AKITA Drilling Ltd. Announces Second Quarter Results
Aug 7, 2008
CALGARY, Aug. 7 /CNW/ - AKITA Drilling Ltd. announced second quarter
earnings and funds flow today. Earnings for the three months ended June 30,
2008 were $1,498,000 ($0.08 per share) on revenue of $20,278,000 compared with
$3,091,000 ($0.17 per share) on revenue of $27,315,000 in 2007. Funds flow
from continuing operations for the quarter ended June 30, 2008 was $3,335,000
compared to $6,179,000 in the corresponding quarter in 2007. In addition,
during the second quarter, the Company generated $5,491,000 from the sale of
underutilized assets.
AKITA Drilling Ltd.'s net earnings for the six months ended June 30, 2008
were $9,145,000 ($0.50 per share) on revenue of $67,660,000. Comparative
figures for 2007 were earnings of $12,178,000 ($0.67 per share) on revenue of
$79,485,000. Funds flow from continuing operations for the period was
$17,609,000 compared to $21,717,000 in 2007.
On June 2, 2008, the Company cancelled 229,000 stock options having
exercise prices of $22.25 to $22.48 per option. This resulted in a one-time
non cash increase of $1,000,000 in selling and administrative expense and a
corresponding increase in contributed surplus. As required by Canadian
Generally Accepted Accounting Principles (GAAP), this is an accelerated
expense of $1,000,000 for the remaining unrecognized value of the cancelled
stock options and is reflected in this quarter rather than over the remaining
term of the options.
The negative effect of weaker market conditions was impacted by
abnormally wet weather for much of the second quarter, resulting in lower
revenue and contribution margins for all rig categories. Operating statistics
for the first six months of 2008 and 2007 are as follows:Number of Rigs Number Operating
of Wells Days
Gross Net Drilled (Drilling)
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Canadian 2008 38 35.225 401 2,977
Drilling 2007 39 35.575 487 3,122
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Alaskan 2008 2 1.0 1 60
Drilling 2007 3 1.5 3 131
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Total 2008 40 36.225 402 3,037
Drilling 2007 42 37.075 490 3,253
-------------------------------------------------------------------------During the second quarter, the Company sold its joint venture well
service assets and one underutilized joint venture drilling rig.
Although overall activity levels for AKITA's fleet have been weaker than
during the comparative period in 2007, management is becoming increasingly
optimistic about prospects for the future as a number of larger customers are
working on plans to develop "higher impact" projects - projects that will
require a significant contribution on the part of their suppliers. Any
positive impact from these projects will not be visible prior to the upcoming
winter.
Financial results for the second quarter are as follows:-------------------------------------------------------------------------
Consolidated Balance Sheets
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Unaudited June 30 December 31
($000's) 2008 2007 2007
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ASSETS
Current assets
Cash $ 59,698 $ 35,629 $ 43,166
Accounts receivable 18,107 28,527 22,505
Other 849 1,101 272
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78,654 65,257 65,943
Restricted cash 5,000 - 5,000
Capital assets 145,885 151,508 152,579
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$ 229,539 $ 216,765 $ 223,522
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LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities $ 9,451 $ 11,668 $ 13,051
Dividends payable 1,279 1,279 1,279
Income taxes payable 1,877 1,172 873
Deferred revenue 1,281 1,566 1,617
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13,888 15,685 16,820
Future income taxes 16,166 15,626 15,055
Pension liability 3,740 3,498 3,609
CLASS A AND CLASS B SHAREHOLDERS' EQUITY
Class A and Class B shares 23,369 23,376 23,369
Contributed surplus 2,230 962 1,110
Retained earnings 170,146 157,618 163,559
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195,745 181,956 188,038
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$ 229,539 $ 216,765 $ 223,522
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Consolidated Statements of Earnings,
Comprehensive Income and Retained Earnings
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Unaudited Three Months Six Months
($000's except per share amounts) Ended Ended
June 30 June 30
2008 2007 2008 2007
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REVENUE $ 20,278 $ 27,315 $ 67,660 $ 79,485
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COSTS AND EXPENSES
Operating and maintenance 13,403 15,912 40,718 45,570
Depreciation 3,143 2,561 8,627 7,474
Selling and administrative 4,680 3,884 8,947 8,451
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21,226 22,357 58,292 61,495
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Revenue less costs and
expenses (948) 4,958 9,368 17,990
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OTHER INCOME (EXPENSE)
Interest income 500 375 977 784
Gain on sale of joint venture
interests in rigs and
other assets 647 31 664 134
Gain (loss) on foreign
currency translation (25) (521) 42 (617)
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1,122 (115) 1,683 301
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EARNINGS BEFORE INCOME TAXES 174 4,843 11,051 18,291
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INCOME TAXES
Current 454 1,335 2,656 4,355
Future (34) 230 1,111 1,610
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420 1,565 3,767 5,965
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EARNINGS (LOSS) FROM
CONTINUING OPERATIONS (246) 3,278 7,284 12,326
Gain on disposal from
discontinued operations, net
of tax 1,941 - 1,941 -
Discontinued operations, net
of tax (197) (187) (80) (148)
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NET EARNINGS AND
COMPREHENSIVE INCOME 1,498 3,091 9,145 12,178
Retained earnings, beginning
of period 169,927 155,994 163,559 148,781
Dividends declared (1,279) (1,285) (2,558) (2,565)
Adjustment on repurchase and
cancellation of share capital - (182) - (776)
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RETAINED EARNINGS, END
OF PERIOD $ 170,146 $ 157,618 $ 170,146 $ 157,618
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Earnings (Loss) per Class A
and Class B share
from continuing operations
Basic $ (0.01) $ 0.18 $ 0.40 $ 0.68
Diluted $ (0.01) $ 0.17 $ 0.40 $ 0.68
Earnings per Class A and
Class B share
Basic $ 0.08 $ 0.17 $ 0.50 $ 0.67
Diluted $ 0.08 $ 0.16 $ 0.50 $ 0.66
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Consolidated Statements of Cash Flows
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Unaudited Three Months Six Months
($000's) Ended Ended
June 30 June 30
2008 2007 2008 2007
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OPERATING ACTIVITIES
Earnings from continuing
operations $ (246) $ 3,278 $ 7,284 $ 12,326
Non-cash items included in
earnings from continuing
operations
Depreciation 3,143 2,561 8,627 7,474
Future income taxes (34) 230 1,111 1,610
Expense for defined benefit
pension plan 66 66 131 131
Stock options charged to
expense 1,053 75 1,120 310
Gain on sale of joint
venture interests in rigs
and other assets (647) (31) (664) (134)
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Funds flow from continuing
operations 3,335 6,179 17,609 21,717
Cash provided from
discontinued operations (160) (126) 24 (34)
Change in non-cash working
capital 16,640 20,021 857 (6,729)
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19,815 26,074 18,490 14,954
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INVESTING ACTIVITIES
Capital expenditures (3,528) (15,681) (4,082) (25,558)
Proceeds on sale of joint
venture interests in rigs
and other assets 1,116 32 1,140 171
Proceeds on sale of
discontinued assets 3,510 - 3,510 -
Change in non-cash working
capital 223 (775) 32 (460)
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1,321 (16,424) 600 (25,847)
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FINANCING ACTIVITIES
Increase (decrease) in bank
indebtedness - (2,850) - -
Dividends paid (1,279) (1,285) (2,558) (2,565)
Repurchase of share capital - (197) - (840)
Change in non-cash working
capital - (26) - -
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(1,279) (4,358) (2,558) (3,405)
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INCREASE (DECREASE) IN CASH 19,857 5,292 16,532 (14,298)
Cash position, beginning of
period 39,841 30,337 43,166 49,927
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CASH POSITION, END OF PERIOD $ 59,698 $ 35,629 $ 59,698 $ 35,629
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Interest paid during the
period $ 1 $ 6 $ 7 $ 39
Income taxes paid during the
period $ 503 $ 1,583 $ 2,488 $ 9,056
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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 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.
%SEDAR: 00002868E
For further information:
For further information: Murray Roth, Vice President, Finance and Chief Financial Officer, (403) 292-7950, website: http://www.akita-drilling.com