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.

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