CALGARY, July 30, 2013 /CNW/ - AKITA Drilling Ltd.'s net income for the three months ended June 30, 2013 was $2,757,000 ($0.15 per share) on revenue of $28,044,000 compared to $2,092,000 ($0.12 per share) on revenue of $35,959,000 for the corresponding period in 2012.  Funds flow from operations for the quarter ended June 30, 2013 was $9,121,000 compared to $8,368,000 in the corresponding quarter in 2012.  Commencing in 2013, the Company is reporting its financial results pursuant to a new accounting standard under International Financial Reporting Standards ("IFRS"), IFRS 11, whereby assets, liabilities, revenues and expenses of joint ventures are required to be reported on an equity accounting basis.  This adoption, which had no effect on net income, has resulted in a reduction of revenue amounts that would have been reported if the Company were allowed to continue to report using the proportionate consolidation basis.

Net income for the six months ended June 30, 2013 was $15,252,000 ($0.85 per share) on revenue of $88,805,000.  Comparative figures for 2012 were net income of $15,996,000 ($0.89 per share) on revenue of $104,136,000.  Funds flow from operations for the January to June period in 2013 was $29,106,000 compared to $28,734,000 for the comparative period in 2012.

Weaker markets conditions, particularly for conventional drilling rigs, as well as wetter than normal weather in June, were the two main influences that resulted in AKITA Drilling achieving fewer operating days in the second quarter of 2013 than in the corresponding quarter of 2012 (i.e., 1,017 compared to 1,161 in 2012).  However, the financial impact of this lower activity was more than offset by having stronger day rates due to the Company's high percentage of pad drilling rigs.

It appears that market conditions will be slower for the balance of the summer drilling season and perhaps the upcoming winter, especially for conventional drilling rigs.  However, management does not anticipate any adverse impact to its pad rig activity as a result of a generally weaker set of market conditions.  Further, during the third quarter, AKITA anticipates having a new pad rig commence operations on a multi-year project.

In the first quarter report issued earlier this year, management indicated that the Company was bidding on the construction of several new custom rigs to meet specialized long-term customer needs.  While a number of these projects have been deferred or cancelled, subsequent to June 30, the Company entered into a multi-year contract to construct and operate a new ultra-deep pad rig for use in the Fort Liard basin. This rig, which should cost approximately twice the amount of a typical oil sands pad triple due to the amount of equipment included, is expected to be funded out of a combination of ongoing cash flow from operations and the Company's existing banking facility.

Selected information from AKITA Drilling Ltd.'s Management's Discussion and Analysis for the Quarterly Report is as follows:

Basis of Analysis in this MD&A , Non-Standard and Additional GAAP Items

Effective January 1, 2013, the Company adopted a new accounting standard under International Financial Reporting Standards ("IFRS"), IFRS 11 "Joint Arrangements", in relation to reporting its joint venture activities.  Under IFRS 11, AKITA is required to report its joint venture assets, liabilities and financial activities using the equity method of accounting.  However, for purposes of analysis in this MD&A, the proportionate share of assets, liabilities and financial activities is included as non-standard GAAP information ("Adjusted") where appropriate.  The Company provides the same drilling services and utilizes the same management, financial and reporting controls for its joint venture activities as are in place for its wholly owned operations.

Operating margin, revenue per operating day, operating and maintenance expense per operating day and operating margin per operating day are not recognized measures under IFRS.  Management and certain investors may find operating margin data to be a useful measurement metric as it provides an indication of the profitability of the business prior to the influence of depreciation, overhead expenses, financing costs and income taxes.  Management and certain investors may find "per operating day" measures for revenue and operating margin indicative of pricing strength while operating and maintenance expense per operating day demonstrates the degree of cost control and provides a proxy for specific inflation rates incurred by the Company.  Readers should be cautioned that in addition to the foregoing, other factors, including the mix of rigs between conventional and pad and singles, doubles and triples can also impact these results.  Readers should also be aware that AKITA includes standby revenue, construction revenue and construction costs in its determination of "per operating day" results.

Funds flow from operations is considered as an additional GAAP measure under IFRS.  AKITA's method of determining funds flow from operations may differ from methods used by other companies and includes cash flow from operating activities before working capital changes.  Management and certain investors may find funds flow from operations to be a useful measurement to evaluate the Company's operating results at year-end and within each year, since the seasonal nature of the business affects the comparability of non-cash working capital changes both between and within periods.

Revenue and Operating & Maintenance Expenses

                   
$ Millions Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change % Change   2013 2012 Change % Change
Revenue per Interim Financial Statements(1) 28.0 35.9 (7.9) (22%)   88.8 104.1 (15.3) (15%)
Proportionate Share of Revenue from Joint Ventures(2) 11.0 8.2 2.8 34%   24.3 19.1 5.2 27%
Adjusted Revenue(2) 39.0 44.1 (5.1) (12%)   113.1 123.2 (10.1) (8%)
                   
$ Millions Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change % Change   2013 2012 Change % Change
Operating & Maintenance Expenses per Interim Financial Statements(1) 18.6 25.6 (7.0) (27%)   56.1 68.3 (12.2) (18%)
Proportionate Share of Operating & Maintenance Expenses from Joint Ventures(2) 6.6 5.1 1.5 29%   14.3 11.9 2.4 20%
Adjusted Operating & Maintenance Expenses(2) 25.2 30.7 (5.5) (18%)   70.4 80.2 (9.8) (12%)
                   
$ Millions Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change % Change   2013 2012 Change % Change
Adjusted Revenue(2) 39.0 44.1 (5.1) (12%)   113.1 123.2 (10.1) (8%)
Adjusted Operating & Maintenance Expenses(2) 25.2 30.7 (5.5) (18%)   70.4 80.2 (9.8) (12%)
Adjusted Operating Margin(1)(2)(3) 13.8 13.4 0.4 3%   42.7 43.0 (0.3) (1%)
                   
$ Dollars Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change % Change   2013 2012 Change % Change
Adjusted Revenue per Operating Day(2) 38,348 37,984 364 1%   35,802 33,579 2,223 7%
Adjusted Operating & Maintenance Expenses per Operating Day(2) 24,779 26,443 (1,664) (6%)   22,286 21,859 427 2%
Adjusted Operating Margin per Operating Day(2)(3) 13,569 11,541 2,028 18%   13,516 11,720 1,796 15%
(1)      Revenue, operating & maintenance expenses and adjusted operating margin include the Company's rig construction for third parties.  AKITA does not disclose its operating margin on rig construction activity separately for competitive reasons.
(2)      Proportionate share of revenue from joint ventures, adjusted revenue, proportionate share of operating & maintenance expenses from joint ventures, adjusted operating & maintenance expenses, adjusted operating margin, adjusted revenue per operating day, adjusted operating & maintenance expenses per operating day and adjusted operating margin per operating day are non-standard accounting measures.  See commentary in "Basis of Analysis in this MD&A, Non-Standard and Additional GAAP Items".
(3) Adjusted operating margin is the difference between adjusted revenue and adjusted operating & maintenance expenses.
   

Second Quarter Comparatives - Impact of Pad Rigs Drives Performance

During the second quarter of 2013, adjusted revenue decreased to $39,049,000 from $44,125,000 during the second quarter of 2012 as a result of weakening market conditions for conventional double and triple sized rigs which was partially offset by an increase in AKITA's pad drilling activity.

Although adjusted revenue for the three month period ended June 30, 2013 decreased, adjusted revenue per operating day increased to $38,348 during the second quarter of 2013 from $37,984 in the comparative quarter of 2012 due to an increased proportion of the Company's revenue being generated by its pad drilling rigs.  These rigs, compared to conventional drilling rigs, typically generate higher revenue on a per day basis.

Adjusted operating and maintenance costs are tied to revenue and amounted to $25,218,000 ($24,779 per operating day) during the second quarter of 2013 compared to $30,668,000 ($26,443 per operating day) in the same period of the prior year.  While pad rigs dominated the drilling activities during the current quarter, the actual mix of pad rigs resulted in lower operating costs when taken on a "per operating day" basis.

The operating margin for the Company increased to $13,831,000 in the second quarter of 2013 from $13,457,000 during the corresponding quarter of 2012.  This increase amounted to 3% compared to a 12% reduction in adjusted revenue.  The negative correlation between changes in operating margin and adjusted revenue was largely the result of a higher proportion of AKITA's drilling activities being derived from pad rigs during the current quarter compared to the corresponding period in 2012, as well as the specific mix of rigs that participated in drilling activities.  Pad rigs typically achieve higher activity levels, revenues per day and operating margins per day than conventional rigs.

Year-to-Date Comparatives - Effects of Weaker Conventional Rig Performance Offset by Impact of Pad Rigs

During the first six months of 2013, adjusted revenue decreased to $113,073,000 from $123,185,000 during the first six months of 2012 as a result of weakening market conditions for conventional double and triple sized rigs which was partially offset by an increase in AKITA's pad drilling activity.

Although adjusted revenue for the year-to-date period ended June 30, 2013 decreased, adjusted revenue per operating day increased to $35,802 during the first six months of 2013 from $33,579 in the comparative six month period of 2012 due to an increased proportion of the Company's revenue being generated by its pad drilling rigs.  These rigs, compared to conventional drilling rigs, typically generate higher revenues on a "per operating day" basis.

Adjusted operating and maintenance costs are tied to revenue and amounted to $70,353,000 ($22,286 per operating day) during the first six months of 2013 compared to $80,154,000 ($21,859 per operating day) in the same period of the prior year.

The operating margin for the Company decreased to $42,720,000 in the first six months of 2013 from $43,031,000 during the corresponding year-to-date period of 2012.  This reduction amounted to 1% compared to a 8% reduction in adjusted revenue.  The lower decline in operating margin compared to adjusted revenue was the result of a higher proportion of AKITA's drilling activities being derived from pad rigs during the first six months of the year compared to the corresponding period in 2012.  Pad rigs typically achieve higher activity levels, revenues per day and operating margins per day than conventional rigs.

Other Comments

From time to time, the Company requires customers to make pre-payments prior to the provision of drilling services.  In addition, from time to time, the Company records cost recoveries related to capital enhancements for specific customer related projects.  At June 30, 2013, deferred revenue related to these activities totalled $371,000 (June 30, 2012 - $Nil).

Depreciation Expense

                   
$ Millions Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change % Change   2013 2012 Change % Change
Depreciation and Amortization Expense 5.5 5.6 (0.1) (2%)   13.0 12.9 0.1 1%
                   

The depreciation and amortization expense reported in the second quarter of 2013 of $5,556,000 was virtually the same as for the corresponding quarter of 2012 ($5,631,000).  The impact of a decline in drilling activity on depreciation and amortization expense was largely offset by an increase in the average cost base for AKITA's rigs.

Depreciation and amortization expense for the first six months of 2013 totalled $13,023,000 compared to $12,897,000 for the corresponding period in 2012.  As with the depreciation and amortization expense for the second quarter, offsetting factors of lower activity in the current year-to-date period and a higher average cost base for AKITA's rigs resulted in depreciation and amortization expense being within 1% of the 2012 total. In the first six months of 2013, drilling rig depreciation accounted for 96% of total depreciation and amortization expense (2012 - 97%).

While AKITA conducts many of its drilling operations via joint ventures, the drilling rigs used to conduct those activities are owned jointly by AKITA and its joint venture partners, and not the joint ventures themselves.  Therefore, the joint ventures do not hold any property, plant, or equipment assets directly.  Consequently, the depreciation balance reported above includes depreciation on assets involved in both wholly owned and joint ventured activities.

Selling and Administrative Expense

                   
$ Millions Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change %Change   2013 2012 Change %Change
Selling & Administrative Expense per Interim Financial Statements 4.5 5.0 (0.5) (10%)   9.1 9.8 (0.7) (7%)
Proportionate Share of Selling & Administrative Expense from Joint Ventures(1) 0.1 0.1 0.0 N/A   0.3 0.3 0.0 N/A
Adjusted Selling & Administrative Expense(1) 4.6 5.1 (0.5) (10%)   9.4 10.1 (0.7) (7%)
   
(1) Proportionate share of selling and administrative expense from joint ventures and adjusted selling and administrative expense are non-standard accounting measures.  See commentary in "Basis of Analysis in this MD&A, Non-Standard and Additional GAAP Items".
   

Adjusted selling and administrative expenses were 8.3% of adjusted revenue in the first six months of 2013 compared to 8.1% of adjusted revenue in the first six months of 2012, largely as a result of decreased adjusted revenue in 2013.  The single largest component was salaries and benefits, which accounted for 60% of these expenses (58% in 2012).

Other Income

                   
$ Millions Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change % Change   2013 2012 Change % Change
Interest Income 0.0 0.1 (0.1) (100%)   0.1 0.2 (0.1) (50%)
Gain (Loss) on Sale of Joint Venture Interests in Rigs and Other Assets 0.0 (0.1) 0.1 100%   0.0 1.1 (1.1) (100%)
Total Other Income 0.0 0.0 0.0 N/A   0.1 1.3 (1.2) (92%)
                   

The Company invests any cash balances in excess of its ongoing operating requirements in bank guaranteed highly liquid investments.  Interest income decreased to $163,000 in the first six months of 2013 from $208,000 in the corresponding period as a result of reduced cash and short term deposit balances.  The Company has undertaken significant capital expenditures related to the construction of new rigs and the conversion of conventional rigs into pad rigs, thereby reducing AKITA's cash balances.

During 2012, the Company disposed of its interests in its remaining two arctic drilling camps and other non-core assets resulting in a $1,062,000 gain.  The Company did not have any significant disposals during the first six months of 2013.

Equity Income from Joint Ventures

                   
$ Millions Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change %Change   2013 2012 Change %Change
Proportionate Share of Revenue from Joint Ventures(1) 11.0 8.2 2.8 34%   24.3 19.1 5.2 27%
Proportionate Share of Operating & Maintenance Expenses  from Joint Ventures(1) 6.6 5.1 1.5 29%   14.3 11.9 2.4 20%
Proportionate Share of Selling & Administrative Expense from Joint Ventures(1) 0.1 0.1 0.0 N/A   0.3 0.3 0.0 N/A
Equity Income from Joint Ventures 4.3 3.0 1.3 43%   9.7 6.9 2.8 41%

(1) Proportionate share of revenue from joint ventures, proportionate share of operating & maintenance expenses from joint ventures and proportionate share of selling & administrative expense from joint ventures are non-standard accounting measures.  See commentary in "Basis of Analysis in this MD&A, Non-Standard and Additional GAAP Items".
   

The Company provides the same drilling services and utilizes the same management, financial and reporting controls for its joint venture activities as are in place for its wholly owned operations.  The analyses of these activities are incorporated throughout the relevant sections of this MD&A.  Joint venture activities are often located in some of the most prospective regions in Canada.  Two thirds of AKITA's joint ventures utilize pad drilling rigs.

Income Tax Expense

                   
$ Millions Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change % Change   2013 2012 Change % Change
Current Tax Expense 0.2 0.3 (0.1) (33%)   4.6 4.9 (0.3) (6%)
Deferred Tax Expense 0.7 0.4 0.3 75%   0.5 0.5 0.0 N/A
Income Tax Expense 0.9 0.7 0.2 29%   5.1 5.4 (0.3) (6%)
                   

Income tax expense decreased to $5,144,000 in the first six months of 2013 from $5,422,000 in the corresponding period in 2012 due to lower pre-tax earnings.  Recent capital additions have affected the portion of income taxes that are deferred to future dates.

Net Income, Funds Flow and Net Cash From Operating Activities

                   
$ Millions Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change % Change   2013 2012 Change % Change
Net Income 2.8 2.1 0.7 33%   15.3 16.0 (0.7) (4%)
Funds Flow From Operations(1) 9.1 8.4 0.7 8%   29.1 28.7 0.4 1%

(1)      Funds flow from operations is an additional GAAP measure under IFRS.  See commentary in "Basis of Analysis in this MD&A, Non-Standard and Additional GAAP Items".

Net income attributable to shareholders increased to $2,757,000 or $0.15 per Class A Non-Voting and Class B Common Share (basic and diluted) for the three month period ended June 30, 2013 from $2,092,000 or $0.12 per share (basic and diluted) in the comparative quarter of 2012.  Funds flow from operations increased to $9,121,000 in the second quarter of 2013 from $8,368,000 in the corresponding quarter in 2012.  Higher net income and funds flow from operations that occurred in second quarter of 2013 were directly attributable to higher operating margins per operating day versus the second quarter of 2012 and were partially offset by lower activity levels in the current quarter.

Net income decreased to $15,252,000 or $0.85 per Class A Non-Voting and Class B Common Share (basic and diluted) for the first six months of 2013 from $15,996,000 or $0.89 per share (basic and diluted) in the corresponding period of 2012.  Funds flow from operations increased to $29,106,000 in the first six months of 2013 from $28,734,000 in the corresponding period in 2012.  Comparability of net income and funds flows for these two periods were mostly affected by rig activity levels (lower in 2013 year-to-date), operating margins (higher in 2013 year-to-date) and depreciation (higher in 2013 on a year-to-date basis).

Fleet and Rig Utilization

At June 30, 2013 AKITA had 38 drilling rigs, including nine that operated under joint ventures, (34.875 net to AKITA) compared to 38 rigs (35.075 net) in the corresponding period of 2012.  During the second quarter of 2013, the Company decommissioned one of its wholly owned single sized conventional rigs.  Effective July, 1, 2013, the Company added one triple sized pad rig (0.85 net to AKITA).  This new rig is scheduled to commence operations during the third quarter of 2013 and will raise the Company rig count to 39 (35.75 net to AKITA).

                   
  Three Months Ended June 30   Six Months Ended June 30
  2013 2012 Change % Change   2013 2012 Change % Change
Operating Days 1,017 1,161 (144) (12%)   3,159 3,669 (510) (14%)
Utilization Rate 29.0% 33.6% (4.6) (14%)   44.9% 53.1% (8.2) (15%)
                   

Liquidity and Capital Resources

Cash used for capital expenditures totalled $15,137,000 in the first six months of 2013 (2012 - $26,437,000).  The most significant expenditure related to the ongoing construction of a new pad rig.  This rig is expected to begin operating during the third quarter of 2013 under a multi-year contract.  Additional capital related to routine capital expenditures.

At June 30, 2013, AKITA's Statement of Financial Position included working capital (current assets minus current liabilities) of $38,337,000 compared to working capital of $41,563,000 at June 30, 2012 and working capital of $31,214,000 at December 31, 2012.  Readers should also be aware of the seasonal nature of AKITA's business and its impact on non-cash working capital balances.  Typically, non-cash working capital balances reach annual maximum levels at the end of the first quarter or during the second quarter as a result of break-up.  Non-cash working capital amounted to $10,719,000 at June 30, 2013 compared to $20,211,000 at December 31, 2012.

The Company had seven rigs under multi-year contracts at June 30, 2013.  Of these contracts, five are anticipated to expire in 2014, one in 2016 and one in 2018.

During 2011, the Company guaranteed bank loans made to joint venture partners totalling $2,700,000 for a period of four years.  The Company has provided an assignment of monies on deposit totalling $3,000,000 with respect to these loans.  These funds have been classified as "restricted cash" on the Statement of Financial Position.  The Company's security from its partners for these guarantees includes interests in specific rig assets.

Forward-Looking Statements

From time to time AKITA makes forward-looking statements.  These statements include but are not limited to comments with respect to AKITA's objectives and strategies, financial condition, results of operations, the outlook for the industry and risk management.

By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that the predictions and other forward-looking statements will not be realized.  Readers of this News Release are cautioned not to place undue reliance on these statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, estimates and intentions expressed in such forward-looking statements.

Forward-looking statements may be influenced by factors such as the level of exploration and development activity carried on by AKITA's customers; world crude oil prices and North American natural gas prices; weather; access to capital markets and government policies.  We caution that the foregoing list of factors is not exhaustive and that investors and others should carefully consider the foregoing factors as well as other uncertainties and events prior to making a decision to invest in AKITA.  Except as required by law, the Company does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by it or on its behalf.

Selected Financial Information for the Company is as follows:

 

                     
AKITA Drilling Ltd.                  
Interim Consolidated Statements of Financial Position          
                     
                     
Unaudited     June 30   June 30   December 31   January 1
$ Thousands     2013   2012   2012   2012
            Note 3   Note 3   Note 3
Assets                  
Current Assets                  
  Cash and cash equivalents    $ 27,618  $ 28,087  $ 11,003  $ 14,553
  Term deposits     -   2,500   -   9,500
  Accounts receivable     24,939   31,854   60,004   45,427
  Income taxes recoverable     168   -   4,487   -
  Prepaid expenses and other     585   745   159   413
        53,310   63,186   75,653   69,893
Non-current Assets                  
Restricted cash     3,000   3,000   3,000   3,000
Other long term assets     303   188   320   200
Investment property     588   613   601   626
Investment in joint ventures     9,327   3,196   4,825   5,672
Property, plant and equipment     207,001   180,328   204,969   166,812
Total Assets    $ 273,529  $ 250,511  $ 289,368  $ 246,203
                     
                     
Liabilities                  
Current Liabilities                  
  Accounts payable and accrued liabilities    $ 13,165  $ 19,265  $ 43,089  $ 26,623
  Deferred revenue     371   -   95   146
  Dividends payable     1,437   1,262   1,255   1,262
  Income taxes payable     -   1,096   -   3,269
        14,973   21,623   44,439   31,300
Non-current Liabilities                  
Deferred income taxes     19,435   12,702   18,886   12,151
Pension liability     2,524   2,178   2,348   1,982
Total Liabilities     36,932   36,503   65,673   45,433
                     
Shareholders' Equity                  
Class A and Class B shares     23,611   23,257   23,186   23,308
Contributed surplus     3,159   2,906   3,060   2,758
Accumulated other comprehensive income     (21)   -   (21)   -
Retained earnings     209,848   187,845   197,470   174,704
Total Equity     236,597   214,008   223,695   200,770
Total Liabilities and Equity    $ 273,529  $ 250,511  $ 289,368  $ 246,203

 

                   
AKITA Drilling Ltd.                  
Interim Consolidated Statements of Net Income and Comprehensive Income        
                   
                   
         Three Months Ended    Six Months Ended
Unaudited      June 30    June 30   June 30    June 30
$ Thousands      2013   2012    2013    2012
            Note 3       Note 3 
                   
Revenue    $ 28,044  $ 35,959  $ 88,805  $ 104,136
                   
Costs and expenses                  
  Operating and maintenance     18,605   25,555   56,049   68,281
  Depreciation and amortization     5,556   5,631   13,023   12,897
  Selling and administrative     4,499   4,953   9,158   9,762
Total costs and expenses     28,660   36,139   78,230   90,940
                   
Revenue less costs and expenses     (616)   (180)   10,575   13,196
                   
Equity income from joint ventures     4,286   2,953   9,714   6,931
                   
Other income (losses)                  
  Interest income     75   105   163   208
  Interest expense     (27)   -   (54)   (1)
  Gain (loss) on sale of joint venture interests in rigs and other assets     (8)   (95)   1   1,062
  Net other gains (losses)      (17)   11   (3)   22
Total other income      23   21   107   1,291
                   
Income before income taxes     3,693   2,794   20,396   21,418
                   
Income taxes     936   702   5,144   5,422
                   
Net income and comprehensive income for the period attributable to
shareholders 		    2,757   2,092   15,252   15,996
                   
                   
Earnings per Class A and Class B Share                  
  Basic    $ 0.15  $ 0.12  $ 0.85  $ 0.89
  Diluted    $ 0.15  $ 0.12  $ 0.85  $ 0.89

 

                     
AKITA Drilling Ltd.                  
Interim Consolidated Statements of Cash Flow               
                     
                     
         Three Months Ended    Six Months Ended
Unaudited      June 30   June 30    June 30   June 30
$ Thousands     2013   2012   2013   2012
            Note 3       Note 3
Operating Activities                  
Net income and comprehensive income    $ 2,757  $ 2,092  $ 15,252  $ 15,996
Non-cash items included in net income:                  
  Depreciation and amortization     5,556   5,631   13,023   12,897
  Deferred income taxes     675   371   549   551
  Expense for defined benefit pension plan     92   102   184   204
  Stock options charged to expense     33   77   99   148
  (Gain) loss on sale of joint venture interests in rigs and other assets     8   95   (1)   (1,062)
Funds flow from operations     9,121   8,368   29,106   28,734
Change in non-cash working capital:                  
  Accounts receivable     27,556   25,243   35,065   13,573
  Prepaid expenses and other     354   265   (426)   (332)
  Income tax recoverable     (168)   -   4,319   -
  Accounts payable and accrued liabilities     (4,722)   (6,310)   (25,536)   501
  Deferred revenue     (111)   -   276   (146)
        22,909   19,198   13,698   13,596
        32,030   27,566   42,804   42,330
  Equity income from joint ventures     (4,286)   (2,953)   (9,714)   (6,931)
  Change in long term deferred revenue     (36)   -   -   -
  Pension benefits paid     (4)   (4)   (8)   (8)
  Interest paid     (1)   -   (1)   (1)
  Income tax expense - current     261   331   4,595   4,871
  Income tax paid     (1,239)   (1,573)   (4,595)   (7,044)
Net Cash from operating activities     26,725   23,367   33,081   33,217
                     
Investing Activities                  
Capital expenditures      (9,093)   (13,750)   (15,137)   (26,437)
Change in non-cash working capital related to capital     631   1,558   (4,387)   (7,859)
Net distributions to investments in joint ventures     2,074   6,875   5,212   9,407
Change in term deposits     -   5,000   -   7,000
Proceeds on sale of joint venture interests in rigs and other assets     104   (45)   113   1,112
Net Cash used in investing activities     (6,284)   (362)   (14,199)   (16,777)
                     
Financing Activities                  
Dividends paid     (1,253)   (1,263)   (2,692)   (2,524)
Proceeds received on exercise of stock options     -   -   425   -
Repurchase of share capital     -   (382)   -   (382)
Net Cash used in financing activities     (1,253)   (1,645)   (2,267)   (2,906)
                     
Increase in Cash and Cash Equivalents     19,188   21,360   16,615   13,534
Cash and cash equivalents, beginning of period     8,430   6,727   11,003   14,553
                     
Cash and Cash Equivalents, End of Period    $ 27,618  $ 28,087  $ 27,618  $ 28,087

 

 

 

 

SOURCE AKITA Drilling Ltd.