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CALGARY, Oct. 22, 2015 /CNW/ - High Arctic Energy Services Inc. (TSX: HWO) ("High Arctic" or the "Company") is pleased to provide a third quarter 2015 operations update.
Third Quarter Update
In Papua New Guinea ("PNG"), Rigs 103, 104 & 115 were all fully-utilized through the third quarter of 2015 and should continue to be fully-utilized through the year end and into 2016. The customer base is expanding as windows of opportunity arise in the drilling schedules of the Company's primary customers, resulting in drilling activity with new customers. As a result of the lower global commodity prices, the Company has been focused on reducing labour and operating expenses in response to the revenue reductions being experienced by High Arctic's customers. Operational teams remain focused on delivering a high level of service quality, which resulted in the Company earning incremental performance incentive payments in the quarter.
The second heli-portable rig that High Arctic purchased in 2014, Rig 116, arrived in Papua New Guinea during the quarter and began earning standby revenue in August, slightly earlier than the Company forecasted. The rig is currently in Port Moresby awaiting deployment to its first drilling site. Mobilization to the first location will commence in 2016 once the customer has finalized their drilling plans. The two year contract term with the customer will commence when the first well is spudded.
In Canada, activity levels continue to be significantly lower than those experienced in the prior year. The operations remain profitable as the business infrastructure has been adjusted to match the current demand for equipment and services. Utilization levels and rental equipment demand in the third quarter were higher than the Company forecasted. This, coupled with a reduced fixed cost structure, resulted in better than anticipated Canadian results.
As a result of the incremental earnings delivered from Rigs 115 and 116 compared to the prior year, the stronger U.S. dollar, strong operational performance in PNG, and the better utilization realized in Q3 from Canadian operations, the Company expects the third quarter 2015 adjusted EBITDA to exceed $18 million.
The Company's contracted status in Papua New Guinea, the strong US dollar exchange rate, continued service quality levels, and similar quarter to quarter demand in Canada should result in fourth quarter adjusted EBITDA being similar to the third quarter.
The Company expects to announce third quarter 2015 financial and operating results after the market closes on Thursday, November 12th.
EBITDA & Adjusted EBITDA
Earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA are non-GAAP measures. EBITDA is a useful supplemental measure of the Company's performance prior to consideration of how operations are financed or how results are taxed or how depreciation and amortization affects results. Adjusted EBITDA is used by management to analyze EBITDA prior to the effect of share-based compensation, gains or losses on sale of assets or investments, excess of insurance proceeds over costs and foreign exchange gains or losses. These measures do not have a standardized meaning as prescribed by International Financial Reporting Standards (IFRS). Both measures are not intended to represent net earnings as calculated in accordance with IFRS and may not be comparable to similar measures presented by other issuers. This information should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS.
This news release may contain forward-looking statements relating to expected future events and financial and operating results of the Company 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 Company's Management's Discussion and Analysis for the quarter ended June 30, 2015 and in the Annual Information Form for the year ended December 31, 2014 found on SEDAR (www.sedar.com). Due to the potential impact of these factors, the Company 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
High Arctic is a publicly traded company listed on the Toronto Stock Exchange under the symbol "HWO". Based in Alberta, the Company's principal focus is to provide drilling and specialized well completion services, equipment rentals and other services to the oil and gas industry.
High Arctic's largest operation is in Papua New Guinea where it provides drilling and specialized well completion services and supplies rig matting, camps and drilling support equipment on a rental basis. The Canadian operation provides snubbing services, nitrogen supplies and equipment on a rental basis to a large number of oil and natural gas exploration and production companies operating in Western Canada.
A full copy of High Arctic's results including the Management's Discussion and Analysis and the Consolidated Financial Statements for quarter ended June 30, 2015 and the notes contained therein can be found on the Investor Relations page of High Arctic's website www.haes.ca or at www.sedar.com. The Corporation's most recent investor presentation can be found at www.haes.ca.
SOURCE High Arctic Energy Services Inc.
For further information: Tim Braun, Chief Executive Officer, (403) 508-7836, firstname.lastname@example.org