MANAGEMENT’S DISCUSSION AND ANALYSIS Management believes that pad drilling, which has led the market during recent years, will continue to be  the most profitable aspect of AKITA’s business in the short and medium term, and potentially beyond. AKITA  began 2013 with 16 pad rigs. During the year, AKITA added one new pad rig suitable for steam assisted gravity  drainage (“SAGD”) drilling in the oil sands and upgraded a conventional double rig into a heavy oil pad rig on  a one-year project. Consequently, at the end of 2013, AKITA had 18 pad rigs. In addition, at year-end, the  Company was constructing a new ultra-deep capacity pad rig for delivery in mid-2014. This rig is expected to  drill liquified natural gas (“LNG”) related prospects on a multi-year basis. Of AKITA’s 18 pad rigs, 12 are focused on drilling projects that are associated with the development of heavy  oil. Management ranks this opportunity as “reasonably steady” and expects the Company’s existing pad rigs  to continue to have ongoing demand. However, pending further infrastructure to move additional heavy oil to  markets in either the US or offshore, management does not expect a significant number of new opportunities  to develop in the short term. Natural gas focused pad rigs constitute the next most significant portion of AKITA’s fleet. At December  31, 2013, the Company had five rigs working or available to drill this resource. While natural gas related  pad drilling activity has been more volatile during the past year than oil related pad drilling, management  anticipates market conditions in 2014 will become somewhat stronger and more stable than during 2013. As  well, management anticipates that opportunities for additional new or retrofitted rigs will be forthcoming in the  near term, subject to sufficient ongoing progress on the development of LNG projects by AKITA’s customers. In addition to pad drilling for heavy oil and natural gas, the Company owns one pad rig that is currently drilling  for potash. AKITA also operates a pad rig that it constructed and sold to a customer to drill potash resources. The initial drilling phase of the project that both rigs are working on is nearing completion, at which time AKITA  anticipates redeploying and upgrading its owned rig into a rig targeting either heavy oil or natural gas. The  customer owned rig is anticipated to be operated by AKITA on the next phase of its potash project. Demand for shallow capacity conventional rigs is highly seasonal and the current 2014 winter season has once  again shown a strong level of demand. Management anticipates that demand after break-up for this class of  rig will be comparable to the corresponding period in 2013. AKITA has eight rigs in this category. Demand is anticipated to remain weak for conventional light double capacity rigs in 2014. As a consequence,  the Company is converting one of its three conventional doubles into a slant capable rig. This rig, which is  anticipated to become available for use during the second quarter of 2014, will become AKITA’s first slant rig. Demand is expected to continue to be strong for conventional heavy capacity double sized rigs and light to  medium capacity triple sized rigs during the first quarter of 2014 and potentially beyond. The Company has  four rigs that are suitable for this market. Opportunities for deep and ultra-deep conventional rigs improved at the end of 2013 and are expected to be  better than 2013 during the first half of 2014 and potentially beyond. Several of the Company’s rigs in this  category are also candidates for future conversions into pad rigs targeting natural gas for LNG projects. AKITA  has five rigs in this category. On November 13, 2013, the Canadian Association of Oilwell Drilling Contractors (“CAODC”) released its 2014  industry drilling forecast estimating 42% average rig utilization compared to 40.3% actual average rig utilization  in 2013. The 2014 forecast was based upon commodity price assumptions of US $90 per barrel for crude  oil and CAD $3.23 per mcf for natural gas. While risks exist to achieving this annual forecast, winter drilling  activity to date appears to be supportive of the CAODC forecast. 27 AKITA DRILLING LTD.  ANNUAL REPORT