RE: Oil service sector Hi Torontojay,
I too agree with you, you have to buy them when no one wants them(when they are dirt cheap).
Akita is just like my recent investment in ADF group. I started buying DRX in mid 2021 at $1.68 when it was ignored by most.Fast forward 2 1/2 year and my DRX stock closed at $7.49.
I too have been an investor in Akita in prior years.I use to write quit often to their prior CFO Murray Roth for info.
You are absolutly right, Akita was a debt free company prior to 2018 and was paying a dividend.
From 2014 to 2018 the yearly dividend was 34 cents.
Prior to buying Extreme Drilling, Akita had 27 rigs all working in Canada exept.1 if i recall properly.
They bought 13 triple from Extreme and took on debt and issued 21,6 million shares.This took
them to 40 rigs.
In 2023, they started to tackle the debt.I beleive they will do the same in 2024 and in 2025.
At the end of Q3 2022, they had LT debt of 94.4 million.It is now down to 79.2 million.
Less debt= less interest payment = more EPS
Now they have 20 CDN and 15 USA based rigs.Most of them are triple or triple pad.
Out of 35 rigs, they only have 4 single,3 double and 1 double pad.
As of friday, they have 10 rigs drilling in Canada in this soft market.I don't have acces to their
USA info.
The CEO seemed positive for 2024.Here is what he said at the end of Q3
Colin Dease, AKITA's Chief Executive Officer stated: "AKITA's US 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 US 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 US.
Here are portions of some of my previous posts on Akita
Akita is is what i call a hidden gem.
In 2018 Akita bought a US based driller(Xtreme drilling).This company had a huge non-capital losses.
This mean that Akita won't pay taxes for years to come in the USA.This assets is not on it's balance sheet.
It equats to $1.92 / share.
Also when covid it them, they took huge write-off on the value of their rig fleets.
They are now valued at 32% of their cost.
Akita will have less depreciation going forward.
In their most recent presentation Akita says that the ACTUAL market value
of their fleet is $11.71 / share.
Are they over optimist? maybe but how much 10%, 20% 30% i don't have the answer.
The fact that they were again profitable in Q3 in a very soft market tells me that
this could be a very rewarding stock.
Book value stands at $3.86 and the stock trades at $1.56 even if they have earned 69 cents/
share over the past 4 quarter.
In the 69 cents there is a one time 6 million$ (3 time 2 million$) that they did received from the US
gov. for covid releaf.So in fact the clean EPS is 49 cents.So the p/e of the past 4 quarter is 3.18
Akita drilling rigs in the US are all in the Permian basin where there is the most drilling activity.
For me, this is a stock that as a very high reward potential and at these valuation a low risk one.
This was a $26+ stock in 2006.They have similar amount of drilling rigs than in 2006 but they are more modern.
I am not saying that it will go back to $26 but i think it will more than double if not triple over
the next 12 months.
Will this occur in the next few weeks? absolutly not but i can see this happening over the next 12 to 24 months and maybe faster than that.
Once it starts moving, it will move fast.
Sorry for all of the spelling mistake, i am french.
good luck with all of your investments.
P.S.Here is the note on the tax assets.
Most investors don't dig enough to find these info.
A net deferred tax asset has not been recognized for $76 million (2021 – $69 million). This amount is primarily related to non-capital losses carried forward. Total gross tax losses available to the Company are $434,694,000 with $398,191,000 in the US and $36,503,000 in Canada. The first of these losses will begin to expire in 2031.