AKITA Drilling Ltd. Announces Third Quarter Results
Oct 31, 2007
CALGARY, Oct. 31 /CNW/ - AKITA Drilling Ltd. announced third quarter
earnings and funds flow today. AKITA Drilling Ltd.'s net earnings for the nine
months ended September 30, 2007 were $14,374,000 or $0.79 per share on revenue
of $110,182,000. Comparative figures for 2006 were $25,400,000 or $1.37 per
share of net earnings on revenue of $132,980,000. Funds flow from operations
for the period was $27,803,000 compared to $35,666,000 in 2006.
Earnings for the three months ended September 30, 2007 were $2,196,000
($0.12 per share) on revenue of $29,964,000 compared to $6,850,000 ($0.37 per
share) on revenue of $38,856,000 in 2006. Funds flow from operations for the
quarter ended September 30, 2007 was $6,120,000 compared to $10,389,000 in the
corresponding quarter in 2006.
The following table shows AKITA's number of rigs and activity levels for
the nine months ended September 30, 2007 along with comparative information
for the corresponding period in 2006:Number
of Wells Operating
Drilled Operating Hours
or Days (Servi-
Number of Rigs Serviced (Drilling) cing)
Gross Net
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Canadian Drilling 2007 39 35.575 697 4,558 N/A
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2006 38 35.075 1,002 6,103 N/A
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Alaskan Drilling 2007 3 1.5 3 131 N/A
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2006 1 0.5 3 88 N/A
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Total Drilling 2007 42 37.075 700 4,689 N/A
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2006 39 35.575 1,005 6,191 N/A
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Canadian Well
Servicing 2007 3 1.5 35 N/A 1,703
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2006 3 1.5 47 N/A 3,901
-------------------------------------------------------------------------Reduced drilling industry activity had a negative impact on day rates for
all sizes of rigs that were not working under term contracts. Weaker market
conditions have also resulted in fewer opportunities for investment in new
rigs. Consequently, AKITA has focussed its efforts on strengthening its
already strong balance sheet. At September 30, 2007, the Company had
$53,098,000 in working capital and no long-term debt.
Management anticipates that the reduction in demand that impacted third
quarter results will extend into the fourth quarter and throughout the winter
drilling season. Although crude oil prices are strong and the market for heavy
oil pad rigs continues to provide optimism, drilling for natural gas has
historically been the largest component of AKITA's market. In contrast to
crude oil, natural gas prices must increase and remain higher in order for
AKITA to show sustainable improvement in this market. Although the Company has
work plans for approximately 90% of its fleet for the winter, this implies a
weaker outlook than would have been present for the corresponding time in 2006
since not all active rigs will have continuous work for the upcoming winter.
On October 25, 2007, the Alberta government released its revised
provincial royalty framework for crude oil and natural gas. The effects of
this new royalty structure, scheduled to become effective in 2009, are
uncertain but could affect future drilling activity in Alberta.
Financial results for the first nine months are as follows:Consolidated Balance Sheets
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September 30 December 31
Unaudited ($000's) 2007 2006 2006
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Assets
Current assets
Cash $ 38,778 $ 43,079 $ 49,927
Accounts receivable 26,604 34,978 38,529
Other 651 1,353 206
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66,033 79,410 88,662
Investments - 55 -
Capital assets 149,079 125,197 133,575
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$ 215,112 $ 204,662 $ 222,237
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Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 10,722 $ 14,552 $ 24,772
Deferred revenue 783 - -
Dividends payable 1,279 1,110 1,285
Income taxes payable 151 4,439 5,924
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12,935 20,101 31,981
Future income taxes 15,749 13,852 14,016
Pension liability 3,563 3,302 3,367
Class A and Class B Shareholders'
Equity
Class A and Class B shares 23,369 23,566 23,440
Contributed surplus 1,036 571 652
Retained earnings 158,460 143,270 148,781
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182,865 167,407 172,873
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$ 215,112 $ 204,662 $ 222,237
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Consolidated Statements of Earnings,
Comprehensive Income and Retained Earnings
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Three Months Nine Months
Ended Ended
Unaudited ($000's except September 30 September 30
per share amounts) 2007 2006 2007 2006
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Revenue $ 29,964 $ 38,856 $ 110,182 $ 132,980
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Costs and expenses
Operating and
maintenance 19,610 22,418 65,772 75,303
Depreciation 3,724 3,157 11,312 11,012
Selling and
administrative 3,670 3,638 12,347 12,897
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27,004 29,213 89,431 99,212
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Operating income 2,960 9,643 20,751 33,768
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Other income (expenses)
Interest income 449 504 1,233 1,413
Gain on sale of joint
venture interests in
rigs and other assets 62 243 196 686
Gain (loss) on foreign
currency translation (208) (9) (825) (110)
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303 738 604 1,989
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Earnings before income
taxes 3,263 10,381 21,355 35,757
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Income taxes
Current 944 3,037 5,248 10,705
Future 123 494 1,733 (348)
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1,067 3,531 6,981 10,357
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Net earnings and
comprehensive income 2,196 6,850 14,374 25,400
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Retained earnings,
beginning of period 157,618 139,812 148,781 124,343
Dividends declared (1,273) (1,110) (3,838) (3,335)
Adjustment on repurchase
and cancellation of
share capital (81) (2,282) (857) (3,138)
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Retained earnings, end
of period $ 158,460 $ 143,270 $ 158,460 $ 143,270
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Earnings per Class A
and Class B share
Basic $ 0.12 $ 0.37 $ 0.79 $ 1.37
Diluted $ 0.12 $ 0.37 $ 0.78 $ 1.36
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Consolidated Statements of Cash Flows
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Three Months Nine Months
Ended Ended
September 30 September 30
Unaudited ($000's) 2007 2006 2007 2006
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Operating Activities
Net earnings $ 2,196 $ 6,850 $ 14,374 $ 25,400
Non-cash items
included in earnings
Depreciation 3,724 3,157 11,312 11,012
Future income taxes 123 494 1,733 (348)
Expense for defined
benefit pension plan 65 65 196 200
Stock options charged
to expense 74 66 384 88
Gain on sale of joint
venture interests in
rigs and other assets (62) (243) (196) (686)
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Funds flow from
operations 6,120 10,389 27,803 35,666
Change in non-cash
working capital 527 (5,591) (6,202) 835
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6,647 4,798 21,601 36,501
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Investing Activities
Capital expenditures (5,973) (12,205) (31,531) (30,464)
Proceeds on sale of joint
venture interests in
rigs and other assets 4,740 483 4,911 1,055
Change in non-cash
working capital (898) (880) (1,358) (222)
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(2,131) (12,602) (27,978) (29,631)
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Financing Activities
Dividends paid (1,273) (1,110) (3,838) (3,335)
Proceeds received on
exercise of stock
options - - - 205
Repurchase of share
capital (88) (2,438) (928) (3,317)
Change in non-cash
working capital (6) (106) (6) (29)
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(1,367) (3,654) (4,772) (6,476)
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Increase (Decrease) in
Cash 3,149 (11,458) (11,149) 394
Cash position, beginning
of period 35,629 54,537 49,927 42,685
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Cash Position, End of
Period $ 38,778 $ 43,079 $ 38,778 $ 43,079
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Interest paid during
the period $ 14 $ - $ 53 $ -
Income taxes paid
during the period $ 1,964 $ 2,268 $ 11,021 $ 12,127
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-------------------------------------------------------------------------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.
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 and North American natural gas prices,
weather, access to capital markets, geopolitical events and government
policies. We caution that the foregoing list of factors is not exhaustive and
that investors and investment advisors should carefully consider the foregoing
factors as well as other uncertainties and events prior to making a decision
to invest in AKITA.
For further information:
For further information: Murray Roth, Vice President, Finance and Chief Financial Officer, (403) 292-7950, website: http://www.akita-drilling.com