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CALGARY, April 9, 2014 /CNW/ - High Arctic Energy Services Inc. (TSX: HWO) ("High Arctic" or the "Company") is pleased to announce that it has signed a new Drilling Services Agreement with InterOil Corporation for one heli-portable drilling rig in Papua New Guinea ("PNG"). High Arctic has agreed to provide one drilling rig and a 100 person camp for a firm contract term of two years with an extension option available to InterOil for one additional year. The two year term commences once the rig has been mobilised and is ready to commence drilling operations. The contract is projected to deliver annualized revenue of approximately US$30 million during the drilling operations. The target spud date for the first well is November 2014.
In conjunction with the award of this contract, High Arctic has agreed to purchase two heli-portable drilling rigs and associated ancillary equipment. The total commitment to purchase and deliver the two rigs with upgrades is estimated at US$52 million. The matching rigs are AC self-erecting 1500 HP triple drilling rigs designed and manufactured as heli-portable. The rigs can be broken down into 2700kg loads allowing maximum transportation versatility and flexible alternatives in helicopter selection. Constructed in 2010, the rigs feature the latest safety designs and drilling automation technology, and have each had approximately one year of use.
Kevin Doran, High Arctic's President, International, stated; "The acquisition of these two drilling rigs is a significant milestone for High Arctic and reflects our continued commitment to expanding our presence within Papua New Guinea. We are excited to be working with InterOil as they move towards commercializing their resources. The second rig should position us to take advantage of the growing activity in the country."
The rig purchase is subject to customary closing conditions and closing is expected to occur by mid-May. The rigs are currently being prepared to be shipped to PNG with an expected landing date in June. The first rig will then be commissioned and upgraded at a customer supplied yard near Port Moresby. The first rig is expected to be mobilised to the field in November at which time revenue streams will commence. The second rig will then be commissioned and is expected to be available for use in early 2015. The Company will market the second rig to both existing and potential new customers in PNG.
The Company plans to acquire the rigs using existing cash on hand and available capacity on its current revolving loan facility.
This news release may contain forward-looking statements relating to expected future events and anticipated 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, but not limited to, market and general economic conditions, and the risks and uncertainties detailed in both the Company's Management Discussion and Analysis for the year ended December 31, 2013 and the Annual Information Form for the year ended December 31, 2013 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
The Company is a provider of specialized oilfield equipment and services for drilling, completion and work over operations. Based in Alberta, High Arctic has operations throughout Western Canada and in Papua New Guinea. The Company's most recent investor presentation can be found at www.haes.ca.
SOURCE: High Arctic Energy Services Inc.
For further information: Ken Olson, Chief Financial Officer, Phone: 403 580 7836 ext 103, Email: firstname.lastname@example.org