AKITA Drilling Ltd T.AKT.A

Source impairment charge reversal = $9.38 / share

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For those who remmber,Akita recorded an asset impairment charge of $80,000,000 in 2020.
It was the covid year and activity level had drop to record low of 13% in Canada.

Last night, Souce energy services reported earnings.
 

They reversed $128.6 million of impairment charges previously recognized on property, plant and equipment in 2019 and 2020This equats to $9.34/ share.
.
Akita impairment charge in 2020 equats to $2.02 / shares.
Take that $2.02 add $3.98 of book depreciated at 69% of cost(impairment included) and add $1.91 of tax asset not on the balance sheet = $7.91
 

Tell me seriously without laughing that Akita is only worth $1.78.
Or like i said previously, that their 35 rigs are worth the value of building 2 new triple.

Q4 was a very low activity quarter.If they brake even in Q4, they will post EPS of 49 cents for 2023.
2024 activity levels is forcast to be better in 2024 than in 2023.
While activity is very low, day rates are strong.
If Akita make EPS of 40 to 60 cents in 2024, they should be close in reaching their LT debt level.
I think that they will continu in 2025 to bring the LT debt down.

Also,i hope that they don't reverse the impairment charge because this is shielding them from
paying any income tax in the US.The first tax asset does expire before 2031.

I guess, the auditors will have a say as to the fair value of their rigs.

Akita as only one rig in the Gas rich Montney region.In Q3 they said 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 $4,000,000."

This retrofit should attrack work in the WCSB region.

Here are some comment from Source in yesterday's outlook section

WCSB activity levels are expected to remain strong in 2024, with modest growth in completion activities throughout the Montney, but particularly in northeastern British Columbia as LNG Canada comes online.

In the longer-term, Source believes the increased demand for natural gas, driven by power generation facilities, increased natural gas pipeline export capabilities and liquefied natural gas exports will drive incremental demand for Source’s services in the WCSB. Source continues to see increased demand from customers that are primarily focused on the development of natural gas properties in the Montney, Duvernay and Deep Basin. This trend is consistent with Source’s view that natural gas will be an important transitional fuel that is critical for the successful movement to a less carbon-intensive world.

 Akita is a turn around situation.It's market cap. being what it is make them fly under
the radar. I could be wrong, but with time , i truly believe that we will see a huge appreciation
in the valuation of this company.

Time will tell.