AKITA Drilling Ltd (TSX:AKT.A) has a high performance drilling rig fleet headquartered in Calgary, Alberta with operations in Western Canada and in the Permian Basin. Stockhouse’s Lyndsay Malchuk sat down with CEO, Colin Dease and CFO, Darcy Reynolds from Akita to talk about the company’s prospects of 2025, their cross-border drilling operations and so much more.

The following is a transcription of the above video, and The Market Online has edited it for clarity.

TMO: We’ll start off around AKITA’s general strategy and outlook, which for our investors, the new ones in our audience, this would be particularly helpful. Colin, as we head into the second month of 2025, what is the outlook for the balance of the quarter and the rest of the year?

Dease: Our activity levels right now are very strong in both our divisions. We’re currently running 12 of 14 rigs in the US and have 14 of 17 rigs active in Canada. We expect strong activity to remain for the balance of the quarter. Having said that, we will be affected by seasonal breakup in Canada. And then looking for the rest of the year, we expect to have a much stronger first half of the year than we did the year prior. And right now things look optimistic for the backend of the year as well.

TMO: What about the operations and market position AKITA has achieved above industry average utilization in both Canada and the US since mid-2024, do you expect this trend to continue?

Dease: That’s correct, Lyndsay. Currently we do expect this trend to continue and currently we’re running 82% utilization in Canada.

That compares to 70% for industry and in the US that is even more pronounced with AKITA running at 86% utilization compared to industry at just 39%.

One of our aims was to maximize our activity in both divisions, and the first time we achieved this objective was late in the third quarter of 2024.

The objective now is to maintain that strong utilization, and that’s what we’re committed to doing. We need to continue to execute for our customers.

One advantage we have now is in the US, it’s much easier to market a hot rig with strong customer references for new work,  rather than compete against our competitors trying to start up a cold rig with new crews.

The company is well positioned now in the US market to continue building off that momentum.

TMO: That’s a fair statement for sure. Darcy, let’s bring it over to you and chat about the demand and acreage challenges with the US rig count continuing to fall. How is AKITA approaching this challenging market? Are there technologies or other operational strategies to compete in this challenged market?

Reynolds: As Colin mentioned we’re, we’re currently running 12 or 14 rigs in the US. This is significantly above the US industry average right now. And how is AKITA doing this? Well, we feel that it’s really down to our focus on operational excellence and customer service. The company goes above and beyond for our customers, always ensuring that they’re satisfied with the product we’re giving them. And really how we do this is our size. We’re small enough that we can give everyone attention to detail. The whole team’s involved every day, including Colin and myself. But we’re also large enough that we’ve got the systems in place to work for the most discerning customers from the largest to the smallest. So it’s really about our size and, and our attention to detail.

TMO: What about the company’s financial health and debt reduction AKITA’s Q3 results highlighted a positive net income of $1.1 million. So how is the company planning to approach debt reduction throughout 2025 and really how does this fit into your broader financial strategy for sustainable growth?

Reynolds: Well, debt repayment has been our focus for the last two years. With $20 million debt repayment targets for 2023 and 2024 we feel that debt repayment and a strong balance sheet is critical in this industry.

Given that activity can drop very quickly, you need that financial strength behind you to weather those kind of storms.

For the last two years with our focus on debt repayment, we’ve taken the focus off growth. We placed it on strengthening the balance sheet.

Now we’re in a position where we can focus on debt repayment, but also focus on growth as well.

So in 2025 we’ll be looking for growth opportunities. We have nothing to share on that front yet, but we’re excited for what’s things are to come.

TMO: I want to touch a bit on thought leadership and market trends. AKITA has been proactive in responding to changing market conditions, as seen in your May Capital Compass here at Stockhouse. What trends or challenges do you foresee shaping the future of drilling? How is AKITA positioned to lead in these areas?

Dease: Yes Lyndsay, there’s a few trends that we’re closely monitoring right now. The biggest, the most imminent is the potential trade tariffs that could be imposed on Canadian oil. So that’s something that we’re monitoring closely. On the optimistic side, to counter that potential threat is optimism that goes along with the first phase of LNG Canada coming online. That in total is about a 10% lift on natural gas demand in Canada once that comes online. There is excitement around our involment in drilling for that LNG project. And the other thing we’re watching for is potential natural gas price recovery. And if that does happen, particularly in the US, it’ll be a big boon to both activity and day rates. So those are the three trends that are sort of on our radar right now.

TMO: So let’s give the audience a closing perspective on this. Colin, looking ahead, what key milestones or achievements should investors and stakeholders expect from AKITA in 2025? And Darcy, how will you measure success across your operations in financial performance?

Dease: I think it’s simple for us, Lyndsay. Our main objective is to maintain strong activity on both sides of the border for 2025. Right now, the Canadian drilling market is fairly strong and so is our Canadian activity. In the US it’s a little bit different. The US market is a fair bit weaker than it was a year prior. There’s about 75 less rigs working today than there was a year ago. Having said that, our rigs are all nearly fully optimized. Our objective is to stay very active in both basins and protect our margins. So that’s definitely our objective for 2025.

TMO: And Darcy, over to you,

Reynolds: I think we measure success for 2025 by the momentum going from 2024 into 2025.

We keep the rigs active and we’ll have a very successful year and pay back some more debt. Then we’ll be in a very strong position to see what’s next for AKITA.

You can find AKITA Drilling Limited on TSX under the ticker symbol AKTA.A. If you would like to learn more about the company, their website is AKITA-drilling.com . Also, check out past conversation with Stockhouse conversing about how the company is set to capitalize on market conditions.

Company shares last traded at $1.64

Join the discussion: Find out what everybody’s saying about this stock on the Akita Drilling investor discussion forum, and check out the rest of Stockhouse’s stock forums and message boards.

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