AKITA Drilling Ltd. Announces Record 2006 Earnings and Funds Flow



    CALGARY, March 19 /CNW/ - Record earnings and funds flow and an active
rig construction program highlighted AKITA's achievements for 2006.
    Earnings for the year ended December 31, 2006 were $33,755,000 or
$1.83 per share on revenue of $174,543,000. Comparative figures for 2005 were
$29,264,000 or $1.57 per share on revenue of $162,110,000. Funds flow from
operations for the current year was $47,199,000 as compared to $42,421,000 in
2005.
    Much of the financial success in 2006 occurred in the first half of the
year. Demand for shallow capacity rigs, and to a lesser degree, deep drilling
rigs, tapered off starting in the third quarter, primarily as a result of
weakness in natural gas prices. Since demand for medium capacity rigs and
heavy oil pad rigs is largely influenced by oil prices, demand for these types
of equipment remained strong throughout the year. Drilling rig utilization was
56.5% compared to the industry average of 55.1% and AKITA's utilization of
59.3% in 2005.
    In 2006, a 3,350 metre capacity rig was constructed for the Doyon Akita
Joint Venture at a cost of $7,594,000 (net cost to AKITA) and commenced
operations on a multi-year contract in Alaska.
    At year-end, AKITA's fleet stood at 39 drilling rigs (35.575 net),
including three drilling rigs (1.5 net) in Alaska. In addition, the Company
has three well servicing rigs (1.5 net), all of which operate in southern
Canada.
    AKITA had three drilling rigs under construction throughout 2006. The
first of these rigs, a shallow capacity rig, commenced operations in early
January of 2007. Two heavy oil pad rigs remain under construction and are
expected to be operational by the second quarter of 2007.
    In October 2006, AKITA's board of directors approved the payment of an
increased quarterly dividend of $0.07 per share. This represents an increase
of 16.7% calculated on an annual basis. During the year, the Company made
direct contributions to enhance shareowner value through purchases pursuant to
its Normal Course Issuer Bid by repurchasing 257,400 Class A Non-Voting Shares
(1.5% of the class) at an average price of $19.46 per share.

    
    Selected financial information for the Company is as follows:

                         CONSOLIDATED BALANCE SHEETS
                           (Dollars in thousands)

    -------------------------------------------------------------------------
    December 31                                            2006         2005
    -------------------------------------------------------------------------

    Assets
    Current assets
      Cash                                            $  49,927    $  42,685
      Accounts receivable                                38,529       50,900
      Other                                                 206           98
                                                     ------------------------
                                                         88,662       93,683
    Investments                                               -           55
    Capital assets                           Note 2     133,575      106,114
                                                     ------------------------

                                                      $ 222,237    $ 199,852
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    Liabilities
    Current liabilities
      Bank indebtedness                      Note 3   $       -    $   4,400
      Accounts payable and accrued
       liabilities                                       24,772       22,803
      Dividends payable                                   1,285        1,120
      Income taxes payable                                5,924        5,861
                                                     ------------------------
                                                         31,981       34,184
    Future income taxes                      Note 9      14,016       14,200
    Pension liability                        Note 5       3,367        3,102


    Class A and Class B Shareholders' Equity
    Class A and Class B shares               Note 6      23,440       23,540
    Contributed surplus                                     652          483
    Retained earnings                                   148,781      124,343
                                                     ------------------------
                                                        172,873      148,366
                                                     ------------------------

                                                      $ 222,237    $ 199,852
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          CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
                   (Dollars in thousands, except per share)

    -------------------------------------------------------------------------
    Year ended December 31                                 2006         2005
    -------------------------------------------------------------------------

    Revenue                                           $ 174,543    $ 162,110
                                                     ------------------------
    Costs and expenses
      Operating and maintenance                          99,970       92,576
      Depreciation                                       14,211       12,691
      Selling and administrative                         15,187       14,140
                                                     ------------------------
                                                        129,368      119,407
                                                     ------------------------
      Operating income                                   45,175       42,703
                                                     ------------------------
    Other income (expense)
      Interest on long-term debt                              -         (138)
      Interest income                                     1,937        1,235
      Gain on sale of joint venture interests
       in rigs and other assets                           1,017          970
                                                     ------------------------
                                                          2,954        2,067
                                                     ------------------------
    Earnings before income taxes                         48,129       44,770
                                                     ------------------------
    Income taxes
      Current                                            14,558       14,419
      Future                                               (184)       1,087
                                                     ------------------------
                                             Note 9      14,374       15,506
                                                     ------------------------
    Net earnings                                         33,755       29,264

    Retained earnings, beginning of year                124,343      100,871
    Dividends declared                                   (4,613)      (4,182)
    Adjustment on repurchase and
     cancellation of share capital           Note 6      (4,704)      (1,610)

                                                     ------------------------
    Retained earnings, end of year                    $ 148,781    $ 124,343
    -------------------------------------------------------------------------
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    Earnings per Class A and Class B share   Note 7
      Basic                                           $    1.83    $    1.57
      Diluted                                         $    1.81    $    1.56
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Dollars in thousands)

    -------------------------------------------------------------------------
    Year ended December 31                                 2006         2005
    -------------------------------------------------------------------------

    Operating activities
    Net earnings                                      $  33,755    $  29,264
    Non-cash items included in earnings
      Depreciation                                       14,211       12,691
      Future income taxes                                  (184)       1,087
      Expense for defined benefit pension plan              265          252
      Stock options charged to expense                      169           97
      Gain on sale of joint venture interests
       in rigs and other assets                          (1,017)        (970)
                                                     ------------------------
    Funds flow from operations                           47,199       42,421
    Change in non-cash working capital                   13,953       (4,931)
                                                     ------------------------
                                                         61,152       37,490
                                                     ------------------------
    Investing activities
    Capital expenditures                                (49,698)     (25,325)
    Proceeds on sales of joint venture interests
     in rigs and other assets                             9,043        7,910
    Reduction in investments                                 55            -
    Change in non-cash working capital                      514          714
                                                     ------------------------
                                                        (40,086)     (16,701)
                                                     ------------------------
    Financing activities
    Increase (decrease) in bank indebtedness             (4,400)       4,400
    Dividends paid                                       (4,448)      (4,182)
    Proceeds received on exercise of stock options          205            -
    Repurchase of share capital                          (5,009)      (1,739)
    Repayment of long-term debt                               -       (3,973)
    Change in non-cash working capital                     (172)         (62)
                                                     ------------------------
                                                        (13,824)      (5,556)
                                                     ------------------------
    Increase in cash                                      7,242       15,233
    Cash position, beginning of year                     42,685       27,452
                                                     ------------------------
    Cash position, end of year                        $  49,927    $  42,685
    -------------------------------------------------------------------------
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    Interest paid during the year                     $      72    $     110
    -------------------------------------------------------------------------
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    Income taxes paid during the year                 $  14,495    $  10,083
    -------------------------------------------------------------------------
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    %SEDAR: 00002868E




For further information:

For further information: Mr. Murray Roth, Vice President, Finance and
Chief Financial Officer, (403) 292-7950, Website:
http://www.akita-drilling.com


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