CALGARY, March 20 /CNW/ - Record earnings and funds flow and an active rig construction program highlighted AKITA's achievements for 2006.
Earnings for the year ended December 31, 2006 were $33,755,000 or $1.83 per share on revenue of $174,543,000. Comparative figures for 2005 were $29,264,000 or $1.57 per share on revenue of $162,110,000. Funds flow from operations for the current year was $47,199,000 as compared to $42,421,000 in 2005.
Much of the financial success in 2006 occurred in the first half of the year. Demand for shallow capacity rigs, and to a lesser degree, deep drilling rigs, tapered off starting in the third quarter, primarily as a result of weakness in natural gas prices. Since demand for medium capacity rigs and heavy oil pad rigs is largely influenced by oil prices, demand for these types of equipment remained strong throughout the year. Drilling rig utilization was 56.5% compared to the industry average of 55.1% and AKITA's utilization of 59.3% in 2005.
In 2006, a 3,350 metre capacity rig was constructed for the Doyon Akita Joint Venture at a cost of $7,594,000 (net cost to AKITA) and commenced operations on a multi-year contract in Alaska.
At year-end, AKITA's fleet stood at 39 drilling rigs (35.575 net), including three drilling rigs (1.5 net) in Alaska. In addition, the Company has three well servicing rigs (1.5 net), all of which operate in southern Canada.
AKITA had three drilling rigs under construction throughout 2006. The first of these rigs, a shallow capacity rig, commenced operations in early January of 2007. Two heavy oil pad rigs remain under construction and are expected to be operational by the second quarter of 2007.
In October 2006, AKITA's board of directors approved the payment of an increased quarterly dividend of $0.07 per share. This represents an increase of 16.7% calculated on an annual basis. During the year, the Company made direct contributions to enhance shareowner value through purchases pursuant to its Normal Course Issuer Bid by repurchasing 257,400 Class A Non-Voting Shares (1.5% of the class) at an average price of $19.46 per share.
Selected financial information for the Company is as follows:
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
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December 31 2006 2005
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Assets
Current assets
Cash $ 49,927 $ 42,685
Accounts receivable 38,529 50,900
Other 206 98
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88,662 93,683
Investments - 55
Capital assets Note 2 133,575 106,114
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$ 222,237 $ 199,852
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Liabilities
Current liabilities
Bank indebtedness Note 3 $ - $ 4,400
Accounts payable and accrued
liabilities 24,772 22,803
Dividends payable 1,285 1,120
Income taxes payable 5,924 5,861
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31,981 34,184
Future income taxes Note 9 14,016 14,200
Pension liability Note 5 3,367 3,102
Class A and Class B Shareholders' Equity
Class A and Class B shares Note 6 23,440 23,540
Contributed surplus 652 483
Retained earnings 148,781 124,343
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172,873 148,366
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$ 222,237 $ 199,852
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CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(Dollars in thousands, except per share)
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Year ended December 31 2006 2005
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Revenue $ 174,543 $ 162,110
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Costs and expenses
Operating and maintenance 99,970 92,576
Depreciation 14,211 12,691
Selling and administrative 15,187 14,140
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129,368 119,407
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Operating income 45,175 42,703
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Other income (expense)
Interest on long-term debt - (138)
Interest income 1,937 1,235
Gain on sale of joint venture interests
in rigs and other assets 1,017 970
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2,954 2,067
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Earnings before income taxes 48,129 44,770
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Income taxes
Current 14,558 14,419
Future (184) 1,087
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Note 9 14,374 15,506
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Net earnings 33,755 29,264
Retained earnings, beginning of year 124,343 100,871
Dividends declared (4,613) (4,182)
Adjustment on repurchase and
cancellation of share capital Note 6 (4,704) (1,610)
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Retained earnings, end of year $ 148,781 $ 124,343
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Earnings per Class A and Class B share Note 7
Basic $ 1.83 $ 1.57
Diluted $ 1.81 $ 1.56
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
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Year ended December 31 2006 2005
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Operating activities
Net earnings $ 33,755 $ 29,264
Non-cash items included in earnings
Depreciation 14,211 12,691
Future income taxes (184) 1,087
Expense for defined benefit pension plan 265 252
Stock options charged to expense 169 97
Gain on sale of joint venture interests
in rigs and other assets (1,017) (970)
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Funds flow from operations 47,199 42,421
Change in non-cash working capital 13,953 (4,931)
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61,152 37,490
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Investing activities
Capital expenditures (49,698) (25,325)
Proceeds on sales of joint venture interests
in rigs and other assets 9,043 7,910
Reduction in investments 55 -
Change in non-cash working capital 514 714
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(40,086) (16,701)
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Financing activities
Increase (decrease) in bank indebtedness (4,400) 4,400
Dividends paid (4,448) (4,182)
Proceeds received on exercise of stock options 205 -
Repurchase of share capital (5,009) (1,739)
Repayment of long-term debt - (3,973)
Change in non-cash working capital (172) (62)
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(13,824) (5,556)
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Increase in cash 7,242 15,233
Cash position, beginning of year 42,685 27,452
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Cash position, end of year $ 49,927 $ 42,685
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Interest paid during the year $ 72 $ 110
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Income taxes paid during the year $ 14,495 $ 10,083
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