CALGARY, AB, Nov. 4, 2021 /CNW/ - AKITA Drilling Ltd. (TSX: AKT.A)

AKITA Drilling (CNW Group/AKITA Drilling Ltd.)

AKITA Drilling Ltd. (the "Company") announces results for the nine months ended September 30, 2021.

As prices for crude oil and natural gas increased, demand for drilling services continued to improve into the third quarter. Operating days increased to 1,169 in the third quarter of 2021 compared to 531 in the third quarter of 2020. In the third quarter of 2021, the Company recorded a net loss of $6,433,000, compared to a net loss of $8,203,000 in the same period of 2020. Adjusted funds flow from operations increased to $252,000 in the third quarter of 2021 from a loss of $669,000 in the same period of 2020 and adjusted EBITDA decreased to $1,395,000 from $1,635,000 over the same period in 2020. Increased activity did have a positive effect on the Company's results but low day rates, which decreased on average between the two quarters, tempered the potential of increased activity. To a lesser extent, startup costs in Canada of $540,000 also impacted results. Activity levels have reached a level whereby the Company is able to secure higher day rates which will go into effect in the fourth quarter of 2021.

 On October 29, the Company completed the extension of its covenant relief period out to June 30, 2023 with a step down of financial covenants from a debt to EBITDA ratio of 5.00:1.00 at the fiscal quarter ended September 30, 2022 to 3.00:1.00 at the fiscal quarter ended September 30, 2023. With activity increasing and day rates improving, moving towards normalized financial covenants is a positive sign for the Company.

Linda Southern-Heathcott, AKITA's Executive Chair and Chief Executive Officer stated: "The significant improvement in the Canadian market is very exciting and is expected have an impact on the Company's results going forward. This improvement, combined with steady increases in activity and day rates in the United States, should translate to an improved 2022 for AKITA".

CONSOLIDATED FINANCIAL HIGHLIGHTS

($Thousands except per share amounts)


For the three months ended September 30, 

For the nine months ended September 30, 


2021

2020

Change

 % Change

2021

2020

Change

 % Change

Revenue



29,906

18,849

11,057

59%

75,728

98,780

(23,052)

(23%)

Operating and maintenance expenses


25,354

13,719

11,635

85%

59,267

75,785

(16,518)

(22%)

Operating margin



4,552

5,130

(578)

(11%)

16,461

22,995

(6,534)

(28%)

Margin %



15%

27%

(12)

(44%)

22%

23%

(1)

(4%)













Adjusted EBITDA(1)



1,395

1,635

(240)

(15%)

7,529

16,265

(8,736)

(54%)

  Per share



0.04

0.04

-

0%

0.19

0.41

(0.22)

(54%)













Adjusted funds flow from (used in) operations(1)


252

(669)

921

138%

5,027

11,583

(6,556)

(57%)

  Per share



0.01

(0.02)

0.03

150%

0.13

0.29

(0.16)

(55%)













Net loss



(6,433)

(8,203)

1,770

22%

(16,192)

(65,682)

49,490

75%

  Per share



(0.16)

(0.21)

0.05

24%

(0.41)

(1.66)

1.25

75%













Capital expenditures


4,130

742

3,388

457%

8,872

5,881

2,991

51%

























Total assets



241,333

278,072

(36,739)

(13%)

241,333

278,072

(36,739)

(13%)

Total debt



74,549

74,252

297

0%

74,549

74,252

297

0%

(1)  Non-GAAP Items






United States Drilling Division




For the three months ended September 30, 

For the nine months ended September 30, 






2021

2020

Change 

% Change

2021

2020

Change 

% Change


Operating days


723

397

326

82%

2,042

2,048

(6)

(0%)


Utilization 


46%

25%

21%

84%

44%

42%

2%

5%


Revenue per operating day(1)

25,137

31,703

(6,566)

(21%)

24,715

32,370

(7,655)

(24%)


Operating and maintenance expenses per operating day(1)

21,249

23,897

(2,648)

(11%)

19,498

24,331

(4,833)

(20%)


Operating margin per operating day

3,888

7,806

(3,918)

(50%)

5,217

8,039

(2,822)

(35%)

(1)Excludes flow through costs.









Activity increased 82% in the third quarter of 2021 to 723 operating days compared to 397 in the third quarter of 2020. The active rig count has continued to improve in the US since the trough seen in the third quarter of 2020. Despite increased activity, day rates are still low. Revenue per day decreased 21% to $25,137 in the third quarter of 2021 from $31,703 in the third quarter of 2020 when the Company's rigs that were operating were still working for rates set in 2019. This reduction in day rates decreased the operating margin to $2,811,000 in the third quarter of 2021 from $3,099,000 in the same period of 2020 despite the 82% increase in activity. Operating costs per day decreased 11% to $21,249 in the third quarter of 2021 from $23,897 in 2020 as steadier programs allow the Company to drive down operating costs on its rigs.

Canadian Drilling Division




For the three months ended September 30, 

For the nine months ended September 30, 






2021

2020

Change 

% Change

2021

2020

Change 

% Change


Operating days


446

134

312

233%

1,096

846

250

30%


Utilization 


24%

7%

17%

243%

20%

15%

5%

34%


Revenue per operating day(1)(2)

23,112

34,985

(11,873)

(34%)

25,162

32,069

(6,907)

(22%)


Operating and maintenance expenses per operating day(1)(2)

18,543

19,791

(1,248)

(6%)

18,710

23,182

(4,472)

(19%)


Operating margin per operating day

4,569

15,194

(10,625)

(70%)

6,452

8,887

(2,435)

(27%)

(1)Excludes flow through costs.









(2)Includes AKITA's share of Joint Venture revenue and expenses.

During the third quarter of 2021, AKITA achieved 446 operating days in Canada, which corresponds to a utilization rate of 24%, compared to 7% (134 days) in the third quarter of 2020 and compared to an industry average of 28% in the third quarter of 2021. Despite a significant increase in operating days, the Company's operating margin in Canada was constant between the third quarter of 2021 at $2,038,000 and the third quarter of 2020 at $2,036,000. There are several factors contributing to the two quarters having equivalent margins despite higher operating days in 2021. Firstly, in 2020, the Company was operating a customer's rig under a labour contract whereby a management fee was earned with no corresponding operating days increasing the margin by $277,000. This rig did not operate in 2021. Secondly, start-up costs on reactivating rigs in the third quarter of 2021 totalled $540,000, decreasing the margin in the quarter. There were no material start-up costs in the third quarter of 2020. Lastly, the mix of rigs operating in the third quarter of 2021 versus the third quarter of 2020 was different, with 2020 having higher margin rigs operating in the quarter.

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 September 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.

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 September 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.

Copyright 2021 Canada NewsWire

Akita Drilling (TSX:AKT.B)
Graphique Historique de l'Action
De Juin 2022 à Juil 2022 Plus de graphiques de la Bourse Akita Drilling
Akita Drilling (TSX:AKT.B)
Graphique Historique de l'Action
De Juil 2021 à Juil 2022 Plus de graphiques de la Bourse Akita Drilling