MANAGEMENT’S DISCUSSION AND ANALYSIS 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: 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  14 AKITA DRILLING LTD.  ANNUAL REPORT Cumulative Quarterly Drilling Utilization Rates 15.0% 40.0% 65.0% Industry AKITA 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter