AKITA Drilling Ltd. Announced 2nd Quarter Earnings and Funds Flow Today
CALGARY, ALBERTA, July 27, 2006 –AKITA Drilling Ltd. announced second quarter earnings and funds flow today. AKITA Drilling Ltd.’s net earnings for the six months ended June 30, 2006 were $18,550,000 or $1.00 per share on revenue of $94,124,000. Comparative figures for 2005 were $12,580,000 or $0.68 per share of net earnings on revenue of $74,729,000. Funds flow from operations for the period was $25,277,000 compared to $19,515,000 in 2005.
Earnings for the three months ended June 30, 2006 were $7,548,000 ($0.41 per share) on revenue of $32,929,000 compared with $3,895,000 ($0.21 per share) on revenue of $24,840,000 in 2005. Funds flow from operations for the quarter ended June 30, 2006 was $8,758,000 compared to $5,984,000 in the corresponding quarter in 2005.
Federal, provincial and territorial government tax rate reductions that will become effective over the next few years resulted in a $1,800,000 reduction of future income taxes.
AKITA currently has four rigs under construction, including one that is scheduled to commence operations during the third quarter of 2006. Construction on the additional three rigs is proceeding on schedule, and such rigs are expected to be integrated into AKITA’s fleet over the next six to nine months.
Demand for rigs in most depth ranges has been reasonably strong, despite the recent reduction in natural gas prices. Activity levels for deep capacity rigs, and to a lesser extent shallow capacity rigs, will likely soften if gas prices remain at current or lower levels for a prolonged period. In addition to finding ways to optimize rig utilization for its existing fleet, management is focused on seeking opportunities that meet AKITA’s current strengths related to drilling in the North and in heavy oil regions in Alberta.
Financial results for the second quarter and on a year-to-year basis are as follows:
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CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
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Unaudited
($000's except per
share amounts) Three Months Six Months
Ended Ended
June 30 June 30
2006 2005 2006 2005
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REVENUE $ 32,929 $ 24,840 $ 94,124 $ 74,729
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COSTS AND EXPENSES
Operating and maintenance 18,358 13,945 52,885 42,950
Depreciation 3,093 2,259 7,855 6,441
Selling and administrative 3,653 3,462 9,259 7,139
--------- --------- --------- -----------
25,104 19,666 69,999 56,530
--------- --------- --------- -----------
OPERATING INCOME 7,825 5,174 24,125 18,199
OTHER INCOME (EXPENSE)
Interest on long-term debt - (41) - (106)
Interest income 525 333 909 546
Gain on sale of joint venture
interests in rigs and other
capital assets 335 527 443 714
Unrealized gain (loss) on
foreign currency
translation (131) - (101) -
--------- --------- --------- ----------
729 819 1,251 1,154
--------- --------- --------- ----------
EARNINGS BEFORE INCOME TAXES 8,554 5,993 25,376 19,353
--------- --------- --------- ----------
INCOME TAXES
Current 2,633 1,828 7,668 5,739
Future (1,627) 270 (842) 1,034
--------- --------- --------- ----------
1,006 2,098 6,826 6,773
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NET EARNINGS 7,548 3,895 18,550 12,580
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Retained earnings,
beginning of period 133,981 108,167 124,343 100,871
Dividends (1,113) (1,023) (2,225) (2,048)
Adjustment on repurchase and
cancellation of share capital (604) (425) (856) (789)
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RETAINED EARNINGS,
END OF PERIOD $139,812 $110,614 $139,812 $110,614
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EARNINGS PER CLASS A
AND CLASS B SHARE
Basic $ 0.41 $ 0.21 $ 1.00 $ 0.68
Diluted $ 0.40 $ 0.21 $ 0.99 $ 0.67
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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Unaudited
($000's)
Three Months Six Months
Ended Ended
June 30 June 30
2006 2005 2006 2005
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OPERATING ACTIVITIES
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Net earnings $ 7,548 $ 3,895 $ 18,550 $ 12,580
Non-cash items included in
earnings
Depreciation 3,093 2,259 7,855 6,441
Future income taxes (1,627) 270 (842) 1,034
Expense for defined benefit
pension plan 66 63 135 126
Stock options charged to
expense 13 24 22 48
Gain on sale of joint venture
interests in rigs and other
capital assets (335) (527) (443) (714)
--------- --------- --------- --------
Funds flow from operations 8,758 5,984 25,277 19,515
Change in non-cash working
capital 19,067 17,367 6,426 9,577
--------- --------- --------- ---------
27,825 23,351 31,703 29,092
--------- --------- --------- ---------
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INVESTING ACTIVITIES
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Capital expenditures (13,300) (4,771) (18,259) (5,898)
Proceeds on sales of joint
venture interests in rigs
and other capital assets 432 1,306 572 1,655
Change in non-cash working
capital 902 (125) 658 52
--------- --------- --------- --------
(11,966) (3,590) (17,029) (4,191)
--------- --------- --------- --------
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FINANCING ACTIVITIES
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Repayment of long-term debt - (1,417) - (2,812)
Dividends (1,113) (1,023) (2,225) (2,048)
Proceeds received on exercise
of stock options 82 - 205 -
Repurchase of share capital (623) (463) (879) (860)
Change in non-cash working
capital 1,846 (2) 77 90
--------- --------- --------- -------
192 (2,905) (2,822) (5,630)
--------- --------- -----------------
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INCREASE IN CASH 16,051 16,856 11,852 19,271
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Cash position, beginning of
period 38,486 29,867 42,685 -
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CASH POSITION,
END OF PERIOD $ 54,537 $ 46,723 $ 54,537 $19,271
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Interest paid during the
period $ - $ 37 $ - $ 94
Income taxes paid during
period $ 2,391 $ 2,368 $ 9,871 $5,383
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CONSOLIDATED BALANCE SHEETS
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($000's)
June 30 December 31
2006 2005 2005
(Unaudited) (Audited)
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ASSETS
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Current assets
Cash $ 54,537 $ 46,723 $ 42,685
Accounts receivable 33,746 20,919 50,900
Other 1,761 693 98
---------- ---------- ----------
90,044 68,335 93,683
Investments 55 55 55
Capital assets 116,389 98,936 106,114
---------- ---------- ----------
$ 206,488 $167,326 $ 199,852
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LIABILITIES
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Current liabilities
Bank indebtedness $ - $ - $ 4,400
Accounts payable and accrued
liabilities 22,184 12,515 23,923
Income taxes payable 3,670 1,881 5,861
Current portion of
long-term debt - 1,161 -
---------- ---------- ----------
25,854 15,557 34,184
Future income taxes 13,358 14,147 14,200
Pension liability 3,237 2,976 3,102
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CLASS A AND CLASS B
SHAREHOLDERS' EQUITY
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Class A and Class B shares 23,722 23,598 23,540
Contributed surplus 505 434 483
Retained earnings 139,812 110,614 124,343
---------- ---------- ----------
164,039 134,646 148,366
---------- ---------- ----------
$ 206,488 $ 167,326 $ 199,852
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AKITA is an Alberta corporation engaged in the contract drilling business in Western Canada and the North and is listed on the Toronto Stock Exchange under the symbol AKT.
For further information please contact Murray Roth, Vice President of Finance,
(403)292-7950. Web site: http://www.akita-drilling.com |
