CALGARY, AB , Aug. 4, 2026 /CNW/ -- AKITA Drilling Ltd. (TSX: AKT)
The second quarter marked a transformative period for AKITA, culminating in the June 30, 2026 acquisition of Fox Drilling and the completion of the Company's share restructuring. Since closing, AKITA has made strong progress integrating Fox's high-specification triple drilling rigs, employees and operations into its Canadian business. At the same time, the elimination of AKITA's dual-class share structure and the commencement of trading under a single common share symbol, "AKT," have simplified the Company's capital structure and broadened its shareholder base. Together, these developments position AKITA as a larger, more diversified drilling contractor with an enhanced platform for future growth and cash flow generation
Colin Dease, AKITA's President and Chief Executive Officer stated: "Although the first half of 2026 was challenging for AKITA, we are optimistic about the second half of the year for two reasons. First, the economic outlook for the industry as a whole is improving in both Canada and the US, and AKITA should be significantly more active in the second half of the year than in the first in both markets.
A second factor that will have a significant impact on the Company in the second half of the year is the acquisition of Fox Dilling, which closed on June 30th. This acquisition adds six triple rigs to AKITA's Canadian fleet and introduces a new customer for AKITA in Paramount Resources. Five of the six rigs are high-specification walking AC triple rigs that are purpose built for the Montney and Duvernay plays in Canada, which are two of the most active areas in the WCSB. One of the recently acquired Fox rigs just set a new operational milestone, drilling the longest measured depth well in Canadian history at 9,605 metres. This achievement surpasses the previous record AKITA established in late 2025 (9500 meters) and underscores the combined Company's technical capabilities and performance in complex, extended-reach drilling.
As exciting as the second half of the year is shaping up for the Company, the streamlining of the Company's share structure into a single common class, now traded under the AKT symbol, is also very significant for all shareholders. It marks an important milestone for AKITA and for the Southern family, who were the controlling shareholder of the Company until the move to a single class of shares on June 30th. The Southern family's stewardship of AKITA over the past 33 years has helped build a unique company with deep roots and strong family values, one that I am proud to own shares in and to help lead into the future. "
The Company reported a net loss of $5,810,000 for the second quarter of 2026 compared with net income of $2,297,000 in the second quarter of 2025. The decrease was primarily attributable to lower drilling activity, with operating days declining 13% in both Canada and the United States, continued pricing and margin pressure in the US market, and $2.0 million of transaction costs related to the acquisition of Fox and the associated share reorganization.
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Net cash from operating activities decreased to $12,111,000 for the three months ended June 30, 2026, from $18,209,000 in the same period of 2025 also due to lower activity in the quarter. Funds flow from operations, which is not affected by changes in non-cash working capital, decreased 92% to $827,000 from $9,863,000 in the second quarter of 2025.
Routine capital expenditures totalled $9,143,000 during the second quarter of 2026, compared with $7,609,000 in the second quarter of 2025. In addition, the acquisition of Fox resulted in the recognition of $76,693,000 of property, plant and equipment, representing the fair value of the six acquired drilling rigs and related ancillary equipment.
CONSOLIDATED FINANCIAL HIGHLIGHTS
Canadian Drilling Division
At January 1, 2026, AKITA amended its joint venture agreements, resulting in the joint ventures being accounted for as joint operations. Accordingly, the Company's proportionate share of the joint operations is now recognized within the applicable line items of the financial statements rather than being presented as a single line item. As a result, all revenue and expenses are included in their respective financial statement line items.
During the second quarter of 2026, AKITA's adjusted operating margin decreased to $3,334,000 from $4,360,000 in the same quarter of 2025. The decrease was primarily attributable to lower day rates and fewer operating days during the quarter. Average day rates declined due to the mix of rigs operating during the second quarter of 2026 compared with the same period in 2025, with more operating days from single rigs and fewer operating days from higher-margin triple rigs. This also contributed to adjusted operating margin per operating day decreasing to $7,826 from $8,896. Activity declined compared with the second quarter of 2025 as several customer drilling programs that typically continue through the second quarter were paused until the third quarter.
The Fox acquisition added six rigs to the Canadian fleet. Two of the acquired rigs were operating when the acquisition closed on June 30, 2026, and accordingly, two operating days were included in the Company's second quarter 2026 results.
United States Drilling Division
Compared with the second quarter of 2025, results for the second quarter of 2026 declined significantly, primarily due to lower adjusted operating margin per operating day, which decreased 41% to $6,557 from $11,151 in the same period of 2025. The reduction in day rates was the result of lower industry activity, which reduced the pricing power of drilling contractors due to an oversupply of drilling rigs. Activity in the second quarter of 2026 was also lower, with 763 operating days compared with 875 operating days in the second quarter of 2025.
Adjusted operating and maintenance expense per operating day increased to $28,659 from $27,555, primarily due to rig reactivation costs incurred during the quarter.
When compared with the first quarter of 2026, activity continued to improve during the second quarter, with operating days increasing to 763 from 590. The higher activity had a positive impact on adjusted operating margin in the US, which increased to $5,003,000 in the second quarter of 2026 from $3,976,000 in the first quarter of 2026.
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 June 30, 2026 will be available on the AKITA website ( www.akita-drilling.com ) and via SEDAR ( www.sedarplus.ca ) or can be requested in print from the Company.
Non-GAAP and Supplementary Financial Measures
Non-GAAP Financial Measures
Adjusted Revenue and Adjusted Operating and Maintenance Expenses
Revenue and operating and maintenance expenses in AKITA's Canadian operating segment include revenue and expenses from AKITA's wholly-owned drilling rigs as well as its share of joint venture revenue and expenses. Excluded from the revenue and expenses in AKITA's Canadian and US operating segment are flow through charges that are billed to operators and repaid to the Company. The volume and timing of the flow through charges can artificially impact the operational per day analysis and as a result management and certain investors may find the comparability between periods is improved when these flow through charges are excluded from revenue per day and operating and maintenance expense per day. The flow through charges do not have any impact on the Company's net earnings as the amounts offset each other.
Adjusted Funds Flow from Operations and Adjusted EBITDA
Adjusted funds flow from operations is not a recognized GAAP measure under IFRS and readers should note that AKITA's method of determining adjusted funds flow from operations may differ from methods used by other companies, and includes cash flow from operating activities before working capital changes, equity income from joint ventures, and income tax amounts paid or recovered during the period. Nonetheless, management and certain investors may find adjusted funds flow from operations to be a useful measurement to evaluate the Company's operating results at year-end and within each year, since the seasonal nature of the business affects the comparability of non-cash working capital changes both between and within periods. Adjusted earnings before interest and finance costs, taxes, depreciation and amortization, other non-cash items and one-time gains and losses ("Adjusted EBITDA") is not a recognized GAAP measure under IFRS and readers should note that AKITA's method of determining adjusted EBITDA may differ from methods used by other companies, and removes the aspect of how the Company finances its operations from adjusted funds flow from operations.
Non-GAAP Ratios
"Adjusted funds flow from operations per share" is calculated on the same basis as net loss per class A and class B share basic and diluted, utilizing the basic and diluted weighted average number of class A and class B shares outstanding during the periods presented.
"Adjusted revenue per operating day" may be useful to analysts, investors, other interested parties and management as a measure of pricing strength and is calculated by dividing adjusted revenue by the number of operating days for the period.
"Adjusted operating and maintenance expenses per operating day" may be useful to analysts, investors, other interested parties and management as it demonstrates a degree of cost control and provides a proxy for specific inflation rates incurred by the Company
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. In particular, forward-looking information in this news release includes, but is not limited to, references to the outlook for the drilling industry (including activity levels and day rates), the Company's relationships and customers and vendors, advantages associated with the percentage of pad drilling rigs in the Company's Canadian drilling fleet, the renewal of drilling contracts, debt repayment.
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.
Although the Company believes that the expectations reflected in the forward-looking information are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and no assurance can be given that these expectations will prove to be correct. By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and therefore carry the risk that the predictions and other forward-looking statements will not be realized. Readers of this news release are cautioned not to place undue reliance on these statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, estimates and intentions expressed in such forward-looking statements.
The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of, among other things, prevailing economic conditions; the level of exploration and development activity carried on by AKITA's customers, world crude oil prices and North American natural gas prices; global liquefied natural gas (LNG) demand, weather, access to capital markets; and government policies. We caution that the foregoing list of factors is not exhaustive and that while 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, prior to making a decision to invest in AKITA. Except where required by law, the Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by it or on its behalf.
SOURCE AKITA Drilling Ltd.
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