AKITA Drilling Ltd. Announces Year-to-Date Earnings and Cash Flow

CALGARY, Oct. 31, 2017

AKITA incurred a net loss of $13,277,000 for the nine months ended September 30, 2017 ($0.74 per share basic & diluted) on revenue of $52,087,000 compared to net earnings of $9,443,000 ($0.53 per share basic & diluted) on revenue of $52,253,000 ($24,003,000 from direct operations and $28,250,000 from contract cancellation revenue) in the comparative period in 2016. Funds flow from operations for the January to September period of 2017 was $6,549,000 compared to $30,268,000 for the same period in 2016.

AKITA's rig activity has increased significantly in the third quarter of 2017 to 810 operating days or 32% utilization compared to 373 operating days or 13% utilization in the third quarter of 2016. This increase in utilization is attributable to higher crude oil prices which improved 7.5% in the third quarter of 2017 over the same period in 2016. This improvement in activity however, has not been enough to impact day rates in a meaningful way and therefore margins remain low, affecting both funds flow from operations and net earnings. Higher utilization rates across the Canadian market are needed to influence pricing. 

During the third quarter AKITA completed construction of and deployed its newest pad drilling rig, Rig 57. This rig is a 4,000 metre AC heavy pad double drilling rig that is well suited for both the Montney formation and heavy oil drilling. Currently the rig is drilling for heavy oil for one of the Company's core customers in the Fort McMurray area. During the third quarter AKITA also began preparing two rigs to move to Texas where the Company intends to establish a presence in the Southern United States. Both rigs are scheduled to be moved from Canada in the fourth quarter of 2017.  

Selected information from AKITA Drilling Ltd.'s Management Discussion and Analysis from the Quarterly Report as follows:

Introduction and General Overview

Activity levels in the contract drilling industry are highly correlated to the market prices of crude oil and natural gas. Average West Texas Intermediate crude oil prices for the third quarter of 2017 were 7.5% higher than in the same period of 2016 and 11% higher on a year-to-date basis when comparing the nine months ended September 30, 2017 to the corresponding period in 2016. Increasing crude oil prices have had a positive effect on drilling activity in the western Canadian sedimentary basin.