AKITA Announces Credit Facility Amendments

AKITA Drilling Ltd. (the "Company") announces it has entered into an amending agreement to its December 19, 2018 credit facility agreement (the "Amended Facility") with a syndicate of lenders comprised of ATB Financial, The Bank of Nova Scotia, HSBC Bank Canada and the Toronto-Dominion Bank (the "Lenders"). The Amended Facility includes adjustments to certain terms and conditions, including an adjustment to the borrowing base calculation, and provision of a five quarter covenant relief period, and revisions to the size of the credit facility.

Covenant Relief Period

A covenant relief period is available until June 30, 2021 (the "Covenant Relief Period") and provides as follows:

The Funded Debt to EBITDA ratio has been replaced with a Funded Debt to Tangible Net Worth Ratio as follows:

A minimum trailing twelve month EBITDA test will be required quarterly during the Covenant Relief Period, with EBITDA varying each period in line with agreed upon forecasts.

The EBITDA to Interest ratio is amended to the following:

Upon the end of the Covenant Relief Period the Company's covenants revert back to:

AKITA has the option to extend the Covenant Relief Period on a quarterly basis subject to the consent of the Lenders.

Borrowing Base

The calculation of the Company's borrowing base has been amended from 75% of Eligible Accounts Receivable plus 40% of the net book value of Eligible Fixed Assets less Priority Payables, to 75% of Eligible Accounts Receivable plus 50% of the orderly liquidation value of Eligible Rig Assets less Priority Payables

Facility Size

The total size of the credit facility has been reduced from CAD. $120,000,000 and US $5,000,000 to CAD. $110,000,000.

The Amended Facility, coupled with extensive cost cutting undertaken by the Company over the first half of the year, which resulted in a one-third reduction of the Company's full time labour force, are expected to provide the Company with the financial flexibility it will require in order to sustain operations over this period of low oil and gas commodity pricing and corresponding weak demand for drilling services.