Mar. 18, 2011 (Canada NewsWire Group) --
CALGARY, March 18 /CNW/ - Earnings for the year ended December 31, 2010 were $5,701,000 or $0.31 per share on revenue of $112,050,000. Comparative figures for 2009 were $8,380,000 or $0.46 per share on revenue of $106,263,000. Funds flow from operations for the current year was $26,833,000 as compared to $23,960,000 in 2009 while cash flow from operations for 2010 was $37,441,000 as compared to $29,235,000 in 2009.
Earnings for the three months ended December 31, 2010 were $3,439,000 or $0.18 per share on revenue of $33,598,000 compared to $3,165,000 or $0.18 per share on revenue of $25,815,000 for the corresponding period in 2009. Funds flow from operations for the quarter ended December 31, 2010 was $8,751,000 as compared to $5,990,000 for the corresponding period in 2009 while cash flow from operations for the quarter ended December 31, 2010 was $12,267,000 as compared to $534,000 for the corresponding period in 2009.
The Company's rig utilization in 2010 was 37.8%, an improvement of 6.7 percentage points over 2009's utilization rate of 31.1%. Many of AKITA's triple sized rigs have deeper capacities than desired by most operators in the drilling environment that existed in 2010, however, management expects these rigs to be more active once operators allocate larger budgets to drilling deeper gas wells.
A substantial portion of AKITA's capital spending during 2010 was directed to converting three conventional rigs into pad rigs, upgrading the capacity of an existing pad rig and the construction of a new pad rig (still under construction at year-end). In total, the Company incurred $23,575,000 on these five projects. Pad rigs have been a key focus market since 2003 and are desirable assets for drilling heavy oil, shale gas and other prospects that involve drilling multiple wells where wellheads are in close proximity to one another. At the end of 2010, the Company had 11 rigs with pad capabilities.
The Company's confidence in the industry and commitment to maintaining a high quality fleet were key to AKITA's $31,624,000 net capital spending during the year, compared to $11,835,000 in net capital spending during 2009. The construction of new pad rigs, conversion of existing conventional rigs into pad rigs and upgrades to existing pad rigs formed the bulk of AKITA's 2010 capital spending. In addition to pad rigs, the Company invested in a major upgrade to one of its shallow capacity conventional rigs.
AKITA's continuing strong cash position provides the Company with the flexibility to evaluate a broad range of alternatives to enhance shareowner value including meeting the Company's long-term strategy of having significant investments in purpose built rigs. AKITA's board of directors and management are actively considering appropriate investment alternatives, including a number of strategic options that may require longer lead times to develop.
AKITA maintains a commitment to safety that permeates all levels of the organization, and again this commitment translated into positive results. During 2010, the Company achieved the lowest rate of reportable incidents since AKITA's inception.
On October 22, 2010, the Canadian Association of Oilwell Drilling Contractors provided its industry drilling forecast for 2011 estimating the drilling of 11,811 wells, compared to 12,145 wells drilled in 2010. The current year estimate was based upon commodity price assumptions of US $80 per barrel for crude oil and Cdn $4.00 per mcf for natural gas. Despite the lower number of wells projected in the 2011 forecast, compared to the 2010 actual wells drilled, the industry is anticipating 10.8% more drilling days in 2011 as a result of anticipating more horizontal wells than drilled in 2010. Although winter drilling activity levels to date appear to support this forecast, management remains cautious regarding post-break up drilling levels given the continuing natural gas price weakness.
Selected financial information for the Company is as follows:
| Consolidated Balance Sheets | |||||||
| December 31($000's of Canadian Dollars) | 2010 | 2009 | |||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ 37,964 | $ 34,142 | |||||
| Term deposits | 10,000 | 18,000 | |||||
| Accounts receivable | 33,379 | 28,523 | |||||
| Income taxes recoverable | 8 | 330 | |||||
| Other | 222 | 421 | |||||
| 81,573 | 81,416 | ||||||
| Restricted cash | 2,500 | 5,000 | |||||
| Capital assets | 158,625 | 147,799 | |||||
| $ 242,698 | $ 234,215 | ||||||
| Liabilities | |||||||
| Current liabilities | |||||||
| Accounts payable and accrued liabilities | $ 18,872 | $ 10,123 | |||||
| Dividends payable | 1,269 | 1,277 | |||||
| Deferred revenue | - | 197 | |||||
| 20,141 | 11,597 | ||||||
| Future income taxes | 20,036 | 20,041 | |||||
| Pension liability | 1,229 | 1,131 | |||||
| 41,406 | 32,769 | ||||||
| Class A and Class B Shareholders' Equity | |||||||
| Class A and Class B shares | 23,447 | 23,376 | |||||
| Contributed surplus | 2,512 | 2,271 | |||||
| Accumulated other comprehensive income | (303) | (354) | |||||
| Retained earnings | 175,636 | 176,153 | |||||
| 201,292 | 201,446 | ||||||
| $ 242,698 | $ 234,215 | ||||||
| Consolidated Statements of Earning and Retained Earnings | |||||||
| Year ended December 31 ($000's of Canadian Dollars, except per share amounts) | 2010 | 2009 | |||||
| Revenue | $ 112,050 | $ 106,263 | |||||
| Costs and expenses | |||||||
| Operating and maintenance | 70,081 | 67,649 | |||||
| Depreciation | 20,873 | 17,476 | |||||
| Selling and administrative | 13,464 | 9,942 | |||||
| 104,418 | 95,067 | ||||||
| Revenue less costs and expenses | 7,632 | 11,196 | |||||
| Other income (expense) | |||||||
| Interest income | 773 | 524 | |||||
| Gain on sale of joint venture interests in rigs and other assets | 75 | 396 | |||||
| Gain (loss) on foreign currency translation | 30 | (215) | |||||
| 878 | 705 | ||||||
| Earnings before income taxes | 8,510 | 11,901 | |||||
| Income taxes | |||||||
| Current | 2,818 | 2,096 | |||||
| Future | (9) | 1,425 | |||||
| 2,809 | 3,521 | ||||||
| Net earnings | 5,701 | 8,380 | |||||
| Retained earnings, beginning of year | 176,153 | 172,878 | |||||
| Dividends declared | (5,079) | (5,105) | |||||
| Adjustment on repurchase and cancellation of share capital | (1,139) | - | |||||
| Retained earnings, end of year | $ 175,636 | $ 176,153 | |||||
| Earnings per Class A and Class B share | |||||||
| Basic | $ 0.31 | $ 0.46 | |||||
| Diluted | $ 0.31 | $ 0.46 | |||||
| Consolidated Statements of Cash Flows | |||||||
| Year ended December 31 ($000's of Canadian Dollars) | 2010 | 2009 | |||||
| Operating activities | |||||||
| Net earnings | $ 5,701 | $ 8,380 | |||||
| Non-cash items included in earnings | |||||||
| Depreciation | 20,873 | 17,476 | |||||
| Future income taxes | (5) | 1,223 | |||||
| Expense (recovery) for defined benefit pension plan | 98 | (2,723) | |||||
| Stock options charged to expense | 241 | - | |||||
| Gain on sale of joint venture interests in rigs and other assets | (75) | (396) | |||||
| Funds flow from operations | 26,833 | 23,960 | |||||
| Change in non-cash working capital | 10,608 | 5,275 | |||||
| 37,441 | 29,235 | ||||||
| Investing activities | |||||||
| Capital expenditures | (31,837) | (12,341) | |||||
| Reduction in cash restricted for loan guarantees | 2,500 | - | |||||
| Proceeds on sales of joint venture interests in rigs and other assets | 213 | 506 | |||||
| Change in non-cash working capital | 1,601 | (20,031) | |||||
| (27,523) | (31,866) | ||||||
| Financing activities | |||||||
| Dividends paid | (5,079) | (5,105) | |||||
| Proceeds received on exercise of stock options | 280 | 64 | |||||
| Repurchase of share capital | (1,348) | - | |||||
| (6,147) | (5,041) | ||||||
| Foreign currency translation | 51 | (354) | |||||
| Increase (decrease) in cash | 3,822 | (8,026) | |||||
| Cash position, beginning of year | 34,142 | 42,168 | |||||
| Cash position, end of year | $ 37,964 | $ 34,142 | |||||
| Interest paid during the year | $ 25 | $ 66 | |||||
| Income taxes paid during the year | $ 2,497 | $ 2,825 | |||||
| Consolidated Statements of Comprehensive Income | |||||||
| Year ended December 31 ($000's of Canadian Dollars) | 2010 | 2009 | |||||
| Net earnings | $ 5,701 | $ 8,380 | |||||
| Other comprehensive income | |||||||
| Foreign currency translation adjustment | 51 | (354) | |||||
| Comprehensive income | $ 5,752 | $ 8,026 | |||||
FORWARD-LOOKING STATEMENTS
From time to time Akita Drilling Ltd. ("AKITA" or the "Company") makes
written and verbal forward-looking statements. These forward-looking
statements include but are not limited to comments with respect to our
objectives and strategies, financial condition, the results of our
operations and business, our outlook for industry and our risk
management discussion. Forward looking statements are typically
identified with words such as "believe", "expect", "forecast",
"anticipate", "intend", "estimate", "plan" and "project" and similar
expressions of future or conditional events such as "will", "may",
"should", "could" or "would".
By their nature these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not be achieved. We caution readers of this News Release not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.
Forward-looking statements may be influenced by the following factors: the level of exploration and development activity carried on by AKITA's customers, world oil and North American natural gas prices, weather, access to capital markets and government policies. We caution that the foregoing list of important factors is not exhaustive and that when 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.
Mr. Murray Roth
Vice President Finance
(403)292-7950
Website: http://www.akita-drilling.com