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RED DEER, AB, June 25, 2013 /CNW/ - High Arctic Energy Services Inc.
(TSX: HWO) ("High Arctic" or the "Company") is pleased to announce that
it has accepted a Letter of Award from Oil Search Limited ("OSL", http://www.oilsearch.com/) for three year contract extensions for its primary contracts in Papua
New Guinea ("PNG"). The extensions will cover the drilling contracts
for Rigs 103 and 104 and the drilling support services contract related
to the supply of personnel and rental equipment to support the related
drilling operations. The new contracts are expected to be signed early
in July once the agreed terms are incorporated into the amending
agreements. The new extensions will be effective July 1, 2013 for a
three year term to June 30, 2016.
Commenting on the renewal, Bill Easson, General Manager Drilling, for
OSL, said; "The extension of these contracts reflects Oil Search's
recognition of, and confidence in, High Arctic's quality service
delivery in Papua New Guinea. Over the last six years, our companies
have forged a strong partnership to safely deliver effective drilling
results in a very challenging environment."
The PNG LNG facility is currently scheduled to come on stream in 2014
(more details can be found at http://www.pnglng.com ). This will have a dramatic impact in PNG and on the companies
working there. With a new three year agreement in place, High Arctic
is well positioned to deliver the services required by OSL to both
continue its oil drilling program that will offset natural declines and
to drill for new gas reserves that will be required as feedstock for
any additional trains added to the PNG LNG facility. It is currently
anticipated that Rig 104 will be fully utilized throughout 2013 in
these endeavors; while Rig 103 will operate either on a leap-frog basis
with Rig 104 or will be made available for use with other customers
should such opportunities arise.
Kevin Doran, Vice President International Operations for High Arctic,
commented "We have been working with OSL since 2007 and have been
committed from day one to being their partner of choice in
accomplishing their goals in PNG. OSL has a deep commitment to the
social license to operate in PNG and invests heavily in the communities
it works in. Our joint focus on employee safety underpins this
commitment. We are proud to be OSL's service company of choice,
helping them to deliver on their commitments to the country, their
communities, workers and shareholders."
The terms of the extensions are substantially similar to the previous
contracts with some inflationary increases in the drilling rig day
rates. High Arctic successfully worked with OSL to identify
substantial cost savings in the drilling support services provided to
reflect the lower current drilling activity levels. This included
headcount reductions, and rental rate reductions on the support
equipment that has been operating in the country for over five years.
The overall effect of these changes is a reduced operating cost
platform for OSL, which is scalable with activity, and positions High
Arctic to grow with future drilling opportunities.
The Company operates three rigs in PNG plus a fleet of support equipment
including camps. Two of the rigs are leased from OSL. Rig 102, a
workover rig owned by High Arctic, has a contract that runs to May 14,
2014 and is not affected by these extensions
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, 2012 and the Annual
Information Form for the year ended December 31, 2012 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, through its subsidiaries, is a provider of specialized
oilfield equipment and services, including drilling, completion and
work over operations. Based in Red Deer, 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:
Chief Financial Officer
Phone: 403-508-7836 ext 103