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RED DEER, AB, Aug. 10 /CNW/ - High Arctic Energy Services Inc. (TSX: HWO)
("High Arctic" or the "Corporation") today announced its results for the
quarter ended June 30, 2009.
Commenting on the results, Michael Binnion, Chairman of the Board, said,
"Despite the slowdown in the industry, the Corporation continued to make
improvements in its financial performance during the first six months of 2009.
The 2009 EBITDA of $17.0 million is significantly improved from $11.8 million
in 2008. The second half of 2009 is shaping up to be very challenging as the
downturn in the industry persists and we work to restructure the balance
Three months ended June 30, 2009
- Revenue from continuing operations increased by $3.0 million (11%) to
$31.2 million in the second quarter of 2009, as compared to revenue
of $28.2 million during the same period of 2008.
- The Corporation recorded a net loss of $2.6 million ($0.06 per share)
in the second quarter of 2009, which was a $6.7 million improvement
over a second quarter 2008 loss of $9.3 million ($0.22 per share).
- EBITDA was $6.4 million ($0.14 per share) for the three months ended
June 30, 2009; an increase of $5.0 million from EBITDA of $1.4
million ($0.03 per share) for the second quarter of 2008. Continuing
operations EBITDA was $4.9 million in the second quarter of 2009
compared to $3.6 million in the second quarter of 2008.
- Operating earnings of $3.0 million for the quarter ending June 30,
2009 increasing $5.6 million from an operating loss of $2.6 million
for the second quarter of 2008. Continuing operations recorded
operating earnings of $2.4 million; an increase of $1.9 million from
$0.5 million of operating earnings in the second quarter of 2008.
Six months ended June 30, 2009
- Revenue from continuing operations increased by $5.4 million (8%) to
$73.0 million in the six months ended June 30, 2009, as compared to
revenue of $67.6 million during the same period of 2008.
- The Corporation recorded a net loss of $0.7 million ($0.02 per share)
in the six months ended June 30, 2009, which was a $10.8 million
improvement over the 2008 net loss of $11.5 million ($0.27 per
share). Continuing operations had a net loss of $0.5 million ($0.01
per share) during the six months ended June 30, 2009 as compared to a
net loss of $6.5 million ($0.16 per share) in the same period of
- EBITDA was $17.0 million ($0.37 per share) for the six months ended
June 30, 2009; an increase of $5.2 million (44%) from EBITDA of $11.8
million ($0.28 per share) for the same period quarter of 2008.
Continuing operations had EBITDA of $14.9 million in the six months
ended June 30, 2009 compared to EBITDA of $15.3 million during the
same period of 2008.
- Operating earnings of $10.1 million for the six months ending June
30, 2009; an increase of $6.6 million from operating earnings of $3.5
million for the same period of 2008. Continuing operations recorded
operating earnings of $9.8 million; an increase of $0.9 million from
$8.9 million of operating earnings in the six months ending June 30,
The Corporation's senior credit facilities matured on June 12, 2009 and
discussions with the lenders over the terms of an extension are ongoing. As of
June 30, 2009 the balance outstanding on the credit facilities was $91.5
million. As previously reported, a sale of High Arctic's interest in Optimal
Pressure Drilling Services is a key condition to an extension. A purchase and
sale agreement to sell the interest was executed effective July 3, 2009. The
total sales proceeds are US$21.8 million. The sale is subject to a number of
customary closing conditions, including the removal of any security interests
registered against the assets. A corporation owned by Mr. Jed Wood, the former
Chief Executive Officer and the largest shareholder, has registered a security
interest against the assets that must be removed before the sale can be
completed. The Corporation has asserted that it is an improper registration
and is working with the senior lender to obtain court approval for the sale.
Either party may terminate the agreement if the closing conditions are not
satisfied by August 31, 2009.
In addition, the Corporation owes $27.9 million in respect of Convertible
Debentures that mature on December 31, 2012. As a result of the maturity of
the senior credit facilities on June 12, 2009, the Corporation was prevented
from paying the semi-annual interest amount of $1.4 million due on June 30,
2009. The debenture holders are in a position to accelerate the maturity date
as a result of the non-payment of the interest. The subordination terms of the
debentures generally prevent the holders from taking any action ahead of the
senior creditors and the Corporation is permitted to settle the principal
amount with shares at market value under the terms of the debentures. The
Corporation has been working with the debenture holders on alternatives to
restructure the debentures as part of an overall plan to improve the capital
structure for the benefit of all stakeholders.
While the Corporation is focusing its best efforts on resolving these
issues and balancing the interests of all of the creditors and the
shareholders, the outcome cannot be predicted at this time. High Arctic had a
cash balance of $22.1 million at June 30, 2009, which it believes provides
adequate liquidity for the foreseeable future, subject to meeting any
requirements of the creditors.
The Financial Statements and Management Discussion and Analysis dated
August 7, 2009 can be viewed on SEDAR at www.sedar.com under High Arctic
Energy Services Inc.
This news release may contain forward-looking statements relating to
expected future events and financial and operating results of the Corporation
that involve risks and uncertainties. Actual results may differ materially
from management expectations, as projected in such forward-looking statements
for a variety of reasons, including market and general economic conditions and
the risks and uncertainties detailed in both the Corporation's Management
Discussion and Analysis and Annual Information Form for the year ended
December 31, 2008 found on SEDAR (www.sedar.com). Due to the potential impact
of these factors, the Corporation disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, unless required by applicable law.
About High Arctic
The Corporation, through its subsidiaries, is a global provider of
specialized oilfield equipment and services, including drilling, completion
and workover operations. Based in Red Deer, Alberta, High Arctic has domestic
operations throughout Western Canada. International operations are currently
active in Asia and Mexico.
For further information:
For further information: Morley Myden, Chief Financial Officer, (403)