Nov. 1, 2010 (Canada NewsWire Group) --
CALGARY, Nov. 1 /CNW/ - AKITA Drilling Ltd.'s net earnings for the three months ended September 30, 2010 were $1,814,000 ($0.10 per share) on revenue of $25,860,000 compared to $752,000 ($0.04 per share) on revenue of $20,871,000 for the corresponding period in 2009. Funds flow from operations for the quarter ended September 30, 2010 was $7,258,000 compared to $3,169,000 in the corresponding quarter in 2009.
Earnings for the nine months ended September 30, 2010 were $2,262,000 ($0.12 per share) on revenue of $78,452,000. Comparative figures for 2009 were earnings of $5,215,000 ($0.29 per share) on revenue of $80,448,000. Funds flow from operations for the period was $18,082,000 compared to $17,970,000 in the corresponding nine month period in 2009.
Drilling activity has recovered from the all time lows seen in the third quarter of 2009. While activity levels have improved, day rates still trail last year and remain well below levels experienced in the peak years of 2006 and 2007. Operating statistics for the first nine months of 2010 and 2009 are as follows:
| Number of Drilling Rigs | Operating Days | Operating Days | |||
| Gross | Net | (Third Quarter) | (Year-to-Date) | ||
| Canadian Operations | 2010 | 37 | 34.225 | 1,382 | 3,938 |
| 2009 | 39 | 36.225 | 808 | 2,875 | |
| U.S. Operations | 2010 | 2 | 1.0 | 5 | 23 |
| 2009 | 2 | 1.0 | 185 | 395 | |
| Total | 2010 | 39 | 35.225 | 1,387 | 3,961 |
| 2009 | 41 | 37.225 | 993 | 3,270 | |
Pad drilling continues to be the most active aspect of the current drilling market. AKITA is actively pursuing pad rig opportunities and is currently retrofitting two of its conventional rigs and upgrading one additional pad rig in order to meet market demand. By the end of the year, the Company will have 11 pad rigs in its fleet. In addition, the Company was recently awarded a contract to construct a new pad rig for delivery next year.
Selected financial information for the Company is as follows:
| Consolidated Balance Sheets | ||||||
| Unaudited | September 30 | December 31 | ||||
| ($000's) | 2010 | 2009 | 2009 | |||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ 41,073 | $ 56,547 | $ 34,142 | |||
| Term deposits | 18,000 | - | 18,000 | |||
| Accounts receivable | 22,125 | 19,351 | 28,523 | |||
| Income taxes recoverable | - | 1,219 | 330 | |||
| Other | 688 | 1,126 | 421 | |||
| 81,886 | 78,243 | 81,416 | ||||
| Restricted cash | 2,500 | 5,000 | 5,000 | |||
| Capital assets | 147,341 | 150,401 | 147,799 | |||
| $ 231,727 | $ 233,644 | $ 234,215 | ||||
| LIABILITIES | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | $ 9,729 | $ 9,082 | $ 10,123 | |||
| Dividends payable | 1,266 | 1,276 | 1,277 | |||
| Income taxes payable | 263 | - | - | |||
| Deferred revenue | 985 | 1,148 | 197 | |||
| Current portion of pension liability | - | 157 | - | |||
| 12,243 | 11,663 | 11,597 | ||||
| Future income taxes | 19,492 | 20,177 | 20,041 | |||
| Pension liability | 1,205 | 2,339 | 1,131 | |||
| 32,940 | 34,179 | 32,769 | ||||
| CLASS A AND CLASS B SHAREHOLDERS' EQUITY | ||||||
| Class A and Class B shares | 23,199 | 23,359 | 23,376 | |||
| Contributed surplus | 2,462 | 2,271 | 2,271 | |||
| Accumulated other comprehensive income | (340) | (430) | (354) | |||
| Retained earnings | 173,466 | 174,265 | 176,153 | |||
| 198,787 | 199,465 | 201,446 | ||||
| $ 231,727 | $ 233,644 | $ 234,215 | ||||
| Consolidated Statements of Earnings | |||||||
| and Retained Earnings | |||||||
| Unaudited | Three Months | Nine Months | |||||
| ($000's) | Ended | Ended | |||||
| September 30 | September 30 | ||||||
| 2010 | 2009 | 2010 | 2009 | ||||
| REVENUE | $ 25,860 | $ 20,871 | $ 78,452 | $ 80,448 | |||
| COSTS AND EXPENSES | |||||||
| Operating and maintenance | 14,721 | 14,852 | 49,346 | 50,951 | |||
| Depreciation | 5,353 | 3,586 | 16,154 | 12,833 | |||
| Selling and administrative | 3,333 | 1,311 | 10,151 | 9,368 | |||
| 23,407 | 19,749 | 75,651 | 73,152 | ||||
| REVENUE LESS COSTS AND EXPENSES | 2,453 | 1,122 | 2,801 | 7,296 | |||
| OTHER INCOME (EXPENSE) | |||||||
| Interest income | 176 | 115 | 550 | 403 | |||
| Gain on sale of joint venture interests in rigs and other assets | 4 | - | 50 | 79 | |||
| Gain (loss) on foreign currency translation | (3) | (136) | 19 | (231) | |||
| 177 | (21) | 619 | 251 | ||||
| EARNINGS BEFORE INCOME TAXES | 2,630 | 1,101 | 3,420 | 7,547 | |||
| INCOME TAXES | |||||||
| Current | 882 | 44 | 1,712 | 710 | |||
| Future | (66) | 305 | (554) | 1,622 | |||
| 816 | 349 | 1,158 | 2,332 | ||||
| NET EARNINGS | 1,814 | 752 | 2,262 | 5,215 | |||
| Retained earnings, beginning of period | 172,912 | 174,789 | 176,153 | 172,878 | |||
| Dividends declared | (1,260) | (1,276) | (3,812) | (3,828) | |||
| Adjustment on repurchase and | |||||||
| cancellation of share capital | - | - | (1,137) | - | |||
| RETAINED EARNINGS, END OF PERIOD | $ 173,466 | $ 174,265 | $ 173,466 | $ 174,265 | |||
| Earnings per Class A and Class B share | |||||||
| Basic | $ 0.10 | $ 0.04 | $ 0.12 | $ 0.29 | |||
| Diluted | $ 0.10 | $ 0.04 | $ 0.12 | $ 0.29 | |||
| Consolidated Statements of Cash Flows | |||||||
| Unaudited | Three Months | Nine Months | |||||
| ($000's) | Ended | Ended | |||||
| September 30 | September 30 | ||||||
| 2010 | 2009 | 2010 | 2009 | ||||
| OPERATING ACTIVITIES | |||||||
| Net earnings | $ 1,814 | $ 752 | $ 2,262 | $ 5,215 | |||
| Non-cash items included in net earnings | |||||||
| Depreciation | 5,353 | 3,586 | 16,154 | 12,833 | |||
| Future income taxes | (49) | 225 | (549) | 1,359 | |||
| Expense for defined benefit pension plan | 25 | (1,394) | 74 | (1,358) | |||
| Stock options charged to expense | 119 | - | 191 | - | |||
| Gain on sale of joint venture interests in rigs and other assets | (4) | - | (50) | (79) | |||
| Funds flow from operations* | 7,258 | 3,169 | 18,082 | 17,970 | |||
| Change in non-cash working capital | 3,870 | 1,755 | 7,092 | 10,731 | |||
| 11,128 | 4,924 | 25,174 | 28,701 | ||||
| INVESTING ACTIVITIES | |||||||
| Capital expenditures | (7,832) | (1,955) | (15,755) | (10,301) | |||
| Reduction in cash restricted for loan guarantees | - | - | 2,500 | - | |||
| Proceeds on sale of joint venture interests in rigs and other assets | 4 | - | 109 | 190 | |||
| Change in non-cash working capital | (539) | - | 15 | - | |||
| (8,367) | (1,955) | (13,131) | (10,111) | ||||
| FINANCING ACTIVITIES | |||||||
| Dividends paid | (1,260) | (1,276) | (3,812) | (3,828) | |||
| Repurchase of share capital | - | - | (1,346) | - | |||
| Proceeds received on exercise of stock options | - | - | 32 | 47 | |||
| (1,260) | (1,276) | (5,126) | (3,781) | ||||
| FOREIGN CURRENCY TRANSLATION | 39 | (178) | 14 | (430) | |||
| INCREASE (DECREASE) IN CASH | 1,540 | 1,515 | 6,931 | 14,379 | |||
| Cash position, beginning of period | 39,533 | 55,032 | 34,142 | 42,168 | |||
| CASH POSITION, END OF PERIOD | $ 41,073 | $ 56,547 | $ 41,073 | $ 56,547 | |||
| Interest paid during the period | $ 14 | $ 9 | $ 17 | $ 24 | |||
| Income taxes paid during the period (net of refunds) | $ (34) | $ 439 | $ 1,119 | $ 4,126 | |||
| * Funds flow from operations is not a recognized measure under Canadian Generally Accepted Accounting Principles. | |||||||
| Consolidated Statements of Comprehensive Income | |||||||
| Unaudited | Three Months | Nine Months | |||||
| ($000's) | Ended | Ended | |||||
| September 30 | September 30 | ||||||
| 2010 | 2009 | 2010 | 2009 | ||||
| NET EARNINGS | $ 1,814 | $ 752 | $ 2,262 | $ 5,215 | |||
| OTHER COMPREHENSIVE INCOME | |||||||
| Foreign currency translation adjustment | 39 | (178) | 14 | (430) | |||
| COMPREHENSIVE INCOME | $ 1,853 | $ 574 | $ 2,276 | $ 4,785 | |||
FORWARD-LOOKING STATEMENTS
From time to time Akita Drilling Ltd. ("AKITA" or the "Company") makes written and verbal forward-looking statements. These forward-looking statements include but are not limited to comments with respect to our objectives and strategies, financial condition, the results of our operations and our business, our outlook for our industry and our risk management discussion. Forward looking statements are typically identified with words such as "believe", "expect", "forecast", "anticipate", "intend", "estimate", "plan" and "project" and similar expressions of future or conditional events such as "will", "may", "should", "could" or "would".
By their nature these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not be achieved. We caution readers of this News Release not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.
Forward-looking statements may be influenced by the following factors: the level of exploration and development activity carried on by AKITA's customers, world oil and North American natural gas prices, weather, access to capital markets and government policies. We caution that the foregoing list of important factors is not exhaustive and that when 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.
%SEDAR: 00002868E
Murray Roth
Vice President, Finance and Chief Financial Officer
(403)292-7950
website: http://www.akita-drilling.com