UPDATE: AKITA Drilling Edges Lower As Posts Lower Q3 Profit, Revs
AKITA Drilling Ltd.'s (AKT-A.TO, AKT-B.TO) reported net income for the three months ended September 30, 2012, was $4.33 million $0.24 per share on revenue of $52.11 million compared to $6.93 million $0.38 per share) on revenue of $54.87 million for the corresponding period in 2011. Funds flow from operations for the quarter ended September 30, 2012 was $10.8 million compared to $12.83 million in the corresponding quarter in 2011.
AKITA said rig activity declined during the third quarter of 2012 to 1,529 operating days or 43.7% utilization compared to 2,140 operating days or 62.9% utilization for the corresponding quarter in 2011. This decline was attributable to weakened market conditions for AKITA's conventional single and double capacity rigs. By contrast AKITA's conventional triples and pad rigs continue to achieve strong utilization.
Management anticipates completion of the first of two pad rigs under construction later in the fourth quarter of 2012 with the second rig being completed early in 2013. These rigs are contracted for either four years or five years. In addition, the company recently completed the conversion of a conventional triple into a pad rig. This rig is set to recommence operations during the fourth quarter of 2012 under a two-year contract. The company has entered into a contract with a third party to build a rig and upon completion, estimated to be in the fourth quarter of 2012, the third party will purchase the rig. The third party has contracted with AKITA to provide multi-year labour services to operate the rig.
Although the weak natural gas and associated natural gas liquids prices are having a negative impact on conventional drilling activity, management remains optimistic on ongoing pad rig activity as well as opportunities to continue drilling with conventional triples. It appears that no significant increase in activity levels for singles and doubles will occur prior to the upcoming winter drilling season.
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