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AKITA Drilling Ltd. Announces First Quarter Results

Apr 28, 2008


    CALGARY, April 28 /CNW/ - AKITA Drilling Ltd. announced first quarter
earnings and funds flow today. AKITA Drilling Ltd.'s net earnings for the
three months ended March 31, 2008 were $7,647,000 or $0.42 per share on
revenue of $48,126,000. Comparative figures for 2007 were earnings of
$9,087,000 or $0.50 per share on revenue of $52,873,000. Funds flow for the
period was $14,458,000 compared to $15,630,000 in 2007.
    Weaker market conditions continued into the first quarter of 2008,
resulting in lower contribution margins for all rig categories. Operating
statistics for the first three months of 2008 and 2007 are as follows:-------------------------------------------------------------------------
                                            Number of
                          Number of Rigs      Wells    Operating   Operating
                        ------------------  Drilled or    Days       Hours
                         Gross       Net     Serviced  (Drilling) (Servicing)
    -------------------------------------------------------------------------
    Canadian       2008    38      34.575       280       2,043       N/A
     Drilling      2007    37      35.075       313       2,085       N/A
    -------------------------------------------------------------------------
    Alaskan        2008     3         1.5         1          58       N/A
     Drilling      2007     3         1.5         1          59       N/A
    -------------------------------------------------------------------------
    Total          2008    41      36.075       281       2,101       N/A
     Drilling     -----------------------------------------------------------
                   2007    40      36.575       314       2,144       N/A
    -------------------------------------------------------------------------
    Canadian Well  2008     3         1.5        14         N/A       353
     Servicing     2007     3         1.5        24         N/A     1,128
    -------------------------------------------------------------------------On April 5, 2008, the Company's management and employees were recognized
for their achievement in safety by being awarded a CAODC Safety Leadership
Award at the Annual CAODC Safety Banquet. This was the eighth time in
nine years that AKITA's safety performance has been recognized by the
industry.
    Recently improved natural gas prices along with record crude oil prices
are starting to provide a basis for optimism with respect to increased
activity for drilling and well servicing. Historically, utilization rate
improvements have preceded any meaningful recovery in day rates. Management
does not anticipate substantial recovery from the impact of the current
downturn prior to the fourth quarter of this year.
    Financial results for the first quarter are as follows:Consolidated Balance Sheets

    -------------------------------------------------------------------------
                                                    March 31      December 31
    ($000's)                                    2008       2007       2007
                                                  (Unaudited)      (Audited)
    -------------------------------------------------------------------------
    ASSETS
    Current assets
      Cash                                    $ 39,841   $ 30,337   $ 43,166
      Accounts receivable                       40,450     58,405     22,505
      Other                                      1,550      1,492        272
                                             --------------------------------
                                                81,841     90,234     65,943

    Restricted cash                              5,000          -      5,000
    Capital assets                             147,575    138,450    152,579
                                             --------------------------------
                                              $234,416   $228,684   $223,522
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Bank indebtedness                       $      -   $  2,850   $      -
      Accounts payable and accrued liabilities  15,902     22,237     13,051
      Deferred revenue                           1,741      1,732      1,617
      Dividends payable                          1,279      1,280      1,279
      Income taxes payable                       1,147      1,485        873
                                             --------------------------------
                                                20,069     29,584     16,820
    Future income taxes                         16,200     15,396     15,055
    Pension liability                            3,674      3,432      3,609

    CLASS A AND CLASS B SHAREHOLDERS' EQUITY
    Class A and Class B shares                  23,369     23,391     23,369
    Contributed surplus                          1,177        887      1,110
    Retained earnings                          169,927    155,994    163,559
                                             --------------------------------

                                               194,473    180,272    188,038
                                             --------------------------------
                                              $234,416   $228,684   $223,522
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Earnings, Comprehensive
    Income and Retained Earnings

    -------------------------------------------------------------------------
    Unaudited                                                Three Months
    ($000's except per share amounts)                           Ended
                                                               March 31
                                                            2008       2007
    -------------------------------------------------------------------------
    REVENUE                                              $ 48,126   $ 52,873
                                                        ---------------------

    COSTS AND EXPENSES
      Operating and maintenance                            27,742     30,156
      Depreciation                                          5,551      4,966
      Selling and administrative                            4,344      4,666
                                                        ---------------------
                                                           37,637     39,788
                                                        ---------------------
    OPERATING INCOME                                       10,489     13,085
                                                        ---------------------

    OTHER INCOME (EXPENSE)
      Interest income                                         477        409
      Gain on sale of joint venture interests
       in rigs and other assets                                17        103
      Gain (loss) on foreign currency translation              67        (96)
                                                        ---------------------
                                                              561        416
                                                        ---------------------
    EARNINGS BEFORE INCOME TAXES                           11,050     13,501
                                                        ---------------------

    INCOME TAXES
      Current                                               2,258      3,034
      Future                                                1,145      1,380
                                                        ---------------------
                                                            3,403      4,414

                                                        ---------------------
    NET EARNINGS AND COMPREHENSIVE INCOME                   7,647      9,087
                                                        ---------------------

    Retained earnings, beginning of period                163,559    148,781
    Dividends declared                                     (1,279)    (1,280)
    Adjustment on repurchase and
     cancellation of share capital                              -       (594)
                                                        ---------------------
    RETAINED EARNINGS, END OF PERIOD                     $169,927   $155,994
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EARNINGS PER CLASS A & CLASS B SHARE
      Basic                                              $   0.42   $   0.50
      Diluted                                            $   0.42   $   0.50
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows

    -------------------------------------------------------------------------
    Unaudited                                                Three Months
    ($000's)                                                    Ended
                                                               March 31
                                                            2008       2007
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net earnings                                         $  7,647   $  9,087
    Non-cash items included in earnings
      Depreciation                                          5,551      4,966
      Future income taxes                                   1,145      1,380
      Expense for defined benefit pension plan                 65         65
      Stock options charged to expense                         67        235
      Gain on sale of joint venture interests
       in rigs and other assets                               (17)      (103)
                                                        ---------------------
    Funds flow from operations                             14,458     15,630
    Change in non-cash working capital                    (15,783)   (26,750)
                                                        ---------------------
                                                           (1,325)   (11,120)
                                                        ---------------------
    INVESTING ACTIVITIES
    Capital expenditures                                     (554)    (9,877)
    Proceeds on sale of joint venture interests
     in rigs and other assets                                  24        139
    Change in non-cash working capital                       (191)       315
                                                        ---------------------
                                                             (721)    (9,423)
                                                        ---------------------
    FINANCING ACTIVITIES
    Increase in bank indebtedness                               -      2,850
    Dividends paid                                         (1,279)    (1,280)
    Proceeds received on exercise of stock options              -          -
    Repurchase of share capital                                 -       (643)
    Change in non-cash working capital                          -         26
                                                        ---------------------
                                                           (1,279)       953
                                                        ---------------------
    DECREASE IN CASH                                       (3,325)   (19,590)
    Cash position, beginning of period                     43,166     49,927

                                                        ---------------------
    CASH POSITION, END OF PERIOD                         $ 39,841   $ 30,337
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest paid during the period                      $      8   $     33
    Income taxes paid during the period                  $  1,985   $  7,473
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------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