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RED DEER, AB, March 12 /CNW/ - High Arctic Energy Services Inc. (TSX: HWO) ("High Arctic" or the "Corporation") today announced its results for the year ended December 31, 2009.
Commenting on the results, Bruce Thiessen, CEO, said, "While industry conditions proved very challenging during 2009, I was satisfied with the overall financial results and the Corporation's ability to maintain market share in the core areas of Canada and Papua New Guinea. Looking forward in 2010, High Arctic has secured first call status with two of the largest producers in Canada and is well positioned to take advantage of emerging opportunities in Papua New Guinea."
Michael Binnion, Chairman of the Board of Directors commented, "The Corporation continued to make progress on reducing its debt and more work remains to be done. High Arctic would like to thank all of our stakeholders for their continued support."
2009 Financial Highlights
- The Corporation reduced its senior debt by $28.5 million to $65.4
million in 2009 mainly as a result of selling its investment in
Optimal Pressure Drilling Services for proceeds of $23.5 million. A
further $14.7 million of the senior debt was repaid in January, 2010.
- On a consolidated basis, the Corporation generated $132.5 million in
revenue during 2009; a decrease of 21% from 2008 revenue of $168.5
- Canadian revenue decreased by 49% to $27.2 million in 2009 compared
to $53.2 million in 2008. The decrease in revenue is mainly
attributable to a 55% reduction in the number of well completions in
western Canada during 2009 as compared to 2008.
- Revenue from continuing international operations was $95.4 million
during 2009 which was an increase of 4% over the 2008 revenue of
$91.8 million. Substantially all of that revenue was generated in
Papua New Guinea.
- EBITDA was $23.1 million ($0.51 per share) for 2009; a decrease of
$3.8 million from $26.9 million ($0.63 per share) for 2008.
- The net loss for 2009 was $16.5 million ($0.36 per share) compared to
a net loss of $39.6 million ($0.93 per share) during 2008. The loss
for 2009 included a $12.1 million charge for the impairment of
certain equipment including assets held for sale, while the 2008 loss
included an impairment charge of $21.7 million related to assets
reclassified to assets held for sale.
Fourth Quarter Financial Highlights
- Revenue from continuing operations decreased by 35% to $26.7 million
in the fourth quarter of 2009, as compared to revenue of $40.8
million during the same period of 2008.
- Revenue in Canada declined $4.7 million (38%) from $12.4 million in
the three months ended December 31, 2008 to $7.7 million in the same
period of 2009. The decline in Canadian revenue is mainly the result
of lower activity levels in the fourth quarter of 2009.
- Revenue from international operations in the period ending December
31, 2009 was $19.0 million, a decline of $9.4 million (33%) from
revenue of $28.4 million during the same period of 2008. In the
fourth quarter of 2008, High Arctic had one drilling rig and one
hydraulic workover rig working in Papua New Guinea. During the fourth
quarter of 2009, High Arctic was operating only one drilling rig with
the hydraulic workover rig on a reduced stacked rate.
- Operating earnings were $5.0 million for the quarter ending December
31, 2009; compared to operating earnings of $3.1 million for the
fourth quarter of 2008. Continuing operations recorded operating
earnings of $5.2 million; compared to $8.7 million of operating
earnings in the fourth quarter of 2008.
- EBITDA was a $6.9 million ($0.15 per share) for the three months
ended December 31, 2009; an increase of $0.6 million from EBITDA of
$6.3 million ($0.15 per share) for the same quarter in 2008.
Continuing operations had EBITDA of $7.1 million in the fourth
quarter of 2009 compared to $11.4 million in the fourth quarter of
- The Corporation recorded a net loss of $11.5 million ($0.25 per
share) in the fourth quarter of 2009, as compared to a net loss of
$24.9 million ($0.59 per share) in the same period of 2008.
The Corporation expects the challenging conditions facing the Canadian oilfield services sector will persist until natural gas prices improve significantly. North American natural gas prices remain at levels that do not encourage a significant increase in drilling activity. The Corporation has been proactive in reducing costs to remain competitive in Canada, but any meaningful increase in financial performance during 2010 will only result with an increase in industry activity.
In Papua New Guinea, management believes that the 2010 activity levels for the Corporation could be similar to the previous year with some opportunities to expand the business. Several oil and gas companies have recently invested in Papua New Guinea which could lead to new work in the second half of 2010.
The Corporation continues to negotiate with its senior lenders to extend the credit facility that matured on June 12, 2009. The senior consolidated debt was reduced by $28.5 million in the year ending December 31, 2009 to $65.4 million and was further reduced in January, 2010 to $50.7 million. Despite this significant progress, the Corporation remains substantially over leveraged and does not have the capacity to repay the senior consolidated debt should the lenders demand payment. 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.
The audited Financial Statements for the year ended December 31, 2009 and the Management Discussion and Analysis dated March 11, 2010 can be viewed on SEDAR at www.sedar.com under High Arctic Energy Services Inc.
EBITDA (being earnings before the deduction of depreciation, amortization, interest expense and income taxes) is not a recognized measure under GAAP. Management believes that, in addition to net earnings, EBITDA is a useful supplemental measure of the Corporation's performance prior to consideration of how operations are financed or how results are taxed. Investors are cautioned that this should not be construed as an alternative to net earnings determined in accordance with GAAP as an indicator of the Corporation's performance. The Corporation's method of calculating EBITDA may differ from the methods used by other issuers and, accordingly, it may not be comparable to similarly titled measures used by other issuers.
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements. When used in this press release, 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: expectations regarding the Corporation's ability to sell assets, raise capital and restructure its long-term debt obligations (including the Corporation's ability to obtain necessary waivers and extensions relating to the credit facility), commodity prices and the impact that they have on industry activity, estimated capital expenditure programs for fiscal 2010 and subsequent periods, 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, worldwide supply and demand for oilfield services, treatment under governmental regulatory regimes and general economic conditions.
With respect to forward-looking statements contained in this press release, the Corporation has made assumptions regarding, among other things, its ability to: obtain equity and debt financing on satisfactory terms, market successfully to current and new customers, obtain equipment from suppliers, construct property and equipment according to anticipated schedules and budgets, remain competitive in all of its operations and attract and retain skilled employees.
The Corporation's actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors detailed in the Corporation's Management Discussion and Analysis for the year ended December 31, 2009 found on SEDAR at www.sedar.com.
These forward-looking statements are made as of the date of this document and the Corporation does not intend, and does not assume any obligation, to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law. The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement.
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 Papua New Guinea.
SOURCE High Arctic Energy Services Inc.
For further information: For further information: Morley Myden, Chief Financial Officer, (403) 340-9825, email@example.com