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30.10.2019 23:07:00
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AKITA announces third quarter results and the continuation of its US division consolidation plan
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 $5,459,000 in the third quarter of 2018. These significant improvements were driven by the number of rigs the company has located in the US (17) compared to the same time last year (four)1. In the US, demand for drilling services remains stronger than in Canada.
In the third quarter of 2019, AKITA's fleet of 17 US-based rigs generated the majority of the Company's revenue, 70% up from 37% in the same period of 2018. Despite declining activity in the US, for both the industry and AKITA through the first three quarters of 2019, demand and activity in the US remain far stronger than in Canada.
1AKITA ended the quarter with 17 rigs. The Xtreme acquisition closed on September 11, 2018 adding 13 rigs to the US rig fleet. Weighted average rig count in the US for the third quarter of 2018 was 6.7 rigs.
Karl Ruud, AKITA's President and Chief Executive Officer stated: "Strengthening the Company's balance sheet continues to be our first priority."
CONSOLIDATED FINANCIAL HIGHLIGHTS
($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.
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