Quantum Battery Metals Corp. — Management Reports 2025

Jul 31, 2025

AKITA DRILLING

Management's Discussion and Analysis

Management's discussion and analysis ("MD&A") for AKITA Drilling Ltd. and its subsidiaries (collectively referred to as "AKITA" or the "Company") should be read in conjunction with the unaudited interim condensed consolidated financial statements ("interim financial statements") for the six months ended June 30, 2025, and the audited consolidated financial statements and MD&A for the year ended December 31, 2024.

References made to 2024 in this MD&A relate to the period from January 1 to June 30, unless otherwise stated. The information in this MD&A was approved on July 30, 2025 by AKITA's Audit Committee on behalf of the Board of Directors, and incorporates all relevant considerations to that date.

Management has prepared this MD&A as well as the accompanying interim financial statements and notes thereof. All financial information is presented in Canadian Dollars ("CAD").

AKITA DRILLING | 2025 Q2 Report 1

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MANAGEMENT'S DISCUSSION & ANALYSIS

Introduction

AKITA is a premier Canadian oil and gas drilling contractor with a fleet of 32 drilling rigs. AKITA provides contract drilling services through two geographical segments: Canada and the United States ("US"). AKITA's US fleet is supported out of its operations base in Midland, Texas and is comprised of 13 high specification AC triple rigs, one high specification AC double rig and one DC triple rig, primarily serving the Permian Basin, which is the most active basin in the US and currently supports approximately half of all US land drilling.

With a fleet of 17 rigs, AKITA's Canadian division operates in Alberta, British Columbia and Saskatchewan. AKITA's Canadian division primarily operates in the oil sands, heavy oil regions and the Montney gas basin.

The Canadian division operates both wholly-owned rigs and rigs that are partially owned by AKITA and First Nation, Métis or Inuvialuit joint venture partners including Akita Mistiyapew Aski Drilling Ltd., a joint venture between AKITA and Saulteau First Nations, and Akita Wood Buffalo Drilling Ltd., a joint venture between AKITA and Chipewyan Prairie First Nation, Fort McMurray 468 First Nation, Fort McKay Métis Nation, Fort Chipewyan Métis Local 125, and Conklin Métis Local 193. Together AKITA's First Nation, Métis and Inuvialuit joint venture partners hold equity interests in five of AKITA's Canadian drilling rigs.

In both Canada and the US, AKITA strives to ensure it is well positioned to meet the demanding requirements of global operators while remaining flexible enough to tailor its services to customized operator requests. Fostered over three decades of operations, AKITA has established a strong safety culture and is committed to coaching and mentoring its personnel to ensure they develop as future leaders and ambassadors for the Company. AKITA is extremely proud of the First Nation, Métis and Inuvialuit joint venture relationships it has forged in Canada, which help to ensure such communities benefit from resource development AKITA is involved in proximate to their traditional lands.

AKITA DRILLING | 2025 Q2 Report 2

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MANAGEMENT'S DISCUSSION & ANALYSIS

Financial Highlights

$Thousands, except per share amounts	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025	2024	Change	% Change	2025	2024	Change	% Change
Revenue	49,574	38,336	11,238	29%	114,660	84,641	30,019	35%
Operating and maintenance expenses	37,635	29,806	7,829	26%	83,664	63,317	20,347	32%
Operating margin	11,939	8,530	3,409	40%	30,996	21,324	9,672	45%
Margin %	24%	22%	2%	9%	27%	25%	2%	8%
Net cash from operating activities	18,209	10,913	7,296	67%	27,218	17,861	9,357	52%
Adjusted funds flow from operations(1)	9,863	6,387	3,476	54%	26,892	17,647	9,245	52%
Per share	0.25	0.16	0.09	56%	0.68	0.44	0.24	55%
Net income (loss)	2,297	(478)	2,775	581%	10,929	2,149	8,780	409%
Per share	0.06	(0.01)	0.07	700%	0.28	0.05	0.23	460%
Capital expenditures	7,609	7,126	483	7%	14,617	11,061	3,556	32%
Weighted average shares outstanding	39,734	39,734	-	0%	39,734	39,725	9	0%
Total assets	258,006	242,353	15,653	6%	258,006	242,353	15,653	6%
Total debt	39,780	52,404	(12,624)	(24%)	39,780	52,404	(12,624)	(24%)

(1) See "Non-GAAP and Supplementary Financial Measures" near the end of this MD&A for further detail.

General Overview

The Company's net income increased to $2,297,000 in the second quarter of 2025 from a loss of $478,000 in the second quarter of 2024. This increase was primarily due to activity increasing in the Company's US division, which increased 40% from the second quarter of 2024 to the second quarter of 2025. Net cash from operations increased to $18,209,000 for the three months ended June 30, 2025, compared to $10,913,000 in the same period of 2024, due to the higher net income in the quarter as well as a larger working capital release in the second quarter of 2025 ($11,521,000) compared to the second quarter of 2024 ($6,994,000). Funds flow from operations, which is not affected by changes in non-cash working capital, increased by 54% due to the stronger results in the US. Capital expenditures increased to $7,609,000 in the second quarter of 2025, from $7,126,000 in the second quarter of 2024. In both quarters capital expenditures related to routine items. In the second quarter of 2025, the Company repaid $10,000,000 in debt reducing its debt balance to $39,780,000 from $52,404,000 on June 30, 2024.

AKITA DRILLING | 2025 Q2 Report

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MANAGEMENT'S DISCUSSION & ANALYSIS

Industry Overview

WTI Prices (\$USD/bbl)(1)

AECO Natural Gas Price(\$CAD/GJ)(2)

Active Rig Count Canada(3)

(1) Source: U.S. Energy Information Administration
(2) Source: Daily Oil Bulletin
(3) Source: Canadian Association of Energy Contractors ("CAOEC")
(4) Source: Baker Hughes North American Rotary Rig Count

US Active Rig Count(4)

Oil and gas drilling activity is cyclical and is affected by numerous factors, most importantly West Texas Intermediate ("WTI") and Western Canadian Select crude oil prices, North American natural gas prices and international liquified natural gas ("LNG") pricing. The prices of these commodities have a significant impact on the capital budgets of oil and gas companies and in turn, demand for drilling rigs. WTI crude oil prices, which have been very volatile in 2025, increased in the second quarter of 2025 primarily due to geopolitical tensions but are still under pressure from easing of production cuts by OPEC+ and uncertainty surrounding the current and potential future tariffs implemented by the current US administration. Tariffs could have a negative impact on all aspects of the industry including, but not limited to, demand for drilling rigs as well as input costs for drilling operations. Natural gas prices in Canada saw a significant decline in the quarter with storage levels above the five-year average and seasonal oversupply in full effect. The

AKITA DRILLING | 2025 Q2 Report

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MANAGEMENT'S DISCUSSION & ANALYSIS

impact of LNG Canada's offtake capacity, which is now ramping up to full operations, has yet to impact AECO pricing but should have a positive effect.

In the US, the active rig count continues to decline and was down to 540 active rigs at the end of June from 573 at the start of the year. The decrease in the active rig count is attributable to several factors in the US including capital discipline of oil and gas operators and extensive operator consolidation, which has had an impact on demand with operators choosing to grow by acquisition rather than growth through drilling. In addition, the volatility and decline in WTI prices caused by global trade uncertainties is impacting drilling plans in the near term.

In Canada, the active rig count which had been above 2024 levels this year fell in June 2025, dropping below levels in the same period in the prior year. A longer spring breakup period as well as the impact of wildfires in Northern Alberta and British Columbia impacted the number of active rigs in Canada. Also impacting Canadian drilling activity is operators deferring drilling programs to later in the year amidst significant commodity price uncertainty.

AKITA DRILLING | 2025 Q2 Report 5

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MANAGEMENT'S DISCUSSION & ANALYSIS

Results by Geographic Segment

Canada

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025	2024	Change	% Change	2025	2024	Change	% Change
$Thousands, except per day amounts
Revenue Canada	10,886	9,820	1,066	11%	34,549	25,369	9,180	36%
Revenue from joint venture drilling rigs	8,098	9,631	(1,533)	(16%)	21,108	22,148	(1,040)	(5%)
Flow through charges(1)	(1,013)	(1,055)	42	4%	(2,067)	(1,684)	(383)	(23%)
Adjusted revenue Canada(1)	17,971	18,396	(425)	(2%)	53,590	45,833	7,757	17%
Operating and maintenance expenses Canada	8,511	8,166	345	4%	24,883	18,479	6,404	35%
Operating and maintenance expenses from joint venture drilling rigs	6,113	6,907	(794)	(11%)	15,473	15,261	212	1%
Flow through charges(1)	(1,013)	(1,055)	42	4%	(2,067)	(1,684)	(383)	(23%)
Adjusted operating and maintenance expenses Canada	13,611	14,018	(407)	(3%)	38,289	32,056	6,233	19%
Adjusted operating margin Canada(1)	4,360	4,378	(18)	(0%)	15,301	13,777	1,524	11%
Margin %(1)	24%	24%	0%	0%	29%	30%	(1%)	(3%)
Operating days	490	473	17	4%	1,418	1,122	296	26%
Adjusted revenue per operating day(1)	36,664	38,892	(2,228)	(6%)	37,796	40,849	(3,053)	(7%)
Adjusted operating and maintenance expenses per operating day(1)	27,768	29,636	(1,868)	(6%)	27,004	28,570	(1,566)	(5%)
Adjusted operating margin per operating day(1)	8,896	9,256	(360)	(4%)	10,792	12,279	(1,487)	(12%)
Utilization(1)	32%	31%	1%	3%	46%	36%	10%	28%
Rig count	17	17	-	0%	17	17	-	0%

(1) See "Non-GAAP and Supplementary Financial Measures" near the end of this MD&A for further detail.

Second Quarter

During the second quarter of 2025, AKITA's adjusted operating margin remained steady at $4,360,000 compared to $4,378,000 in the same quarter of 2024. Despite the consistent operating margin, activity levels increased with 490 operating days recorded in the second quarter of 2025 compared to 473 operating days in the second quarter of 2024.

Adjusted operating margin per operating day decreased to $8,896 in the second quarter of 2025, from $9,256 in the same period of 2024. This decrease is due to operating margin earned on a labour contract

AKITA DRILLING | 2025 Q2 Report

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MANAGEMENT'S DISCUSSION & ANALYSIS

in 2024 that was not active in 2025. Excluding the profit from this contract, adjusted operating margin per operating day increased 4% in the second quarter of 2025 compared to the second quarter of 2024 consistent with the modest day rate increases secured throughout the year.

Year-to-Date

During the first six months of 2025, adjusted revenue in Canada increased to $53,590,000 from $45,833,000 over the first six months of 2024, a 17% increase due to a very strong first quarter in 2025 and 26% more operating days over the first six months of 2025. Included in 2024 revenue is contract cancellation revenue of $1,500,000 and labour revenue of $1,814,000 highlighting the strength of the first quarter of 2025 which did not include contract cancellation nor labour revenue.

Adjusted operating and maintenance costs per operating day decreased to $27,004 in the first half of 2025, from $28,570 in the same period of 2024 due to higher costs in the first quarter of 2024 with January rig activations. The Company has seen increasing input costs on operating and maintenance costs and is closely monitoring the potential impact of tariffs on supplies.

AKITA DRILLING | 2025 Q2 Report 7

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MANAGEMENT'S DISCUSSION & ANALYSIS

United States

$Thousands, except per day amounts	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025	2024	Change	% Change	2025	2024	Change	% Change
Revenue US	38,688	28,516	10,172	36%	80,111	59,272	20,839	35%
Flow through charges(1)	(4,812)	(3,583)	(1,229)	(34%)	(10,322)	(7,342)	(2,980)	(41%)
Adjusted revenue US(1)	33,876	24,933	8,943	36%	69,789	51,930	17,859	34%
Operating and maintenance expenses US	28,929	21,640	7,289	34%	58,404	44,837	13,567	30%
Flow through charges(1)	(4,812)	(3,583)	(1,229)	(34%)	(10,322)	(7,342)	(2,980)	(41%)
Adjusted operating and maintenance expenses US	24,117	18,057	6,060	34%	48,082	37,495	10,587	28%
Adjusted operating margin US(1)	9,759	6,876	2,883	42%	21,707	14,435	7,272	50%
Margin %(1)	29%	28%	1%	4%	31%	28%	3%	11%
Operating days	875	623	252	40%	1,794	1,342	452	34%
Adjusted revenue per operating day(1)	38,706	40,021	(1,315)	(3%)	38,895	38,696	199	1%
Adjusted operating and maintenance expenses per operating day(1)	27,595	28,984	(1,429)	(5%)	26,798	27,940	(1,142)	(4%)
Adjusted operating margin per operating day(1)	11,151	11,037	114	1%	12,097	10,756	1,341	12%
Utilization(1)	65%	46%	19%	41%	66%	49%	17%	35%
Rig count	15	15	-	0%	15	15	-	0%

(1) See "Non-GAAP and Supplementary Financial Measures" near the end of this MD&A for further detail.

Second Quarter

Despite a decline in the active rig count across the US industry, AKITA's operating days in the second quarter of 2025 improved by 40% to 875 operating days, up from 623 operating days in the same period of 2024. This significant increase in activity drove higher adjusted operating margin, which increased to $9,759,000 in the second quarter of 2025, from $6,876,000 in the same period of 2024.

Adjusted revenue per operating day decreased to $38,706 in the second quarter of 2025 from $40,021 in the second quarter of 2024, largely due to pricing pressure across AKITA's US fleet amid a declining industry rig count. Adjusted revenue in the second quarter of 2025 includes one-time drill pipe revenue of $1,061,000. Excluding this amount, adjusted revenue per day decreased by 6% between the second quarter of 2024 and the second quarter of 2025.

AKITA DRILLING | 2025 Q2 Report 8

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MANAGEMENT'S DISCUSSION & ANALYSIS

Adjusted operating expense per operating day decreased to $27,555 in the second quarter of 2025, from $28,984 in the second quarter of 2024. This reduction reflects AKITA's continued focus on cost control and operational efficiency across its fleet.

Year-to-Date

During the first six months of 2025, adjusted operating margin increased to $21,707,000 from $14,435,000 in the same period in 2024. This is attributable to higher activity in the first half of 2025 with 1,794 operating days compared to 1,342 operating days in the first half of 2024. Adjusted revenue per operating day remained flat between the two periods however, adjusted revenue per day included $1,312 adjusted revenue per day of one time drill pipe revenue. Excluding drill pipe revenue, adjusted revenue per day decreased 3% in the first half of 2025 compared to the same period in 2024.

Future Outlook and Strategy

The drilling industry is cyclical and certain key factors that impact AKITA's results are beyond management's control. Like other drilling contractors, AKITA is exposed to the effects of fluctuating oil and gas prices and changes in the exploration and development budgets of its customers. The outlook for the drilling industry for the second half of 2025 is somewhat unclear with the volatility in oil prices, the impact of geopolitical tensions and the current and future tariffs uncertainty.

The outlook for AKITA in Canada for the balance of the year despite the volatility in oil prices and the current low AECO prices, continues to be positive with demand for the Company's oil sands and deep natural gas rigs looking strong. Additionally, once fully operational LNG Canada should have a positive impact on AECO prices. Capital spending is expected to be in line with the prior year and includes maintenance capital only at this time.

In the US, the balance of the year remains difficult to foresee. The active rig count has continued to decline in the second quarter of 2025 and the Company is currently operating seven rigs. With sustained oil prices near $65 USD, there is more talk of getting rigs back to work than laying rigs down from the Company's customers and we are hopeful that there will be a recovery in activity near the end of the third quarter of this year. Like the Canadian division, capital in the US is expected to be limited to maintenance capital for the balance of the year.

The Company's focus for the balance of 2025, which has been debt repayment for the past three years, is shifting to a balance of debt repayment and shareholder return but could change if market conditions deteriorate.

AKITA DRILLING | 2025 Q2 Report 9

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MANAGEMENT'S DISCUSSION & ANALYSIS

Depreciation and Amortization Expense

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
				%				%
$Millions	2025	2024	Change	Change	2025	2024	Change	Change
Depreciation and amortization expense	7.1	6.8	0.3	4%	14.0	14.7	(0.7)	(5%)

Depreciation and amortization expense increased to $7,087,000 during the second quarter of 2025 from $6,784,000 during the corresponding period in 2024, due to the addition of depreciable assets over the last year.

AKITA depreciates its drilling rig assets on a straight-line basis where the estimated useful lives and residual values of various rig components have been chosen to match the expected life of that component. In the second quarter of 2025, drilling rig depreciation accounted for 98% of total depreciation expense (Q2 2024 - 98%).

While AKITA conducts some of its drilling operations via joint ventures, the drilling rigs used to conduct those activities are owned jointly by AKITA and its joint venture partners, and not by the joint ventures themselves. As the joint ventures do not hold any property, plant, or equipment assets directly, the Company's depreciation expense includes depreciation of assets involved in both wholly-owned and joint venture activities.

Selling and Administrative Expenses

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
				%				%
$Millions	2025	2024	Change	Change	2025	2024	Change	Change
Selling and administrative expenses	4.4	3.6	0.8	22%	9.5	8.2	1.3	16%

Selling and administrative expenses increased to $4,438,000 in the second quarter of 2025 (9% of revenue) from $3,627,000 (9% of revenue) in the second quarter of 2024. The increase to selling and administrative expenses relates to an increase to the Company's share-based compensation in the second quarter of 2025 which is revalued on a quarterly basis.

In the first six months of 2025, selling and administrative costs increased to $9,511,000 from $8,244,000 during the same period in 2024 of which, salaries and benefits accounted for 40% (2024 - 46%). The

AKITA DRILLING | 2025 Q2 Report 10

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MANAGEMENT'S DISCUSSION & ANALYSIS

increase for the six months ended June 30, 2025 compared to the first six months of 2024 is also due to share based compensation.

Equity Income from Joint Ventures

$Millions	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025	2024	Change	% Change	2025	2024	Change	% Change
Proportionate share of revenue from joint ventures	8.1	9.6	(1.5)	(16%)	21.1	22.1	(1.0)	(5%)
Proportionate share of operating and maintenance expenses from joint ventures	6.1	6.9	(0.8)	(12%)	15.5	15.2	0.3	2%
Proportionate share of selling and administrative expenses from joint ventures	0.1	0.1	-	0%	0.2	0.2	-	0%
Equity income from joint ventures	1.9	2.6	(0.7)	(27%)	5.4	6.7	(1.3)	(19%)

The Company provides the same drilling services and utilizes the same management and financial and reporting controls for its joint venture activities as are in place for its wholly-owned operations. The Company's joint venture rigs were less active in the second quarter of 2025, with 252 operating days compared to 305 operating days in the second quarter of 2024. This reduction was due to timing of operator programs and required recertifications rather than a lack of demand for the joint venture rigs.

Other Income (Loss)

$Millions	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025	2024	Change	% Change	2025	2024	Change	% Change
Interest Income	-	0.1	(0.1)	(100%)	-	0.2	(0.2)	(100%)
Interest expense	(0.8)	(1.2)	0.4	33%	(1.8)	(2.5)	0.7	28%
Unrealized gain (loss) on risk management contracts	0.1	(0.1)	0.2	200%	-	0.2	(0.2)	(100%)
Gain on sale of assets	-	-	-	n/a	0.2	-	0.2	n/a
Net other gains	0.6	-	0.6	n/a	0.6	0.1	0.5	500%
Total other loss	(0.1)	(1.2)	1.1	92%	(1.0)	(2.0)	1.0	50%

Total other income (loss) is the aggregate of interest income, interest expense, unrealized gain (loss) on risk management contracts, gain (loss) on sale of assets, and net other gains (losses).

AKITA DRILLING | 2025 Q2 Report 11

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MANAGEMENT'S DISCUSSION & ANALYSIS

In the second quarter of 2025, the Company recorded interest expense of $854,000, down from $1,224,000 in the same period of 2024 due to lower debt levels in 2025, averaging $45,000,000 over the second quarter compared to $61,500,000 over the second quarter of 2024. Also contributing to the lower interest expense is a reduction in the average interest rate to 6.54% in the second quarter of 2025 compared to 7.54% in the same period of 2024.

The Company is exposed to changes in interest rates on borrowings under its operating loan facility, which is subject to floating interest rates. To mitigate this risk, the Company entered into an interest rate swap with its principal banker as the agent on the syndication along with two other Canadian banks in June of 2022. The term of the interest rate swap is June 15, 2022 to June 15, 2026 and the notional amount of the swap is $50,000,000. The fixed rate is 3.94% while the floating rate is indexed to the Canadian Overnight Repo Rate ("CORRA"). At period end, the interest rate swap is valued at fair value with any unrealized gain (loss) recorded as other income (loss) on the consolidated income statement. For the three months ended June 30, 2025, the Company recorded an unrealized gain of $148,000 (2024 - loss of $82,000).

During the second quarter of 2025, the Company sold spare equipment for a loss of $72,000 (2024 - nil) and proceeds of $57,000 (2024 - nil). During the second quarter of 2025, the Company received the final payment on an insurance claim for a net gain of $479,000 recorded in net other gains.

Income Tax Expense

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
$Millions	2025	2024	Change	% Change	2025	2024	Change	% Change
Current tax expense	-	-	-	n/a	-	-	-	n/a
Deferred tax expense (recovery)	(0.1)	-	(0.1)	n/a	1.1	0.9	0.2	22%
Total income tax expense (recovery)	(0.1)	-	(0.1)	n/a	1.1	0.9	0.2	22%

The Company recorded a deferred tax expense of $1,122,000 in the first six months of 2025, compared to a deferred tax expense of $919,000 in the corresponding period in 2024. As the Company's taxable income in Canada increases, it utilizes its future tax losses, thereby generating higher deferred tax expense. The Company's effective tax rate changed slightly quarter over quarter decreasing to 23% in the first six months of 2025 compared to 24% in the same period of 2024 due to a shift in the revenue between provinces. Refer to the Company's 2024 Annual Report for additional tax disclosures. The Company currently has significant tax losses available in both Canada and the United States.

AKITA DRILLING | 2025 Q2 Report 12

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MANAGEMENT'S DISCUSSION & ANALYSIS

Net Income, Net Cash and Adjusted Funds Flow

$Millions	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025	2024	Change	% Change	2025	2024	Change	% Change
Net income (loss)	2.3	(0.5)	2.8	560%	10.9	2.1	8.8	419%
Net cash from operating activities	18.2	10.9	7.3	67%	27.2	17.9	9.3	52%
Adjusted funds flow from operations(1)	9.9	6.4	3.5	54%	26.9	17.6	9.3	53%

(1) See "Non-GAAP and Supplementary Financial Measures" near the end of this MD&A for further detail.

The Company generated net income of $2,297,000 ($0.06 per Class A Non-Voting and Class B Common share, basic and diluted) for the second quarter of 2025, compared to net loss of $478,000 ($0.01 per Class A Non-Voting and Class B Common share, basic and diluted) for the second quarter of 2024. Adjusted funds flow from operations increased to $9,863,000 in the second quarter of 2025, from $6,387,000 during the corresponding quarter in 2024. Higher activity in the US division was the key driver for the improved results in the second quarter of 2025 compared to the second quarter of 2024.

The Company generated net income of $10,929,000 ($0.28 per Class A Non-Voting and Class B Common share, basic and $0.27 diluted) for the first six months of 2025 compared to a net income of $2,149,000 ($0.05 per Class A Non-Voting and Class B Common share, basic and diluted) in the corresponding period of 2024. Adjusted funds flow from operations increased to $26,892,000 during the first six months of 2025, from $17,647,000 in the corresponding period in 2024. The reason for the increased results in the first half of 2025 was improved activity in both the Canadian and US operating segments.

AKITA DRILLING | 2025 Q2 Report 13

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MANAGEMENT'S DISCUSSION & ANALYSIS

Summary of Quarterly Results

The following table shows key selected quarterly financial information for the Company:

For the Three Months Ended
$Thousands, except per share (Unaudited)	Mar. 31	Jun. 30	Sep. 30	Dec. 31	Annual Totals
2025
Revenue	65,086	49,574			114,660
Net income	8,632	2,297			10,929
Income per share (basic)($)	0.22	0.06			0.28
Adjusted funds flow from operations(1)	17,029	9,863			26,892
Cash flow from operations	9,009	18,209			27,218
Capital expenditures	7,008	7,609			14,617
2024
Revenue	46,304	38,336	45,828	62,857	193,325
Net income (loss)	2,627	(478)	1,106	9,608	12,863
Income (loss) per share (basic and diluted)($)	0.07	(0.01)	0.03	0.23	0.32
Adjusted funds flow from operations(1)	11,260	6,387	8,345	18,722	44,714
Cash flow from operations	6,948	10,913	6,458	5,945	30,264
Capital expenditures	3,935	7,126	7,378	9,604	28,043
2023
Revenue	65,000	58,349	54,813	47,317	225,479
Net income (loss)	9,523	6,177	3,880	(1,165)	18,415
Income (loss) per share (basic and diluted)($)	0.24	0.16	0.10	(0.04)	0.46
Adjusted funds flow from operations(1)	15,159	12,620	10,566	7,177	45,522
Cash flow from operations	(414)	16,150	2,308	17,523	35,567
Capital expenditures	2,504	4,700	4,566	12,822	24,592

(1) See "Non-GAAP and Supplementary Financial Measures" near the end of this MD&A for further detail.

Key trends over the past ten quarters, after giving consideration to the seasonal nature of AKITA's operations, are as follows:

• The impact of the significant improvement in the profitability of the US operating segment can be seen in the first quarter of 2023 with higher activity and day rates in the US improving results for the Company as a whole and then slowing down in the fourth quarter of 2023 as activity in the US dropped from 14 active rigs to 6 active rigs;

AKITA DRILLING | 2025 Q2 Report

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MANAGEMENT'S DISCUSSION & ANALYSIS

• Revenue in the first quarter of 2023 weighted to the US operating segment and returned to an even split in the first quarter of 2024. In the first quarter of 2025, revenue was 50% from US operations and 50% from Canada when including AKITA's share of revenue from joint ventures; and
• The seasonal nature of the Company's Canadian operations, which typically means cash from operations peaks in the second quarter of the year, as activity in Canada slows down for breakup and the working capital that built in the first quarter is released, can be seen in the cash from operations balances.

Liquidity and Capital Resources

Cash used for capital expenditures totalled $14,617,000 in the first six months of 2025 compared to $11,061,000 over the same period in 2024. Year-to-date capital spending in both 2025 and 2024 related to routine capital items such as level IV inspections, recertifications and drill pipe.

At June 30, 2025, AKITA's Statements of Financial Position included working capital (current assets minus current liabilities) of $25,746,000 compared to $15,783,000 at June 30, 2024, and $23,549,000 at December 31, 2024. Readers should be aware of the seasonal nature of AKITA's Canadian operations and its effect on non-cash working capital balances. Typically, non-cash working capital balances reach annual maximum levels at the end of the first quarter or during the second quarter as a result of spring break-up. Working capital at June 30, 2025 increased significantly compared to June 30, 2024, due to higher cash balances at June 30, 2025 due to a more active first quarter in the Company's Canadian division.

The Company has a syndicated credit agreement with the Company's principal banker as the agent on the syndication and three other Canadian banks. The operating loan facility totals $110,000,000. The Credit facility expires in September 2026. The interest rate on the Company's credit facility ranges from 175 to 300 basis points over prime interest rates depending on the Funded Debt(1) to EBITDA(1) Ratio. Security for this facility includes all present and after-acquired personal property and a first floating charge over all other present and after-acquired property including real property. The financial covenants are:

1. The Funded Debt(1) to EBITDA(1) Ratio: the Company shall ensure that the Funded Debt(1) to EBITDA(1) Ratio shall not be more than 3.00:1.00.

The Funded Debt(1) to EBITDA(1) Ratio shall be calculated quarterly on the last day of each Fiscal Quarter on a rolling four quarter basis.

AKITA DRILLING | 2025 Q2 Report 15

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MANAGEMENT'S DISCUSSION & ANALYSIS

1. The EBITDA(1) to Interest Expense(1) Ratio: the Company shall ensure that the EBITDA(1) to Interest Expense(1) Ratio shall not be less than 3.00:1.00.

The EBITDA(1) to Interest Expense(1) Ratio shall be calculated quarterly on the last day of each Fiscal Quarter on a rolling four quarter basis.

At June 30, 2025, the Company was in compliance with its covenants with a Funded Debt(1) to EBITDA(1) Ratio of 0.53:1.00, and an EBITDA(1) to Interest Expense(1) Ratio of 15.47:1.00.

The facility also includes a borrowing base calculation which is the sum of:

(i) 75% of Eligible Accounts Receivable(1); plus
(ii) 50% of orderly liquidated value of all Eligible Rig Assets(1); less
(iii) Priority Payables(1) of the Loan Parties.

At June 30, 2025, the Company's borrowing base totalled $126,845,000.

The credit facility includes a $10,000,000 operating line of credit that is classified as current, given the Company expects to settle the balance within a normal operating cycle. The maturity date aligns with the total credit facility. At June 30, 2025, the current portion of debt was nil (June 30, 2024 - nil).

The balance outstanding under the credit loan facility, net of unamortized loan fees, is classified as long-term debt as the credit agreement has no required repayment obligations prior to the end of the loan facility term. The Company borrowed $40,000,000 in total from this facility as at June 30, 2025 (June 30, 2024 - $53,000,000).

The Company's objectives when managing capital are:

• to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and
• to augment existing resources to meet further growth opportunities.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, repurchase shares, issue new shares, sell assets or take on long-term debt.

Seasonality

The Canadian drilling industry is seasonal with activity typically building in the fall as the ground freezes and peaking during the winter months. Northern transportation routes become available once areas with

AKITA DRILLING | 2025 Q2 Report 16

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MANAGEMENT'S DISCUSSION & ANALYSIS

muskeg conditions freeze to allow the movement of drilling rigs and other heavy equipment. The peak Canadian 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 as frozen ground thaws. The summer drilling season begins when road bans are lifted, typically later in June or early July. Some areas are subject to environmental orders for specific well leases which can prevent drilling activity during certain periods when authorities prioritize wildlife or habitat protections. Such restrictions may affect activity levels and operating results. While seasonality can affect all rig classes, pad drilling rigs are generally less susceptible to seasonality than conventional drilling rigs since pad rigs can be situated on a pad just before the start of spring break up with the ability to drill several wells before a rig move on restricted roads would be necessary.

The Permian Basin, where AKITA primarily conducts its US drilling operations, is infrequently subject to weather constraints, but may experience operational restrictions for other reasons.

Significant Accounting Estimates and Judgments

The preparation of the accompanying interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements, as well as the reported amounts for revenue and expenses during the period. Estimates and judgments are continually evaluated and are based upon historical experience and other factors, including expectations of future events that are believed to be reasonable in the circumstances. Actual outcomes could differ materially from these estimates.

Impairment of Assets

At each reporting date, the Company assesses whether there are indicators of asset impairment. If such indicators exist, the Company performs an asset impairment test and, if required, the Company recognizes an asset impairment loss calculated as the lesser of the difference between the amortized cost of the asset and the present value of the estimated future cash flows or the recoverable amount. The carrying amount of the asset is reduced by the impairment loss.

AKITA's asset impairment estimates do not have any effect on the financial condition of the Company, as any asset write-down is a non-cash item. However, total assets and results of operations, including net income, could be overstated as a result of projections of discounted future cash flows that are too high.

AKITA DRILLING | 2025 Q2 Report 17

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MANAGEMENT'S DISCUSSION & ANALYSIS

Useful Lives of Drilling Rigs

Management makes significant estimates related to the useful lives of drilling rigs. Depreciation methods and rates have been selected so as to amortize the net cost of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each annual reporting period.

Defined Benefit Pension Liability

A significant estimate used in the preparation of AKITA's interim financial statements relates to the measurement of employee future benefits which consists of the non-current defined benefit pension liability for certain retired employees that was recorded as $3,937,000 at June 30, 2025 (June 30, 2024 - $4,031,000). AKITA utilizes the services of a third party to assist in the actuarial estimate of the Company's pension expense and liability. For 2025, a key assumption is the 4.6% discount rate (2024 - 4.6%).

Deferred Income Taxes

The Company makes assumptions related to the measurement of deferred income taxes, including future tax rates, timing of reversals of timing differences and the anticipated tax rules that will be in place when timing differences reverse. Consequently, total liabilities of the Company, as well as results of operations including net income, could be either understated or overstated.

Class A Non-Voting and Class B Common Shares

Authorized

An unlimited number of Class A Non-Voting shares

An unlimited number of Class B Common shares

Issued	Class A Non-Voting		Class B Common		Total
$Thousands, except per share amounts	Number of Shares	Consideration	Number of Shares	Consideration	Number of Shares	Consideration
December 31, 2024	38,080,407	144,999	1,653,784	1,366	39,734,191	146,365
Shares issued	-	-	-	-	-	-
June 30, 2025	38,080,407	144,999	1,653,784	1,366	39,734,191	146,365

At July 30, 2025, the Company had 38,080,407 Class A Non-Voting shares and 1,653,784 Class B Common shares outstanding. At that date, there were also 2,438,500 stock options outstanding, of which 1,481,500 were exercisable.

AKITA DRILLING | 2025 Q2 Report 18

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MANAGEMENT'S DISCUSSION & ANALYSIS

Non-GAAP and Supplementary Financial Measures

Non-GAAP Financial Measures

Adjusted Revenue and Adjusted Operating and Maintenance Expenses

Revenue and operating and maintenance expenses in AKITA's Canadian operating segment include revenue and expenses from AKITA's wholly-owned drilling rigs as well as its share of joint venture revenue and expenses. Excluded from the revenue and expenses in AKITA's Canadian and US operating segment are flow through charges that are billed to operators and repaid to the Company. The volume and timing of the flow through charges can artificially impact the operational per day analysis and as a result management and certain investors may find the comparability between periods is improved when these flow through charges are excluded from revenue per day and operating and maintenance expense per day. The flow through charges do not have any impact on the Company's net earnings as the amounts offset each other.

Adjusted Funds Flow from Operations

Adjusted funds flow from operations is not a recognized GAAP measure under IFRS and users of this MD&A should note that AKITA's method of determining adjusted funds flow from operations may differ from methods used by other companies, and includes cash flow from operating activities before working capital changes, equity income from joint ventures, and income tax amounts paid or recovered during the period. Nonetheless, management and certain investors may find adjusted funds flow from operations to be a useful measurement to evaluate the Company's operating results at year-end and within each year, since the seasonal nature of the business affects the comparability of non-cash working capital changes both between and within periods.

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
$Thousands	2025	2024	2025	2024
Net cash from operating activities	18,209	10,913	27,218	17,861
Interest paid	806	1,175	1,694	2,385
Interest expense	(854)	(1,224)	(1,790)	(2,483)
Post-employment benefits paid	79	79	158	158
Equity income from joint ventures	1,917	2,632	5,419	6,675
Unrealized loss on foreign exchange	1,227	(194)	1,210	(602)
Change in non-cash working capital	(11,521)	(6,994)	(7,017)	(6,347)
Adjusted funds flow from operations	9,863	6,387	26,892	17,647

AKITA DRILLING | 2025 Q2 Report 19

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MANAGEMENT'S DISCUSSION & ANALYSIS

Terms Defined in the Company's Credit Facility

The following terms are defined in the Company's credit facility agreement and are used in the calculation of the Company's financial covenants:

"EBITDA" means, for any fiscal period, the Net Income of the Canadian Borrower on a consolidated basis in accordance with GAAP but without duplication, plus (in each case, for the Canadian Borrower on a consolidated basis but without duplication):

a) all amounts deducted in the calculation of Net Income in respect of Interest Expense;
b) all amounts deducted in the calculation of Net Income in respect of the provision for income taxes (in accordance with Generally Accepted Accounting Principles);
c) all amounts deducted in the calculation of Net Income in respect of non-cash items including, without limitation, depletion, accretion (to the extent not included in clause (a) above), depreciation, amortization and future income tax liabilities;
d) all amounts deducted in the calculation of Net Income in respect of equity loss, minority interests, extraordinary losses, non-recurring losses (including losses on the sale of property, plant and equipment) and any non-cash impairment charges and any other non-cash charges;
e) all cash distributions received in such period from persons which are not Guarantors;
f) all amounts deducted in the calculation of Net Income in respect of discretionary management bonuses, fees and other compensation declared and payable to the directors or shareholders of the Canadian Borrower on commercially reasonable terms. For the avoidance of doubt, bonuses, fees or other compensation that the Canadian Borrower, on a consolidated basis, is contractually required to pay may not be added back;
g) all amounts deducted in the calculation of Net Income in respect of share based compensation;
h) unrealized foreign exchange losses incurred in the ordinary course of business;

"Funded Debt" means, as of any date of determination, with respect to the Canadian Borrower on a consolidated basis, all Indebtedness, but excluding obligations owing between any Loan Parties and less all cash and Cash Equivalents denominated in Canadian Dollars and U.S. Dollars held by the Loan Parties up to a maximum of $10,000,000 and which are: (i) in accounts with the Agent which are subject to Perfected Security Interests and rights of set-off in favour of the Agent; or (ii) in accounts with a financial institution acceptable to the Agent (acting reasonably) which are subject to Perfected Security Interests and a blocked account control agreement in favour of and satisfactory to the Agent.

AKITA DRILLING | 2025 Q2 Report 20

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MANAGEMENT'S DISCUSSION & ANALYSIS

"Interest Expense" means for any fiscal period, in respect of the Canadian Borrower on a consolidated basis as determined in accordance with GAAP, the aggregate cost of credit outstanding during that period including, without limitation, interest charges (including for postponed Indebtedness), capitalized interest, the interest component of Financial Leases, fees payable in respect of letters of credit and letters of guarantee, discounts incurred and fees payable in respect of bankers' acceptance advances.

"Eligible Accounts Receivable" means at any time, any Account Receivable of the Loan Parties (net of any credit balance, returns, trade discounts, or unbilled amounts or retention) that meets and at all times continues to meet all of the standards of eligibility (and the Canadian Borrower by including such account in any computation of the Borrowing Base shall be deemed to represent and warrant to the Agent and the Lenders that to the knowledge of the Canadian Borrower all of the following statements are accurate and complete with respect to such account):

a) it is a valid and legally enforceable obligation of the applicable Account Debtor;
b) such account is genuine as appearing on its face or as represented in the books and records of the Canadian Borrower on a consolidated basis;
c) such account is free from valid claims regarding rescission, cancellation or avoidance, whether by operation of Applicable Law or otherwise, and except to the extent of any reduction made pursuant to paragraph (e) of this definition is net of all then applicable holdbacks and prepayment credits;
d) such account does not relate to services not as of yet completed;
e) without limiting the generality of paragraph (c) of this definition, is not subject to any offset, counterclaim or other defence on the part of the Account Debtor or any claim by the Account Debtor that denies liability in whole or in part; and, if the Account Debtor denies liability only in part, the undisputed portion of the Account Receivable shall be allowed so long as the Account Debtor has agreed that it will pay such portion not in dispute in accordance with its terms;
f) such Account Receivable is not outstanding more than 90 days after billing date, provided that the under 90 day portion may be included; (i) where the over 90 day portion is less than 10% of all Accounts Receivable of such Account Debtor and its Related Parties; (ii) the Agent and the Lenders have nevertheless designated the Account Receivable as good; or (iii) where the Account Debtor has long term debt obligations rated no worse than BBB by S&P or DBRS Limited;
g) it is owed by an Account Debtor whose principal place of business is located in Canada or the United States, unless otherwise supported by a letter of credit acceptable to the Agent, in its discretion;
h) it is denominated in either Canadian Dollars or United States Dollars;
i) it is subject to a Perfected Security Interest in favour of the Agent;

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MANAGEMENT'S DISCUSSION & ANALYSIS

j) such account is, and at all times will be, free and clear of all Security Interests other than Priority Payables (to the extent deducted in calculating the Borrowing Base) and any Permitted Encumbrances;
k) such account is not in respect of a builders lien or similar holdbacks;
l) the Account Receivable does not arise from a sale or lease to or rendering of services to a Related Party of any Loan Party, or, in each case, to their respective Affiliates;

Any Eligible Accounts Receivable which are at any time Eligible Accounts Receivable but which subsequently fail to meet any of the foregoing requirements shall immediately cease to be an Account Receivable.

Non-GAAP Ratios

"Adjusted funds flow from operations per share" is calculated on the same basis as net loss per Class A and Class B share (basic and diluted), utilizing the basic and diluted weighted average number of Class A and Class B shares outstanding during the periods presented.

"Adjusted revenue per operating day" may be useful to analysts, investors, other interested parties and management as a measure of pricing strength and is calculated by dividing adjusted revenue by the number of operating days for the period.

"Adjusted operating and maintenance expenses per operating day" may be useful to analysts, investors, other interested parties and management as it demonstrates a degree of cost control and provides a proxy for specific inflation rates incurred by the Company.

Supplementary Financial Measures

A supplementary financial measure:

a) is, or is intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of the Company;
b) is not presented in the financial statements of the Company;
c) is not a non-GAAP financial measure; and
d) is not a non-GAAP ratio.

Supplementary financial measures presented and discussed in this MD&A are as follows:

• "Operating Margin %" – represents operating margin as a percentage of revenue.
• "Adjusted Operating Margin %" – represents adjusted operating margin as a percentage of adjusted revenue.
• "Utilization" – represents the operating days achieved divided by the maximum operating days based on the number of days in the year and the rigs available.

AKITA DRILLING | 2025 Q2 Report 22

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MANAGEMENT'S DISCUSSION & ANALYSIS

Forward-Looking Statements

From time to time AKITA makes forward-looking statements. These statements include but are not limited to comments with respect to AKITA's objectives and strategies, financial condition, results of operations, the outlook for industry and risk management discussions. In particular, forward-looking information in this MD&A includes, but is not limited to, references to the impact of current and potential future tariffs, geopolitical tensions, the Company's focus on balancing debt repayment with shareholder returns, the outlook for the North American economy and the drilling industry (including the demand for drilling services, customer budgets and drilling programs, day rates, supply issues, labour shortages, input costs and rig counts), oil and natural gas prices (including as they may be affected by production cuts by OPEC+), the demand for oil, future investment, the Company's oil sands and natural gas drilling activity, the Company's existing credit facility, and interest rates on borrowings under the facility, the Company's operating performance and cash flows, future investment, debt repayment, capital spending by the Company, tax rates, and the Company's capital program.

Although the Company believes that the expectations reflected in the forward-looking information are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and no assurance can be given that these expectations will prove to be correct. By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and therefore carry the risk that the predictions and other forward-looking statements will not be realized. Readers of this MD&A are cautioned not to place undue reliance on these statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, estimates and intentions expressed in such forward-looking statements.

The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of, among other things:

• Changes in international trade laws, regulations, agreements, treaties, taxes, tariffs, duties or policies of Canada, the US or other countries;
• Prevailing economic conditions including world crude oil prices, North American natural gas prices and global LNG demand;
• Fluctuations and uncertainty surrounding the future price of commodities;
• The impact of global supply chain disruptions;

AKITA DRILLING | 2025 Q2 Report

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MANAGEMENT'S DISCUSSION & ANALYSIS

• The impact of the level of industry activity for Canadian and US crude oil and natural gas exploration and development on the demand, pricing and terms for contract drilling services;
• The impact of changes in demand for crude oil, natural gas or other liquid hydrocarbons on the demand and pricing for drilling services;
• The level of exploration and development activity carried on by AKITA's customers;
• Increased competition, including as a result of the movement of drilling rigs among regions or reduced levels of activity in the oil and gas industry;
• Energy transition targets and industry's ability to achieve them;
• The loss of one or more major customers;
• Changes to existing laws, regulations and government policies, and the introduction of new laws and regulations, including those governing the management, transportation and disposal of hazardous substances and other waste materials and otherwise relating to the protection of the environment;
• The impact of climate change activism;
• Access to capital markets including AKITA's ability to obtain additional debt or equity financing;
• Variations in interest rates and principal repayments under the terms of the Company's credit facility;
• The Company's ability to make scheduled payments of principal and interest on, or to refinance, its indebtedness;
• The sufficiency of AKITA's assets to repay indebtedness under its credit facility in the event repayment were to be accelerated following an event of default;
• The impact of dilutive financings or other transactions;
• Fluctuations in foreign exchange, interest and tax rates;
• The adequacy of AKITA's insurance coverage or contractual indemnity rights to cover losses, and the applicability of anti-indemnification legislation;
• The Company's ability to attract, develop and maintain a skilled and safe workforce and maintain a cost structure that varies with activity levels;
• The availability of qualified management personnel;
• A general reduction in rates in the drilling industry caused by a capital overbuild.

We caution that the foregoing list of factors is not exhaustive and that while relying on forward-looking statements to make decisions with respect to AKITA, investors and others should carefully consider the foregoing factors, as well as other uncertainties and events, prior to making a decision to invest in AKITA. Except where required by law, the Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by it or on its behalf.

AKITA DRILLING | 2025 Q2 Report 24

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MANAGEMENT'S DISCUSSION & ANALYSIS

Management's Responsibility for Financial Information

As at June 30, 2025, management evaluated, under the supervision of and the participation of the President and Chief Executive Officer (the "CEO") and the Vice President, Finance and Chief Financial Officer (the "CFO"), the effectiveness of the Company's disclosure controls and procedures ("DC&P") as defined under National Instrument 52-109. Based on that evaluation, the CEO and CFO concluded that the Company's DC&P was effective as at June 30, 2025.

No changes were made to the Company's internal control over financial reporting ("ICFR") during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's ICFR.

As in prior quarters, AKITA's Audit Committee reviewed this document, including the attached interim financial statements.

AKITA DRILLING | 2025 Q2 Report 25