CALGARY, Canada - High Arctic Energy Services Inc. (TSX: HWO) (the 'Corporation' or 'High Arctic') released its' fourth quarter and year-end results today.
The audited consolidated financial statements, management
discussion & analysis ('MD&A'), and annual information form for the year ended December 31, 2023 will be available on SEDAR at www.sedar.com, and on High Arctic's website at www.haes.ca. All amounts are denominated in Canadian dollars ('CAD'), unless otherwise indicated.
The Corporation provided an update today on the intention to issue shareholders a tax efficient return of capital to a maximum of $38.2 million and plan to reorganize the Corporation at a special meeting of the Shareholders. The recommendation to reorganize is expected to include the following elements: a spinoff of the international business to shareholders as a Canadian publicly listed company, maintaining the Corporation as a Canadian publicly listed company focused on growing the Canadian business, distribution of a return of capital to shareholders of between $33.0 million and $38.2 million before July 26, 2024, and right-sizing the general and administrative infrastructure to align with the new corporate structure.
The Corporation is working with DLA Piper (Canada) LLP as legal advisor and Lightyear Capital Inc. as financial advisor on the revised reorganization plan. The completion of which will be subject to Board, stock exchange, applicable regulatory and shareholder approval at a special meeting of the Shareholders to be held before the end of June 2024.
Mike Maguire, Chief Executive Officer commented: 'Our businesses in both Canada and PNG have finished the year with a solid quarter and we made an exciting acquisition with the purchase and amalgamation of Delta Rental Services in Canada.
Following the receipt of feedback from our shareholders and consultation with our advisors, I am excited to provide today's update on the path the Board intends to take in order to reorganize the Corporation and release a tax-efficient return of cash to shareholders.
The proposed spin-off of the Papua New Guinean business as a publicly listed Canadian company will allow senior management to concentrate where we have had the most success in the past. The remaining publicly listed company with the Canadian assets has been further strengthened with the addition of Delta Rental Services and becomes an attractive vehicle for future growth and transactions.
I continue to believe our customers and employees in both PNG and Canada will appreciate and benefit from locally managed businesses.'
Expectations that Rig 103 drilling activity will be concluded by the end of June 2024 have been confirmed with the receipt of formal notice from High Arctic's principal customer in PNG of its intention to suspend drilling operations and cold stack Rig 103 at the conclusion of this final approved well on the Rig 103 drilling schedule. The Corporation remains engaged with its principal customer on planning for 2025 drilling activity. Further, the PNG Government and Papua- LNG operator TotalEnergies have released a joint statement advising that the FID of the Papua-LNG project is now expected in 2025.
2023 Highlights
The following highlights the Corporations results for Q4 2023 and YTD 2023: Acquired Delta late in Q4 2023 which expanded High Arctic's geographical coverage in Alberta and offers both operational synergies and potential for cross deployment of underutilized assets in the Canadian rentals business.
Realized a third continuous quarter of full utilization of PNG Rig 103 in Q4 2023, pursuant to a 3-year contract that was renewed in 2022.
Improved liquidity with a working capital balance of $63.0 million, which includes a cash balance of $50.3 million, and long-term debt of $3.5 million.
Generated Adjusted EBITDA from continuing operations of $11.8 million in FY 2023 and $3.2 million in Q4 2023.
Realized a net loss from continuing operations of $12.8 million in FY 2023 and net income from continuing
operations of $2.7 million in Q4 2023. The loss was primarily due to a non-cash impairment loss of $20.5
million on PNG asset carrying values.
Sold the Corporation's Canadian Nitrogen transportation, hauling and pumping services business for cash consideration of $1.35 million.
FORWARD-LOOKING STATEMENTS
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, statements pertaining to the following: general economic and business conditions which will include, among other things, the outlook for energy services; continued impact of Russia-Ukraine conflict; the impact of conflict in the middle east; the Corporation's ability to maintain a USD bank account and conduct its business in USD in PNG; market fluctuations in interest rates, commodity prices, and foreign currency exchange rates; restrictions to repatriate funds held in PGK; expectations regarding the Corporation's ability to manage its liquidity risk; raise capital and manage its debt finance agreements; projections of market prices and costs; factors upon which the Corporation will decide whether or not to undertake a specific course of operational action or expansion; the Corporation's ongoing relationship with its major customers; the return of capital to the Corporation's shareholders and reorganization including spinoff of the PNG Business to shareholders as a Canadian publicly listed company, distribution of a return of capital to shareholders, and obtaining applicable regulatory and shareholder approvals; right sizing of the general and administrative infrastructure to align with the new corporate structure; expansion of Canadian oil and gas takeaway capacity to global markets; the performance of the Corporation's investment in Team Snubbing, and whether Team High Arctic Energy Services Inc. Q4 2023 Results 8 can realize high utilization operations for its two snubbing packages in 2024 in Alaska; strong demand for the Corporations Canadian rental equipment in 2024 and the delivery of improved financial performance in 2024, Papua New Guinea being on the precipice of a new round of large-scale projects in the natural resources sector; if and the timing of when a final investment decision will be made on the Papua-LNG project; whether the development of the P'nyang gas field will follow Papua-LNG; whether Rig 103 will continue to operate through the first half of 2024 and beyond that through the term of its contract; if the Corporation's primary customers will add approved wells to its current drilling schedule, and the corporation's expectation of maintaining current financial performance if they do; the Corporation's ability to position itself to be a significant supplier of services, equipment and manpower for other projects in PNG deploying idle heli-portable drilling rigs 115 and 116; future work with other exploration companies in PNG; scaling the Canadian business; executing on one or more corporate transactions; estimated credit risks and the utilization of tax losses. With respect to forward-looking statements contained in this press release, the Corporation has made assumptions regarding, among other things, its ability to: maintain its ongoing relationship with major customers; successfully market its services to current and new customers; devise methods for, and achieve its primary objectives; source and obtain equipment from suppliers; successfully manage, operate, and thrive in an environment which is facing much uncertainty; remain competitive in all its operations; attract and retain skilled employees and obtain equity and debt financing on satisfactory terms. The Corporation's actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth above and elsewhere in this press release, along with the risk factors set out in the most recent Annual Information Form filed on SEDAR+ at www.sedarplus.ca. 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
Energy Services High Arctic is an oilfield services company currently operating in PNG and Western Canada. In PNG, the product line consists of drilling services, workover services and equipment rental including rig mats, cranes, and oilfield related equipment. In Canada, the product line consists primarily of oilfield equipment and pressure control rentals. The Corporation also offers snubbing and well servicing activities through its interests in Team Snubbing Services Inc. and in the Seh' Chene Well Services Limited Partnership.
Contact:
Mike Maguire
Chief Executive Officer
Tel: +1 (403) 508-7836
HIGH ARCTIC ENERGY SERVICES INC 
