CALGARY, AB, Nov. 4, 2021 /CNW/ - AKITA Drilling Ltd.
(TSX: AKT.A)
AKITA Drilling Ltd. (the "Company") announces results for the
nine months ended September 30,
2021.
As prices for crude oil and natural gas increased, demand for
drilling services continued to improve into the third quarter.
Operating days increased to 1,169 in the third quarter of 2021
compared to 531 in the third quarter of 2020. In the third quarter
of 2021, the Company recorded a net loss of $6,433,000, compared to a net loss of
$8,203,000 in the same period of
2020. Adjusted funds flow from operations increased to $252,000 in the third quarter of 2021 from a loss
of $669,000 in the same period of
2020 and adjusted EBITDA decreased to $1,395,000 from $1,635,000 over the same period in 2020.
Increased activity did have a positive effect on the Company's
results but low day rates, which decreased on average between the
two quarters, tempered the potential of increased activity. To a
lesser extent, startup costs in Canada of $540,000 also impacted results. Activity levels
have reached a level whereby the Company is able to secure higher
day rates which will go into effect in the fourth quarter of
2021.
On October 29, the Company
completed the extension of its covenant relief period out to
June 30, 2023 with a step down of
financial covenants from a debt to EBITDA ratio of 5.00:1.00 at the
fiscal quarter ended September 30,
2022 to 3.00:1.00 at the fiscal quarter ended September 30, 2023. With activity increasing and
day rates improving, moving towards normalized financial covenants
is a positive sign for the Company.
Linda Southern-Heathcott, AKITA's
Executive Chair and Chief Executive Officer stated: "The
significant improvement in the Canadian market is very exciting and
is expected have an impact on the Company's results going forward.
This improvement, combined with steady increases in activity and
day rates in the United States,
should translate to an improved 2022 for AKITA".
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
($Thousands except
per share amounts)
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
2021
|
2020
|
Change
|
%
Change
|
2021
|
2020
|
Change
|
%
Change
|
|
Revenue
|
|
|
29,906
|
18,849
|
11,057
|
59%
|
75,728
|
98,780
|
(23,052)
|
(23%)
|
|
Operating and
maintenance expenses
|
|
25,354
|
13,719
|
11,635
|
85%
|
59,267
|
75,785
|
(16,518)
|
(22%)
|
|
Operating
margin
|
|
|
4,552
|
5,130
|
(578)
|
(11%)
|
16,461
|
22,995
|
(6,534)
|
(28%)
|
|
Margin %
|
|
|
15%
|
27%
|
(12)
|
(44%)
|
22%
|
23%
|
(1)
|
(4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
|
1,395
|
1,635
|
(240)
|
(15%)
|
7,529
|
16,265
|
(8,736)
|
(54%)
|
|
Per
share
|
|
|
0.04
|
0.04
|
-
|
0%
|
0.19
|
0.41
|
(0.22)
|
(54%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted funds flow
from (used in) operations(1)
|
|
252
|
(669)
|
921
|
138%
|
5,027
|
11,583
|
(6,556)
|
(57%)
|
|
Per
share
|
|
|
0.01
|
(0.02)
|
0.03
|
150%
|
0.13
|
0.29
|
(0.16)
|
(55%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(6,433)
|
(8,203)
|
1,770
|
22%
|
(16,192)
|
(65,682)
|
49,490
|
75%
|
|
Per
share
|
|
|
(0.16)
|
(0.21)
|
0.05
|
24%
|
(0.41)
|
(1.66)
|
1.25
|
75%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
4,130
|
742
|
3,388
|
457%
|
8,872
|
5,881
|
2,991
|
51%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
241,333
|
278,072
|
(36,739)
|
(13%)
|
241,333
|
278,072
|
(36,739)
|
(13%)
|
|
Total debt
|
|
|
74,549
|
74,252
|
297
|
0%
|
74,549
|
74,252
|
297
|
0%
|
|
(1)
Non-GAAP Items
|
|
|
|
|
|
United States Drilling Division
|
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
|
|
|
|
2021
|
2020
|
Change
|
% Change
|
2021
|
2020
|
Change
|
% Change
|
|
Operating
days
|
|
723
|
397
|
326
|
82%
|
2,042
|
2,048
|
(6)
|
(0%)
|
|
Utilization
|
|
46%
|
25%
|
21%
|
84%
|
44%
|
42%
|
2%
|
5%
|
|
Revenue per operating
day(1)
|
25,137
|
31,703
|
(6,566)
|
(21%)
|
24,715
|
32,370
|
(7,655)
|
(24%)
|
|
Operating and
maintenance expenses per operating day(1)
|
21,249
|
23,897
|
(2,648)
|
(11%)
|
19,498
|
24,331
|
(4,833)
|
(20%)
|
|
Operating margin per
operating day
|
3,888
|
7,806
|
(3,918)
|
(50%)
|
5,217
|
8,039
|
(2,822)
|
(35%)
|
|
(1)Excludes flow through costs.
|
|
|
|
|
|
|
|
|
Activity increased 82% in the third quarter of 2021 to 723
operating days compared to 397 in the third quarter of 2020. The
active rig count has continued to improve in the US since the
trough seen in the third quarter of 2020. Despite increased
activity, day rates are still low. Revenue per day decreased 21% to
$25,137 in the third quarter of 2021
from $31,703 in the third quarter of
2020 when the Company's rigs that were operating were still working
for rates set in 2019. This reduction in day rates decreased the
operating margin to $2,811,000 in the
third quarter of 2021 from $3,099,000
in the same period of 2020 despite the 82% increase in activity.
Operating costs per day decreased 11% to $21,249 in the third quarter of 2021 from
$23,897 in 2020 as steadier programs
allow the Company to drive down operating costs on its rigs.
Canadian Drilling Division
|
|
|
For the three months
ended September 30,
|
For the nine months
ended September 30,
|
|
|
|
|
|
2021
|
2020
|
Change
|
% Change
|
2021
|
2020
|
Change
|
% Change
|
|
Operating
days
|
|
446
|
134
|
312
|
233%
|
1,096
|
846
|
250
|
30%
|
|
Utilization
|
|
24%
|
7%
|
17%
|
243%
|
20%
|
15%
|
5%
|
34%
|
|
Revenue per operating
day(1)(2)
|
23,112
|
34,985
|
(11,873)
|
(34%)
|
25,162
|
32,069
|
(6,907)
|
(22%)
|
|
Operating and
maintenance expenses per operating day(1)(2)
|
18,543
|
19,791
|
(1,248)
|
(6%)
|
18,710
|
23,182
|
(4,472)
|
(19%)
|
|
Operating margin per
operating day
|
4,569
|
15,194
|
(10,625)
|
(70%)
|
6,452
|
8,887
|
(2,435)
|
(27%)
|
|
(1)Excludes flow through costs.
|
|
|
|
|
|
|
|
|
|
(2)Includes AKITA's share of Joint Venture
revenue and expenses.
|
During the third quarter of 2021, AKITA achieved 446 operating
days in Canada, which corresponds
to a utilization rate of 24%, compared to 7% (134 days) in the
third quarter of 2020 and compared to an industry average of 28% in
the third quarter of 2021. Despite a significant increase in
operating days, the Company's operating margin in Canada was constant between the third quarter
of 2021 at $2,038,000 and the third
quarter of 2020 at $2,036,000. There
are several factors contributing to the two quarters having
equivalent margins despite higher operating days in 2021. Firstly,
in 2020, the Company was operating a customer's rig under a labour
contract whereby a management fee was earned with no corresponding
operating days increasing the margin by $277,000. This rig did not operate in 2021.
Secondly, start-up costs on reactivating rigs in the third quarter
of 2021 totalled $540,000, decreasing
the margin in the quarter. There were no material start-up costs in
the third quarter of 2020. Lastly, the mix of rigs operating in the
third quarter of 2021 versus the third quarter of 2020 was
different, with 2020 having higher margin rigs operating in the
quarter.
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,
2021 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
September 30, 2021 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
(including as may be affected by the COVID-19
pandemic), 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.