AKITA Drilling Ltd. Announces Results
CALGARY, ALBERTA, October 25, 2006 –AKITA Drilling Ltd. announced third quarter earnings and funds flow today. AKITA Drilling Ltd.’s net earnings for the nine months ended September 30, 2006 were $25,400,000 or $1.37 per share on revenue of $132,980,000. Comparative figures for 2005 were $19,688,000 or $1.06 per share of net earnings on revenue of $115,469,000. Funds flow from operations for the period was $35,666,000 compared to $29,834,000 in 2005.
Earnings for the three months ended September 30, 2006 were $6,850,000 ($0.37 per share) on revenue of $38,856,000 compared with $7,108,000 ($0.38 per share) on revenue of $40,740,000 in 2005. Funds flow from operations for the quarter ended September 30, 2006 was $10,389,000 compared to $10,319,000 in the corresponding quarter in 2005.
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Number of
Wells Operating Operating
Number of Rigs Drilled or Days Hours
at September 30 Serviced (Drilling) (Servicing)
--------------- (Year to (Year to (Year to
Gross Net Date) Date) Date)
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Canadian 2006 38 35.075 1,002 6,103 N/A
Drilling 2005 37 34.075 1,022 5,793 N/A
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Canadian Well 2006 3 1.5 47 N/A 3,901
Servicing 2005 3 1.5 38 N/A 4,118
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Alaskan 2006 1 0.5 3 88 N/A
Drilling 2005 N/A N/A N/A N/A N/A
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During the third quarter, AKITA commissioned its latest rig. The Company anticipates redeploying this rig from its current location in Alberta into Alaska later this year where it is scheduled to operate on a term contract for one of AKITA’s joint ventures. The projected timetable for completion of the remaining three rigs currently under construction has been delayed as a result of unexpected delays associated with the delivery of certain key components of the rigs. However, management still anticipates the receipt of its shallow capacity drilling rig during the fourth quarter of 2006 and also anticipates completion of the remaining two heavy oil pad drilling rigs by mid-2007.
Demand for shallow drilling rigs, and to a lesser degree deep drilling rigs, tapered off during the third quarter as a result of current weakness in natural gas prices. Management anticipates that activity levels for these types of rigs will increase with the onset of winter drilling, but may once again become vulnerable to weaker demand by late winter or spring unless natural gas prices strengthen significantly. Demand for medium capacity rigs and for heavy oil pad drilling rigs is largely influenced by oil prices and continues to remain strong. Demand for drilling rigs in the Canadian North appears to be less than in previous years and may be constrained by the lack of positive developments on the Mackenzie Valley Pipeline.
Financial results for the third quarter and on a year-to-date 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 Nine Months
Ended Ended
September 30 September 30
2006 2005 2006 2005
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REVENUE $ 38,856 $ 40,740 $ 132,980 $ 115,469
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COSTS AND EXPENSES
Operating and maintenance 22,418 23,281 75,303 66,231
Depreciation 3,157 2,760 11,012 9,201
Selling and administrative 3,638 4,107 12,897 11,246
------- ------ ------ --------
29,213 30,148 99,212 86,678
------- ------ ------ --------
OPERATING INCOME 9,643 10,592 33,768 28,791
OTHER INCOME (EXPENSE)
Interest on long-term debt - (22) - (128)
Interest income 504 330 1,413 876
Gain on sale of joint
venture interests in rigs
and other capital assets 243 36 686 750
Gain (loss) on foreign
currency translation (9) - (110) -
------- ------ ------- --------
738 344 1,989 1,498
------- ------ ------- --------
EARNINGS BEFORE INCOME TAXES 10,381 10,936 35,757 30,289
------- ------ ------- --------
INCOME TAXES
Current 3,037 3,428 10,705 9,167
Future 494 400 (348) 1,434
------ ------- ------ --------
3,531 3,828 10,357 10,601
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NET EARNINGS 6,850 7,108 25,400 19,688
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Retained earnings,
beginning of period 139,812 110,614 124,343 100,871
Dividends (1,110) (1,021) (3,335) (3,069)
Adjustment on repurchase and
cancellation of share capital (2,282) (549) (3,138) (1,338)
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RETAINED EARNINGS,
END OF PERIOD $143,270 $116,152 $143,270 $116,152
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EARNINGS PER CLASS A
AND CLASS B SHARE
Basic $ 0.37 $ 0.38 $ 1.37 $ 1.06
Diluted $ 0.37 $ 0.38 $ 1.36 $ 1.05
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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Unaudited
($000's) Three Months Nine Months
Ended Ended
September 30 September 30
2006 2005 2006 2005
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OPERATING ACTIVITIES
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Net earnings $6,850 $7,108 $25,400 $19,688
Non-cash items included
in earnings
Depreciation 3,157 2,760 11,012 9,201
Future income taxes 494 400 (348) 1,434
Expense for defined benefit
pension plan 65 63 200 189
Stock options charged to
expense 66 24 88 72
Gain on sale of joint
venture interests in rigs
and other capital assets (243) (36) (686) (750)
------- ------- ------- --------
Funds flow from operations 10,389 10,319 35,666 29,834
Change in non-cash working
capital (5,591) (7,222) 835 2,355
------- ------- ------- --------
4,798 3,097 36,501 32,189
------- ------- ------- --------
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INVESTING ACTIVITIES
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Capital expenditures (12,205) (6,059) (30,464) (11,957)
Proceeds on sales of joint
venture interests in rigs
and other capital assets 483 163 1,055 1,818
Change in non-cash working
capital (880) 55 (222) 107
------- ------- ------- --------
(12,602) (5,841) (29,631) (10,032)
-------- ------- -------- --------
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FINANCING ACTIVITIES
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Repayment of long-term debt - (1,044) - (3,856)
Dividends (1,110) (1,021) (3,335) (3,069)
Proceeds received on exercise
of stock options - - 205 -
Repurchase of share capital (2,438) (589) (3,317) (1,449)
Change in non-cash working
capital (106) (5) (29) 85
-------- ------- -------- --------
(3,654) (2,659) (6,476) (8,289)
-------- ------- -------- --------
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INCREASE IN CASH (11,458) (5,403) 394 13,868
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Cash position, beginning of
period 54,537 46,723 42,685 27,452
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CASH POSITION, END OF PERIOD $43,079 $41,320 $43,079 $41,320
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Interest paid during the
period $ - $ 15 $ - $ 109
Income taxes paid during
period $ 2,268 $ 2,333 $ 12,127 $ 7,716
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CONSOLIDATED BALANCE SHEETS
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($000's)
September 30 December 31
2006 2005 2005
(Unaudited) (Audited)
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ASSETS
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Current assets
Cash $ 43,079 $ 41,320 $ 42,685
Accounts receivable 34,978 32,905 50,900
Other 1,353 586 98
-------- -------- ----------
79,410 74,811 93,683
Investments 55 55 55
Capital assets 125,197 102,108 106,114
-------- -------- ----------
$ 204,662 $ 176,974 $ 199,852
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LIABILITIES
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Current liabilities
Bank indebtedness $ - $ - $ 4,400
Accounts payable and accrued
liabilities 15,662 16,127 23,923
Income taxes payable 4,439 2,976 5,861
Current portion of long-term debt - 117 -
-------- -------- ----------
20,101 19,220 34,184
Future income taxes 13,852 14,547 14,200
Pension liability 3,302 3,039 3,102
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CLASS A AND CLASS B SHAREHOLDERS' EQUITY
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Class A and Class B shares 23,566 23,558 23,540
Contributed surplus 571 458 483
Retained earnings 143,270 116,152 124,343
------- -------- ----------
167,407 140,168 148,366
------- -------- ----------
$ 204,662 $ 176,974 $ 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 |
