AKITA Drilling Ltd. Announces Third Quarter Results



    CALGARY, Oct. 30 /CNW/ - AKITA Drilling Ltd. announced third quarter
earnings and funds flow today. AKITA Drilling Ltd.'s net earnings for the nine
months ended September 30, 2008 were $12,826,000 ($0.70 per share) on revenue
of $101,407,000. Comparative figures for 2007 were earnings of $14,373,000
($0.79 per share) on revenue of $109,288,000. Funds flow from continuing
operations for the period was $25,332,000 compared to $27,852,000 in 2007.
    Earnings for the three months ended September 30, 2008 were $3,681,000
($0.20 per share) on revenue of $33,747,000 compared to $2,196,000 ($0.12 per
share) on revenue of $29,804,000 for the corresponding period in 2007. Funds
flow from continuing operations for the quarter ended September 30, 2008 was
$7,723,000 compared to $6,136,000 in the corresponding quarter in 2007.
    Although still low, AKITA's drilling activity showed some improvement in
the third quarter, particularly for medium and deep capacity rigs. Operating
statistics for the first nine months of 2008 and 2007 are as follows:

    
                                         Number of
                                       Drilling Rigs     Number
                                                        of Wells   Operating
                                      Gross       Net    Drilled     Days
    -------------------------------------------------------------------------
    Canadian Operations     2008        37      34.725       640       4,666
                            2007        39      35.575       697       4,558
    -------------------------------------------------------------------------
    U.S. Operations         2008         3         1.5         2         122
                            2007         3         1.5         3         131
    -------------------------------------------------------------------------
    Total                   2008        40      36.225       642       4,788
                            2007        42      37.075       700       4,689
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    During the third quarter, AKITA entered into a multi-year contract with a
major customer and is currently performing upgrades on two of its rigs in
order to fulfil this obligation. In addition, AKITA currently has 95% of its
rigs booked for upcoming winter work, although not all of these upcoming
projects may span the entire season. Nevertheless, management remains cautious
in its expectations, particularly as a consequence of recent significant
declines in crude oil and natural gas prices and the unprecedented events that
are taking place in the world capital markets.
    Financial results for the third quarter are as follows:


    
    -------------------------------------------------------------------------
    Consolidated Balance Sheets
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Unaudited                                    September 30    December 31
    ($000's of Canadian Dollars)                2008       2007     2007
    -------------------------------------------------------------------------
    ASSETS
    Current assets
      Cash                                   $  46,316  $  38,778  $  43,166
      Accounts receivable                       35,808     26,604     22,505
      Other                                      1,498        651        272
                                            ---------------------------------
                                                83,622     66,033     65,943
    Restricted cash                              5,000          -      5,000
    Capital assets                             147,642    149,079    152,579
                                            ---------------------------------

                                             $ 236,264  $ 215,112  $ 223,522
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Accounts payable and accrued
       liabilities                           $  12,941  $  10,722  $  13,051
      Dividends payable                          1,278      1,279      1,279
      Income taxes payable                       2,290        151        873
      Deferred revenue                           1,888        783      1,617
                                            ---------------------------------

                                                18,397     12,935     16,820
    Future income taxes                         16,199     15,749     15,055
    Pension liability                            3,805      3,563      3,609

    CLASS A AND CLASS B SHAREHOLDERS' EQUITY
    Class A and Class B shares                  23,334     23,369     23,369
    Contributed surplus                          2,271      1,036      1,110
    Retained earnings                          172,258    158,460    163,559
                                            ---------------------------------

                                               197,863    182,865    188,038
                                            ---------------------------------

                                             $ 236,264  $ 215,112  $ 223,522
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    Consolidated Statements of Earnings, Comprehensive Income and
    Retained Earnings
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Unaudited                         Three Months          Nine Months
    ($000's of Canadian Dollars,         Ended                 Ended
     except per share amounts)        September 30          September 30
                                     2008       2007       2008       2007
    -------------------------------------------------------------------------

    REVENUE                       $  33,747  $  29,804  $ 101,407  $ 109,288
                                 --------------------------------------------

      Operating and maintenance      20,970     19,468     61,688     65,038
      Depreciation                    3,935      3,662     12,562     11,136
      Selling and administrative      4,079      3,610     13,026     12,061
                                 --------------------------------------------
                                     28,984     26,740     87,276     88,235
                                 --------------------------------------------
    Revenue less costs and
     expenses                         4,763      3,064     14,131     21,053
                                 --------------------------------------------
    OTHER INCOME (EXPENSE)
      Interest income                   479        449      1,456      1,233
      Gain on sale of joint
       venture interests in rigs
       and other assets                  32         62        696        196
      Gain (loss) on foreign
       currency translation              52       (208)        94       (825)
                                 --------------------------------------------
                                        563        303      2,246        604
                                 --------------------------------------------
    EARNINGS BEFORE INCOME TAXES      5,326      3,367     16,377     21,657
                                 --------------------------------------------
    INCOME TAXES
      Current                         1,612        970      4,268      5,325
      Future                             33        123      1,144      1,733
                                 --------------------------------------------
                                      1,645      1,093      5,412      7,058
                                 --------------------------------------------
    EARNINGS FROM CONTINUING
     OPERATIONS                       3,681      2,274     10,965     14,599

    Gain on disposal from
     discontinued operations,
     net of tax                           -          -      1,941          -
    Discontinued operations,
     net of tax                           -        (78)       (80)      (226)
                                 --------------------------------------------
    NET EARNINGS AND
     COMPREHENSIVE INCOME             3,681      2,196     12,826     14,373

    Retained earnings, beginning
     of period                      170,146    157,618    163,559    148,781
    Dividends declared               (1,277)    (1,273)    (3,835)    (3,838)
    Adjustment on repurchase and
     cancellation of share capital     (292)       (81)      (292)      (857)
                                 --------------------------------------------
    RETAINED EARNINGS,
     END OF PERIOD                $ 172,258  $ 158,460  $ 172,258  $ 158,459
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per Class A and
     Class B share from
     continuing operations
      Basic                       $    0.20  $    0.12  $    0.60  $    0.80
      Diluted                     $    0.20  $    0.12  $    0.60  $    0.79

    Earnings per Class A and
     Class B share
      Basic                       $    0.20  $    0.12  $    0.70  $    0.79
      Diluted                     $    0.20  $    0.12  $    0.70  $    0.78
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    Consolidated Statements of Cash Flows
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Unaudited                         Three Months          Nine Months
    ($000's of Canadian Dollars)         Ended                 Ended
                                      September 30          September 30
                                     2008       2007       2008       2007
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Earnings from continuing
     operations                   $   3,681  $   2,274  $  10,965  $  14,599
    Non-cash items included in
     earnings from continuing
     operations
      Future income taxes                33        123      1,144      1,733
      Expense for defined
       benefit pension plan              65         65        196        196
      Stock options charged
       to expense                        41         74      1,161        384
      Gain on sale of joint
       venture interests in rigs
       and other assets                 (32)       (62)      (696)      (196)
                                 --------------------------------------------
    Funds flow from continuing
     operations                       7,723      6,136     25,332     27,852
    Cash provided from (to)
     discontinued operations              -        (16)        24        (49)
    Change in non-cash working
     capital                        (14,065)       527    (13,208)    (6,202)
                                 --------------------------------------------
                                     (6,342)     6,647     12,148     21,601
                                 --------------------------------------------
    INVESTING ACTIVITIES
    Capital expenditures             (5,779)    (5,973)    (9,861)   (31,531)
    Proceeds on sale of joint
     venture interests in rigs
     and other assets                   119      4,740      1,259      4,911
    Proceeds on sale of
     discontinued assets                  -          -      3,510          -
    Change in non-cash
     working capital                    211       (898)       243     (1,358)
                                 --------------------------------------------
                                     (5,449)    (2,131)    (4,849)   (27,978)
                                 --------------------------------------------
    FINANCING ACTIVITIES
    Dividends paid                   (1,277)    (1,273)    (3,835)    (3,838)
    Repurchase of share capital        (327)       (88)      (327)      (928)
    Change in non-cash working
     capital                             13         (6)        13         (6)
                                 --------------------------------------------
                                     (1,591)    (1,367)    (4,149)    (4,772)
                                 --------------------------------------------
    INCREASE (DECREASE) IN CASH     (13,382)     3,149      3,150    (11,149)
    Cash position, beginning
     of period                       59,698     35,629     43,166     49,927
                                 --------------------------------------------
    CASH POSITION, END OF PERIOD  $  46,316  $  38,778  $  46,316  $  38,778
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest paid during the
     period                       $       8  $      14  $      15  $      53
    Income taxes paid during
     the period                   $   1,199  $   1,964  $   3,687  $  11,021
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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 our business, our outlook for our 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.
    
    %SEDAR: 00002868E




For further information:

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


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