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AKITA announces first quarter results

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CALGARY, AB, May 6, 2021 /CNW/ - AKITA Drilling Ltd. (TSX: AKT.A)

AKITA Drilling Ltd. Logo (CNW Group/AKITA Drilling Ltd.)
AKITA Drilling Ltd. Logo (CNW Group/AKITA Drilling Ltd.)

AKITA Drilling Ltd. (the "Company") announces results for the three months ended March 31, 2021.

The impact of the severe economic slowdown, attributable to the COVID-19 global pandemic that curtailed drilling activity over the last three quarters of 2020, continued to influence the first quarter of 2021. In the first quarter of 2021, the company recorded a net loss of $3,651,000, compared to a net loss of $52,257,000 ($321,000 excluding the asset impairment loss of $60,000,000) in the first quarter of 2020. Adjusted funds flow from operations decreased to $3,719,000 in the first quarter of 2021 from $10,154,000 in the same period of 2020 and adjusted EBITDA decreased to $4,534,000 from $11,646,000 over the same period in 2020. Year over year results in the first quarter of 2021 were significantly lower than the first quarter of 2020 since the impact of the COVID-19 pandemic had not yet manifested over the same period in 2020.

Compared to the fourth quarter of 2020, the first quarter of 2021 has shown definite signs of improvement. Activity levels in both Canada and the US have improved and the general sentiment in the industry is that a slow recovery is underway. In the quarter, AKITA commenced operating near Fort Nelson BC on its first geothermal drilling project, which is closely linked to local First Nations groups and AKITA's joint venture partners.

Karl Ruud, AKITA's President and Chief Executive Officer stated: "We believe the worst activity levels are behind us and are cautiously optimistic, especially in Canada, that the industry is poised for improvement over the coming years."

CONSOLIDATED FINANCIAL HIGHLIGHTS

($ thousands except per share amounts)





For the three months ended March 31,


2021

2020

Change

% Change

Revenue




27,171

53,572

(26,401)

(49%)

Operating and maintenance expenses

20,012

41,192

(21,180)

(51%)

Operating margin



7,159

12,380

(5,221)

(42%)

Margin %



26%

23%

3%

13%









Adjusted EBITDA(1)


4,534

11,646

(7,112)

(61%)

Per share



0.11

0.29

(0.18)

(61%)









Net cash from (used in) operating activities

(5,692)

4,583

(10,275)

(224%)









Adjusted funds flow from operations(1)

3,719

10,154

(6,435)

(63%)

Per share



0.09

0.26

(0.17)

(65%)









Net loss




(3,651)

(52,257)

48,606

93%

Per share



(0.09)

(1.32)

1.23

93%









Capital expenditures


1,604

3,527

(1,923)

(55%)









Weighted average shares outstanding

39,608

39,608

-

0%









Total assets



252,771

317,567

(64,796)

(20%)

Total debt



79,258

86,631

(7,373)

(9%)

CONSOLIDATED OPERATIONAL HIGHLIGHTS

For the three months ended March 31,


2021

2020

Change

% Change

Canada








Operating days


490

613

(123)

(20%)


Utilization



27%

55%

(28%)

(51%)


Revenue per operating day(1)(2)

28,816

30,449

(1,633)

(5%)


Operating and maintenance expenses per
operating day(1)(2)

21,071

23,002

(1,931)

(8%)


Operating margin per operating day

7,745

7,447

298

4%

United States








Operating days


704

1,108

(404)

(36%)


Utilization



46%

68%

(22%)

(32%)


Revenue per operating day(1)

26,888

35,996

(9,108)

(25%)


Operating and maintenance expenses per
operating day(1)

20,878

28,013

(7,135)

(25%)


Operating margin per operating day

6,010

7,983

(1,973)

(25%)









(1)Non-GAAP Items







(2)Includes AKITA's share of Joint Venture revenue and expenses.


United States Drilling Division

In the US, the land drilling active rig count reached a decade low of 244 rigs in August of 2020, and has been slowly increasing since then, with 417 rigs active at the end of the first quarter of 2021. This level of activity is still significantly lower than the prior two years. AKITA's utilization was 48% (704 operating days) in the first quarter of 2021, compared to 32% (506 operating days) in the fourth quarter of 2020 and 68% (1,108 operating days) in the first quarter of 2020. Although activity has begun to improve in the US, it is improving slowly and day rates remain depressed.

Revenue in the US was $18,919,000 for the first quarter of 2021, down from $39,844,000 in the first quarter of 2020. This 53% drop in revenue is attributable to the decrease in operating days, coupled with revenue per operating day, which fell to $26,888 per operating day in the first quarter of 2021 compared to $35,996 over the same period in 2020.

Canadian Drilling Division

In Canada, industry utilization in the first quarter of 2021 averaged 27%, below the first quarter utilization average in 2020 of 35% and 2019 average of 29%. AKITA's first quarter utilization was in line with industry average at 27% (490 operating days) compared to 31% (613 operating days) in the first quarter of 2020. The demand for drilling services in Canada that reached a historical low in June of 2020, due to the above noted factors, has slowly started to improve. Historically the first quarter of the year is the most active in Canada.

Revenue in Canada was $14,120,000 for the first quarter of 2021, down from $18,665,000 in the first quarter of 2020. This 24% drop in revenue is attributable to both the decrease in operating days and a 5% decrease in revenue per day. Operating income per operating day increased slightly to $7,745 in the first quarter of 2021 from $7,447 in the first quarter of 2020 due to lower operating and maintenance expenses per operating day which decreased 8% due to cost cutting in the second quarter of 2020 and $807,000 in Canadian Emergency Wage Subsidy received in the first quarter of 2021.

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 March 31, 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 March 31, 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.

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