Mr. Colin Dease reports

AKITA ANNOUNCES THIRD QUARTER RESULTS AND NET INCOME OF $3.9 MILLION FOR THE QUARTER

Akita Drilling Ltd. has released results for the nine months ended Sept. 30, 2023.

The company's net income increased to $3.88-million in the third quarter of 2023, up from $2.66-million during the same period of 2022. With a fifth consecutive quarter of positive earnings, the company has returned to a positive retained earnings balance ($3,672,000), which has been in a deficit position since the asset impairment recorded in the first quarter of 2021. Higher day rates drove the improved earnings as activity levels fell between the two quarters (1,491 operating days in the third quarter of 2023 versus 1,676 in the same period of 2022). Adjusted funds flow from operations increased 18 per cent to $10,566,000 in the third quarter of 2023 from $8,957,000 in the same period of 2022, also driven by improved rates. Net cash from operations decreased to $2,308,000 for the three months ended Sept. 30, 2023, compared with $3,727,000 in the same period of 2022, due to a third quarter working capital build in 2023. Total debt decreased to $79,233,000 at the end of the third quarter of 2023 from $94,436,000 at the same time in 2022. In Canada, the company began the quarter operating 10 rigs, which declined to five at the end of the quarter primarily due to timing of operator programs, which will reverse in the fourth quarter. In the United States, the active rigs for the company went from 14 at the start of the quarter and to eight active rigs at the end of the third quarter of 2023 as the active rig count continued to fall for the U.S. industry as a whole. Akita anticipates the active rig count for the company will partially rebound in the fourth quarter of 2023.

The company spent $4,566,000 on routine capital items in the third quarter of 2023, up from $3.02-million over the same period in 2022. In addition to routine capital items, the company commenced an upgrade to one of its oil sands designed rigs to enable the rig to be competitive in the deep gas market in Canada. This upgrade is anticipated to be done mid-fourth quarter of 2023 at a cost of approximately $4-million.

Colin Dease, Akita's chief executive officer, stated: "Akita's U.S. active rig count stayed constant at 14 rigs until the third quarter of 2023 despite broader market declines in the industry, highlighting the marketability of our U.S. fleet. We are confident our lull in activity will be short-lived, and we are looking forward to 2024 and increased activity in both Canada and the U.S."

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 Sept. 30, 2023, will be available on the Akita website or on SEDAR+, or can be requested in print from the company.

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