supplementary Financial Measures" near the end of
this release for further detail.
|
|
Canadian Drilling Division
|
|
|
For the Three Months
Ended March 31,
|
|
$Thousands except per
day amounts
|
|
2023
|
2022
|
Change
|
% Change
|
|
Revenue
Canada
|
|
|
19,427
|
16,242
|
3,185
|
20 %
|
|
Revenue from joint
venture drilling rigs
|
7,782
|
5,903
|
1,879
|
32 %
|
|
Flow through
charges(1)
|
|
(829)
|
(1,082)
|
253
|
23 %
|
|
Adjusted revenue
Canada(1)
|
26,380
|
21,063
|
5,317
|
25 %
|
|
|
|
|
|
|
|
|
Operating and
maintenance expenses Canada
|
14,072
|
12,423
|
1,649
|
13 %
|
|
Operating and
maintenance expenses from joint venture drilling rigs
|
5,494
|
4,516
|
978
|
22 %
|
|
Flow through
charges(1)
|
|
(829)
|
(1,082)
|
253
|
23 %
|
|
Adjusted operating
and maintenance expenses Canada(1)
|
18,737
|
15,857
|
2,880
|
18 %
|
|
|
|
|
|
|
|
|
Adjusted operating
margin Canada(1)
|
7,643
|
5,206
|
2,437
|
47 %
|
|
Margin
%(1)
|
|
|
29 %
|
25 %
|
4 %
|
16 %
|
|
|
|
|
|
|
|
|
Operating
days
|
|
|
720
|
722
|
(2)
|
(0 %)
|
|
|
|
|
|
|
|
|
Adjusted revenue per
operating day(1)
|
36,639
|
29,173
|
7,466
|
26 %
|
|
Adjusted operating and
maintenance per operating day(1)
|
26,024
|
21,963
|
4,061
|
18 %
|
|
Adjusted operating
margin per operating day(1)
|
10,615
|
7,210
|
3,405
|
47 %
|
|
|
|
|
|
|
|
|
Utilization(1)
|
|
|
40 %
|
40 %
|
0 %
|
0 %
|
|
|
|
|
|
|
|
|
Rig count
|
|
|
20
|
20
|
-
|
0 %
|
|
(1)
See "Non-GAAP and Supplementary Financial Measures" near the end of
this release for further detail.
|
|
|
|
During the first quarter of 2023, AKITA achieved 720 operating days
in Canada, which corresponds to a
utilization rate of 40% compared to an industry utilization of 45%.
For the first quarter of 2022, the Company's utilization rate was
40% with an industry average of 39%.
Adjusted revenue in Canada
increased to $26,380,000 in the first
quarter of 2023 from $21,063,000 in
the first quarter of 2022. Adjusted revenue per operating day
increased to $36,639 in the first
quarter of 2023 from $29,173 in the
same period of 2022, due to higher day rates which in turn
increased adjusted revenue. Rates improved in the latter half of
2022 and impacted 2023's first quarter results.
Higher revenue in the quarter was offset by higher adjusted
operating and maintenance expenses which increased 18% to
$18,737,000 in the first quarter of
2023 from $15,857,000 in the same
period of 2022. As activity remained flat for the Company in
Canada, this increase is due to
higher labour costs as well as increased costs for consumable rig
supplies and repairs.
United States Drilling Division
|
|
|
For the Three Months
Ended March 31,
|
|
$ Thousands except per
day amounts (CAD)
|
2023
|
2022
|
Change
|
% Change
|
|
Revenue
US
|
|
|
45,573
|
28,744
|
16,829
|
59 %
|
|
Flow through
charges(1)
|
|
(4,573)
|
(2,211)
|
(2,362)
|
(107 %)
|
|
Adjusted revenue
US(1)
|
|
41,000
|
26,533
|
14,467
|
55 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance expenses US
|
31,355
|
23,831
|
7,524
|
32 %
|
|
Flow through
charges(1)
|
|
(4,573)
|
(2,211)
|
(2,362)
|
(107 %)
|
|
Adjusted operating
and maintenance expenses US(1)
|
26,782
|
21,620
|
5,162
|
24 %
|
|
|
|
|
|
|
|
|
Adjusted operating
margin US(1)
|
14,218
|
4,913
|
9,305
|
189 %
|
|
Margin %
(1)
|
|
|
35 %
|
19 %
|
16 %
|
84 %
|
|
|
|
|
|
|
|
|
Operating
days
|
|
|
1,044
|
1,017
|
27
|
3 %
|
|
|
|
|
|
|
|
|
Adjusted revenue per
operating day(1)
|
39,272
|
26,089
|
13,183
|
51 %
|
|
Adjusted operating and
maintenance per operating day(1)
|
25,653
|
21,259
|
4,394
|
21 %
|
|
Adjusted operating
margin per operating day(1)
|
13,619
|
4,830
|
8,789
|
182 %
|
|
|
|
|
|
|
|
|
Utilization
(1)
|
|
|
77 %
|
71 %
|
6 %
|
8 %
|
|
|
|
|
|
|
|
|
Rig count
|
|
|
15
|
16
|
(1)
|
(6 %)
|
|
(1)See
"Non-GAAP and Supplementary Financial Measures" near the end of
this release for further detail.
|
|
The impact of day rate increases in the US that took effect in the
second half of 2022 are clear to see when comparing revenue of
$41,000,000 in the first quarter of
2023 with revenue of $26,533,000 over
the same period of 2022; a 55% increase, despite activity levels
increasing just 3% over the same period. Quarter-over-quarter
revenue per day increased 51% from the first quarter of 2022 to the
first quarter of 2023 with the largest increases to the second and
third quarters of 2022.
Activity increased 27 days in the first quarter of 2023 (1,044)
from the first quarter of 2022 (1,017) as all 14 rigs that the
Company is currently marketing in the US were working during both
quarters.
Operating and maintenance costs increased 24% between the first
quarter of 2023 and 2022, leading to increased costs per day of
$25,653 in the first quarter of 2023
from $21,259 in the first quarter of
2022. The primary driver of the cost per day increase is increased
labour costs. Operating and maintenance costs were offset in the
first quarter of 2023 by $2,000,000
in Employee Retention Credits received from the IRS.
During the first quarter of 2023 the Company disposed of certain
components, including the centre section of one of its idle US
rigs, for proceeds of $2,027,000,
decreasing the Company's total US rig count to 15 rigs. The Company
also relocated two rigs from Colorado to Texas in order to consolidate its US
Operations in the Permian basin.
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 March 31,
2023 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 March 31,
|
2023
|
2022
|
|
Net cash from (used in)
operating activities
|
(414)
|
247
|
|
Interest
paid
|
2,178
|
1,030
|
|
Interest
expense
|
(2,231)
|
(1,069)
|
|
Post-employment
benefits paid
|
86
|
69
|
|
Equity income from
joint ventures
|
2,184
|
1,296
|
|
Change in non-cash
working capital
|
13,356
|
3,423
|
|
Adjusted funds flow
from operations
|
15,159
|
4,996
|
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, and the renewal of
drilling contracts.
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.