content_image/236612.jpg
year in 2012, AKITA achieved 6,717 operating days, representing 48.3% utilization. It should be noted that AKITA calculates its utilization rates based only upon rigs actively operating. Rigs that are moving or receiving standby revenue do not contribute to AKITA’s utilization statistic. 

The drilling industry is seasonal, with activity building in the fall and peaking during the winter months, at which time areas with muskeg conditions freeze sufficiently to allow the movement of rigs and other heavy equipment. The peak drilling season ends with “spring break-up”, at which time drilling operations are curtailed due to seasonal road bans (temporary prohibitions on road use) and restricted access to agricultural land. 

The following graph illustrates AKITA’s 2013 drilling utilization rates compared to the industry average: 

<img src='content_image/236612.jpg'>

Note: Drilling utilization rates are average rates based upon the number of days in a year a rig is operating, excluding move days. 

Source: Canadian Association of Oilwell Drilling Contractors (“CAODC”). 

In addition to traditional seasonal impacts, the business of AKITA may be affected at various times in two important ways as a result of warmer than normal temperatures. First, increases in overall temperatures would have the effect of shortening the winter drilling season. Another impact of warmer than normal temperatures on AKITA is related to a reduced demand for natural gas for heating. To the extent that warmer weather impacts the demand for natural gas including the resultant lower natural gas prices for many of AKITA’s customers, AKITA’s customers might reduce natural gas drilling programs, which in turn, might reduce the demand for AKITA’s services. 

A significant shift in drilling has occurred in recent years with respect to the type of equipment preferred by AKITA’s customers. Specifically, there has been a shift away from conventional rigs requiring trucks to relocate from well to well, towards the use of pad rigs with self-moving systems which allow the rig to move itself within a set of well locations. Moreover, pad rigs typically drill wells in “batches” whereby a series of surface holes 

