/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW/
RED DEER, AB, Dec. 20 /CNW/ - High Arctic Energy Services Inc. (TSX: HWO) ("High Arctic" or the "Corporation") is pleased to announce that it has signed a Letter of Intent (LOI) to extend several important contracts in Papua New Guinea. The LOI covers the Rig 104 contract and the drilling support services contract related to the supply of support personnel and rental equipment. The Rig 104 contract was set to expire on December 17, 2010. The LOI contemplates that the Rig 104 contract and the drilling support services contract will be extended for a further 3 years to December 17, 2013 with some modifications to the day rates and terms of the contracts. The terms of the extensions have been substantially agreed upon and, provided the final contracts are signed, will be effective from December 18, 2010. The new contracts are subject to execution of definitive agreements and final approval by the parties, which is contemplated to be fully completed by January 31, 2011. Drilling Services will continue uninterrupted as provided under the LOI.
Rig 104 is a heli-portable drilling unit that was a new build deployed into Papua New Guinea during 2008. The rig is owned by High Arctic's customer and managed by High Arctic under an operating lease. It is expected that the rig will continue to be deployed on the drilling program of the customer. The new contract will have a 120 day termination clause exercisable by the customer at any time up to June 30, 2011.
A companion rig, Rig 103, is also leased to High Arctic by that same customer but is currently drilling for another operator in Papua New Guinea. The Rig 103 contract runs until completion of the services for that other operator which is expected to be in the first part of 2011. Negotiations for the extension of the Rig 103 contract will continue as part of the LOI related negotiations.
High Arctic recently announced a new three year contract for Rig 102. That contract runs until May 14, 2014 and will recommence operations following a substantial upgrade. The plan is to have that rig ready to begin operations in May, 2011.
Commenting on the LOI, Kevin Doran, Regional Manager for Australia/Asia Pacific, said, "I am excited to extend our relationship with the leading operator in Papua New Guinea. The past four years have been a very positive experience for both sides and I am confident we will continue to build on that relationship and deliver the high quality services that they expect of us."
This news release may contain forward-looking statements relating to expected future events and financial and operating results of the Corporation 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 Corporation's Management Discussion and Analysis for the year ended December 31, 2009 and in the Annual Information Form for the year ended December 31, 2009 found on SEDAR (www.sedar.com). Due to the potential impact of these factors, the Corporation 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 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.
For further information: For further information:
Chief Financial Officer