High Arctic Signs 3 Year PNG Contract Renewals


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

Forward-Looking Statements

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:

Ken Olson
Chief Financial Officer
Phone: 403-508-7836 ext 103
Email: ken.olson@haes.ca

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