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AKITA Drilling Ltd T.AKT.B


Primary Symbol: T.AKT.A Alternate Symbol(s):  AKTAF

AKITA Drilling Ltd. provides contract drilling services, primarily to the oil and gas industry, in Canada and the United States. The Company is an oil and gas drilling contractor with a fleet of about 32 drilling rigs. Its United States fleet is supported out of its operations base in Midland, Texas and consists of 13 high specification AC triple rigs, one high specification AC double rig and one DC triple rig, all serving the Permian Basin. With a fleet of 17 rigs, its Canadian division operates in Alberta, British Columbia, Saskatchewan, and as market conditions dictate, the Yukon and the Northwest Territories. The Canadian division operates both wholly owned rigs and rigs. Its Canadian division primarily operates in the oil sands, heavy oil regions and in the Montney deep gas basin. In addition, the Canadian division plays a role in drilling potash and other energy transition targets, including carbon capture wells, hydrogen storage wells and geothermal wells.


TSX:AKT.A - Post by User

Comment by Hockeyzon Jun 04, 2024 8:44pm
186 Views
Post# 36072345

RE:running at least 11 rigs in Canada by August."

RE:running at least 11 rigs in Canada by August."

So why did the analyst for Akita raise his target price by 39% from $2.70 to $3.75.  To me, it is because of his last line “… Akita has line of sight to running at least 11 rigs in Canada by August”.  Per page 23 of the 2023 Akita annual report, Akita had a 31% rig utilization of its 20 rigs in Canada.  That calculates to 6.2 (20 rigs X 31%) rigs being fully utilized. If that changes to at least 11 rigs being fully utilized for 80% (due to spring break-up, etc.) of the time, it equates to 8.8 (11 rigs X 80%) fully utilized rigs, which is massive (not even including increased pricing power of the rigs). Adjusted Canadian operating margins would increase by 41.9% (8.8rigs/6.2 rigs), from $23.0M in 2023 to $32.6M, an increase of $9.6M ($23.0M X 41.9%) in profits in Akita’s Canadian operations only. Net income would increase by $9.6M from $18.4M to $28.0M and earnings per share would increase to $0.701 ($28.0M/40M shares) per share. Also, instead of paying off $24M in debt like Akita did in 2023, they would be able to pay off more than $33.6M in debt.

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