Mr. Colin Dease reports

AKITA ANNOUNCES FIRST QUARTER RESULTS AND NET INCOME OF $9.5 MILLION FOR THE QUARTER

Akita Drilling Ltd. has released results for the three months ended March 31, 2023.

The Company's net income increased to $9,523,000 in the first quarter of 2023 from a loss of $2,933,000 during the same period of 2022. Higher day rates drove the improved earnings as activity levels remained constant between the two quarters (1,764 operating days in the first quarter of 2023 versus 1,739 in the same period of 2022). Adjusted funds flow from operations increased 203% to $15,159,000 in the first quarter of 2023 from $4,996,000, also driven by improved rates. Net cash from operations decreased to a loss of $414,000 for the three months ended March 31, 2023, compared to a gain of $247,000 in the same period of 2022, due to the continued build of the Company's working capital balances which typically peak at the end of the first quarter. Debt decreased to $91,212,000 at the end of the first quarter of 2023 from $94,521,000 at the same time in 2022. In Canada, the Company operated 12 rigs in the first quarter of 2023 (11 rigs in the same period of 2022) and 14 rigs in the US (13 rigs in the first quarter of 2022). The Company spent $2,504,000 on routine capital items in the first quarter of 2023, down from $6,412,000 over the same period in 2022.

Colin Dease, AKITA's Chief Executive Officer stated: "We are pleased with our first quarter results and our focus for the balance of the year will be on meaningful debt repayments while we work to increase our active rig count in Canada."

Canadian Drilling Division

During the first quarter of 2023, AKITA achieved 720 operating days in Canada, which corresponds to a utilization rate of 40% compared to an industry utilization of 45%. For the first quarter of 2022, the Company's utilization rate was 40% with an industry average of 39%.

Adjusted revenue in Canada increased to $26,380,000 in the first quarter of 2023 from $21,063,000 in the first quarter of 2022. Adjusted revenue per operating day increased to $36,639 in the first quarter of 2023 from $29,173 in the same period of 2022, due to higher day rates which in turn increased adjusted revenue. Rates improved in the latter half of 2022 and impacted 2023's first quarter results.

Higher revenue in the quarter was offset by higher adjusted operating and maintenance expenses which increased 18% to $18,737,000 in the first quarter of 2023 from $15,857,000 in the same period of 2022. As activity remained flat for the Company in Canada, this increase is due to higher labour costs as well as increased costs for consumable rig supplies and repairs.

United States Drilling Division

The impact of day rate increases in the US that took effect in the second half of 2022 are clear to see when comparing revenue of $41,000,000 in the first quarter of 2023 with revenue of $26,533,000 over the same period of 2022; a 55% increase, despite activity levels increasing just 3% over the same period. Quarter-over-quarter revenue per day increased 51% from the first quarter of 2022 to the first quarter of 2023 with the largest increases to the second and third quarters of 2022.

Activity increased 27 days in the first quarter of 2023 (1,044) from the first quarter of 2022 (1,017) as all 14 rigs that the Company is currently marketing in the US were working during both quarters.

Operating and maintenance costs increased 24% between the first quarter of 2023 and 2022, leading to increased costs per day of $25,653 in the first quarter of 2023 from $21,259 in the first quarter of 2022. The primary driver of the cost per day increase is increased labour costs. Operating and maintenance costs were offset in the first quarter of 2023 by $2,000,000 in Employee Retention Credits received from the IRS.

During the first quarter of 2023 the Company disposed of certain components, including the centre section of one of its idle US rigs, for proceeds of $2,027,000, decreasing the Company's total US rig count to 15 rigs. The Company also relocated two rigs from Colorado to Texas in order to consolidate its US Operations in the Permian basin.

FURTHER INFORMATION

This news release shall be used as preparation for reading the full disclosure documents. AKITA's unaudited interim condensed consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2023 will be available on the AKITA website or via SEDAR or can be requested in print from the Company.

We seek Safe Harbor.