AKITA Drilling Ltd. Announces 212% Increase in Annual Earnings and 31% Increase in Annual Funds Flow

CALGARY, March 13, 2012 /CNW/ - Net income for the year ended December 31, 2011 was $23,353,000 or $1.29 per share (basic and diluted) on revenue of $199,934,000.  Comparative figures for 2010 were $7,470,000 or $0.41 per share (basic and diluted) on revenue of $145,138,000.  Funds flow from operations for the current year was $42,880,000 as compared to $32,798,000 in 2010, while net cash from operating activities for 2011 was $34,196,000 as compared to $31,858,000 in 2010.

AKITA's rig utilization has traditionally been ahead of industry and 2011 was no exception.  While conventional rig activity, notably for deep capacity rigs, was negatively affected by low natural gas prices, pad rigs consistently achieved utilization that reinforced them as AKITA's most highly sought after rig class.  The following table highlights AKITA's utilization rate for the past five years:

RIG UTILIZATION RATES (PERCENT)
	2011	2010	2009	2008	2007
AKITA Pad Rigs	67.9	67.4	59.5	46.4	58.5
AKITA Fleet	51.5	37.8	31.1	42.2	40.9
Industry	49.6	40.7	24.6	41.7	37.0

 

In 2010, AKITA converted three conventional rigs into pad rigs, upgraded the capacity of an existing pad rig and commenced the construction of a new pad rig.  This activity was followed in 2011 with the conversion of three additional conventional rigs into pad rigs and the completion of the pad rig which was started in 2010.  At year-end, the Company had one additional conventional rig undergoing conversion into a pad rig.

AKITA is well positioned with the financial resources to accomplish its capital spending plans without having to strain its balance sheet or impair its commitment to excellence.  In addition to having $18,228,000 in cash and $9,500,000 in term deposits at December 31, 2011, the Company has also established a long-term financing arrangement to provide up to $50,000,000 for capital and general corporate purposes.

AKITA is strongly committed to the ongoing safety of its employees.  Since inception, AKITA's annual safety performance has been better than industry averages.  In 2011, the Company had a lost-time accident frequency of 0.24 accidents per 200,000 hours worked compared to an accident rate of 0.93 for the industry (preliminary estimate provided by the Canadian Association of Oilwell Drilling Contractors).  The Company incorporates methods to eliminate or reduce hazards in the design of equipment as well as through the use of regularly updated standardized operating procedures.  All managers, employees and subcontractors are required to understand and accept their responsibility for maintaining a safe working environment.  Regularly scheduled safety meetings and an ongoing commitment to training, both on-the-job and through related courses, form the basic cornerstones of this understanding.

On November 8, 2011, the Canadian Association of Oilwell Drilling Contractors provided its industry drilling forecast for 2012 estimating the drilling of 12,672 wells, compared to 16,148 wells completed in 2011.  The current year estimate was based upon commodity price assumptions of US $88 per barrel for crude oil and Cdn $4.00 per mcf for natural gas.  Although winter drilling activity to date has been strong and appears to support this forecast, management remains cautious regarding post-break up drilling activity given the continuing natural gas price weakness and no clear signal of improvement.

Selected financial information for the Company is as follows:

AKITA Drilling Ltd.
Consolidated Statements of Financial Position
			December 31		December 31		January 1
(000's of Canadian Dollars)			2011		2010		2010
					Restated (1)		Restated (1)
Assets
Current Assets
Cash and cash equivalents			$	18,228	$	37,964	$	34,142
Term deposits				9,500		10,000		18,000
Accounts receivable				48,351		33,339		28,523
Income taxes recoverable				-		-		330
Prepaid expenses and other				413		222		421
				76,492		81,525		81,416
Non-current Assets
Restricted cash				3,000		2,500		5,000
Other long term assets				200		-		-
Investment property				626		-		-
Property, plant and equipment				166,812		134,562		121,346
Total Assets			$	247,130	$	218,587		$ 207,762
Liabilities
Current Liabilities
Accounts payable and accrued liabilities			$	27,550	$	18,830	$	10,123
Deferred revenue				146		-		197
Dividends payable				1,262		1,269		1,277
Income taxes payable				3,269		85		-
				32,227		20,184		11,597
Non-current Liabilities
Deferred income taxes				12,264		13,235		12,679
Pension liability				1,535		1,429		1,363
Total Liabilities				46,026		34,848		25,639
Shareholders' Equity
Class A and Class B shares				23,308		23,447		23,376
Contributed surplus				2,758		2,512		2,271
Accumulated other comprehensive income				-		50		-
Retained earnings				175,038		157,730		156,476
Total Equity				201,104		183,739		182,123
Total Liabilities and Equity			$	247,130	$	218,587	$	207,762

(1)	Comparative financial information for 2010 has been restated for IFRS

AKITA Drilling Ltd.
Consolidated Statements of Net Income and Comprehensive Income
				Year Ended
				December 31
(000's of Canadian Dollars except per share amounts)				2011		2010
						Restated (1)
Revenue				$	199,934	$	145,138
		Operating and maintenance			132,520		96,919
		Depreciation			20,933		24,540
		Selling and administrative			16,117		13,625
Total costs and expenses					169,570		135,084
Revenue less costs and expenses					30,364		10,054
Other income (losses)
		Interest income			638		798
		Interest expense			(23)		(25)
		Gain on sale of joint venture interests in rigs and other assets			787		75
		Other gains and losses (net)			(4)		30
Total other income					1,398		878
Income before income taxes					31,762		10,932
Income taxes					8,409		3,462
Net income for the year attributable to shareholders					23,353		7,470
Other comprehensive income
Foreign currency translation adjustment					(50)		50
Comprehensive income for the year attributable to shareholders				$	23,303	$	7,520
Net Income per Class A and Class B Share
		Basic		$	1.29	$	0.41
		Diluted		$	1.29	$	0.41
(1) Comparative financial information for 2010 has been restated for IFRS

AKITA Drilling Ltd.
Consolidated Statements of Cash Flow
			Year Ended
			December 31
(000's of Canadian Dollars)			2011	2010
				Restated (1)
Operating Activities
Net income		$	23,353	$	7,470
Non-cash items included in net income
	Depreciation		20,933		24,540
	Deferred income taxes		(971)		556
	Expense for defined benefit pension plan		106		66
	Stock options charged to expense		246		241
	Gain on sale of joint venture interests in rigs and other assets		(787)		(75)
			42,880		32,798
Change in non-cash working capital
	Accounts receivable		(15,012)		(4,816)
	Prepaid expenses and other		(191)		529
	Accounts payable and accrued liabilities		3,212		3,160
	Deferred revenue		146		(197)
			31,035		31,474
Interest paid			(23)		(25)
Income tax expense - non cash			9,380		2,906
Income tax paid			(6,196)		(2,497)
Net cash from operating activities			34,196		31,858
Investing Activities
Capital expenditures			(48,985)		(32,654)
Change in cash restricted for loan guarantees			(500)		2,500
Redemption (investment) of term deposits			500		8,000
Proceeds on sale of joint venture interests in rigs and other assets			1,487		213
Net cash used in investing activities			(47,498)		(21,941)
Financing Activities
Dividends paid			(5,066)		(5,079)
Proceeds received on exercise of stock options			-		280
Repurchase of share capital			(1,118)		(1,346)
Loan commitment fee paid			(200)		-
Net cash used in financing activities			(6,384)		(6,145)
Effect of exchange rate changes on cash and cash equivalents			(50)		50
Increase (decrease) in cash and cash equivalents			(19,736)		3,822
Cash and cash equivalents, beginning of year			37,964		34,142
Cash and Cash Equivalents, End of Year		$	18,228	$	37,964
(1) Comparative financial information for 2010 has been restated for IFRS

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

Revenue and Operating & Maintenance Expenses

$Million	2011	2010	Change	% Change
Revenue	199.9	145.1	54.8	38%
Operating & Maintenance Expenses	132.5	96.9	35.6	37%
Operating margin (Note)	67.4	48.2	19.2	40%

Note: Operating margin is the difference between revenue and operating & maintenance expenses

$Dollars	2011	2010	Change	% Change
Revenue per operating day	29,158	26,962	2,196	8%
Operating & Maintenance Expenses per operating day	19,326	18,005	1,321	7%
Operating margin (Note) per operating day	9,832	8,957	875	10%

Note: Operating margin is the difference between revenue and operating & maintenance expenses

The changeover from GAAP to IFRS did not directly affect the Company's recognition of revenue.  It did, however, affect the balances reported for operating and maintenance expenses.  Certain expenditures that were previously recorded as maintenance expenses under GAAP are now recorded as property, plant and equipment under IFRS.  This reduced the balance otherwise reported as operating and maintenance expenses under IFRS.

Upon adoption of IFRS, revenue for goods and services provided by the Company to its customers on a cost recovery basis is presented in the Company's income statement on a gross basis.  These amounts were reported on a net basis under Canadian GAAP.  This change has resulted in offsetting increases to Revenue, Operating and Maintenance and Selling and Administrative expenses.

Revenue increased to $199,934,000 in 2011 from $145,138,000 in 2010.  Stronger market conditions resulted in the Company achieving 6,857 operating days of rig activity compared to 5,383 operating days in 2010. This stronger market also had a positive impact on day rates, as average revenue per day increased to $29,158 per day compared to $26,962 in the comparative year.  Revenue improvements were broadly based: conventional drilling activity improved as a result of increasing demand for AKITA's rigs while pad drilling demand improvements were largely a result of having an increasing number of rigs to service this aspect of the market.

Operating and maintenance costs are tied to activity levels and amounted to $132,520,000 or $19,326 per operating day during 2011 compared to $96,919,000 or $18,005 per operating day for the prior year.  This increase in total operating and maintenance costs was the result of increased drilling activity coupled with the change in rig mix including the change in the range of services provided.

The Company's operating margin for 2011 was $67,414,000, up from $48,219,000 in 2010.  The operating margin improvement was a combined result of higher rig utilization and improved profit margins on a "per operating day" basis; both improvements due to stronger market conditions in 2011 as compared to 2010.  On a "per operating day" basis, AKITA's operating margin rose in 2011 to $9,832 from $8,957 in 2010.

AKITA provided drilling services to 40 different customers in 2011 (42 different customers - 2010), including two customers that each provided more than 10% of AKITA's revenue for the year (2010 - four customers).

Depreciation Expense

$Million	2011	2010	Change	% Change
Depreciation Expense	20.9	24.5	(3.6)	(15%)

The changeover from GAAP to IFRS affected the balances reported and methods used in determining depreciation expense.  Certain expenditures that were previously recorded as maintenance expenses under GAAP are now recorded as property, plant and equipment under IFRS.  This had the impact of increasing the balance otherwise reported as depreciation expense under IFRS.  Depreciation is also measured on a more detailed component-by-component basis under IFRS rather than using the asset-by-asset basis under GAAP.  This change in approach has resulted in some differences that, depending on the actual assets being depreciated, had the effect of either increasing or decreasing the actual depreciation balance reported.  In general, the more detailed component-by-component depreciation approach is not expected to produce changes that are material in amount especially when considered over extended periods.

During 2011, the Company analyzed historical use patterns for its fleet and consequently changed its estimate of the useful lives of its rigs.  Previously, most of the Company's rig components were depreciated over an average of 2,000 operating days per rig, while selected rigs had components that were being depreciated over an average of 3,600 operating days.  Effective January 1, 2011, the Company began depreciating all of its rigs over an average useful life of 3,600 operating days per rig.  AKITA depreciates its drilling rigs using the unit of production method.

Concurrent with the change in estimate for useful lives of rigs, the Company reassessed and changed its estimates for salvage values for its rigs.  Previously, salvage values were set between $50,000 and $300,000 per rig.  Effective January 1, 2011, the Company began applying salvage values equal to 20% of the original cost of each rig.

The major factors that impacted 2011 and 2010 depreciation were as follows: the one-time change to useful lives of rigs and related salvage values described previously (effect was to reduce 2011 depreciation by $6,867,000; 2010 - no change), ongoing rig activity levels, ongoing changes in rig mix working, and the recording of certain expenditures as assets under IFRS, necessitating depreciation for costs recorded as expense under previous GAAP.  This final change resulted in an increased depreciation expense of $4,645,000 for 2011 (2010 - $3,945,000).  Since depreciation is based upon usage, it is impracticable to determine the impact of these changes in estimates for future periods until they occur.

The decrease in depreciation expense to $20,933,000 during 2011, from $24,540,000 during 2010 was mostly attributable to the change in estimated useful lives for the rig fleet.  Higher rig activity and a mix of rigs working having a higher average cost base offset much of the impact of the above noted change in estimated useful lives for the rig fleet compared to the previous year.  Drilling rig depreciation accounted for 96% of total depreciation expense in 2011 (2010 - 96%).

Selling and Administrative Expenses

$Million	2011	2010	Change	% Change
Selling & Administrative expenses	16.1	13.6	2.5	18%

The changeover from GAAP to IFRS did not affect the Company's recognition of selling and administrative expenses per se.  However, selling and administrative expenses increased $240,000 in 2011 ($173,000 in 2010) as a result of the Company's change in revenue presentation as described in this MD&A under the section "Revenue and Operating & Maintenance Expenses".

Selling and administrative expenses increased to $16,117,000 in 2011 from $13,625,000 in 2010.  Selling and administrative expenses equated to 8.1% of total revenue in 2011, compared to 9.4% of total revenue in 2010, in part due to the increase in rig activity and related revenue.

The single largest component of selling and administrative expenses was salaries and benefits which accounted for 64% of these expenses (60% in 2010).

Other Income (Expense)

$Million	2011	2010	Change	% Change
Interest Income	0.6	0.8	(0.2)	(25%)
Gain on sale of joint venture interests in rigs and other assets	0.8	0.1	0.7	700%
Other Income	1.4	0.9	0.5	56%

The changeover from GAAP to IFRS did not affect the Company's recognition of other income.

The Company invests any cash balances in excess of its ongoing operating requirements in bank guaranteed highly liquid investments.  Interest income, decreased to $638,000 in 2011, compared to $798,000 in 2010 as a result of reduced cash and term deposit balances, as these assets were more actively deployed to fund the Company's significant capital expenditure program.

The gain on sale of joint venture interests in rigs and other assets, which resulted from the disposition of certain non-core assets, totalled $787,000 in 2011 compared to $75,000 in the previous year.  The Company does not anticipate this to be a significant continuing source of regular earnings in the future.

Income Tax Expense

$Million	2011	2010	Change	% Change
Current Tax	9.4	2.9	6.5	224%
Deferred Tax	(1.0)	0.6	(1.6)	(267%)
Total Income Tax Expense	8.4	3.5	4.9	140%

The changeover from GAAP to IFRS did not affect methods used in determining income tax expense.  However, predominantly as a result of changes in balances reported for income before income taxes due to decreased operating and maintenance expense and increased depreciation expense, the amount reported as deferred income tax expense has increased vis-à-vis the balance that would have been recorded under Canadian GAAP.

Income tax expense increased to $8,409,000 in 2011 from $3,462,000 in 2010, due to higher pre-tax income as well as one-time costs to repatriate one of the Company's rigs (hereinafter referred to as the "Arctic Wolf") from Alaska to Canada.

During 2011, the Company repatriated the Arctic Wolf.  This repatriation was treated as a sale at fair value for US tax purposes, thereby creating a taxable event.  The effect was to increase current tax expense and current income taxes payable by $2,432,000 and to decrease deferred tax expense and deferred income taxes payable by $2,263,000.  This transaction was carried out to reduce the income taxes payable for income earned from the rig's future operations, since the Canadian income tax rate is substantially lower than the US income tax rate.

Net Income and Cash Flow

$Million	2011	2010	Change	% Change
Net Income	23.4	7.5	15.9	212%
Funds Flow from Operations(Note)	42.9	32.8	10.1	31%
Change in non-cash working capital	(11.9)	(1.3)	(10.6)	815%
Non-cash income tax expense	9.4	2.9	6.5	224%
Income tax paid	(6.2)	(2.5)	(3.7)	148%
Net cash from operating activities	34.2	31.9	2.3	7%

Note: See commentary regarding non standard accounting measure.

The changeover from GAAP to IFRS affected the determination of both net income and funds flow from operations.  This was primarily due to a decrease in operating and maintenance expenses that was partially offset by an increase in depreciation expense.

Net income increased to $23,353,000 or $1.29 per Class A Non-Voting and Class B Common Share (basic and diluted) for 2011 from $7,470,000 or $0.41 per share (basic and diluted) in 2010.  Funds flow from operations increased to $42,880,000 in 2011 from $32,798,000 in 2010.  Higher net income and funds flow from operations that occurred in 2011 were directly attributable to increased demand for AKITA's drilling services, resulting in both higher activity levels and increased operating margins per day compared to 2010.

Each of AKITA's rig classes contributed to the improvements in net income and funds flow from operations.  During the year, the Company increased the number of rigs performing pad drilling, thereby increasing the total number of drilling days and associated net income and funds flow from operations.  Conventional rig utilization and associated day rates both increased resulting in improved financial results.

Non Standard Accounting Measure

Funds flow from operations is not a recognized measure under IFRS.  AKITA's method of determining funds flow from operations may differ from methods used by other companies and involves including operating cash flow 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.

Fleet and Utilization

The following table summarizes rig changes that occurred in 2011:

	Gross	Net
Number of rigs at December 31, 2010	37	33.225
Exchange of two 50% interests in two rigs into a 100% interest in one rig	(1)	0.000
New rigs completed during the year	2	1.850
Number of rigs at December 31, 2011	38	35.075

Utilization rates are a key statistic for the drilling industry since they measure revenue volume and influence pricing.  During 2011, AKITA achieved 6,857 operating days, which corresponded to a utilization rate of 51.5% compared to an industry average utilization rate of 49.6% during the same period.  During the comparative year in 2010, AKITA achieved 5,383 operating days, representing 37.8 % utilization.  It should be noted that AKITA calculates utilization rates based upon rigs actively operating.  Rigs that are moving or receiving standby revenue do not contribute to AKITA's utilization statistic.

Drilling Fleet Summary at December 31, 2011

	Conventional Rigs		Pad Rigs
	Number of Rigs	Percent Utilization	Number of Rigs	Percent Utilization
Singles	9	40.2%	0	N/A
Doubles	8	61.5%	4	73.4%
Triples	7	28.3%	10	65.7%
Total	24	45.2%	14	67.9%

From time to time, the Company enters into drilling contracts for extended terms.  At December 31, 2011, AKITA had nine rigs with multi-year contracts that extend into 2012 or beyond.  Of these contracts, one is anticipated to expire in 2012, five in 2013 and three in 2014.

During the fourth quarter of 2011, rig activity for the Company included 1,715 operating days compared to 1,422 operating days during the corresponding period in 2010.  This increase in overall activity levels had a positive correlation on overall results as revenue rates equated to $32,633 per operating day in the fourth quarter of 2011 compared to $29,425 in the fourth quarter of 2010.  Operating costs, which are also tied to activity levels, increased to $22,451 per day compared to $18,307 in the corresponding quarter of 2010.  Consequently, the Company's operating margin in the fourth quarter of 2011 (being the difference between revenue and operating and maintenance costs) increased to $17,462,000 during the fourth quarter of 2011 from $15,810,000 in the corresponding quarter in 2010.  However, the operating margin on a per operating day basis declined in the fourth quarter of 2011 to $10,182 per operating day compared to the operating margin of $11,118 per operating day in the fourth quarter of 2010.  AKITA's conventional rigs were busier in the fourth quarter of 2011 compared to the corresponding quarter in 2010.  These rigs typically garner lower margins than the pad rigs, and were a significant factor in the quarterly "per operating day" margin reduction experienced in the current quarter.

Net income increased to $6,977,000 or $0.39 per Class A Non-Voting and Class B Common Share (basic and diluted) for the fourth quarter of 2011 from $4,854,000 or $0.27 per share (basic and diluted) in the fourth quarter of 2010.  Funds flow from operations increased to $13,104,000 in the fourth quarter of 2011 from $11,558,000 in the corresponding quarter in 2010.  The higher net income and funds flow that occurred in the fourth quarter of 2011 compared to the corresponding quarter in 2010 was directly attributable to increased demand for AKITA's drilling services.

Liquidity and Capital Resources

The changeover from GAAP to IFRS affected the balances reported and methods used in determining property, plant and equipment.  On January 1, 2010, the Company recorded an IFRS 1 exemption to report selected assets at fair value for deemed costs.  This exemption resulted in a reduction of carrying values of $32,578,000 at that date.  Certain expenditures that were previously recorded as maintenance expenses under GAAP are now recorded as property, plant and equipment under IFRS.  Depreciation is also measured on a more detailed component-by-component basis under IFRS rather than using an asset-by-asset basis used under GAAP.  This change in approach resulted in some differences that, depending on the actual assets being depreciated, had the effect of either increasing or decreasing the carrying values for property, plant and equipment.  In general, the more detailed component-by-component depreciation approach is not considered to produce changes that are material in amount especially when considered over extended periods.

The changeover from GAAP to IFRS did not affect the balances reported for working capital items for the Company.

As a result of a change in the estimate of useful lives for most of its rigs, the carrying values for property, plant and equipment are higher than they would have been if the previous estimates were continued.  Please refer to the depreciation discussion earlier in this document for further information.

In years in which no new rigs are built under contract, and occasionally in years when new rigs are added to the fleet, the Company typically restricts capital expenditures to less than 50% of funds flow from operations.  In 2011, AKITA's net capital expenditure program of $56,933,000 represented 133% of funds flow from operations.  In 2010, AKITA's net capital expenditure program of $37,895,000 represented 116% of funds flow from operations.  In addition to routine capital expenditures, the Company added new rigs in each of 2011 and 2010.

At December 31, 2011, AKITA had $44,265,000 in working capital, including $18,228,000 in cash and $9,500,000 in term deposits, compared to $61,341,000 in working capital, including $37,964,000 in cash and $10,000,000 in term deposits, for the previous year.  In 2011, AKITA generated $34,196,000 from operating activities.  Cash was also generated from proceeds on sales of joint venture rigs and other assets ($1,487,000) and the redemption of term deposits ($500,000).  During the same period, cash was used for capital expenditures ($48,985,000), payment of dividends ($5,066,000), repurchasing share capital ($1,118,000), to increase restricted cash ($500,000) and payment of a loan commitment fee ($200,000).

For all of 2010 and most of 2011, the Company did not have a bank operating loan or other lending facility.  In the fourth quarter of 2011, the Company established an operating loan facility with its principal banker totalling $50,000,000, having an initial five year term.  Although the loan has been extended in order to provide financing for general corporate purposes, capital expenditures and acquisitions, management intends to access this facility primarily to enable the Company to fund anticipated new rig construction requirements related to drilling contracts that it might be awarded.  The interest rate on the facility varies based upon the actual amounts borrowed, but ranges from 0.4% to 1.4% over prime interest rates or 1.4% to 2.4% over guaranteed notes, depending on the preference of the Company.  The Company did not access this facility during the year.

Property, Plant and Equipment

AKITA's 2011 capital expenditure program was its largest in its history.  The Company has been actively executing its strategy to increase market penetration in self-moving pad rigs.  During the year, the Company completed the conversion of three conventional rigs into pad rigs and added two new pad rigs.  At December 31, 2011, AKITA had one additional rig that was undergoing a conversion from a conventional rig into a pad rig.

In addition to AKITA's emphasis on increasing its number of pad rigs, the Company executed a rig exchange transaction with a joint venture partner in Alaska, thereby taking possession of a former joint venture rig and relocating it to Canada.  This rig, a heavy conventional double, was retrofitted to make it competitive in a non-arctic environment.

Capital expenditures totalled $56,933,000 in 2011.  The total cost of the rig construction projects described in the previous two paragraphs totalled $30,062,000 of this amount.  Additional capital expenditures related to rig equipment for existing rigs ($14,098,000), certifications and overhauls having a life in excess of one year ($7,536,000), drill pipe and drill collars ($2,587,000) and other equipment ($2,650,000).  Capital expenditures for 2010 totalled $37,895,000.  It should be noted that prior to the adoption of IFRS, certification and overhaul costs were charged to expense.

Commitments

During the year, AKITA guaranteed bank loans made to joint venture partners totalling $2,700,000 for a period of four years.  AKITA has provided an assignment of monies on deposit totalling $3,000,000 with respect to these guarantees.  AKITA's security from its partners for these guarantees includes interests in specific rig assets.  The $3,000,000 in deposits have been classified as restricted cash on the balance sheet and are in addition to the $18,228,000 in cash and $9,500,000 in term deposits held at December 31, 2011.

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 industry and risk management discussions.

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 achieved.  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 the following factors: the level of exploration and development activity carried on by AKITA's customers, world crude oil prices, 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 while 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.