AKITA Drilling Ltd. Announces Year-to-Date Earnings and Cash Flow
CALGARY, Nov. 5, 2018 /CNW/ - AKITA Drilling Ltd.'s net loss for the three months ended September 30, 2018 was $5,459,000 (net loss of $0.24 per share basic and diluted) on revenue of $22,465,000 compared to a net loss of $3,811,000 (net loss of $0.21 per share basic and diluted) on revenue of $14,908,000 for the corresponding period of 2017. Funds flow from operations decreased to a loss of $638,000 in the third quarter of 2018 from $1,472,000 in the corresponding period of 2017.
AKITA incurred a net loss of $10,329,000 for the nine months ended September 30, 2018 ($0.53 per share basic and diluted) on revenue of $66,847,000 compared to net loss of $13,277,000 ($0.74 per share basic and diluted) on revenue of $52,807,000 in the comparative period in 2017. Funds flow from operations for the January to September period of 2018 was $5,519,000 compared to $6,549,000 for the same period in 2017.
On September 11, 2018, AKITA's completed the acquisition of United States based Xtreme Drilling Corp. ("Xtreme"), and the strategy to integrate the two companies into one premium pure play drilling company with balanced operations in Canada and the United States was initiated. While significant progress in the corporate integration has already been achieved, the integration process remains ongoing as Management strives to unlock additional cost saving synergies and to implement further operating efficiencies. As of September 30, 2018, AKITA commands a total fleet of 40 rigs, comprised of a 17 rig United States fleet and a 23 rig Western Canadian fleet.
In Canada, AKITA achieved 483 operating days or 25% utilization over Q3 2018, a significant drop from 810 operating days or 32% utilization over the same period in 2017. Notwithstanding a significant improvement in West Texas Intermediate oil pricing ("WTI"), up to an average of $70.23 USD/bbl for September 2018 as compared to $49.82 USD/bbl for September 2017, demand for drilling rigs in Canada was severely curtailed with natural gas prices for Q3 of 2018 compared to Q3 of 2017 and by the material differential in pricing between WTI and Western Canadian Select oil (the "Differential"). The Differential averaged $29.86 USD/bbl for September 2018 compared to $9.89 USD/bbl for September 2017. Utilization levels remained flat when compared to the third quarter of 2017 and day rates remained largely unchanged, resulting in a continuation of a low margin environment affecting both funds flow from operations and net earnings.
Although sustained low margins in the Canadian drilling industry resulted in a further reduction of 35 rigs in the Western Canadian rig fleet, resulting in a total fleet size of 602 rigs compared to 637 rigs in the year prior, the existing fleet is still more than capable of meeting current industry drilling demands. Accordingly, higher utilization rates are needed across Western Canada to influence day rate pricing in a meaningful way.
In the United States, the drilling industry is stronger and more active than in Western Canada. As at September 30, 2018, AKITA was operating 15 rigs out of its 17 rig United States fleet, equal to an 88% utilization level. AKITA will evaluate further opportunities to add to the four rigs deployed to the United States Permian market from Canada in 2018 should suitable opportunities allow. In addition, AKITA has rebranded the Xtreme fleet of high specification late model AC triples to the AKITA name, which has a long history of operating top quality drilling services, and further integrated the United States fleet.
Selected information from AKITA Drilling Ltd.'s Management Discussion and Analysis from the Quarterly Report as follows:
Introduction and General Overview
During the third quarter of 2018, the Company closed on the acquisition of Xtreme Drilling Corp.("Xtreme"). Xtreme is a United States based drilling company with 13 high specification triple drilling rigs operating in several US basins. With the acquisition of Xtreme, AKITA's United States fleet now includes 17 drilling rigs giving the Company a well-balanced fleet between Canada (23 drilling rigs) and the United States. The closing date of the Xtreme acquisition was September 11, 2018, and results in this MD&A include 19 days of Xtreme's operations. The focus of this MD&A is on AKITA's financial results for the three and nine months ended September 30, 2018.
Activity levels in the contract drilling industry are highly correlated to the market prices of crude oil and natural gas. Average West Texas Intermediate ("WTI") crude oil prices for the third quarter of 2018 were 45% higher than in the same period of 2017 and 32% higher on a year-to-date basis when comparing the nine months ended September 30, 2018, to the corresponding period in 2017. Increasing crude oil prices have not impacted activity in the Canadian industry.
Limited access to markets for Canadian oil is the cause of the essentially stagnant activity in the Canadian market. Canadian oil is deeply discounted compared to WTI prices which is causing Canadian producers to delay capital spending in Canada or shift capital spending to other international markets if available.
AKITA had 40 drilling rigs at September 30, 2018, including five that operated under joint ventures (38.75 net to AKITA), compared to 28 rigs as at September 30, 2017. During the third quarter of 2018, a fourth rig was moved from Canada to the United States leaving 23 rigs in Canada. Also during the quarter, AKITA acquired Xtreme, adding 13 drilling rigs to AKITA's United States fleet bringing the total up to 17.
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
2018 |
2017 |
Change |
% |
2018 |
2017 |
Change |
% |
||
Canada1 |
|||||||||
Operating days |
483 |
810 |
(327) |
(40%) |
2,164 |
2,701 |
(537) |
(20%) |
|
Utilization rate |
25% |
32% |
(7) |
(22%) |
33% |
36% |
(3) |
(8%) |
|
United States2 |
|||||||||
Operating days |
381 |
- |
381 |
- |
558 |
- |
558 |
- |
|
Utilization rate |
62% |
- |
62 |
- |
52% |
- |
52 |
- |
|
(1) |
Canadian utilization was calculated based on an average of 24 rigs in Canada for the first three quarters of 2018. |
(2) |
United States utilization was calculated based on the number of rigs in the United States in the quarter plus the 19 days of utilization for the 13 rigs acquired on September 11, 2018, which were 81% utilized during the 19 days. |
Utilization Rates in Canada |
Three Months Ended September 30 |
Nine Months Ended September 30 |
||
AKITA |
Industry(1) |
AKITA |
Industry(1) |
|
2018 |
23% |
30% |
33% |
29% |
2017 |
32% |
30% |
36% |
29% |
(1) Source: CAODC |
||||
Generally, AKITA meets or exceeds industry average rig utilization rates as a result of positive customer relations, meaningful joint ventures with Aboriginal and First Nations partners, employee expertise, safety performance, drilling performance and because the majority of the Company's rig fleet are high-demand pad drilling rigs.
For the three months ended September 30, 2018, AKITA's utilization fell below industry average due to AKITA's customers delaying capital programs as a result of pricing differentials between Canada and the United States.
Activity in the United States continues to be very strong and AKITA ended the quarter with 15 of 17 drilling rigs operating. The acquisition of Xtreme added 221 operating days for the period of September 12 to September 30, 2018.
Revenue and Operating & Maintenance Expenses
Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||
$Millions |
2018 |
2017 |
Change |
% |
2018 |
2017 |
Change |
% |
Total drilling revenue |
22.5 |
14.9 |
7.6 |
51% |
66.8 |
52.1 |
14.7 |
28% |
Operating & maintenance expenses |
18.8 |
11.8 |
7.0 |
60% |
51.3 |
44.2 |
7.1 |
16% |
$Dollars |
2018 |
2017 |
Change |
% |
2018 |
2017 |
Change |
% |
AKITA and joint ventures' revenue per operating day(1) |
33,398 |
25,586 |
7,812 |
31% |
30,985 |
26,400 |
4,585 |
17% |
AKITA and joint ventures' operating & maintenance expenses per operating day(1) |
26,314 |
20,287 |
6,027 |
30% |
23,360 |
21,514 |
1,846 |
9% |
AKITA and joint ventures' operating margin per operating day |
7,084 |
5,299 |
1,785 |
34% |
7,626 |
4,886 |
2,740 |
56% |
(1) |
AKITA and joint ventures' revenue per operating day and AKITA and joint ventures' operating & maintenance expenses per operating day are non-GAAP financial measures. See "Basis of Analysis in this MD&A, Non-GAAP and Additional GAAP Items". |
Third Quarter Comparatives
During the third quarter of 2018, revenue increased to $22,465,000 compared to $14,908,000 during the third quarter of 2017 as a result of increased revenue per day which increased to $33,398 from $25,586 between the two quarters. The increase in revenue per day is attributable to both general rate increases in the Canadian market, as well as operating days in the United States where revenue per day on average is higher than in Canada.
Operating and maintenance expenses are directly related to operating days and amounted to $18,800,000 ($26,314 per operating day) during the third quarter of 2018, compared to $11,800,000 ($20,287 per operating day) during the same period of the prior year. The increase in operating and maintenance expenses for both the total and per-day amounts, is due to costs to move rigs to the United States from Canada and the costs to start up those rigs. Also contributing to the increase in direct cost per day is the mix of rigs working, with higher cost rigs working in the third quarter of 2018 compared to the same period in 2017.
Year-to-Date Comparatives
During the first nine months of 2018, revenue increased to $66,847,000 from $52,087,000 during the first nine months of 2017 as a result of higher revenue per day. Revenue per operating day increased to $30,985 during the first nine months of 2018 from $26,400 in the comparative nine month period of 2017. The increase in revenue per day is due to higher Canadian day rates and more United States activity as noted above, as well as the mix of rigs that worked as pad triple drilling rigs earn more revenue per day than conventional rigs.
Operating and maintenance expenses are tied to operating days and amounted to $51,323,000 ($23,360 per operating day) during the first nine months of 2018 compared to $44,172,000 ($21,514 per operating day) in the same period of the prior year. The increase in operating costs for both the year-to-date and three months ended September 30, 2018, is due to the move and start-up costs related to relocated rigs to the United States from Canada and the increased utilization of higher-cost rigs working in the year when compared to the same period in 2017.
Depreciation and Amortization Expense
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
$ Millions |
2018 |
2017 |
Change |
% |
2018 |
2017 |
Change |
% |
|
Depreciation and amortization expense |
6.0 |
6.6 |
(0.6) |
(9%) |
17.4 |
21.0 |
(3.6) |
(17%) |
|
Depreciation and amortization expense decreased to $6,008,000 during the third quarter of 2018 from $6,550,000 during the corresponding period in 2017, primarily due to an asset write-down and asset impairment loss recorded in the fourth quarter of 2017, which reduced the Company's depreciable property by $29,123,000. This asset write-down and asset impairment loss also affected the depreciation and amortization expense for the first nine months of 2018 which decreased to $17,421,000 compared to $21,020,000 for the corresponding period in 2017.
On January 1, 2018, AKITA changed its depreciation method to a straight-line calculation from a unit-of-production basis on drilling rig assets. The rationale for this change was to have rig depreciation more closely match the new lifecycle of rigs. Drilling technology is a critical component of modern drilling rigs and drilling rigs' useful lives are reduced as new technologies are utilized for modern drilling programs. As a result, the passage of time plays a more significant role than operating days in determining a drilling rig's life. Accordingly, the straight-line depreciation method matches the new lifecycle more accurately than the unit-of-production depreciation method. The estimated effect of the change in depreciation method on the Company's interim financial statements for the first three quarters of 2018 is not material. In the first nine months of 2018, drilling rig depreciation accounted for 97% of total depreciation expense (2017 - 97%).
While AKITA conducts some of its drilling operations via joint ventures, the drilling rigs used to conduct those activities are owned jointly by AKITA and its joint venture partners, and not by the joint ventures themselves. As the joint ventures do not hold any property, plant, or equipment assets directly, the Company's depreciation expense includes depreciation on assets involved in both wholly-owned and joint venture activities.
Selling and Administrative Expenses
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
$ Millions |
2018 |
2017 |
Change |
% Change |
2018 |
2017 |
Change |
% Change |
|
Selling & administrative expenses |
6.9 |
2.9 |
4.0 |
138% |
15.4 |
10.2 |
5.2 |
51% |
|
Selling and administrative expenses were 23% of revenue in the first nine months of 2018 compared to 14% of revenue in the first nine months of 2017. The increase is due primarily to costs incurred for the acquisition of Xtreme which accounted for over half of the increase. The other portion of the increase relates to AKITA's United States operations, including both the former Xtreme entities and AKITA's existing United States operations.
Equity Income from Joint Ventures
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
$ Millions |
2018 |
2017 |
Change |
% |
2018 |
2017 |
Change |
% |
|
Operating Days |
192 |
260 |
(68) |
(26%) |
653 |
778 |
(125) |
(16%) |
|
Proportionate share of revenue from joint ventures |
6.4 |
5.8 |
0.6 |
10% |
17.5 |
19.2 |
(1.7) |
(9%) |
|
Proportionate share of operating & maintenance expenses from joint ventures |
3.9 |
4.6 |
(0.7) |
(15%) |
12.3 |
13.9 |
(1.6) |
(12%) |
|
Proportionate share of selling & administrative expenses from joint ventures |
0.1 |
0.1 |
0.0 |
0% |
0.2 |
0.3 |
(0.1) |
(33%) |
|
Equity income from joint ventures per interim financial statements |
2.4 |
1.1 |
1.3 |
118% |
5.0 |
5.0 |
0.0 |
0% |
|
The Company provides the same drilling services and utilizes the same management, financial and reporting controls for its joint venture activities as are in place for its wholly-owned operations. Equity income from joint ventures increased during the three and nine months ended September 30, 2018 compared to the same period in 2017 due to increases in revenue per-day for the Company's joint venture rigs. Operating expenses for the joint venture rigs decreased during the three and nine months ended September 30, 2018 due to reduced activity.
Other Income (Loss)
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
$ Millions |
2018 |
2017 |
Change |
% |
2018 |
2017 |
Change |
% |
|
Total other income |
(0.3) |
0.1 |
(0.4) |
(400%) |
(0.2) |
0.5 |
(0.7) |
(140%) |
|
Total other income is the aggregate of interest income, interest expense, gain on sale of assets, and net other gains all of which are discussed below in detail.
Interest income decreased to $65,000 in the first nine months of 2018 from $342,000 in the corresponding period in 2017. The decrease is related to the collection of the interest-bearing long-term receivable held related to contract cancellation revenue recorded in 2016. This long-term receivable was collected over three years with the final payment received in the first quarter of 2018.
During the first nine months of 2018, the Company incurred interest expense of $441,000 compared to $126,000 in the same period of 2017. Interest expense is comprised of $128,000 related to the future cost of the Company's defined benefit pension plan and $253,000 interest on the Company's credit facility with the balance related to debt assumed with the acquisition of Xtreme.
Income Tax Expense (Recovery)
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
$ Millions |
2018 |
2017 |
Change |
% |
2018 |
2017 |
Change |
% |
|
Current tax expense (recovery) |
0.0 |
0.1 |
(0.1) |
(100%) |
(0.0) |
(3.0) |
3.0 |
100% |
|
Deferred tax expense (recovery) |
(1.7) |
(1.4) |
(0.3) |
(21%) |
(2.2) |
(1.6) |
(0.6) |
(38%) |
|
Income tax expense (recovery) |
(1.7) |
(1.3) |
(0.4) |
(31%) |
(2.2) |
(4.6) |
2.4 |
52% |
|
Income tax recovery decreased to $2,249,000 in the first nine months of 2018 from $4,633,000 in the corresponding period in 2017, mainly due a smaller loss for tax purposes recorded in the first three quarters of 2018 compared to 2017. There was no current tax recovery recorded in 2018 as all potential loss carryback amounts have been utilized.
Net Income (Loss), Funds Flow and Net Cash From Operating Activities
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
$ Millions |
2018 |
2017 |
Change |
% |
2018 |
2017 |
Change |
% |
|
Net loss |
(5.5) |
(3.8) |
(1.7) |
(45%) |
(10.3) |
(13.3) |
3.0 |
23% |
|
Funds flow from operations(1) |
(0.6) |
1.5 |
(2.1) |
(140%) |
5.5 |
6.5 |
(1.0) |
(15%) |
|
(1) |
Funds flow from operations is an additional GAAP measure under IFRS. See commentary in "Basis of Analysis in this MD&A, Non-GAAP and Additional GAAP Items". |
During the three months ended September 30, 2018, the Company reported a net loss of $5,459,000 or $0.24 per Class A Non-Voting and Class B Common share (basic and diluted) compared to a net loss of $3,811,000 or $0.21 per share (basic and diluted) in the comparative quarter of 2017. Funds flow from operations decreased to negative $638,000 during the third quarter of 2018 from $1,472,000 in the corresponding quarter in 2017. The decrease in funds flow from operations and the increase in net loss are both a result of acquisition costs incurred in the quarter and move costs associated with relocating rigs to the United States.
Net loss decreased to $10,329,000 or $0.53 per Class A Non-Voting and Class B Common share (basic and diluted) for the first nine months of 2018 from a net loss of $13,277,000 or $0.74 per share (basic and diluted) in the corresponding period of 2017. Funds flow from operations decreased to $5,519,000 during the first nine months of 2018 from $6,549,000 in the corresponding period in 2017. The decrease in both net income and funds flow from operations for the nine month period ended September 30, 2018 is directly attributable to the transaction and move costs noted above.
The following table reconciles funds flow and cash flow from operations:
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
$ Millions |
2018 |
2017 |
Change |
% Change |
2018 |
2017 |
Change |
% |
|
Funds flow from operations(1) |
(0.6) |
1.5 |
(2.1) |
(140%) |
5.5 |
6.5 |
(1.0) |
(15%) |
|
Change in non-cash working capital |
(7.3) |
(1.8) |
(5.5) |
(306%) |
1.9 |
7.0 |
(5.1) |
(73%) |
|
Equity income from joint ventures |
(2.4) |
(1.1) |
(1.3) |
118% |
(5.0) |
(5.0) |
0.0 |
0% |
|
Interest Paid |
0.3 |
0.0 |
0.3 |
100% |
0.3 |
0.0 |
0.3 |
100% |
|
Current income tax expense (recovery) |
0.0 |
0.1 |
(0.1) |
(100%) |
0.0 |
(3.0) |
3.0 |
100% |
|
Income tax recovered |
2.7 |
2.3 |
0.4 |
17% |
2.7 |
2.3 |
0.4 |
17% |
|
Net cash from (used in) operating activities |
(7.4) |
1.0 |
(8.4) |
(840%) |
5.3 |
7.8 |
(2.5) |
(32%) |
|
(1) |
Funds flow from operations is an additional GAAP measure under IFRS. See commentary in "Basis of Analysis in this MD&A, Non-GAAP and Additional GAAP Items". |
Liquidity and Capital Resources
Cash used for capital expenditures totalled $10,062,000 in the first nine months of 2018 (2017 - $16,779,000). All of the capital spending year-to-date relates to general rig capital for both Canada and the United States. In the same period of 2017 half of the capital spending related to the construction of a heavy AC double pad drilling rig in Canada.
At September 30, 2018, AKITA's Statements of Financial Position included working capital (current assets minus current liabilities) of $10,573,000 compared to working capital of $20,140,000 at September 30, 2017, and working capital of $15,528,000 at December 31, 2017. Readers should be aware of the seasonal nature of AKITA's business and its effect on non-cash working capital balances. Typically, non-cash working capital balances reach annual maximum levels at the end of the first quarter or early in the second quarter and decline thereafter as a result of spring break-up and reduced drilling activities. Working capital at September 30, 2018 decreased compared to September 30, 2017, as a result of the transaction related costs relating to the acquisition of Xtreme.
The Company chooses to maintain a conservative Statement of Financial Position due to the cyclical nature of the industry. In conjunction with the closing of the Xtreme acquisition the Company entered into a new operating loan facility with its principal banker totalling $125,000,000 that is available until 2022. The interest rate ranges from 50 to 200 basis points over prime interest rates depending on the funded debt to EBITDA ratio. Security for this facility includes all present and after-acquired personal property and a first floating charge over all other present and after-acquired property including real property.
Future Outlook
The drilling industry is cyclical and certain key factors that have an effect on AKITA's results are beyond management's control. Like other drilling contractors, AKITA is exposed to the effects of fluctuating crude oil and natural gas prices and changes in the exploration and development budgets of its customers.
With the winter drilling season approaching in Canada activity levels have begun to increase. The Company is focussing on efficient rig start-ups and on cost control. The Company anticipates that 2019 will be another challenging year for the Canadian drilling industry and AKITA.
In the United States, the Company is anticipating a very active year for 2019. The focus for the fourth quarter of 2018 and the first quarter of 2019 will be on the integration of the Xtreme operations into AKITA's operations, and ensuring that AKITA's attention to safety and customer satisfaction is a focus in the United States. Additional rig moves from Canada to the United States will be evaluated as opportunities arise. The Xtreme rigs and operations are being rebranded to AKITA to capitalize on AKITA's quality reputation and long-term relationships with multi-national oil companies.
Capital spending in both Canada and the United States will be limited to maintenance capital with larger projects undertaken only when an immediate return is planned. Overall the Company's capital objective will be to strengthen the balance sheet and repay debt when possible.
With AKITA's modern fleet of 23 drilling rigs in Canada and 17 drilling rigs in the United States, the Company is well positioned to capitalize on opportunities in both countries. Shareholder value will remain a key initiative for the Company and management welcomes our new shareowners to the Company.
Basis of Analysis in this MD&A, Non-GAAP and Additional GAAP Items
AKITA and its joint ventures' revenue per operating day and AKITA and its joint ventures' operating and maintenance expenses per operating day are not recognized GAAP measures under International Financial Reporting Standards ("IFRS"). Management and certain investors may find "per operating day" measures for AKITA and joint ventures' revenue indicate pricing strength while AKITA and joint ventures' operating and maintenance expenses per operating day demonstrates a degree of cost control and provides a proxy for specific inflation rates incurred by the Company. Readers should be cautioned that in addition to the foregoing, other factors, including the mix of drilling rigs that are utilized can also influence these results.
Funds flow from operations is considered an additional GAAP item under IFRS. AKITA's method of determining 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. Management and certain investors may find 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.
Forward-looking Statements
From time to time AKITA makes forward-looking statements. These statements include but are not limited to comments with respect to AKITA's objectives and strategies, financial condition, results of operations, the outlook for the industry and risk management.
By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that the predictions and other forward-looking statements will not be realized. Readers of this MD&A 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.
Forward-looking statements may be influenced by factors such as the level of exploration and development activity carried on by AKITA's customers; world crude oil prices and North American natural gas prices; weather; access to capital markets and government policies. We caution that the foregoing list of factors is not exhaustive and that 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 as required by law, the Company does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by it or on its behalf.
Selected Financial Information for the Company is as follows:
AKITA Drilling Ltd. |
|||||
Interim Statements of Financial Position |
|||||
Unaudited |
September 30, |
September 30, |
December 31, |
||
$ Thousands |
2018 |
2017 |
2017 |
||
ASSETS |
|||||
Current Assets |
|||||
Cash |
$ 12,261 |
$ 4,675 |
$ 560 |
||
Accounts receivable |
39,215 |
23,474 |
27,024 |
||
Income taxes recoverable |
829 |
3,051 |
3,076 |
||
Prepaid expenses and other |
1,450 |
567 |
89 |
||
Assets held for sale |
1,314 |
- |
- |
||
55,069 |
31,767 |
30,749 |
|||
Non-current Assets |
|||||
Restricted cash |
1,092 |
1,890 |
1,525 |
||
Other long-term assets |
1,334 |
748 |
528 |
||
Investments in joint ventures |
3,275 |
4,359 |
4,096 |
||
Property, plant and equipment |
350,797 |
201,819 |
170,599 |
||
TOTAL ASSETS |
$ 411,567 |
$ 240,583 |
$ 207,497 |
||
LIABILITIES |
|||||
Current Liabilities |
|||||
Accounts payable and accrued liabilities |
$ 35,701 |
$ 10,102 |
$ 13,696 |
||
Dividends payable |
3,367 |
1,525 |
1,525 |
||
Deferred income |
1,100 |
- |
- |
||
Current portion finance leases |
578 |
- |
- |
||
Current portion of long-term debt |
3,750 |
- |
- |
||
44,496 |
11,627 |
15,221 |
|||
Non-current Liabilities |
|||||
Financial instruments |
- |
15 |
9 |
||
Deferred income taxes |
10,343 |
22,033 |
12,592 |
||
Deferred share units |
595 |
375 |
388 |
||
Pension liability |
5,117 |
4,568 |
4,832 |
||
Long-term debt |
70,878 |
- |
- |
||
Total Liabilities |
131,429 |
38,618 |
33,042 |
||
SHAREHOLDERS' EQUITY |
|||||
Class A and Class B shares |
146,264 |
23,871 |
23,871 |
||
Contributed surplus |
4,654 |
4,456 |
4,500 |
||
Accumulated other comprehensive loss |
(434) |
(366) |
(495) |
||
Retained earnings |
129,654 |
174,004 |
146,579 |
||
Total Equity |
280,138 |
201,965 |
174,455 |
||
TOTAL LIABILITIES AND EQUITY |
$ 411,567 |
$ 240,583 |
$ 207,497 |
||
AKITA Drilling Ltd. |
||||||||||
Interim Statements of Net Loss and Comprehensive Loss |
||||||||||
Unaudited |
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
$ Thousands except per share amounts |
2018 |
2017 |
2018 |
2017 |
||||||
REVENUE |
$ |
22,465 |
$ |
14,908 |
$ |
66,847 |
$ |
52,087 |
||
COSTS AND EXPENSES |
||||||||||
Operating and maintenance |
18,846 |
11,806 |
51,323 |
44,172 |
||||||
Depreciation and amortization |
6,008 |
6,550 |
17,421 |
21,020 |
||||||
Selling and administrative |
6,872 |
2,861 |
15,433 |
10,249 |
||||||
Total Costs and Expenses |
31,726 |
21,217 |
84,177 |
75,441 |
||||||
Revenue Less Costs and Expenses |
(9,261) |
(6,309) |
(17,330) |
(23,354) |
||||||
EQUITY INCOME FROM JOINT VENTURES |
2,426 |
1,081 |
4,987 |
4,992 |
||||||
OTHER INCOME (LOSS) |
||||||||||
Interest income |
25 |
111 |
65 |
342 |
||||||
Interest expense |
(272) |
(42) |
(441) |
(126) |
||||||
Gain on sale of assets |
1 |
20 |
24 |
160 |
||||||
Net other gains (losses) |
(54) |
37 |
117 |
76 |
||||||
Total Other Income (Loss) |
(300) |
126 |
(235) |
452 |
||||||
Loss Before Income Taxes |
(7,135) |
(5,102) |
(12,578) |
(17,910) |
||||||
Income tax recovery |
(1,676) |
(1,291) |
(2,249) |
(4,633) |
||||||
NET LOSS FOR THE PERIOD ATTRIBUTABLE TO SHAREHOLDERS |
(5,459) |
(3,811) |
(10,329) |
(13,277) |
||||||
Other comprehensive income |
- |
- |
61 |
- |
||||||
COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO SHAREHOLDERS |
$ |
(5,459) |
$ |
(3,811) |
$ |
(10,268) |
$ |
(13,277) |
||
NET LOSS PER CLASS A AND CLASS B SHARE |
||||||||||
Basic |
$ |
(0.24) |
$ |
(0.21) |
$ |
(0.53) |
$ |
(0.74) |
||
Diluted |
$ |
(0.24) |
$ |
(0.21) |
$ |
(0.53) |
$ |
(0.74) |
||
AKITA Drilling Ltd. |
||||||||||
Interim Statements of Cash Flows |
||||||||||
Unaudited |
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||
$ Thousands |
2018 |
2017 |
2018 |
2017 |
||||||
OPERATING ACTIVITIES |
||||||||||
Net loss and comprehensive loss |
$ |
(5,459) |
$ |
(3,811) |
$ |
(10,329) |
$ |
(13,277) |
||
Non-cash items included in net loss: |
||||||||||
Depreciation and amortization |
6,008 |
6,550 |
17,421 |
21,020 |
||||||
Deferred income tax expense (recovery) |
(1,676) |
(1,375) |
(2,249) |
(1,669) |
||||||
Defined benefit pension plan expense |
117 |
112 |
351 |
337 |
||||||
Stock options and deferred share units expense |
375 |
23 |
359 |
324 |
||||||
Gain on sale of assets |
(1) |
(20) |
(24) |
(160) |
||||||
Unrealized gain on financial guarantee contracts |
(1) |
(7) |
(9) |
(26) |
||||||
Funds flow from (used in) operations |
(637) |
1,472 |
5,520 |
6,549 |
||||||
Change in non-cash working capital |
(7,337) |
(1,751) |
1,873 |
6,985 |
||||||
Equity income from joint ventures |
(2,426) |
(1,081) |
(4,987) |
(4,992) |
||||||
Post-employment benefits |
(22) |
(24) |
(66) |
(72) |
||||||
Interest paid |
337 |
- |
254 |
- |
||||||
Current income tax expense (recovery) |
- |
84 |
- |
(2,964) |
||||||
Income taxes recoverable |
2,657 |
2,270 |
2,657 |
2,269 |
||||||
Net Cash From (Used In) Operating Activities |
(7,428) |
970 |
5,251 |
7,775 |
||||||
INVESTING ACTIVITIES |
||||||||||
Net cash consideration for Xtreme shares |
(43,852) |
- |
(43,852) |
- |
||||||
Capital expenditures |
(6,057) |
(4,577) |
(10,062) |
(16,779) |
||||||
Change in non-cash working capital related to capital |
2,434 |
883 |
(1,023) |
(1,098) |
||||||
Distributions from investments in joint ventures |
2,182 |
935 |
5,808 |
3,885 |
||||||
Change in cash restricted for loan guarantees |
375 |
363 |
1,113 |
1,079 |
||||||
Proceeds on sale of assets |
- |
20 |
23 |
188 |
||||||
Net Cash Used In Investing Activities |
(44,918) |
(2,376) |
(47,993) |
(12,725) |
||||||
FINANCING ACTIVITIES |
||||||||||
Change in long-term debt |
59,793 |
- |
59,793 |
- |
||||||
Dividends paid |
(1,525) |
(1,525) |
(4,575) |
(4,575) |
||||||
Loan commitment fee |
(761) |
- |
(836) |
(50) |
||||||
Net Cash From (Used In) Financing Activities |
57,507 |
(1,525) |
54,382 |
(4,625) |
||||||
Foreign Currency Translation |
- |
- |
61 |
- |
||||||
Increase (Decrease) In Cash and Cash Equivalents |
5,161 |
(2,931) |
11,701 |
(9,575) |
||||||
Cash and cash equivalents, beginning of period |
7,100 |
7,606 |
560 |
14,250 |
||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ |
12,261 |
$ |
4,675 |
$ |
12,261 |
$ |
4,675 |
||
SOURCE AKITA Drilling Ltd.
Darcy Reynolds, Vice President, Finance & CFO, (403) 292-7530
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