AKITA announces first quarter results with net income of $8.6 million.

May 06 2025 22:00 BST

CALGARY, AB , May 6, 2025 /CNW/ - AKITA Drilling Ltd.(TSX: AKT.A)

AKITA Drilling Ltd. ("AKITA" or the "Company") announces net income of $8.6 million for the three months ended March 31, 2025, compared to $2.6 million for the same period in 2024. The momentum that began in the fourth quarter of 2024 carried through into the first quarter of 2025, driving increased activity in both the Canadian and US divisions which significantly impacted overall results. Adjusted funds flow from operations was $17.0 million for the first quarter of 2025 compared to $11.2 million in the first quarter of 2024. Despite a higher working capital build in the first quarter of 2025, net cash from operations increased to $9,009,000 for the three months ended March 31, 2025, compared to $6,948,000 in the same period of 2024.

Colin Dease, AKITA's President and Chief Executive Officer stated: "Our primary objective entering the first quarter of 2025 was to sustain the high utilization levels we established over the third and fourth quarters of 2024, and we accomplished this objective. Looking ahead, our focus remains on continuing the momentum of the last two quarters for the balance of the year."

AKITA's Canadian division had the most significant increase in activity with operating days increasing to 928 in the first quarter of 2025, from 649 in the first quarter of 2024. This increase in operating days was split between AKITA's single rigs, oilsands triple rigs and deep gas triple rigs. In the US, operating days increased 200 to 919 in the first quarter of 2025, from 719 in the first quarter of 2024. AKITA's improved activity in the US is significant given that the overall US industry rig count is down year over year.

Capital expenditures, which included drill pipe and other routine capital items were $7,008,000 in the first quarter of 2025, up from $3,935,000 in the first quarter of 2024. Total debt decreased to $51,948,000 at the end of the first quarter of 2025 from $69,610,000 at March 31, 2024.

CONSOLIDATED FINANCIAL HIGHLIGHTS

	For the Three Months Ended March 31,
($ thousands except per share amounts)	2025	2024	Change	% Change
Revenue	65,086	46,304	18,782	41 %
Operating and maintenance expenses	46,028	33,511	12,517	37 %
Operating margin	19,058	12,793	6,265	49 %
Margin %	29 %	28 %	1 %	4 %


Net cash from (used in) operating activities	9,009	6,948	2,061	30 %

Adjusted funds flow from operations⁽¹⁾	17,029	11,260	5,769	51 %
Per share	0.43	0.28	0.15	54 %

Net income (loss)	8,632	2,627	6,005	229 %
Per share	0.22	0.07	0.15	214 %

Capital expenditures	7,008	3,935	3,073	78 %

Weighted average shares outstanding	39,734	39,716	18	0 %

Total assets	275,467	258,204	17,263	7 %
Total debt	51,948	69,610	(17,662)	(25 %)
⁽¹⁾See "Non-GAAP and Supplementary Financial Measures" near the end of this release for further detail.

Canadian Drilling Division

	For the Three Months Ended March 31,
$Thousands except per day amounts	2025	2024	Change	% Change
Revenue Canada	23,664	15,549	8,115	52 %
Revenue from joint venture drilling rigs	13,010	12,517	493	4 %
Flow through charges⁽¹⁾	(1,054)	(629)	(425)	(68 %)
Adjusted revenue Canada ⁽¹⁾	35,620	27,437	8,183	30 %

Operating and maintenance expenses Canada	16,372	10,313	6,059	59 %
Operating and maintenance expenses from joint venture drilling rigs	9,361	8,354	1,007	12 %
Flow through charges⁽¹⁾	(1,054)	(629)	(425)	(68 %)
Adjusted operating and maintenance expenses Canada ⁽¹⁾	24,679	18,038	6,641	37 %

Adjusted operating margin Canada ⁽¹⁾	10,941	9,399	1,542	16 %
Margin %⁽¹⁾	31 %	34 %	(3 %)	(9 %)

Operating days	928	649	279	43 %

Adjusted revenue per operating day⁽¹⁾	38,384	42,276	(3,892)	(9 %)
Adjusted operating and maintenance per operating day⁽¹⁾	26,594	27,794	(1,200)	(4 %)
Adjusted operating margin per operating day ⁽¹⁾	11,790	14,482	(2,692)	(19 %)
Utilization⁽¹⁾	61 %	42 %	19 %	45 %
Rig count	17	17	-	0 %
⁽¹⁾ See "Non-GAAP and Supplementary Financial Measures" near the end of this release for further detail.

The Company's Canadian division generated stronger results quarter over quarter. The division achieved 928 operating days in the first quarter of 2025, up from 628 in Q1 2024, corresponding to a utilization rate of 61% (2024 - 42%) compared to an industry utilization average of 54% (2024 - 50%).

Adjusted revenue in Canada increased to $35,620,000 in the first quarter of 2025 from $27,437,000 in the first quarter of 2024. This increase was attributable to increased activity. Adjusted revenue per operating day decreased to $38,383 in the first quarter of 2025, from $42,276 in the same period of 2024. However, 2024 revenue includes contract cancellation revenue of $1,500,000 and $1,814,000 in revenue related to a labour contract where the costs are billed to the operator. Adjusting for the contract cancellation revenue and labour revenue, adjusted revenue per operating day was $37,169 in the first quarter of 2024, 3% below the first quarter of 2025 and reflective of the modest day rate increases the Company has secured over the last year.

Adjusted operating and maintenance expenses increased 37% to $24,679,000 in the first quarter of 2025, up from $18,038,000 in the same period of 2024, due to the higher number of operating days in the first quarter of 2025. On a per-day basis, adjusted operating and maintenance expense decreased by 4% quarter over quarter, however, this comparison includes $1,610,000 in labour contract costs incurred in 2024. When adjusted for this, the per-day expense increased by 5% in the first quarter of 2025 compared to the first quarter of 2024, reflecting higher supply and labour costs impacting the Canadian segment.

United States Drilling Division

	For the Three Months Ended March 31,
$ Thousands except per day amounts (CAD)	2025	2024	Change	% Change
Revenue US	41,422	30,755	10,667	35 %
Flow through charges⁽¹⁾	(5,510)	(3,759)	(1,751)	(47 %)
Adjusted revenue US ⁽¹⁾	35,912	26,996	8,916	33 %

Operating and maintenance expenses US	29,655	23,197	6,458	28 %
Flow through charges⁽¹⁾	(5,510)	(3,759)	(1,751)	(47 %)
Adjusted operating and maintenance expenses US ⁽¹⁾	24,145	19,438	4,707	24 %

Adjusted operating margin US ⁽¹⁾	11,767	7,558	4,209	56 %
Margin %⁽¹⁾	33 %	28 %	5 %	18 %

Operating days	919	719	200	28 %

Adjusted revenue per operating day⁽¹⁾	39,077	37,547	1,530	4 %
Adjusted operating and maintenance per operating day⁽¹⁾	26,273	27,035	(762)	(3 %)
Adjusted operating margin per operating day ⁽¹⁾	12,804	10,512	2,292	22 %
Utilization⁽¹⁾	68 %	53 %	15 %	28 %
Rig count	15	15	-	0 %
⁽¹⁾See "Non-GAAP and Supplementary Financial Measures" near the end of this release for further detail.

Despite the decrease in the active rig count in the US industry, AKITA's operating days for the first quarter of 2025 improved by 28% to 919 compared to 719 in the first quarter of 2024. This increased activity resulted in higher adjusted operating margin, which increased to $11,767,000 from $7,558,000 in the same period of 2024.

Adjusted revenue per operating day increased to $39,077 in the first quarter of 2025 from $37,547 in the first quarter of 2024. This increase is due to one-time drill pipe revenue of $1,293,000 received in the first quarter of 2025. Adjusting for this amount, revenue per day was essentially flat quarter over quarter despite continued pressure from operators to lower rates given the lower active rig count in the US.

Adjusted operating expense per operating day decreased to $26,273 per day in the first quarter of 2025 from $27,035 in the first quarter of 2024. This decrease is consistent with AKITA's continued focus on cost control and ensuring our operations are as efficient as possible.

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, 2025 will be available on the AKITA website (www.akita-drilling.com) or via SEDAR (www.sedarplus.ca) or can be requested in print from the Company.

Non-GAAP and Supplementary Financial Measures

Non-GAAP Financial Measures

Adjusted Revenue and Adjusted Operating and Maintenance Expenses

Revenue and operating and maintenance expenses in AKITA's Canadian operating segment include revenue and expenses from AKITA's wholly-owned drilling rigs as well as its share of joint venture revenue and expenses. Excluded from the revenue and expenses in AKITA's Canadian and US operating segment are flow through charges that are billed to operators and repaid to the Company. The volume and timing of the flow through charges can artificially impact the operational per day analysis and as a result management and certain investors may find the comparability between periods is improved when these flow through charges are excluded from revenue per day and operating and maintenance expense per day. The flow through charges do not have any impact on the Company's net earnings as the amounts offset each other.

Adjusted Funds Flow from Operations and Adjusted EBITDA

Adjusted funds flow from operations is not a recognized GAAP measure under IFRS and readers should note that AKITA's method of determining adjusted funds flow from operations may differ from methods used by other companies, and includes cash flow from operating activities before working capital changes, equity income from joint ventures, and income tax amounts paid or recovered during the period. Nonetheless, management and certain investors may find adjusted funds flow from operations to be a useful measurement to evaluate the Company's operating results at year-end and within each year, since the seasonal nature of the business affects the comparability of non-cash working capital changes both between and within periods. Adjusted earnings before interest and finance costs, taxes, depreciation and amortization, other non-cash items and one-time gains and losses ("Adjusted EBITDA") is not a recognized GAAP measure under IFRS and readers should note that AKITA's method of determining adjusted EBITDA may differ from methods used by other companies, and removes the aspect of how the Company finances its operations from adjusted funds flow from operations.

$Thousands
For the three months ended March 31,	2025	2024
Net cash from (used in) operating activities	9,009	6,948
Interest paid	888	1,210
Interest expense	(936)	(1,259)
Post-employment benefits paid	79	79
Equity income from joint ventures	3,502	4,043
Unrealized loss on foreign exchange	(17)	(408)
Change in non-cash working capital	4,504	647
Adjusted funds flow from operations	17,029	11,260

Non-GAAP Ratios

"Adjusted funds flow from operations per share" is calculated on the same basis as net loss per class A and class B share basic and diluted, utilizing the basic and diluted weighted average number of class A and class B shares outstanding during the periods presented.

"Adjusted revenue per operating day" may be useful to analysts, investors, other interested parties and management as a measure of pricing strength and is calculated by dividing adjusted revenue by the number of operating days for the period.

"Adjusted operating and maintenance expenses per operating day" may be useful to analysts, investors, other interested parties and management as it demonstrates a degree of cost control and provides a proxy for specific inflation rates incurred by the Company.

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. In particular, forward-looking information in this news release includes, but is not limited to, references to the outlook for the drilling industry (including activity levels and day rates), the Company's relationships and customers and vendors, advantages associated with the percentage of pad drilling rigs in the Company's Canadian drilling fleet, the renewal of drilling contracts, and debt repayment.

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.

Although the Company believes that the expectations reflected in the forward-looking information are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and no assurance can be given that these expectations will prove to be correct. By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and therefore carry the risk that the predictions and other forward-looking statements will not be realized. Readers of this news release are cautioned not to place undue reliance on these statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, estimates and intentions expressed in such forward-looking statements.

The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of, among other things, prevailing economic conditions; the level of exploration and development activity carried on by AKITA's customers, world crude oil prices and North American natural gas prices; global liquefied natural gas (LNG) demand, weather, access to capital markets; and government policies. We caution that the foregoing list of factors is not exhaustive and that while relying on forward-looking statements to make decisions with respect to AKITA, investors and others should carefully consider the foregoing factors, as well as other uncertainties and events, prior to making a decision to invest in AKITA. Except where required by law, the Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by it or on its behalf.

SOURCE AKITA Drilling Ltd.

Company Announcements

AKITA announces first quarter results with net income of $8.6 million.