Red Deer, Canada – November 14, 2011 – High Arctic Energy Services Inc. (TSX: HWO) (“High Arctic” or the “Corporation”) today announced its operating and financial results for the third quarter and first nine months of 2011.
Highlights for Third Quarter of 2011
- Revenue increased by $0.3 million, or 1%, for the third quarter ended September 30, 2011 compared to the third quarter ended September 30, 2010 as a result of increased activity in Canada. Revenue in that region improved by $2.0 million, or 21.7%. This was partially offset by a $1.7 million, or 8.6%, decline in Papua New Guinea revenue. Canadian activity levels started out slow in July from an extended spring breakup, but rebounded strongly for the remainder of the quarter.
- High Arctic’s Canadian business is primarily dependent on natural gas and liquids rich natural gas well drilling and completions. Despite a drop in natural gas well completions in proportion to overall well completions in Canada, High Arctic’s equipment utilization and snubbing product line utilization was higher in the third quarter compared to last year, which is indicative both that High Arctic has increased market share in terms of overall natural gas well completions and that the Corporation’s services are in higher demand in the unconventional shale gas plays in Canada.
- Adjusted EBITDA was $7.9 million versus $8.0 in the same prior period and $22.2 million year to date compared to $23.9 million in 2010. The slight decline can be attributable to results in the Papua New Guinea division because of pricing concessions granted to receive 3 year contract extensions, startup costs to put the newly refurbished Rig 102 into service and the impact of a weaker US dollar on US dollar based revenues. The foreign exchange loss excluded in calculating adjusted EBITDA arose primarily on intercompany debt balances owed to foreign operations and is a non-cash charge.
- Cash Flows provided by operations during the third quarter of 2011 increased by $0.2 million to $6.0 million compared to $5.8 million in the third quarter of 2010.
- The Corporation’s financial position continued to strengthen in the third quarter of 2011 as total debt was reduced to $18.4 million as at September 30, 2011 compared to $19.6 million at June 30, 2011 and $36.5 million at December 31, 2010. Operating working capital at September 30, 2011 of $21.5 million exceeded total debt by $3.1 compared to net debt of $0.6 million at the end of June 30, 2011 and $4.7 million at December 31, 2010. Total debt to 12-month trailing EBITDA ratio was 0.60 times at September 30, 2011 compared to 1.1 times as at December 31, 2010. As at the end of September 30, 2011, $10.0 million of the $30.0 million credit facility remains available to be drawn.
Commenting on the results, Bruce Thiessen, High Arctic’s Chief Executive Officer, stated: “The third quarter was another solid quarter for High Arctic, particularly in the Canadian division. Canadian revenue was up 21% from the third quarter of 2010 partially due to pent up demand following an unusually wet second quarter. We expect to see continued strong activity through the fourth quarter and the first quarter of 2012 as drilling in the liquids rich gas plays continues to drive demand for our high pressure well completion services. We anticipate further improvements in day rates due to robust demand for our specialized services and the overall industry trends. We continued to invest in our fleet of rental products in Papua New Guinea as part of our efforts to diversify our customer base and deploy our strong operating cash flows in opportunities that provide attractive rates of return. These capital investments will continue to come on stream over the coming months as the equipment is delivered into the field in Papua New Guinea.“
Further Information
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.
Dennis Sykora
Executive Vice President and General Counsel
Phone: 403 340 9825
Email: dennis.sykora@dev.haes.ca
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