AKITA ANNOUNCES TRANSFORMATIVE ACQUISITION OF FOX DRILLING AND ELIMINATION OF DUAL CLASS SHARE STRUCTURE

The most recent announcement (April 27, 2026) details a transformative acquisition of Fox Drilling Limited Partnership interests from Paramount Resources Ltd. Key components include: - Acquisition of six high-specification triple drilling rigs (five AC walking rigs). - Consideration paid entirely in equity: issuance of 19,264,270 Common Shares to Paramount Resources. - Elimination of the dual-class share structure (Class A Non-Voting converted to Class B Common). - Post-transaction ownership structure shifts significantly: Paramount Resources holds ~33%, Sentgraf Enterprises Ltd. holds ~10%. - Board composition changes with two new directors from the Riddell family joining and three current directors stepping down. - Rig utilization agreement secured: 2,700 rig days over three years committed by Paramount. - Financial projection: Contribution of $12.5 million to $22.2 million annually to net cash from operating activities.

Historical context (March 2026 Annual Results): - FY 2025 Net Income was $13.9 million, with debt reduced to $35 million (down from $50 million in 2024). - Revenue grew 4% YoY to $200.9 million. - Normal Course Issuer Bid (NCIB) active, repurchasing shares at an average of $2.09.

Historical context (November 2025 Q3 Results): - Net debt was $27.8 million at quarter end. - Canadian utilization improved to 46%, while US utilization dropped to 43%. - Management anticipated US recovery in Q1 2026.

This news represents a fundamental shift in the company's capital structure, governance, and operational scale. - Strategic Shift: The entry of Paramount Resources as a ~33% shareholder effectively creates a strategic partnership that borders on a takeover scenario without a change in control label. This reduces float significantly and concentrates ownership. - Governance Overhaul: Eliminating the dual-class structure is generally positive for minority shareholders, aligning voting rights with economic interest. However, it removes the specific control mechanism previously held by insiders (likely Sentgraf or founders), potentially altering management incentives. - Operational Scale: Adding six rigs increases fleet capacity significantly. The guaranteed 2,700 rig days from Paramount mitigates immediate utilization risk but creates customer concentration risk (reliance on one major partner for a large portion of revenue). - Financial Dilution: Issuing ~19 million shares is material. Without current share price data, the exact dilution percentage cannot be calculated precisely, but given the historical NCIB activity and implied share counts, this represents a substantial equity raise without cash inflow to the balance sheet (asset-for-equity swap). - Debt Profile: The transaction is share-funded, preserving the debt reduction progress made in 2025 ($35M total debt). However, integration costs and potential maintenance capex for new rigs could strain free cash flow if utilization targets are missed.

AKITA Drilling Ltd. operates a fleet of drilling rigs primarily in Western Canada (Montney, Duvernay) and the United States. The company focuses on high-specification AC walking rigs. - Flagship Project: The core business is contract drilling services rather than a single exploration project. The "Fox Drilling" acquisition represents the most significant asset expansion to date. - Operations: Divided into Canadian and US segments. Canada has shown higher utilization (46% vs industry 43%) compared to the US segment which faced pricing pressure in late 2025.