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AKITA Drilling Ltd. Announces Second Quarter Results

Jul 28, 2009


    CALGARY, July 28 /CNW/ - AKITA Drilling Ltd.'s net earnings for the three
months ended June 30, 2009 were $555,000 ($0.03 per share) on revenue of
$17,881,000 compared to $1,498,000 ($0.08 per share) on revenue of $20,278,000
in the corresponding quarter in 2008. Funds flow from continuing operations
for the quarter ended June 30, 2009 was $2,750,000 compared to $3,335,000 in
the corresponding quarter in 2008.
    Earnings for the six months ended June 30, 2009 were $4,463,000 ($0.24
per share) on revenue of $59,577,000. Comparative figures for 2008 were
earnings of $9,145,000 ($0.50 per share) on revenue of $67,660,000. Funds flow
from continuing operations for the period was $14,801,000 compared to
$17,609,000 in 2008.
    Market conditions have continued to be the weakest in the history of the
Company. Operating statistics for the first six months of 2009 and 2008 are as
follows:Number of Rigs   Number of Wells   Operating
                                                Drilled          Days
                           Gross     Net
    --------------------------------------------------------------------
                    2009     39    36.225         185            2,067
        Canada     -----------------------------------------------------
                    2008     38    35.225         401            2,977
    --------------------------------------------------------------------
                    2009      2      1.0           6              210
    United States  -----------------------------------------------------
                    2008      2      1.0           1               60
    --------------------------------------------------------------------
                    2009     41    37.225         191            2,277
        Total      -----------------------------------------------------
       Drilling     2008     40    36.225         402            3,037
    --------------------------------------------------------------------During the second quarter, the Company redeployed one rig from Colorado
to Canada as a result of an early contract termination. The remaining two rigs
in the United States are both located in Alaska.
    On May 15, 2009, AKITA announced the retirement of Mr. John Hlavka as
Chief Executive Officer of the Company effective June 30, 2009. Mr. Hlavka, a
veteran of the Canadian drilling industry for over six decades, has had a
distinguished career with AKITA since the formation of the Company. Mr. Hlavka
will continue to serve on the Board of Directors.
    The Board of Directors has appointed Mr. Karl Ruud as President and Chief
Executive Officer of the Company. Mr. Ruud most recently served the Company in
the role of President and Chief Operating Officer. Mr. Ruud has extensive
drilling experience in Canada and internationally and has been with AKITA
since the formation of the Company. Mr. Ruud has a broad range of experience
in all aspects of AKITA's business.
    It appears that weak market conditions will persist for the balance of
this year and potentially beyond. The Company is well positioned financially,
and has a significant asset base that includes a broad range of drilling
equipment, including eight pad rigs which are involved in some of the most
active development regions in the current market. Further, AKITA has a
significant base of well-trained personnel to meet our customers'
requirements, both in the existing market and when drilling conditions
improve. We are pleased to remind our shareowners that since the Company began
operations in 1993, it has been able to generate positive earnings and funds
flow from operations in every quarter.
    Selected financial information for the Company is as follows:Consolidated Balance Sheets

    -------------------------------------------------------------------------
    Unaudited                                      June 30        December 31
    ($000's)                                  2009        2008        2008

    -------------------------------------------------------------------------
    ASSETS

    Current assets
      Cash                                 $  55,032   $  59,698   $  42,168
      Accounts receivable                     20,828      18,107      41,534
      Income taxes recoverable                 1,008           -           -
      Other                                    1,962         849       1,123
                                           ----------------------------------

                                              78,830      78,654      84,825
    Restricted cash                            5,000       5,000       5,000
    Capital assets                           152,032     145,885     153,044
                                           ----------------------------------

                                           $ 235,862   $ 229,539   $ 242,869

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    Current liabilities
      Accounts payable and accrued
       liabilities                         $   7,747   $   9,451   $  20,061
      Dividends payable                        1,276       1,279       1,276
      Income taxes payable                         -       1,877         399
      Deferred revenue                         2,830       1,281           -
      Current portion of pension
       liability                                 268           -           -
                                           ----------------------------------

                                              12,121      13,888      21,736
    Future income taxes                       19,952      16,166      18,818
    Pension liability                          3,622       3,740       3,854

    CLASS A AND CLASS B SHAREHOLDERS'
     EQUITY

    Class A and Class B shares                23,359      23,369      23,312
    Contributed surplus                        2,271       2,230       2,271
    Accumulated other comprehensive
     income                                     (252)          -           -
    Retained earnings                        174,789     170,146     172,878
                                           ----------------------------------
                                             200,167     195,745     198,461
                                           ----------------------------------

                                           $ 235,862   $ 229,539   $ 242,869

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Earnings
    and Retained Earnings

    -------------------------------------------------------------------------
    Unaudited                    Three Months               Six Months
    ($000's except per               Ended                     Ended
     share amounts)                 June 30                   June 30
                               2009         2008         2009         2008
    -------------------------------------------------------------------------

    REVENUE                 $  17,881    $  20,278    $  59,577    $  67,660
                            -------------------------------------------------
    COSTS AND EXPENSES
      Operating and
       maintenance             10,949       13,403       36,099       40,718
      Depreciation              2,667        3,143        9,247        8,627
      Selling and
       administrative           3,661        4,680        8,057        8,947
                            -------------------------------------------------
                               17,277       21,226       53,403       58,292
                            -------------------------------------------------
    Revenue less costs
     and expenses                 604         (948)       6,174        9,368
                            -------------------------------------------------

    OTHER INCOME (EXPENSE)
      Interest income              73          500          288          977
      Gain on sale of joint
       venture interests in
       rigs and other assets       58          647           79          664
      Gain (loss) on foreign
       currency translation       (97)         (25)         (95)          42
                            -------------------------------------------------
                                   34        1,122          272        1,683
                            -------------------------------------------------
    EARNINGS BEFORE INCOME
     TAXES                        638          174        6,446       11,051
                            -------------------------------------------------

    INCOME TAXES
      Current                     332          454          666        2,656
      Future                     (249)         (34)       1,317        1,111
                            -------------------------------------------------
                                   83          420        1,983        3,767
                            -------------------------------------------------
    EARNINGS (LOSS) FROM
     CONTINUING OPERATIONS        555         (246)       4,463        7,284

    Gain on disposal from
     discontinued operations,
     net of tax                     -        1,941            -        1,941
    Discontinued operations,
     net of tax                     -         (197)           -          (80)
                            -------------------------------------------------

    NET EARNINGS                  555        1,498        4,463        9,145

    Retained earnings,
     beginning of period      175,510      169,927      172,878      163,559
    Dividends declared         (1,276)      (1,279)      (2,552)      (2,558)
                            -------------------------------------------------
    RETAINED EARNINGS,
     END OF PERIOD          $ 174,789    $ 170,146    $ 174,789    $ 170,146
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (Loss) per
     Class A and Class B
     share from continuing
     operations
      Basic                 $    0.03    $   (0.01)   $    0.24    $    0.40
      Diluted               $    0.03    $   (0.01)   $    0.24    $    0.40

    Earnings per Class A
     and Class B share
      Basic                 $    0.03    $    0.08    $    0.24    $    0.50
      Diluted               $    0.03    $    0.08    $    0.24    $    0.50
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows

    -------------------------------------------------------------------------
    Unaudited                    Three Months               Six Months
    ($000's)                         Ended                     Ended
                                    June 30                   June 30
                               2009         2008         2009         2008
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Earnings from
     continuing operations  $     555    $    (246)   $   4,463    $   7,284
    Non-cash items included
     in earnings from
     continuing operations
      Depreciation              2,667        3,143        9,247        8,627
      Future income taxes        (432)         (34)       1,134        1,111
      Expense for defined
       benefit pension plan        18           66           36          131
      Stock options charged
       to expense                   -        1,053            -        1,120
      Gain on sale of joint
       venture interests in
       rigs and other
       assets                     (58)        (647)         (79)        (664)
                            -------------------------------------------------
    Funds flow from
     continuing operations      2,750        3,335       14,801       17,609
    Cash provided from
     discontinued
     operations                     -         (160)           -           24
    Change in non-cash
     working capital            9,769       16,640        8,976          857
                            -------------------------------------------------
                               12,519       19,815       23,777       18,490
                            -------------------------------------------------
    INVESTING ACTIVITIES
    Capital expenditures         (988)      (3,528)      (8,346)      (4,082)
    Proceeds on sale of
     joint venture
     interests in rigs
     and other assets             141        1,116          190        1,140
    Proceeds on sale of
     discontinued assets            -        3,510            -        3,510
    Change in non-cash
     working capital           (1,359)         223            -           32
                            -------------------------------------------------
                               (2,206)       1,321       (8,156)         600
                            -------------------------------------------------
    FINANCING ACTIVITIES
                            -------------------------------------------------
    Dividends paid             (1,276)      (1,279)      (2,552)      (2,558)
    Proceeds received on
     exercise of stock
     options                       32            -           47            -
                            -------------------------------------------------
                               (1,244)      (1,279)      (2,505)      (2,558)
                            -------------------------------------------------
    FOREIGN CURRENCY
     TRANSLATION                 (384)           -         (252)           -
                            -------------------------------------------------
    INCREASE IN CASH            8,685       19,857       12,864       16,532
    Cash position,
     beginning of period       46,347       39,841       42,168       43,166
                            -------------------------------------------------
    CASH POSITION,
     END OF PERIOD          $  55,032    $  59,698    $  55,032    $  59,698
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Income taxes paid
     during the period      $   1,310    $     503    $   2,071    $   2,488
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Comprehensive Income

    -------------------------------------------------------------------------
    Unaudited                    Three Months               Six Months
    ($000's)                         Ended                     Ended
                                    June 30                   June 30
                               2009         2008         2009         2008

    -------------------------------------------------------------------------

    NET EARNINGS            $     555    $   1,498    $   4,463    $   9,145

    OTHER COMPREHENSIVE
     INCOME
      Foreign currency
       translation
       adjustment                (384)           -         (252)           -
                            -------------------------------------------------
    COMPREHENSIVE INCOME    $     171    $   1,498    $   4,211    $   9,145
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------%SEDAR: 00002868E



For further information:

For further information: Mr. Murray Roth, Vice President Finance, (403)
292-7950, Website: http://www.akita-drilling.com