AKITA Drilling Ltd. releases year-end results

CALGARY, March 5, 2014 /CNW/ - Net income for the year ended December 31, 2013 was $26,515,000 or $1.48 per share - basic ($1.47 - diluted) on revenue of $167,533,000.  Comparative figures for 2012 were net income of $28,755,000 or $1.60 per share (basic and diluted) on revenue of $203,440,000.  Funds flow from operations for the current year was $57,619,000 as compared to $59,412,000 in 2012, while net cash from operating activities for 2013 was $39,554,000 as compared to $41,988,000 in 2012.  Commencing in 2013, the Company is reporting its financial results pursuant to a new accounting standard under International Financial Reporting Standards ("IFRS"), IFRS 11, whereby assets, liabilities, revenues and expenses of joint ventures are required to be reported on an equity accounting basis.  This adoption, which had no effect on net income, has resulted in a reduction of revenue amounts that would have been reported if the Company were allowed to continue to report under the proportionate consolidation basis.

While AKITA's 2013 utilization was higher than industrys', both AKITA's and industry's utilization were lower than in 2012.  For AKITA, the decline resulted from weaker demand for its conventional double and triple sized rigs.  By contrast, AKITA's pad rigs continued to achieve strong utilization.  Consequently, one of the Company's strategies has been the construction of new pad rigs or the conversion of conventional rigs into pad rigs when contracting opportunities warrant such changes.  The following table highlights AKITA's utilization rates for the past five years:

RIG UTILIZATION RATES (PERCENT)          
      2013   2012  2011  2010  2009
AKITA Pad Rigs     71.9   61.7 67.9 67.4 59.5
AKITA Overall Fleet     43.4   48.3 51.5 37.8 31.1
Industry      40.3   41.6 49.6 40.7 24.6

 

Major capital projects in 2013 continued to focus on non-conventional assets in the Company's fleet.  During the third quarter, AKITA completed its latest pad rig which is now operating on a multi-year contract drilling for heavy oil.  Near year-end, AKITA converted a double sized rig into a pad rig for a one-year project.  In addition, the Company is also converting a conventional double sized rig into a rig with slant drilling capability - the first slant rig developed by the Company.  This rig is scheduled to be available for use during the second quarter of 2014.  Additionally, during the third quarter of 2013, the Company announced that it had entered into a multi-year contract to construct and operate a new ultra-deep pad rig for use in the Liard Basin to help supply natural gas for anticipated upcoming liquified natural gas ("LNG") projects.  This ultra-deep pad rig is on schedule and on budget and is anticipated to be completed by mid-2014. 

At December 31, 2013, AKITA's fleet included 18 pad drilling rigs, up from 16 pad rigs at the end of 2012.  In addition to its pad rigs, the Company also operates 20 conventional rigs that span all depth ranges.  While AKITA's overall level of capital expenditures was lower in 2013 compared to 2012, the Company's Board and Management remain steadfast in their commitment to ensure that AKITA's rig fleet evolves in the most suitable manner to remain well positioned within the changing drilling environment.

AKITA consistently maintains the financial resources to accomplish its capital spending plans.  In addition to having $18,998,000 in cash and term deposits at December 31, 2013, the Company has a long-term financing arrangement to provide up to $100,000,000 for capital expenditures and general corporate purposes.  As such, the Company has great flexibility to meet future capital requirements.

AKITA is fully committed to the ongoing safety of its employees and regularly achieves one of the safest working records in the Canadian industry.  The Company continually considers methods to eliminate or reduce hazards through the design of equipment and through the execution of evolving standardized operating procedures.  In 2013, the Company's lost-time accident frequency was 0.13 accidents per 200,000 hours worked which was comparable with AKITA's best ever lost-time accident frequency of 0.12 established in 2012.  Field employees complete extensive safety training and must meet current industry certifications.  Managers, employees and subcontractors are all required to understand and accept their responsibility for maintaining a safe working environment.

On November 13, 2013, the Canadian Association of Oilwell Drilling Contractors ("CAODC") provided its industry drilling forecast for 2014 estimating 42% average rig utilization, compared to 40.3% average rig utilization in 2013.  The current year estimate was based upon commodity price assumptions of US $90 per barrel for crude oil and CAD $3.23 per mcf for natural gas.  Winter drilling activity to date appears to be supportive of the CAODC forecast.  There remain however numerous risks to achieving this forecast, with perhaps  two of the greatest being the risk in transportation capacity for heavy oil and the potential of delays to LNG related projects.  In the event that LNG related projects proceed on the current anticipated sets of timelines, Management anticipates long-term opportunities for additional custom drilling rigs.

Selected information from AKITA Drilling Ltd.'s Management's Discussion and Analysis for the Year-end Report is as follows:

Basis of Analysis in this MD&A , Non-Standard and Additional GAAP Items

Effective January 1, 2013, the Company adopted a new accounting standard under IFRS, IFRS 11 "Joint Arrangements", in relation to reporting its joint venture activities.  Under IFRS 11, AKITA is required to report its joint venture assets, liabilities, revenues and expenses using the equity method of accounting.  However, for purposes of analysis in this MD&A, the proportionate share of assets, liabilities and financial activities is included as non-standard information ("Adjusted") where appropriate.  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.

Operating margin, revenue per operating day, operating and maintenance expense per operating day and operating margin per operating day are not recognized measures under IFRS.  Management and certain investors may find operating margin data to be a useful measurement metric as it provides an indication of the profitability of the business prior to the influence of depreciation, overhead expenses, financing and income taxes.  Management and certain investors may find "per operating day" measures for revenue and operating margin indicate pricing strength while operating and maintenance expense per operating day demonstrates the 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 rigs between conventional and pad and singles, doubles and triples can also impact these results.  Readers should also be aware that AKITA includes standby revenue, construction revenue and construction costs in its determination of "per operating day" results.

Funds flow from operations is considered as an additional GAAP measure.  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 as well as equity income from joint ventures adjusted for income tax amounts paid 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.

                 
$Millions   2013   2012   Change   % Change
Revenue per financial statements (1)   167.5   203.4   (35.9)   (18%)
Proportionate share of revenue from joint ventures (2)   48.9   37.8   11.1   29%
Adjusted revenue (2)   216.4   241.2   (24.8)   (10%)
                 
                 
$Millions   2013   2012   Change   % Change
Operating & maintenance expenses per financial statements (1)   106.3   137.9   (31.6)   (23%)
Proportionate share of operating & maintenance expenses from joint ventures (2)   29.5   23.1   6.4   28%
Adjusted operating & maintenance expenses (2)   135.8   161.0   (25.2)   (16%)
                 
                 
$Millions   2013   2012   Change   % Change
Adjusted revenue (2)   216.4   241.2   (24.8)   (10%)
Adjusted operating & maintenance expenses (2)   135.8   161.0   (25.2)   (16%)
Adjusted operating margin (1) (2) (3)   80.6   80.2   0.4     0%
                 
                 
$Dollars   2013   2012   Change   % Change
Adjusted revenue per operating day (2)   35,629   35,844     (215)   (1%)
Adjusted operating & maintenance expenses per operating day (2)   22,366   23,928   (1,562)   (7%)
Adjusted operating margin per operating day (2) (3)   13,263   11,916   1,347   11%

(1) Revenue, operating & maintenance expenses and adjusted operating margin include the Company's rig construction for third parties.  AKITA does not disclose its operating margin on rig construction activity separately for competitive reasons.
(2) Proportionate share of revenue from joint ventures, adjusted revenue, proportionate share of operating & maintenance expenses from joint ventures, adjusted operating & maintenance expenses, adjusted operating margin, adjusted revenue per operating day, adjusted operating & maintenance expenses per operating day and adjusted operating margin per operating day are non-standard accounting measures.  See commentary in "Basis of Analysis in this MD&A, Non-Standard and Additional GAAP Items".
(3) Adjusted operating margin is the difference between adjusted revenue and adjusted operating & maintenance expenses.

Adjusted revenue of $216,374,000 in 2013 was 10% lower than the 2012 adjusted revenue of $241,232,000 largely as a result of weaker demand for the Company's conventional triple and double sized rigs.  This drop in demand for conventional rigs was partially offset by continuing strong demand for the Company's pad rigs throughout 2013.  In addition to contract drilling, annual results were also affected by a reduction in rig construction revenue from $17,940,000 in 2012 to $1,074,000 in 2013 as the Company's rig construction project was completed in the first quarter of 2013 and the rig was sold to a third party.  During 2013, average revenue per operating day decreased marginally to $35,629 per day compared to $35,844 in 2012 as the loss of construction revenue noted above (which was factored into these "per operating day" statistics) was generally offset by the shift in rig mix to a higher proportion of pad rigs.  Such rigs typically obtain higher day rates than conventional rigs.

Adjusted operating and maintenance costs are tied to activity levels and amounted to $135,827,000 or $22,366 per operating day during 2013 compared to $161,036,000 or $23,928 per operating day for the prior year.  Reduced activity levels, the reduction in construction costs and the actual mix of rigs including the number and types of ancillary services provided resulted in lower operating and maintenance costs when considered on both an annual as well as a "per operating day" basis.

The Company's adjusted operating margin for 2013 was $80,547,000, up marginally from $80,196,000 in 2012.  AKITA's higher level of pad rig activity, in an otherwise weaker drilling market, was sufficient to ensure the adjusted operating margin was sustained.  Pad rig contracts typically result in higher operating margins than conventional rig contracts due to higher rig cost, complexity and associated ancillary services.  On a "per operating day" basis, AKITA's operating margin rose in 2013 to $13,263 from $11,916 in 2012.

From time to time, the Company requires customers to make pre-payments prior to the provision of services.  In addition, from time to time, the Company records cost recoveries related to capital enhancements for specific customer related projects.  At December 31, 2013, deferred revenue related to these activities totalled $334,000 (December 31, 2012 - $95,000).

Depreciation and Amortization Expense

       
$Millions   2013  2012  Change  % Change
Depreciation and Amortization Expense   26.8 24.3 2.5 10%

The increase in depreciation and amortization expense to $26,825,000 during 2013 from $24,342,000 during 2012 was mostly attributable to the higher average cost base for drilling rigs which more than offset the decline in drilling activity.  Drilling rig depreciation accounted for 96% of total depreciation and amortization expense in 2013 (2012 - 97%).

While AKITA conducts many 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 the joint ventures themselves.  Therefore, the joint ventures do not hold any property, plant, or equipment assets directly.  Consequently, the depreciation balance reported above includes depreciation on assets involved in both wholly owned and joint ventured activities.

Selling and Administrative Expense

         
$Millions  2013  2012  Change  % Change
Selling & administrative expenses per financial statements 18.2 18.5 (0.3) (1%)
Proportionate share of selling & administrative expenses from joint ventures (1) 0.6 0.5 0.1 2%
Adjusted selling & administrative expenses (1)) 18.8 19.0 (0.2) (1%)
 
(1) Proportionate share of selling & administrative expenses from joint ventures and adjusted selling & administrative expenses are non-standard accounting measures.  See commentary in "Basis of Analysis in this MD&A, Non-standard and Additional GAAP Items".

Adjusted selling and administrative expenses decreased marginally to $18,786,000 in 2013 from $18,935,000 in 2012.  Adjusted selling and administrative expenses equated to 8.7% of total adjusted revenue in 2013, compared to 7.8% of total adjusted revenue in 2012, as a result of decreased adjusted revenue.

The single largest component of adjusted selling and administrative expenses was salaries and benefits which accounted for 60% of these expenses in 2013 (64% in 2012).

Equity Income from Joint Ventures

 
$Millions  2013  2012  Change  % Change
Proportionate share of revenue from joint ventures (1) 48.9 37.8 11.1 29%
Proportionate share of operating & maintenance expenses from joint ventures (1) 29.5 23.1 6.4 28%
Proportionate share of selling & administrative expense from joint ventures (1) 0.6 0.5 0.1 20%
Equity income from joint ventures 18.8 14.2 4.6 32%

(1) Proportionate share of revenue from joint ventures, proportionate share of operating & maintenance expenses from joint ventures and proportionate share of selling & administrative expenses from joint ventures are non-standard accounting measures.  See commentary in "Basis of Analysis in this MD&A, Non-standard and Additional GAAP Items".

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.  The analyses of these activities are incorporated throughout the relevant sections of this MD&A.  Joint venture activities are often located in some of the most prospective regions in Canada.  Further, two thirds of AKITA's joint ventures utilize pad drilling rigs.

Other Income (Losses)

 
$Millions  2013  2012  Change  % Change
Interest Income 0.3 0.4 (0.1) (25%)
Interest Expense (0.1) 0.0 (0.1) N/A
Gain on Sale of Joint Venture Interests in Rigs and Other Assets 0.1 1.1 (1.0) (91%)
Other Gains (Losses) 0.4 0.0 0.4 N/A
Total Other Income 0.7 1.5 (0.8) (53%)

The Company invests any cash balances in excess of its ongoing operating requirements in bank guaranteed highly liquid investments.  Interest income decreased to $345,000 in 2013 from $385,000 in 2012 as a result of reduced cash and term deposit balances for most of 2013.  The Company has undertaken significant capital expenditures related to the construction of new rigs and the conversion of conventional rigs into pad rigs, thereby reducing cash balances over time.

Interest expense of $108,000 (2012 - $4,000) has been accrued primarily to reflect the future cost of the Company's unfunded defined benefit pension plan.

During 2012, the Company disposed of its interests in its remaining two arctic drilling camps and other non-core assets resulting in a $1,082,000 gain.  AKITA disposed of several minor assets in 2013, resulting in $106,000 in gains.

In 2013, amounts reported as "Net Other Gains" of $385,000 include unrealized amounts related to forward exchange contracts purchased to provide a hedge for foreign rig equipment commitments for a rig under construction ($235,000), an unrealized cost related to loan guarantees that the Company has provided on behalf of certain joint venture partners ($106,000) and other ($44,000).

Other than the foreign currency hedge on major capital expenditures noted above, readers should be aware that in 2013 the Company conducted all of its operations in Canada, thereby reducing its exposure to foreign currency fluctuations.

Income Tax Expense

 
$Millions, except income tax rate (%)  2013  2012  Change  % Change
Current tax 5.4 3.0 2.4 80%
Deferred tax 3.8 6.7 (2.9) (43%)
Total income tax expense 9.2 9.7 (0.5) (5%)
Effective income tax rate 25.7%  25.1%    

Income tax expense decreased to $9,167,000 in 2013 from $9,658,000 in 2012, due to lower pre-tax income which was partially offset by an increase in the Canadian federal income tax rate as a result of a change in provincial allocations of revenue and expenses.  AKITA's proportion of income taxes that are deferred to future years has declined as a result of lower capital expenditures in 2013 when compared to the previous year.

Net Income, Funds Flow and Net Cash From Operating Activities

 
$Million  2013  2012  Change  % Change
Net income 26.5 28.8 (2.3) (8%)
Funds flow from operations(1) 57.6 59.4 (1.8) (3%)

(1) Funds flow from operations is an additional GAAP measure under IFRS.  See commentary in "Basis of Analysis in this MD&A, Non-Standard and Additional GAAP Items

Net income attributable to shareholders decreased to $26,515,000 or $1.48 (basic) per Class A Non-Voting and Class B Common Share ($1.47 - diluted) for 2013 from $28,755,000 or $1.60 per share (basic and diluted) in 2012.  Funds flow from operations decreased to $57,619,000 in 2013 from $59,412,000 in 2012.

The net income decline in 2013 compared to 2012 was attributable to higher depreciation expense as a result of an increase in the number of pad drilling rigs in AKITA's fleet as well as having reduced "other income", particularly as it related to gains on sales of non-core or obsolete assets.

By contrast to net income, the $1,793,000 reduction in funds flow in 2013 compared to 2012 resulted from a significant decline in the portion of income taxes that are deferred to future periods, which was affected by reduced capital expenditures compared to 2012.

Fleet and Rig Utilization

The following table summarizes rig changes that occurred in 2013:

     
   Gross Net
Number of rigs at December 31, 2012 39  35.875
Decommissioning of two rigs during the year (2) (2.000)
New rig completed during the year 1 0.850
Number of rigs at December 31, 2013 38 34.725

Utilization rates are a key statistic for the drilling industry since they measure revenue volume and influence pricing.  During 2013, AKITA achieved 6,073 operating days, which corresponded to a utilization rate of 43.4% compared to an industry average utilization rate of 40.3% during the same period.  During the comparative year in 2012, AKITA achieved 6,717 operating days, representing 48.3% utilization.  It should be noted that AKITA calculates its utilization rates based only upon rigs actively operating.  Rigs that are moving or receiving standby revenue do not contribute to AKITA's utilization statistic.

Liquidity and Capital Resources

At December 31, 2013, AKITA had $40,645,000 in working capital, including $13,998,000 in cash, compared to $31,214,000 in working capital, including $11,003,000 in cash, for the previous year.  In 2013, AKITA generated $39,554,000 from operating activities.  Cash was also generated from joint venture distributions ($13,525,000), from proceeds on exercise of stock options ($566,000) and from proceeds on sales of joint venture rigs and other assets ($443,000).  During the same period, cash was used for capital expenditures ($37,290,000), payment of dividends ($5,567,000), investing in term deposits ($5,000,000), increasing restricted cash balances used for loan guarantees ($2,950,000) repurchasing Class A Non-Voting Shares ($126,000), and payment of a loan commitment fee ($160,000).

In 2011, the Company established an operating loan facility with its principal banker totalling $50,000,000, having an initial five year term.  This facility was increased to $75,000,000 in 2012 and the term was also extended for an additional year.  In the fourth quarter of 2013, this facility was increased to $100,000,000 and the term was extended for an additional year to 2018.  Although the facility has been provided in order to finance general corporate needs, capital expenditures and acquisitions, management intends to access this facility primarily to enable the Company to fund new rig construction requirements related to drilling contracts that it might be awarded.  The interest rate on the facility varies based upon the actual amounts borrowed, but ranges from 0.45% to 1.45% over prime interest rates or 1.45% to 2.45% over guaranteed notes, depending on the preference of the Company.  The Company accessed this facility during the second quarter of 2012 on an interim basis with the borrowed amount being repaid within that quarter.  The facility has not been accessed since that date.

During the third quarter of 2013, the Company was awarded a contract to construct and operate an ultra-deep capacity rig on a long-term basis.  The Company sourced approximately $16 Million of materials for this rig from non-Canadian suppliers.  In order to minimize the risk of currency translation adjustments, AKITA purchased forward currency contracts totalling $13 Million, all of which remained outstanding at December 31, 2013.  These contracts expire during the second quarter of 2014.

Capital expenditures totalled $35,113,000 in 2013.  During the year, the Company completed the construction of a new pad rig for drilling heavy oil.  In addition, AKITA completed the conversion of a conventional double rig into a pad rig.  At December 31, 2013 the Company had two additional major capital projects in progress: the conversion of a conventional double rig into AKITA's first rig capable of drilling wells on a slant basis, as well as the ongoing construction of an ultra-deep pad rig.  Both of these projects are scheduled to be completed in 2014. The cost incurred during 2013 for the four aforementioned rig construction projects was $13,617,000.  Additional capital expenditures related to certifications and overhauls having a life in excess of one year ($8,666,000), rig equipment for existing rigs ($10,848,000) drill pipe and drill collars ($1,102,000) and other equipment ($880,000).  Capital expenditures for 2012 totalled $65,356,000.

From time to time, the Company enters into drilling contracts for extended terms.  At December 31, 2013, AKITA had seven rigs with multi-year contracts that extend into 2014 or beyond.  Of these contracts, five are anticipated to expire in 2014, one in 2016 and one in 2018.

During 2011, AKITA guaranteed bank loans made to joint venture partners in order to facilitate their purchase of co-owned rig interests totalling $2,700,000 for a period of four years.  During the third quarter of 2013, the Company guaranteed bank loans made to joint venture partners totalling $2,812,000 for a period of four years.  AKITA has provided assignments of monies on deposit totalling $5,950,000 with respect to these guarantees.  AKITA's security from its partners for these guarantees includes interests in specific rig assets.  The $5,950,000 in deposits has been classified as restricted cash on the balance sheet and is in addition to the $13,998,000 in cash held at December 31, 2013.

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 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.

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.        
Consolidated Statements of Financial Position  
           
      December 31 December 31 January 1
$ Thousands   2013 2012 (1) 2012 (1)
Assets        
Current Assets        
  Cash     $ 13,998  $ 11,003  $ 14,553
  Term deposits   5,000 - 9,500
  Accounts receivable   42,342 60,004 45,427
  Income taxes recoverable   - 4,487 -
  Prepaid expenses and other   365 159 413
      61,705 75,653 69,893
Non-current Assets        
Restricted cash   5,950 3,000 3,000
Other long term assets   1,017 921 826
Investments in joint ventures   10,092 4,825 5,672
Property, plant and equipment   212,984 204,969 166,812
Total Assets    $ 291,748  $ 289,368  $ 246,203
           
           
Liabilities        
Current Liabilities        
  Accounts payable and accrued liabilities    $ 18,865  $ 43,089  $ 26,623
  Deferred revenue   334 95 146
  Dividends payable   1,439 1,255 1,262
  Income taxes payable   422 - 3,269
      21,060 44,439 31,300
Non-current Liabilities        
Financial instruments   106 - -
Deferred income taxes   22,738 18,886 12,151
Pension liability   2,556 2,348 1,982
Total Liabilities   46,460 65,673 45,433
           
Shareholders' Equity        
Class A and Class B shares   23,908 23,186 23,308
Contributed surplus   3,185 3,060 2,758
Accumulated other comprehensive income   88 (21) -
Retained earnings   218,107 197,470 174,704
Total Equity   245,288 223,695 200,770
Total Liabilities and Equity    $ 291,748  $ 289,368  $ 246,203
           
(1) Certain comparative figures have been restated to conform with IFRS 11 and IAS 19.  

 

             
AKITA Drilling Ltd.          
Consolidated Statements of Net Income and Comprehensive Income    
             
       Year Ended December 31   
$ Thousands except per share amounts   2013 2012 (1)
         
Revenue    $ 167,533  $ 203,440
         
Costs and expenses      
  Operating and maintenance   106,281 137,854
  Depreciation and amortization   26,825 24,342
  Selling and administrative   18,265 18,462
Total costs and expenses   151,371 180,658
         
Revenue less costs and expenses   16,162 22,782
         
Equity income from joint ventures   18,792 14,163
         
Other income (losses)      
  Interest income   345 385
  Interest expense   (108) (4)
  Gain on sale of joint venture interests in rigs and other assets   106 1,082
  Net other gains   385 5
Total other income    728 1,468
         
Income before income taxes   35,682 38,413
         
Income taxes   9,167 9,658
         
Net income for the year attributable to shareholders   26,515 28,755
         
  Other comprehensive income   109 (21)
         
Comprehensive income for the year attributable to shareholders   $ 26,624  $ 28,734
         
         
Net income per Class A and Class B Share      
  Basic    $ 1.48  $ 1.60
  Diluted    $ 1.47  $ 1.60
         
(1) Certain comparative figures have been restated to conform with IFRS 11 and IAS 19.  
 



 
     
         
AKITA Drilling Ltd.      
Consolidated Statements of Cash Flows      
         
       Year Ended December 31  
$ Thousands   2013 2012 (1)
         
Operating Activities      
Net income    $ 26,515  $ 28,755
Non-cash items included in net income:      
  Depreciation and amortization   26,825 24,342
  Deferred income taxes   3,852 6,742
  Expense for defined benefit pension plan   369 353
  Stock options charged to expense   293 302
  Gain on sale of joint venture interests in rigs and other assets   (106) (1,082)
  Unrealized foreign currency gain   (235) -
  Unrealized loss on financial guarantee contracts   106 -
Funds flow from operations   57,619 59,412
Change in non-cash working capital:      
  Accounts receivable   17,662 (14,577)
  Prepaid expenses and other   (206) 254
  Income tax recoverable   4,487 (4,487)
  Accounts payable and accrued liabilities   (21,866) 18,884
  Deferred revenue   239 (51)
      316 23
  Equity income from joint ventures   (18,792) (14,163)
  Pension benefits paid   (15) (15)
  Interest paid   4 -
  Income tax expense - current   5,352 2,916
  Income tax paid    (4,930) (6,185)
Net cash from operating activities   39,554 41,988
         
Investing Activities      
Capital expenditures    (35,113) (65,356)
Change in non-cash working capital related to capital   (2,177) (2,425)
Net distributions from investments in joint ventures   13,525 15,010
Change in cash restricted for loan guarantees   (2,950) -
Change in term deposits   (5,000) 9,500
Proceeds on sale of joint venture interests in rigs and other assets   443 3,984
Net cash used in investing activities   (31,272) (39,287)
         
Financing Activities      
Dividends paid   (5,567) (5,038)
Proceeds received on exercise of stock options   566 18
Repurchase of share capital   (126) (1,091)
Loan commitment fee paid   (160) (140)
Net cash used in financing activities   (5,287) (6,251)
         
Increase (decrease) in cash and cash equivalents   2,995 (3,550)
Cash and cash equivalents, beginning of year   11,003 14,553
         
Cash and Cash Equivalents, End of Year    $ 13,998  $ 11,003
         
(1) Certain comparative figures have been restated to conform with IFRS 11 and IAS 19.  

   

SOURCE AKITA Drilling Ltd.

For further information:

Murray Roth
Vice President, Finance and Chief Financial Officer
(403) 292-7950

Website: http://www.akita-drilling.com