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for anticipated upcoming liquified natural gas (“LNG”) projects. This ultra-deep pad rig is on schedule and on budget and is anticipated to be completed by mid-2014. 

At December 31, 2013, AKITA’s fleet included 18 pad drilling rigs, up from 16 pad rigs at the end of 2012. In addition to its pad rigs, the Company also operates 20 conventional rigs that span all depth ranges. While AKITA’s overall level of capital expenditures was lower in 2013 compared to 2012, the Company’s Board and Management remain steadfast in their commitment to ensure that AKITA’s rig fleet evolves in the most suitable manner to remain well positioned within the changing drilling environment. 

AKITA consistently maintains the financial resources to accomplish its capital spending plans. In addition to having $18,998,000 in cash and term deposits at December 31, 2013, the Company has a long-term financing arrangement to provide up to $100,000,000 for capital expenditures and general corporate purposes. As such, the Company has great flexibility to meet future capital requirements. 

AKITA is fully committed to the ongoing safety of its employees and regularly achieves one of the safest working records in the Canadian industry. The Company continually considers methods to eliminate or reduce hazards through the design of equipment and through the execution of evolving standardized operating procedures. In 2013, the Company’s lost-time accident frequency was 0.13 accidents per 200,000 hours worked which was comparable with AKITA’s best ever lost-time accident frequency of 0.12 established in 2012. Field employees complete extensive safety training and must meet current industry certifications. Managers, employees and subcontractors are all required to understand and accept their responsibility for maintaining a safe working environment. 

On November 13, 2013, the Canadian Association of Oilwell Drilling Contractors (“CAODC”) provided its industry drilling forecast for 2014 estimating 42% average rig utilization, compared to 40.3% average rig utilization in 2013. The current year estimate was based upon commodity price assumptions of US $90 per barrel for crude oil and CAD $3.23 per mcf for natural gas. Winter drilling activity to date appears to be supportive of the CAODC forecast. There remain, however, numerous risks to achieving this forecast, with perhaps two of the greatest being the risk in transportation capacity for heavy oil and the potential of delays to LNG related projects. In the event that LNG related projects proceed on the current anticipated sets of timelines, Management anticipates long-term opportunities for additional custom drilling rigs. 

We wish to thank our team of dedicated employees who possess the skills, experience and commitment to make the most of the opportunities before us. We also appreciate AKITA’s many aboriginal partners, who play a critical role in ensuring success for the Company’s numerous joint ventures. In addition, we recognize the key role that our customers and suppliers play in attaining our objectives and we thank them for their support over this past year. Our directors’ continued astute counsel and unwavering belief in AKITA are sincerely appreciated. Finally, we wish to thank our shareowners for the continued support and confidence that you place in your Company. 

On behalf of the Board of Directors, 

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March 5, 2014 

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