High Arctic Reports 28% increase in 3rd Qtr EBITDA

Highlights

• Net earnings for the quarter and nine months improved to $6.5 million and $22.9 million, respectively, more than doubling the $3.0 million and $10.2 million reported in the same periods for 2011.
• Consolidated revenue for the third quarter increased 22% to $35.8 million compared to $29.3 million for the quarter last year. Year to date revenues of $107.6 million are up 19% compared to 2011.
• Consolidated operating margins continued strong at 33% for the quarter, the same as in 2011 and to 33% for 2012 year to date compared to 31% last year. The margins benefited from the favourable returns generated during 2012 on capital invested in new rental equipment offset somewhat by lower margins during 2012 on nitrogen sales and the supply of additional personnel services in PNG carrying a lower margin.
• The strong growth in revenue for the quarter was driven by increased activity in PNG and by the deployment of a 250K UB Unit in Canada. In PNG, the third quarter revenue was $22.6 million compared to $18.1 million in 2011, the 25% increase primarily from the growth in the matting and equipment rental business and from supplying additional personnel services as part of the start up of a second drilling crew. Year to date revenues in PNG of $71.2 million are up 21% for the same reasons plus from the operation of Rig 102 for the full nine months of 2012 compared to four months in 2011.
• Revenue for Canada was also strong, up 18% to $13.2 million for the quarter compared to $11.2 million in 2011. The quarter saw flat revenue levels in the core snubbing business, but benefited from the deployment of a 250K UB unit from mid-June to mid-September that generated $3.0 million of revenue during the third quarter. The nitrogen business did see a drop in revenue for the quarter as both nitrogen and snubbing activities were softer during September as overall industry activity was down. Year to date, Canadian revenue of $36.4 million in 2012 was up 17% compared to $31.2 million last year, driven by the 250K UB unit and strong activity levels during the first quarter in the liquids rich natural gas plays in Alberta and British Columbia.
• High Arctic continues to be in a very strong financial position. At September 30, 2012, the Company had $22.7 million of cash on hand, well in excess of its debt of $15.0 million.
• The Company continues to generate strong cash flows from its operations. For the third quarter, High Arctic generated $9.4 million (2011- $6.0 million) of cash flows provided by operations and $26.2 million (2011 – $19.1 million) year to date. The 12 months trailing Adjusted EBITDA was $40.6 million at September 30, 2012 compared to $31.8 million for the 12 months ended September 30, 2011.
• As a result of its strong financial position, High Arctic instituted a monthly dividend of $0.01 per share and the first monthly dividend was paid on June 14, 2012. At that monthly rate, the annual dividend will total $6.0 million, which leaves the Company with most of its current operating cash flow available for investment in its business.

A full copy of High Arctic’s third quarter results including Management’s Discussion and Analysis, Consolidated Financial Statements and Notes to the Consolidated Financial Statements can be found on the Investor Relations page of High Arctic’s website www.haes.ca or at www.sedar.com.