CALGARY, Oct. 30, 2019 /CNW/ - AKITA Drilling
Ltd. (TSX: AKT.A)
AKITA Drilling Ltd. ("the Company") announces that its
focus on consolidation of its US operations continues with four
more drilling rigs moving to the Permian basin. This brings the
Company's total rig count operating out of its Midland, Texas facility to ten rigs out of the
Company's 17 rig US fleet.
The third quarter of 2019 showed stronger results for the
Company. Operating margin increased by 118%, up to $13,361,000 in the third quarter of 2019, from
$6,120,000 in the same period of
2018. EBITDA improved significantly to $4,690,000 in the third quarter of 2019 up from a
loss of $855,000 in the third quarter
of 2018. Adjusted funds flow from operations was $3,076,000 in the third quarter of 2019 compared
to $637,000 used in operations in the
same period of the prior year. The Company's net loss decreased to
$5,397,000 in the third quarter of
2019 from $5,459,000 in the third
quarter of 2018. These significant improvements were driven by the
number of rigs the company has located in the US (17) compared to
the same time last year (four)1.
In the US, demand for drilling services remains stronger than in
Canada.
In the third quarter of 2019, AKITA's fleet of 17 US-based
rigs generated the majority of the Company's revenue, 70% up from
37% in the same period of 2018. Despite declining activity in the
US, for both the industry and AKITA through the first three
quarters of 2019, demand and activity in the US remain far stronger
than in Canada.
1 AKITA ended the quarter with 17 rigs.
The Xtreme acquisition closed on September
11, 2018 adding 13 rigs to the US rig fleet. Weighted
average rig count in the US for the third quarter of 2018 was 6.7
rigs.
Karl Ruud, AKITA's
President and Chief Executive Officer stated: "Strengthening the
Company's balance sheet continues to be our first
priority."
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
($Thousands except
per share amounts)
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
2019
|
2018
|
Change
|
%
Change
|
2019
|
2018
|
Change
|
%
Change
|
|
Adjusted revenue
(1)
|
42,988
|
28,855
|
14,133
|
49%
|
136,959
|
84,342
|
52,617
|
62%
|
|
Adjusted operating
and
maintenance expenses
(1)
|
29,627
|
22,735
|
6,892
|
30%
|
92,457
|
63,585
|
28,872
|
45%
|
|
Operating
margin
|
13,361
|
6,120
|
7,241
|
118%
|
44,502
|
20,757
|
23,745
|
114%
|
|
Margin %
|
31%
|
21%
|
10
|
48%
|
32%
|
25%
|
7
|
28%
|
|
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
4,690
|
(855)
|
5,545
|
649%
|
16,992
|
5,284
|
11,708
|
222%
|
|
Per share
|
0.12
|
(0.04)
|
0.16
|
400%
|
0.43
|
0.27
|
0.16
|
59%
|
|
|
|
|
|
|
|
|
|
|
Adjusted funds flow
from
operations(1)
|
3,076
|
(637)
|
3,713
|
583%
|
12,462
|
5,520
|
6,942
|
126%
|
|
Per share
|
0.08
|
(0.03)
|
0.11
|
367%
|
0.31
|
0.28
|
0.03
|
11%
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
(5,397)
|
(5,459)
|
62
|
1%
|
(11,932)
|
(10,329)
|
(1,603)
|
(16%)
|
|
Per share
|
(0.14)
|
(0.24)
|
0.10
|
42%
|
(0.30)
|
(0.53)
|
0.23
|
43%
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
3,301
|
6,057
|
(2,756)
|
(46%)
|
11,083
|
10,062
|
1,021
|
10%
|
|
Dividends
declared
|
-
|
3,367
|
(3,367)
|
(100%)
|
6,734
|
6,417
|
317
|
5%
|
|
Weighted average
shares
outstanding
|
39,608
|
22,469
|
17,139
|
76%
|
39,608
|
19,459
|
20,149
|
104%
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
376,877
|
411,567
|
(34,690)
|
(8%)
|
376,877
|
411,567
|
(34,690)
|
(8%)
|
|
Total debt
|
82,318
|
74,628
|
7,690
|
10%
|
82,318
|
74,628
|
7,690
|
10%
|
|
(1)Non-GAAP Items
|
|
|
CONSOLIDATED OPERATIONAL HIGHLIGHTS
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
2019
|
2018
|
Change
|
% Change
|
2019
|
2018
|
Change
|
% Change
|
|
Operating
days
|
|
|
|
|
|
|
|
|
|
Canada
|
338
|
483
|
(145)
|
(30%)
|
1,216
|
2,164
|
(948)
|
(44%)
|
|
United
States
|
843
|
381
|
462
|
121%
|
2,991
|
558
|
2,433
|
436%
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per
operating day(1)
|
|
|
|
|
|
|
|
|
|
Canada(2)
|
37,601
|
37,468
|
133
|
0%
|
32,935
|
31,616
|
1,319
|
4%
|
|
United
States
|
35,918
|
28,236
|
7,682
|
27%
|
32,401
|
28,539
|
3,862
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
maintenance per
operating
day(1)
|
|
|
|
|
|
|
|
|
|
Canada(2)
|
29,746
|
29,157
|
589
|
2%
|
23,624
|
23,171
|
453
|
2%
|
|
United
States
|
23,218
|
22,709
|
509
|
2%
|
21,307
|
24,091
|
(2,784)
|
(12%)
|
|
|
|
|
|
|
|
|
|
|
|
Utilization
|
|
|
|
|
|
|
|
|
|
Canada
|
16%
|
25%
|
(9)
|
(36%)
|
19%
|
33%
|
(14)
|
(42%)
|
|
United
States(3)
|
54%
|
62%
|
(8)
|
(13%)
|
64%
|
52%
|
12
|
23%
|
|
|
|
|
|
|
|
|
|
|
|
(1)Non-GAAP Items
|
|
(2)Includes AKITA's share of Joint Venture
revenue and expenses. See " Non-GAAP Items".
|
|
(3)Utilization in the US is a weighted
average for the year based on the number of days each rig was
physically in the US and owned by the Company.
|
United States Drilling Division
AKITA achieved 843 operating days in the US in the third
quarter of 2019 compared to 381 operating days in the same period
of 2018. At September 30, 2019, 11 of
AKITA's 17 US-based rigs operated, compared to 15 rigs operating at
September 30, 2018. This highlights
the decline in activity that the US drilling industry has seen over
the last three quarters. Revenue from AKITA's US division increased
to $30,279,000 in the third quarter
of 2019 from $10,758,000 in the same
period of 2018. With the consolidation of operations into
higher-demand basins well underway, the Company's attention for the
remainder of 2019 and into 2020 will be further cost
rationalization and improving margins.
Canadian Drilling Division
In Canada, utilization
decreased to 16% (338 operating days) in the third quarter of 2019
from 25% (483 operating days) in the third quarter of 2018. Revenue
in the Canadian division decreased to $12,709,000 in the third quarter of 2019 from
$18,097,000 in the third quarter of
2018. Regulated production cuts, pipeline access and political and
regulatory uncertainty are all weighing heavily on the Canadian
energy industry, which in turn is negatively affecting drilling
activity. Activity levels in Canada declined sharply in the fourth quarter
of 2018 and this has persisted through the first three quarters of
2019. AKITA does not anticipate a change to this low demand
environment without an improvement in the factors mentioned
above.
FURTHER INFORMATION
This news release shall be used as preparation for reading
the full disclosure documents. AKITA's unaudited interim condensed
consolidated financial statements and management's discussion and
analysis for the quarter ended September 30,
2019 will be available on the AKITA website
(www.akita-drilling.com) or via SEDAR (www.sedar.com) or can be
requested in print from the Company.
NON-GAAP ITEMS
This news release references
Non-GAAP (Generally Accepted Accounting Principles) items. Revenue
per operating day, operating and maintenance expense per operating
day, adjusted revenue, adjusted operating and maintenance expense,
EBITDA and adjusted funds flow from operations are all considered
Non-GAAP items. Management feels that these Non-GAAP items are
useful in assessing the Company's performance. These terms do not
have standardized meanings prescribed under International Financial
Reporting Standards (IFRS) and may not be comparable to similar
measures used by other companies. For further information, see
"Basis of Analysis in this MD&A and Non-GAAP Items" in AKITA's
2019 third quarter Management's Discussion &
Analysis.
FORWARD-LOOKING INFORMATION:
Certain statements contained in this news release may
constitute forward-looking information. Forward-looking information
is often, but not always, identified by the use of words such as
"anticipate", "plan", "estimate", "expect", "may", "will",
"intend", "should", and similar expressions.
Forward-looking information involves known and unknown
risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in
such forward-looking information.
The Company's actual results could differ materially
from those anticipated in this forward-looking information as a
result of regulatory decisions, competitive factors in the
industries in which the Company operates, prevailing economic
conditions, and other factors, many of which are beyond the control
of the Company.
The Company believes that the expectations reflected in
the forward-looking information are reasonable, but no assurance
can be given that these expectations will prove to be correct and
such forward-looking information should not be unduly relied
upon.
Any forward-looking information contained in this news
release represents the Company's expectations as of the date
hereof, and is subject to change after such date. The Company
disclaims any intention or obligation to update or revise any
forward-looking information whether as a result of new information,
future events or otherwise, except as required by applicable
securities legislation.
SOURCE AKITA Drilling Ltd.
