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CALGARY, July 28 /CNW/ - AKITA Drilling Ltd.'s net earnings for the three months ended June 30, 2009 were $555,000 ($0.03 per share) on revenue of $17,881,000 compared to $1,498,000 ($0.08 per share) on revenue of $20,278,000 in the corresponding quarter in 2008. Funds flow from continuing operations for the quarter ended June 30, 2009 was $2,750,000 compared to $3,335,000 in the corresponding quarter in 2008.
Earnings for the six months ended June 30, 2009 were $4,463,000 ($0.24 per share) on revenue of $59,577,000. Comparative figures for 2008 were earnings of $9,145,000 ($0.50 per share) on revenue of $67,660,000. Funds flow from continuing operations for the period was $14,801,000 compared to $17,609,000 in 2008.
Market conditions have continued to be the weakest in the history of the Company. Operating statistics for the first six months of 2009 and 2008 are as follows:
Number of Rigs Number of Wells Operating
Drilled Days
Gross Net
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2009 39 36.225 185 2,067
Canada -----------------------------------------------------
2008 38 35.225 401 2,977
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2009 2 1.0 6 210
United States -----------------------------------------------------
2008 2 1.0 1 60
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2009 41 37.225 191 2,277
Total -----------------------------------------------------
Drilling 2008 40 36.225 402 3,037
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During the second quarter, the Company redeployed one rig from Colorado to Canada as a result of an early contract termination. The remaining two rigs in the United States are both located in Alaska.
On May 15, 2009, AKITA announced the retirement of Mr. John Hlavka as Chief Executive Officer of the Company effective June 30, 2009. Mr. Hlavka, a veteran of the Canadian drilling industry for over six decades, has had a distinguished career with AKITA since the formation of the Company. Mr. Hlavka will continue to serve on the Board of Directors.
The Board of Directors has appointed Mr. Karl Ruud as President and Chief Executive Officer of the Company. Mr. Ruud most recently served the Company in the role of President and Chief Operating Officer. Mr. Ruud has extensive drilling experience in Canada and internationally and has been with AKITA since the formation of the Company. Mr. Ruud has a broad range of experience in all aspects of AKITA's business.
It appears that weak market conditions will persist for the balance of this year and potentially beyond. The Company is well positioned financially, and has a significant asset base that includes a broad range of drilling equipment, including eight pad rigs which are involved in some of the most active development regions in the current market. Further, AKITA has a significant base of well-trained personnel to meet our customers' requirements, both in the existing market and when drilling conditions improve. We are pleased to remind our shareowners that since the Company began operations in 1993, it has been able to generate positive earnings and funds flow from operations in every quarter.
Selected financial information for the Company is as follows:
Consolidated Balance Sheets
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Unaudited June 30 December 31
($000's) 2009 2008 2008
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ASSETS
Current assets
Cash $ 55,032 $ 59,698 $ 42,168
Accounts receivable 20,828 18,107 41,534
Income taxes recoverable 1,008 - -
Other 1,962 849 1,123
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78,830 78,654 84,825
Restricted cash 5,000 5,000 5,000
Capital assets 152,032 145,885 153,044
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$ 235,862 $ 229,539 $ 242,869
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LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities $ 7,747 $ 9,451 $ 20,061
Dividends payable 1,276 1,279 1,276
Income taxes payable - 1,877 399
Deferred revenue 2,830 1,281 -
Current portion of pension
liability 268 - -
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12,121 13,888 21,736
Future income taxes 19,952 16,166 18,818
Pension liability 3,622 3,740 3,854
CLASS A AND CLASS B SHAREHOLDERS'
EQUITY
Class A and Class B shares 23,359 23,369 23,312
Contributed surplus 2,271 2,230 2,271
Accumulated other comprehensive
income (252) - -
Retained earnings 174,789 170,146 172,878
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200,167 195,745 198,461
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$ 235,862 $ 229,539 $ 242,869
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Consolidated Statements of Earnings
and Retained Earnings
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Unaudited Three Months Six Months
($000's except per Ended Ended
share amounts) June 30 June 30
2009 2008 2009 2008
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REVENUE $ 17,881 $ 20,278 $ 59,577 $ 67,660
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COSTS AND EXPENSES
Operating and
maintenance 10,949 13,403 36,099 40,718
Depreciation 2,667 3,143 9,247 8,627
Selling and
administrative 3,661 4,680 8,057 8,947
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17,277 21,226 53,403 58,292
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Revenue less costs
and expenses 604 (948) 6,174 9,368
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OTHER INCOME (EXPENSE)
Interest income 73 500 288 977
Gain on sale of joint
venture interests in
rigs and other assets 58 647 79 664
Gain (loss) on foreign
currency translation (97) (25) (95) 42
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34 1,122 272 1,683
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EARNINGS BEFORE INCOME
TAXES 638 174 6,446 11,051
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INCOME TAXES
Current 332 454 666 2,656
Future (249) (34) 1,317 1,111
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83 420 1,983 3,767
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EARNINGS (LOSS) FROM
CONTINUING OPERATIONS 555 (246) 4,463 7,284
Gain on disposal from
discontinued operations,
net of tax - 1,941 - 1,941
Discontinued operations,
net of tax - (197) - (80)
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NET EARNINGS 555 1,498 4,463 9,145
Retained earnings,
beginning of period 175,510 169,927 172,878 163,559
Dividends declared (1,276) (1,279) (2,552) (2,558)
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RETAINED EARNINGS,
END OF PERIOD $ 174,789 $ 170,146 $ 174,789 $ 170,146
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Earnings (Loss) per
Class A and Class B
share from continuing
operations
Basic $ 0.03 $ (0.01) $ 0.24 $ 0.40
Diluted $ 0.03 $ (0.01) $ 0.24 $ 0.40
Earnings per Class A
and Class B share
Basic $ 0.03 $ 0.08 $ 0.24 $ 0.50
Diluted $ 0.03 $ 0.08 $ 0.24 $ 0.50
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Consolidated Statements of Cash Flows
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Unaudited Three Months Six Months
($000's) Ended Ended
June 30 June 30
2009 2008 2009 2008
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OPERATING ACTIVITIES
Earnings from
continuing operations $ 555 $ (246) $ 4,463 $ 7,284
Non-cash items included
in earnings from
continuing operations
Depreciation 2,667 3,143 9,247 8,627
Future income taxes (432) (34) 1,134 1,111
Expense for defined
benefit pension plan 18 66 36 131
Stock options charged
to expense - 1,053 - 1,120
Gain on sale of joint
venture interests in
rigs and other
assets (58) (647) (79) (664)
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Funds flow from
continuing operations 2,750 3,335 14,801 17,609
Cash provided from
discontinued
operations - (160) - 24
Change in non-cash
working capital 9,769 16,640 8,976 857
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12,519 19,815 23,777 18,490
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INVESTING ACTIVITIES
Capital expenditures (988) (3,528) (8,346) (4,082)
Proceeds on sale of
joint venture
interests in rigs
and other assets 141 1,116 190 1,140
Proceeds on sale of
discontinued assets - 3,510 - 3,510
Change in non-cash
working capital (1,359) 223 - 32
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(2,206) 1,321 (8,156) 600
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FINANCING ACTIVITIES
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Dividends paid (1,276) (1,279) (2,552) (2,558)
Proceeds received on
exercise of stock
options 32 - 47 -
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(1,244) (1,279) (2,505) (2,558)
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FOREIGN CURRENCY
TRANSLATION (384) - (252) -
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INCREASE IN CASH 8,685 19,857 12,864 16,532
Cash position,
beginning of period 46,347 39,841 42,168 43,166
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CASH POSITION,
END OF PERIOD $ 55,032 $ 59,698 $ 55,032 $ 59,698
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Income taxes paid
during the period $ 1,310 $ 503 $ 2,071 $ 2,488
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Consolidated Statements of Comprehensive Income
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Unaudited Three Months Six Months
($000's) Ended Ended
June 30 June 30
2009 2008 2009 2008
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NET EARNINGS $ 555 $ 1,498 $ 4,463 $ 9,145
OTHER COMPREHENSIVE
INCOME
Foreign currency
translation
adjustment (384) - (252) -
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COMPREHENSIVE INCOME $ 171 $ 1,498 $ 4,211 $ 9,145
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