Calgary, Canada – February 5, 2018 – High Arctic Energy Services Inc. (“High Arctic” or the “Corporation”) is providing the following operational and Papua New Guinea (“PNG”) joint drilling company negotiation status update.
Activity for High Arctic’s Concord Service rig operations in Canada remains strong with fourth quarter utilization of 55% and for the month of January 2018 utilization of 65% on its 56 marketed rigs. The activity levels experienced in January 2018 are 12% above those experienced in January 2017. The Corporation expects continued strong utilization for the first quarter until spring break up.
In anticipation of increasing activity in the Corporation’s operations, the board of directors has approved an initial capital budget of $13.3 million for 2018, the majority of which will be utilized as upgrades and replacement for certain equipment in the Corporation’s operating fleet as well as additional investment in rental equipment to support the growth in the Corporation’s Canadian operations.
High Arctic continues to progress discussions with its key customer in PNG related to the formation of a joint drilling company in PNG while drilling operations continue under existing operating agreements. The negotiation term under the initial letter of intent has now expired, however, High Arctic and its key customer remain active in progressing discussions relating to the potential formation of a top tier consolidated drilling entity in PNG. High Arctic will continue to provide further updates as these discussions progress.
Mr. J. Cameron Bailey, the Chief Executive Officer of High Arctic stated that, “We are very pleased with the improvement in activity in Canada and the high rig utilization the Corporation has been able to achieve in Canada and PNG while maintaining its stellar safety and performance record. We remain active at reviewing international and domestic acquisition opportunities that complement our existing service offering which may result in increasing the capital budget in 2018.”
The Corporation is currently operating a total of five rigs, in PNG three of which are with its key customer. Rig 103 successfully completed its drilling assignment in P’nyang and has commenced demobilization to our forward base in the Southern Highlands where it will await its next assignment. Rig 104 remains on standby in Muruk and is expected to commence movement to its next well shortly. Local landowner issues at the location on which Rig 405 is currently engaged in operations, has resulted in a temporary suspension of operations. Current expectations are this suspension could last eight to twelve weeks. High Arctic is working closely with its customer on this matter with the goal to recommence operations as quickly as possible and complete the drilling operations in the most economical manner possible. During this temporary suspension under the drilling services contract for Rig 405, High Arctic will receive a reduced rate which will largely offset the reduced operating costs during this period, until such time that full operations recommence.
Rig 115 is being prepared to mobilize to its drilling assignment in Kimu with an anticipated spud date in April and Rig 116 remains under contract in Port Moresby.
This Press Release contains forward-looking statements. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, and similar expressions are intended to identify forward-looking statements. Such statements reflect the Corporation’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Corporation’s actual results, performance or achievements to vary from those described in this Press Release. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this Press Release as intended, planned, anticipated, believed, estimated or expected. Specific forward-looking statements in this Press Release include, among others; the recommencement of operations for Rig 405; the Corporation’s ability to negotiate and execute agreements to effect the proposed joint company with its key customer; anticipation of increased activity levels for 2018; estimated capital budget expenditures; commodity prices and the impact they have on industry activity; projections of market prices and costs; and the Corporation’s ability to finance a possible purchase of the customer’s interest in the proposed joint company, treatment under governmental regulatory regimes and political uncertainty and civil unrest. In addition to the risk factors set out above and elsewhere in this Press Release, readers are directed to the additional risk factors set out in the Corporation’s most recent Annual Information Form filed on SEDAR at www.sedar.com.
The forward-looking statements contained in this Press Release are expressly qualified in their entirety by this cautionary statement. These statements are given only as of the date of this Press Release. The Corporation does not assume any obligation to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law.
About High Arctic
High Arctic is a publicly traded company listed on the Toronto Stock Exchange under the symbol “HWO”. The Corporation’s principal focus is to provide drilling and specialized well completion services, equipment rentals and other services to the oil and gas industry.
High Arctic’s largest operation is in Papua New Guinea where it provides drilling and specialized well completion services and supplies rig matting, camps and drilling support equipment on a rental basis. The Canadian operation provides well servicing, well abandonment, snubbing and nitrogen services and equipment on a rental basis to a large number of oil and natural gas exploration and production companies operating in Western Canada.
For more information, please contact:
J. Cameron Bailey
Chief Executive Officer