AKITA Drilling Ltd. ('AKITA' or the 'Company') announces net earnings of $4,288,000 in 2022 compared to a net loss in 2021 of $20,990,000, marking a significant turning point for the Company.
This meaningful improvement in the Company's results is primarily due to strong results in the Company's US division. While the Company was more active in both Canada (2,518 operating days in 2022 compared to 1,594 operating days in 2021) and the US (4,088 operating days in 2022 compared to 2,871 operating days in 2021) the primary driver for the improved results was the 165% increase in the Company's adjusted operating margin in the United States in 2022, most of which was generated in the second half of the year. Funds flow from operations increased to $34,813,000 in 2022, the highest annual funds flow from operations since 2015. The Company's net earnings and funds flow from operations were both weighted heavily to the fourth quarter which generated 46% of the funds flow from operations for the entire year. Capital spending for the year was 10% higher in 2022 than in 2021, with 36% of the 2022 capital being spent in the first quarter of the year. This weighting of capital spend early in the year, when significantly improved results were not yet realized, increased the Company's total debt to $95 million in the first quarter of 2022, with the balance of the Company's capital program for the year funded through cash flow.
Linda Southern-Heathcott, AKITA's Executive Chair and Chief Executive Officer stated: 'The momentum that began in 2021 continued into 2022 and allowed the Company to strengthen its balance sheet, building working capital to $31.1 million at the end of 2022 compared to $6.5 million at the end of 2021, and to achieve positive net earnings for the first time since 2016. We are very pleased with the Company's improving profitability and look forward to 2023. I would like to express a special thanks to AKITA's employees for their hard work and sacrifices through the challenging last few years. It is their hard work and dedication that got us to this point'
The Company's US operating segment had a strong year with meaningful day rate increases throughout the year and improved activity compared to the prior year. Adjusted operating margin increased 165% to $35,631,000 in 2022 from $13,427,000 in 2021. Of the total operating margin in the year, 70% was generated in the second half of year as day rate increases began to improve results. Activity built in 2021 in the US operating segment and remained constant through 2022, averaging 1,000 operating days per quarter. The key driver for improved results was higher day rates. Revenue per day improved from $26,089 in the first quarter of 2022 to $37,721 in the fourth quarter. Revenue in the US accounted for 63% of the Company's total 2022 adjusted revenue, consistent with 62% in 2021. Adjusted operating margin in the US was 64% of the total for the Company in 2022, up from 60% in 2021.
Adjusted operating and maintenance costs increased to $95,167,000 in 2022 from $57,997,000 in 2021 due to increased activity as well as an increase in adjusted operating and maintenance expense per day which increased 15% to $23,280 in 2022 from $20,201 in 2021. Operating and maintenance expense in the fourth quarter of 2022 was positively impacted by the receipt of a $2.0 million Employee Retention Credit ('ERC') from the IRS. The ERC is a COVID-19 related credit, granted to employers that retained a certain number of employees while experiencing significant decreases in revenue during the pandemic. This amount reduced the total operating costs in the quarter.
FORWARD-LOOKING INFORMATION
Certain statements contained in this news release may constitute forward-looking information. Forward-looking information is often, but not always, identified by the use of words such as 'anticipate', 'plan', 'estimate', 'expect', 'may', 'will', 'intend', 'should', and similar expressions.
Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information.
The Company's actual results could differ materially from those anticipated in this forward-looking information as a result of regulatory decisions, competitive factors in the industries in which the Company operates, prevailing economic conditions, and other factors, many of which are beyond the control of the Company.
The Company believes that the expectations reflected in the forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon.
Any forward-looking information contained in this news release represents the Company's expectations as of the date hereof, and is subject to change after such date. The Company disclaims any intention or obligation to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required by applicable securities legislation.
Contact:
Tel: (403) 292-7537
AKITA DRILLING LTD. 
