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AKITA Drilling Ltd. Announces Second Quarter Results

Jul 31, 2007


    CALGARY, July 31 /CNW/ - AKITA Drilling Ltd. announced second quarter
earnings and funds flow today. AKITA Drilling Ltd.'s net earnings for the six
months ended June 30, 2007 were $12,178,000 or $0.67 per share on revenue of
$80,218,000. Comparative figures for 2006 were $18,550,000 or $1.00 per share
of net earnings on revenue of $94,124,000. Funds flow from operations for the
period was $21,683,000 compared to $25,277,000 in 2006.
    Earnings for the three months ended June 30, 2007 were $3,091,000 ($0.17
per share) on revenue of $27,345,000 compared with $7,548,000 ($0.41 per
share) on revenue of $32,929,000 in 2006. Funds flow from operations for the
quarter ended June 30, 2007 was $6,053,000 compared to $8,758,000 in the
corresponding quarter in 2006.

    Operating statistics for the first six months of 2007 and 2006 are as
follows:-------------------------------------------------------------------------
                                            Number of
                           Number of Rigs     Wells    Operating   Operating
                          ----------------  Drilled or    Days       Hours
                          Gross        Net   Serviced  (Drilling) (Servicing)
    -------------------------------------------------------------------------
    Canadian        2007     39       35.575      487      3,122      N/A
    Drilling        2006     37       34.075      632      4,253      N/A
    -------------------------------------------------------------------------
    Alaskan         2007      3         1.5         3       131       N/A
    Drilling        2006      1         0.5         3        88       N/A
    -------------------------------------------------------------------------
    Canadian        2007      3         1.5        25       N/A      1,221
      Well
    Servicing       2006      3         1.5        30       N/A      2,898
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------AKITA added two heavy oil pad rigs to its fleet during the second
quarter. The first rig commenced its multi-year term contract midway through
the quarter, while the second rig, which does not have a term contract
associated with it, is expected to commence drilling operations later in the
third quarter. The Company does not have any immediate plans to increase its
fleet size at this time. AKITA remains poised, with the financial and other
resources it has at its disposal, to respond to market opportunities, as they
arise.
    Management anticipates that demand for rigs in all depth ranges will
continue to lag behind last year's activity levels. To date, activity levels
for shallow, deep and northern rig categories have been the most adversely
affected. Heavy oil pad rigs and, to a lesser extent, medium depth capacity
rigs, have been more modestly impacted by the lower demand. Management
anticipates that overall market conditions will not improve significantly
until an improved forecast for natural gas is broadly accepted by the
Company's customers.

    Financial results for the first six months are as follows:-------------------------------------------------------------------------
    Consolidated Balance Sheets

    -------------------------------------------------------------------------
                                                  June 30         December 31
    Unaudited ($000's)                        2007        2006        2006
    -------------------------------------------------------------------------
    Assets
    Current assets
      Cash                                 $  35,629   $  54,537   $  49,927
      Accounts receivable                     28,527      33,746      38,529
      Other                                    1,101       1,761         206
                                           ----------------------------------

                                              65,257      90,044      88,662
    Investments                                    -          55           -
    Capital assets                           151,508     116,389     133,575
                                           ----------------------------------

                                           $ 216,765   $ 206,488   $ 222,237
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current liabilities
      Accounts payable and accrued
       liabilities                         $  11,668   $  21,071   $  24,772
      Deferred revenue                         1,566           -           -
      Dividends payable                        1,279       1,113       1,285
      Income taxes payable                     1,172       3,670       5,924
                                           ----------------------------------

                                              15,685      25,854      31,981
    Future income taxes                       15,626      13,358      14,016
    Pension liability                          3,498       3,237       3,367

    Class A and Class B shareholders' Equity
    Class A and Class B shares                23,376      23,722      23,440
    Contributed surplus                          962         505         652
    Retained earnings                        157,618     139,812     148,781
                                           ----------------------------------

                                             181,956     164,039     172,873
                                           ----------------------------------

                                           $ 216,765   $ 206,488   $ 222,237
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    Consolidated Statements of Earnings,
    Comprehensive Income and Retained Earnings

    -------------------------------------------------------------------------
                                     Three Months            Six Months
    Unaudited                          Ended                   Ended
    ($000's except                    June 30                 June 30
    per share amounts)            2007        2006        2007        2006
    -------------------------------------------------------------------------

    Revenue                    $  27,345   $  32,929   $  80,218   $  94,124
                               ----------------------------------------------

    Costs and expenses
      Operating and
       maintenance                16,006      18,358      46,162      52,885
      Depreciation                 2,622       3,093       7,588       7,855
      Selling and
       administrative              4,011       3,653       8,677       9,259
                               ----------------------------------------------
                                  22,639      25,104      62,427      69,999
                               ----------------------------------------------
      Operating income             4,706       7,825      17,791      24,125
                               ----------------------------------------------

    Other income (expenses)
      Interest income                375         525         784         909
      Gain on sale of joint
       venture interests in
       rigs and other assets          31         335         134         443
      Gain (loss) on foreign
       currency translation         (521)       (131)       (617)       (101)
                               ----------------------------------------------
                                    (115)        729         301       1,251
                               ----------------------------------------------
    Earnings before income
     taxes                         4,591       8,554      18,092      25,376
                               ----------------------------------------------

    Income taxes
      Current                      1,270       2,633       4,304       7,668
      Future                         230      (1,627)      1,610        (842)
                               ----------------------------------------------
                                   1,500       1,006       5,914       6,826
                               ----------------------------------------------
    Net earnings and
     comprehensive income          3,091       7,548      12,178      18,550
                               ----------------------------------------------


    Retained earnings,
     beginning of period         155,994     133,981     148,781     124,343
    Dividends declared            (1,285)     (1,113)     (2,565)     (2,225)
    Adjustment on repurchase
     and cancellation of
     share capital                  (182)       (604)       (776)       (856)
                               ----------------------------------------------
    Retained earnings, end of
     period                    $ 157,618   $ 139,812   $ 157,618   $ 139,812
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per Class A and
     Class B share
      Basic                    $    0.17   $    0.41   $    0.67   $    1.00
      Diluted                  $    0.16   $    0.40   $    0.66   $    0.99
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    Consolidated Statements of Cash Flows

    -------------------------------------------------------------------------
                                    Three Months             Six Months
                                       Ended                   Ended
                                      June 30                 June 30
    Unaudited ($000's)            2007        2006        2007        2006
    -------------------------------------------------------------------------

    Operating activities
    Net earnings               $   3,091   $   7,548   $  12,178   $  18,550
    Non-cash items included
     in earnings
      Depreciation                 2,622       3,093       7,588       7,855
      Future income taxes            230      (1,627)      1,610        (842)
      Expense for defined
       benefit pension plan           66          66         131         135
      Stock options charged to
       expense                        75          13         310          22
      Gain on sale of joint
       venture interests in
       rigs and other assets         (31)       (335)       (134)       (443)
                               ----------------------------------------------
    Funds flow from operations     6,053       8,758      21,683      25,277
    Change in non-cash
     working capital              20,021      19,067      (6,729)      6,426
                               ----------------------------------------------
                                  26,074      27,825      14,954      31,703
                               ----------------------------------------------
    Investing activities
    Capital expenditures         (15,681)    (13,300)    (25,558)    (18,259)
    Proceeds on sale of joint
     venture interests in rigs
     and other assets                 32         432         171         572
    Change in non-cash working
     capital                        (775)        902        (460)        658
                               ----------------------------------------------
                                 (16,424)    (11,966)    (25,847)    (17,029)
                               ----------------------------------------------
    Financing activities
    Increase (decrease) in
     bank indebtedness            (2,850)          -           -           -
    Dividends paid                (1,285)     (1,113)     (2,565)     (2,225)
    Proceeds received on
     exercise of stock options         -          82           -         205
    Repurchase of share
     capital                        (197)       (623)       (840)       (879)
    Change in non-cash working
     capital                         (26)      1,846           -          77
                               ----------------------------------------------
                                  (4,358)        192      (3,405)     (2,822)
                               ----------------------------------------------
    Increase (decrease) in
     cash                          5,292      16,051     (14,298)     11,852
    Cash position, beginning
     of period                    30,337      38,486      49,927      42,685
                               ----------------------------------------------
    Cash position, end of
     period                    $  35,629   $  54,537   $  35,629   $  54,537
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest paid during the
     period                    $       6   $       -   $      39   $       -
    Income taxes paid during
     the period                $   1,583   $   2,391   $   9,056   $   9,871
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------%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