AKITA Drilling Ltd. Announces Second Quarter Results
CALGARY, July 30 /CNW/ - AKITA Drilling Ltd.'s net loss for the three months ended June 30, 2010 was $567,000 ($0.03 loss per share) on revenue of $19,357,000 compared to net earnings of $555,000 ($0.03 per share) on revenue of $17,881,000 in 2009. Funds flow from operations for the quarter ended June 30, 2010 was $3,758,000 compared to $2,750,000 in the corresponding quarter in 2009.
Earnings for the six months ended June 30, 2010 were $448,000 ($0.02 per share) on revenue of $52,592,000. Comparative figures for 2009 were earnings of $4,463,000 ($0.24 per share) on revenue of $59,577,000. Funds flow from operations for the period was $10,824,000 compared to $14,801,000 in 2009.
Operating statistics for the first six months of 2010 and 2009 are as follows:
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Number of Rigs Operating
Days
Gross Net
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2010 37 34.225 2,556
Canada ----------------------------------
2009 39 36.225 2,067
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2010 2 1.0 18
United States ----------------------------------
2009 2 1.0 210
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2010 39 35.225 2,574
Total ----------------------------------
2009 41 37.225 2,277
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Demand for rigs having certain capacities, particularly for heavy doubles and light triples increased during the second quarter. This increase in activity was offset by revenue rates that fell throughout most of last year and have not yet recovered to levels that were comparable to rates at the beginning of 2009. Consequently, earnings and funds flow are lower than comparative figures for 2009. Wet weather, particularly in June, delayed the start-up of a number of rigs until the third quarter. This also had an adverse impact on results.
Demand for conventional (i.e. non-pad or specialized) rigs has improved, but remains far below supply. The categories of rigs that are most affected include deep (i.e. 5,000 metre plus capacities) and shallow (i.e. under 1,500 metre capacities), as these rigs typically drill for natural gas in conventional formations. As a result of low natural gas prices, limited opportunities for work are available.
The Company continues to receive inquiries about expanding its pad drilling capabilities. Earlier this year, AKITA retrofitted two of its smaller rigs (2,000 metre and 2,200 metre capacities) to perform pad drilling for a specialized project that is expected to commence during the third quarter. In addition, AKITA is upgrading one of its existing rigs into a 4,000 metre pad rig for heavy oil or shale gas drilling. Management anticipates that pad rig demand should remain strong for the foreseeable future.
Selected financial information for the Company is as follows:
Consolidated Balance Sheets
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Unaudited June 30 December 31
($000's) 2010 2009 2009
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ASSETS
Current assets
Cash and cash equivalents $ 39,533 $ 55,032 $ 34,142
Term deposits 18,000 - $ 18,000
Accounts receivable 22,384 20,828 28,523
Income taxes recoverable 653 1,008 330
Other 1,009 1,962 421
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81,579 78,830 81,416
Restricted cash 2,500 5,000 5,000
Capital assets 144,862 152,032 147,799
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$ 228,941 $ 235,862 $ 234,215
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LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities $ 7,252 $ 7,747 $ 10,123
Dividends payable 1,267 1,276 1,277
Deferred revenue 1,626 2,830 197
Current portion of pension
liability - 268 -
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10,145 12,121 11,597
Future income taxes 19,541 19,952 20,041
Pension liability 1,180 3,622 1,131
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30,866 35,695 32,769
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CLASS A AND CLASS B SHAREHOLDERS'
EQUITY
Class A and Class B shares 23,199 23,359 23,376
Contributed surplus 2,343 2,271 2,271
Accumulated other comprehensive
income (379) (252) (354)
Retained earnings 172,912 174,789 176,153
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198,075 200,167 201,446
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$ 228,941 $ 235,862 $ 234,215
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Consolidated Statements of Earnings (Loss)
and Retained Earnings
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Unaudited Three Months Six Months
($000's except per Ended Ended
share amounts) June 30 June 30
2010 2009 2010 2009
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REVENUE $ 19,357 $ 17,881 $ 52,592 $ 59,577
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COSTS AND EXPENSES
Operating and
maintenance 12,935 10,949 34,625 36,099
Depreciation 4,145 2,667 10,801 9,247
Selling and
administrative 3,170 3,661 6,818 8,057
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20,250 17,277 52,244 53,403
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REVENUE LESS COSTS AND
EXPENSES (893) 604 348 6,174
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OTHER INCOME (EXPENSE)
Interest income 252 73 374 288
Gain on sale of joint
venture interests in
rigs and other assets 46 58 46 79
Gain (loss) on foreign
currency translation 22 (97) 22 (95)
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320 34 442 272
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EARNINGS (LOSS) BEFORE
INCOME TAXES (573) 638 790 6,446
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INCOME TAXES
Current (147) 332 830 666
Future 141 (249) (488) 1,317
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(6) 83 342 1,983
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NET EARNINGS (LOSS) (567) 555 448 4,463
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Retained earnings,
beginning of period 175,891 175,510 176,153 172,878
Dividends declared (1,275) (1,276) (2,552) (2,552)
Adjustment on repurchase
and cancellation of
share capital (1,137) - (1,137) -
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RETAINED EARNINGS, END OF
PERIOD $ 172,912 $ 174,789 $ 172,912 $ 174,789
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Earnings (loss) per
Class A and Class B share
Basic $ (0.03) $ 0.03 $ 0.02 $ 0.24
Diluted $ (0.03) $ 0.03 $ 0.02 $ 0.24
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Consolidated Statements of Cash Flow
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Unaudited Three Months Six Months
($000's) Ended Ended
June 30 June 30
2010 2009 2010 2009
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OPERATING ACTIVITIES
Net earnings (loss) $ (567) $ 555 $ 448 $ 4,463
Non-cash items included
in net earnings (loss)
Depreciation 4,145 2,667 10,801 9,247
Future income taxes 129 (432) (500) 1,134
Expense for defined
benefit pension plan 25 18 49 36
Stock options charged
to expense 72 - 72 -
Gain on sale of joint
venture interests in
rigs and other assets (46) (58) (46) (79)
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Funds flow from
operations 3,758 2,750 10,824 14,801
Change in non-cash
working capital 12,938 9,769 3,222 8,976
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16,696 12,519 14,046 23,777
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INVESTING ACTIVITIES
Capital expenditures (6,319) (988) (7,923) (8,346)
Reduction in cash
restricted for loan
guarantees - - 2,500 -
Proceeds on sale of joint
venture interests in
rigs and other assets 105 141 105 190
Change in non-cash
working capital 2,851 (1,359) 554 -
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(3,363) (2,206) (4,764) (8,156)
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FINANCING ACTIVITIES
Increase (decrease) in
bank indebtedness - - - -
Dividends paid (1,275) (1,276) (2,552) (2,552)
Proceeds received on
exercise of stock
options 32 32 32 47
Repurchase of share
capital (1,346) - (1,346) -
Change in non-cash
working capital - - - -
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(2,589) (1,244) (3,866) (2,505)
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FOREIGN CURRENCY
TRANSLATION (12) (384) (25) (252)
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INCREASE IN CASH 10,732 8,685 5,391 12,864
Cash position, beginning
of period 28,801 46,347 34,142 42,168
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CASH POSITION, END OF
PERIOD $ 39,533 $ 55,032 $ 39,533 $ 55,032
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Interest paid during the
period $ 1 $ 45 $ 3 $ 52
Income taxes paid during
the period $ 695 $ 1,310 $ 1,153 $ 2,071
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Consolidated Statements of Comprehensive Income (Loss)
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Unaudited Three Months Six Months
($000's) Ended Ended
June 30 June 30
2010 2009 2010 2009
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NET EARNINGS (LOSS) $ (567) $ 555 $ 448 $ 4,463
OTHER COMPREHENSIVE
INCOME (LOSS)
Foreign currency
translation
adjustment (12) (384) (25) (252)
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COMPREHENSIVE INCOME
(LOSS) $ (579) $ 171 $ 423 $ 4,211
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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 foregoing factors as well as other uncertainties and events.
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