Letter to the Shareowners Net income for the year ended December 31, 2013 was $26,515,000 or  $1.48 per share - basic ($1.47 - diluted) on revenue of $167,533,000. Comparative figures for 2012 were net income of $28,755,000 or $1.60 per share (basic and diluted) on  revenue of $203,440,000. Funds flow from operations for the current year was $57,619,000 as compared  to $59,412,000 in 2012, while net cash from operating activities for 2013 was $39,554,000 as compared to  $41,988,000 in 2012. Commencing in 2013, the Company is reporting its financial results pursuant to a new  accounting standard under International Financial Reporting Standards (“IFRS”), IFRS 11, whereby assets,  liabilities, revenues and expenses of joint ventures are required to be reported on an equity accounting basis.  This adoption, which had no effect on net income, has resulted in a reduction of revenue amounts that would  have been reported if the Company were allowed to continue to report under the proportionate consolidation  basis. While AKITA’s 2013 utilization was higher than industry’s, both AKITA’s and industry’s utilization were lower  than in 2012. For AKITA, the decline resulted from weaker demand for its conventional double and triple sized  rigs. By contrast, AKITA’s pad rigs continued to achieve strong utilization. Consequently, one of the Company’s  strategies has been the construction of new pad rigs or the conversion of conventional rigs into pad rigs when  contracting opportunities warrant such changes. The following table highlights AKITA’s utilization rates for the  past five years: Major capital projects in 2013 continued to focus on non-conventional assets in the Company’s fleet. During  the third quarter, AKITA completed its latest pad rig which is now operating on a multi-year contract drilling for  heavy oil. Near year-end, AKITA converted a double sized rig into a pad rig for a one-year project. The Company  is also converting a conventional double sized rig into a rig with slant drilling capability - the first slant rig  developed by the Company. This rig is scheduled to be available for use during the second quarter of 2014.  Additionally, during the third quarter of 2013, the Company announced that it had entered into a multi-year  contract to construct and operate a new ultra-deep pad rig for use in the Liard Basin to help supply natural gas  4 AKITA DRILLING LTD.  ANNUAL REPORT Linda A. Southern-Heathcott Chairman of the Board Karl Ruud President and Chief Executive Officer Rig Utilization Rates  Percent 2013 2012 2011 2010 2009 AKITA Pad Rigs 71.9 61.7 67.9 67.4 59.5 AKITA Overall Fleet 43.4 48.3 51.5 37.8 31.1 Industry 40.3 41.6 49.6 40.7 24.6