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CALGARY, Alberta, May 15, 2024 (GLOBE NEWSWIRE) — High Arctic Energy Services Inc. (TSX: HWO) (the “Corporation” or “High Arctic”) launched its’ first quarter monetary and working outcomes. The unaudited consolidated monetary statements, administration dialogue & evaluation (“MD&A”), for the quarter ended March 31, 2024 will probably be out there on SEDAR+ at www.sedarplus.ca, and on High Arctic’s web site at www.haes.ca. All quantities are denominated in Canadian {dollars} (“CAD”), until in any other case indicated.

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Intention to Return Capital and Reorganize
On May 11, 2024 the Corporation introduced the Annual General and Special Meeting of Shareholders to be held in Calgary, Alberta on June 17, 2024 (the “Meeting”). The assembly has been referred to as by the High Arctic Board of Directors for the aim of holding a shareholders vote on the separation of the Corporation’s North American and Papua New Guinea (“PNG”) companies, by the use of a court-approved plan of association (the “Arrangement”), in addition to a distribution of surplus money to shareholders by the use of a return of capital of as much as $0.76 per frequent share (as much as $38.2 million) of High Arctic (the “Return of Capital”).

The Arrangement will switch High Arctic’s PNG enterprise to a separate, devoted, and impartial, publicly traded firm named High Arctic Overseas Holdings Corp. (“SpinCo”), whereas High Arctic will proceed to personal and function the Corporation’s present North American Business. Each of the 2 firms may have its personal administration and operational groups and a separate Board of Directors.

Under the proposed Arrangement, every shareholder of High Arctic will obtain one-quarter of 1 (1/4) frequent share of SpinCo and one-quarter of 1 (1/4) frequent share of post-Arrangement High Arctic for every frequent share of High Arctic held. As a results of the Arrangement, every shareholder will proceed to personal its professional rata portion of each SpinCo and post-Arrangement High Arctic. The Arrangement, the Return of Capital, and different resolutions associated to the reorganization, in addition to annual assembly issues, will probably be put to the Shareholders for approval on the Meeting. Both the Arrangement and the Return of Capital would require two thirds (2/3) of all votes forged in favour to go.

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Mike Maguire, Chief Executive Officer commented:

“Our businesses in both Canada and PNG have had very solid starts to 2024. Our recent acquisition and amalgamation of Delta Rental Services in Canada has delivered financial performance in line with our pre-transaction expectations and we anticipate further improvement as we move out of integration phase and optimize equipment cross-deployment. In PNG Rig 103 has delivered another high-quality quarter of drilling activity ahead of its suspension and stacking which will be completed in Q2 2024.

I am pleased to have finally published the details of our long-anticipated reorganization and the associated tax efficient Return of Capital to shareholders. I am excited about the opportunities that this can unlock for the two distinct and separate businesses. Mail-out of meeting materials to shareholders is underway and I encourage all shareholders to read the materials which detail the reasons supporting the Arrangement, key dates and the processes available for voting.

The PNG business will be owned by a new publicly listed Canadian company with operations focussed on PNG. High Arctic will retain the Canadian assets which have been strengthened with the addition of Delta Rental Services and is an attractive vehicle for future growth and transactions. The Board and Management of High Arctic unanimously recommend that all shareholders vote in favour of all resolutions at the meeting.”

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In the next dialogue, the three months ended March 31, 2024 could also be known as the “quarter” or “Q1 2024” and the comparative three months ended March 31, 2023 could also be known as “Q1 2023”. References to different quarters could also be introduced as “QX 20XX” with X/XX being the quarter/12 months to which the commentary relates.

2024 FIRST QUARTER HIGHLIGHTS

• Seamless integration of the Delta enterprise with the legacy High Arctic rental enterprise that now operates beneath the Delta Rental Services banner with first quarter outcomes consistent with expectations, and potential for upside from deploying underutilized belongings into our expanded geographical protection in Alberta.
• Realized a fourth steady quarter of full utilization of PNG Rig 103 and with efficiency in Q1 2024 in keeping with the second half of 2023.
• Improved liquidity with a working capital steadiness of $67.5 million, which features a money steadiness of $57.3 million, and long-term debt of $3.5 million.
• Generated Adjusted EBITDA from persevering with operations of $4.5 million on income of $18.0 million.
• Achieved internet revenue of $3.5 million or $0.07 per share on a fully-diluted foundation.
• Strong Q1 2024 operational efficiency from Team Snubbing resulted in $0.5 million in revenue from fairness investments from High Arctic’s 42% fairness funding.

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2024 Strategic Objectives
High Arctic’s 2024 Strategic Objectives construct on the platforms created and instructions taken in 2023, and embody:

• Continued relentless concentrate on security excellence and high quality service supply,
• Distribute surplus capital and put together for the spin out of the PNG enterprise to shareholders,
• Create acceptable capital and company constructions for the present companies, that present the chance to contemplate transactions which might create worth for the Corporation’s shareholders,
• Grow the core companies by selective and opportunistic investments,
• Steward capital to protect steadiness sheet energy and monetary flexibility, and
• Execute accretive acquisitions in Canada that permit the Corporation to optimize its out there tax loss carry-forwards.

Q1 2024 Investor Conference Call
A High Arctic investor convention name is schedule to start at 11:00 am MT (1:00 pm ET) on Thursday, May 16, 2024.

The convention name dial in numbers are 1-800-898-3989 or 416-340-2217 and the participant passcode is 6026512#. Participants becoming a member of from outdoors North America can discover International dial-in numbers at: https://www.confsolutions.ca/ILT?oss=7P1R8009525114

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An archived recording of the convention name will probably be out there roughly two hours after the decision ends by dialing 1-800-408-3053 and coming into passcode 8446938# will stay out there till June 15, 2024. An audio recording of the convention name may even be out there inside 24 hours on High Arctic’s web site.

RESULTS OVERVIEW

The following is a abstract of choose monetary info of the Corporation:

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^{(1) The variety of frequent shares utilized in calculating internet loss per share, money stream from (utilized in) working actions, funds stream from working actions per share, dividend funds per share, and shareholders’ fairness per share is decided as defined in Note 10 of the Financial Statements.
(2) Readers are cautioned that Oilfield companies working margin, EBITDA (Earnings earlier than curiosity, tax, depreciation, and amortization), Adjusted EBITDA, Operating loss, Funds stream from working actions, Dividend funds per share, Working capital doesn’t have a standardized which means prescribed by IFRS – see “Non IFRS Measures” within the MD&A for calculations of those measures.}

Three-month interval ended March 31, 2024 Summary:

• Drilling Rig 103 operated repeatedly by Q1 2024, driving substantive will increase in each the Drilling Services and Ancillary Services segments together with pull by leases related to drilling exercise when in comparison with the Q1 2023 outcomes. When coupled with elevated contribution from Canadian leases inclusive of the primary full quarter contribution from the Delta enterprise acquired in This fall 2023, and a discount in low margin reimbursables, this delivered the next monetary outcomes:
  • Revenue for the quarter from persevering with operations of $18,005, corresponding to This fall 2023 and a rise of $9,234 or 105% in comparison with Q1 2023 at $8,771, and
  • Adjusted EBITDA from persevering with operations of $4,529 in Q1 2024, outpacing the $3,240 generated in This fall 2023 and a big enhance of $3,588 over Q1 2023.
• The improved operations in Q1 2024 mixed with elevated funding revenue within the quarter to drive the next improved monetary outcomes for the Corporation regardless of elevated administrative bills related to the reorganization initiative:
  • Net revenue of $3,505 from persevering with operations in Q1 2024 in comparison with $2,745 in This fall 2023 and a internet loss from persevering with operations of $630 realized in Q1 2023, and
  • Increased oilfield companies working margins from 33.0% in Q1 2023 to 40.8% in Q1 2024.

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Drilling companies phase

 ^{(1) See “Non-IFRS Measures”}

Ancillary companies phase

 ^{(1) See “Non-IFRS Measures”}

Liquidity and capital sources

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 ^{(1) See “Non-IFRS Measures”}

The Bank of PNG (“BPNG”) continues to encourage using the native market forex, Kina, or PGK. Due to High Arctic’s requirement to transact with worldwide suppliers and clients, High Arctic has acquired approval from the BPNG to keep up its USD account inside the circumstances of the BPNG forex laws. The Corporation continues to make use of PGK for native transactions when sensible. Included within the BPNG’s circumstances is for PNG drilling contracts to be settled in PGK, until in any other case authorized by the BPNG for the contracts to be settled in USD. The Corporation has traditionally acquired such approval for its contracts with its key clients in PNG. The Corporation will proceed to hunt BPNG of PNG approval for contracts to be settled in USD on a contract-by-contract foundation, nevertheless, there isn’t any assurance the BPNG will grant these approvals.

If such approvals aren’t acquired, the Corporation’s PNG drilling contracts will probably be settled in PGK which might expose the Corporation to alternate fee fluctuations associated to the PGK. In addition, this may occasionally delay the Corporation’s means to obtain USD which can impression the Corporation’s means to settle USD denominated liabilities and repatriate funds from PNG on a well timed foundation. The Corporation additionally requires the approval from the PNG Internal Revenue Commission (“IRC”) to repatriate funds from PNG and make funds to non-resident PNG suppliers and repair suppliers. While delays may be skilled for the IRC approvals, all such approvals have ultimately been acquired prior to now.

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Operating Activities
In Q1 2024, money generated from working actions from persevering with operations was $7,435, as in contrast with $308 of money generated from working actions from persevering with operations in Q1 2023. Funds stream from persevering with operations totaled $4,617 within the quarter whereas it was solely $1,291 in Q1 2023 (see “Non-IFRS Measures”). In Q1 2024, adjustments in non-cash working capital totaled $2,818 versus ($983) in Q1 2023.

Investing Activities
During the quarter, the Corporation’s money spent on investing actions from persevering with operations totaled $1,050 and associated to capital expenditures. For Q1 2023 the Corporation acquired $27,768 internet, primarily because of the receipt of the ultimate money proceeds of $28,000 from the 2022 sale of the Corporation’s Canadian effectively servicing belongings.

Financing Activities
During the quarter, the Corporation’s money utilized in financing actions was $298 and considerably decrease when in comparison with Q1 2023 at $964. During Q1 2024, the Corporation paid $45 (Q1 2023: $56) in the direction of principal funds on its mortgage financing (see “Mortgage Financing” under) and $253 in opposition to lease legal responsibility funds (Q1 2023: $153). The largest contributor to the decline in money utilized in financing actions within the quarter was as a result of $730 and $25 returned to shareholders within the type of dividends and share repurchases in Q1 2023 in comparison with nil for each in Q1 2024.

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Mortgage financing

The Corporation has mortgage financing secured by lands and buildings owned by High Arctic positioned inside Alberta, Canada. The mortgage has a remaining preliminary time period of beneath three years with a set rate of interest of 4.30% with funds occurring month-to-month. The Corporation’s mortgage financing comprises sure non-financial covenants requiring lenders’ consent together with adjustments to the underlying enterprise.

Outlook

The acquisition of Delta in December and its integration with our legacy leases enterprise in Canada, has delivered scale for a cash-positive operation. Delta has carried out consistent with our pre-transaction expectations throughout this primary quarter and we anticipate to see robust efficiency by 2024 as we concentrate on the advertising of underutilized belongings into our expanded geographical protection.

Over the previous two years, the Corporation has divested underperforming and non-core belongings and enterprise. Now the ‎Corporation’s Canadian enterprise consists of a high-margin tools rental enterprise centered upon strain ‎management, a minority curiosity in Canada’s largest oilfield snubbing companies enterprise, Team Snubbing ‎Services Inc., and industrial properties at Clairmont and Whitecourt in Alberta, Canada.‎

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High Arctic’s funding in Team Snubbing has positively impacted our monetary outcomes. In Canada, Team Snubbing continues to report constant progress in service hours and income era quarter-over-quarter, and the outlook by 2024 is for a continuation of this constructive pattern. Team Snubbing has elevated its possession of its worldwide partnership to 90% by a non-cash association and has management of Team Snubbing International Inc. and its enterprise. Both of its snubbing packages in Alaska recommenced operations, after seasonal slowdowns, in the course of the first quarter and are anticipated to function by the 12 months up till the depths of winter.

We have set a strong platform for 2024 with a robust first quarter from our leases enterprise and the funding in Team Snubbing. Coupling the outlook for Team Snubbing and the strategic progress of our efficiently mixed leases enterprise together with the business macro developments round pipeline tasks that can lastly entry tidewater markets and broaden oil and fuel takeaway for Canada in 2024, the Corporation anticipates robust demand for its tools. Our Canadian enterprise will probably be effectively positioned for the doorway of latest management anticipated by the reorganization to ship upon a progress technique that creates worth for shareholders.

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Consistent with the tip of 2023, the outlook for the Corporation’s PNG enterprise in 2024 stays subdued. In the Drilling Services phase, Rig 103 realized full utilisation in Q1 2024 and can end drilling exercise in the course of the second quarter, with relocation to droop and cold-stack Rig 103 anticipated to be accomplished by the tip of Q2 2024. The Ancillary Services phase’s rental fleet of kit continues to generate robust utilization and pricing and our manpower options continues to construct momentum as we improve service choices and capabilities. With no further wells for Rig 103, the Corporation expects related PNG rental revenues to reduce within the second half of 2024.

In the long run, High Arctic believes PNG is on the precipice of a brand new spherical of large-scale tasks within the pure sources sector. ‎The Papua ‎LNG mission headed up by French super-major TotalEnergies is anticipated to be the subsequent main mission and is now focusing on a last funding choice in 2025. There is expectation for elevated drilling exercise by the latter half of this decade, ‎not solely to develop wells for the provision of fuel to the Papua-LNG export facility, but additionally to probe for and ‎appraise different discoveries. The latest signing of a fiscal stability settlement between the P’nyang fuel discipline three way partnership and the federal government of PNG is one other constructive sign for that mission to observe Papua-LNG.

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There are a lot of different petroleum tasks and substantive nation-building tasks together with infrastructure, ‎electrification, telecommunications and protection tasks deliberate for the event of PNG. ‎These ‎tasks would require entry to move and materials dealing with equipment, high quality worksite and short-term ‎highway mats and a substantive quantity of labour together with expert tools operators, certified tradespeople and engineers, ‎geoscientists and different professionals. ‎High Arctic’s PNG enterprise continues to place itself to be a significant provider of companies, tools and manpower for this market.

The Corporation continues to pursue enterprise alternatives in PNG, interact with potential clients for its companies there and within the wider area and take actions to guard its functionality to understand the long run potential of the PNG enterprise.

NON-IFRS MEASURES
This press launch comprises references to sure monetary measures that wouldn’t have a standardized which means prescribed by International Financial Reporting Standards (“IFRS”) and will not be corresponding to the identical or related measures utilized by different firms. High Arctic makes use of these monetary measures to evaluate efficiency and believes these measures present helpful supplemental info to shareholders and buyers. These monetary measures are computed on a constant foundation for every reporting interval and embody Oilfield companies working margin, EBITDA (Earnings earlier than curiosity, tax, depreciation and amortization), Adjusted EBITDA, Operating loss, Funds stream from working actions, Working capital and Long-term monetary liabilities. These wouldn’t have standardized meanings.

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These monetary measures shouldn’t be thought-about as a substitute for, or extra significant than, internet revenue (loss), money from working actions, present belongings or present liabilities, money and/or different measures of monetary efficiency as decided in accordance with IFRS.

For further info relating to non-IFRS measures, together with their use to administration and buyers and reconciliations to measures acknowledged by IFRS, please consult with the Corporation’s MD&A, which is accessible on-line at www.sedar.com and thru High Arctic’s web site at www.haes.ca.   

FORWARD-LOOKING STATEMENTS

This press launch comprises forward-looking statements. When used on this doc, the phrases “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, and related expressions are supposed to establish forward-looking statements. Such statements replicate the Corporation’s present views with respect to future occasions and are topic to sure dangers, uncertainties, and assumptions. Many elements may trigger the Corporation’s precise outcomes, efficiency, or achievements to fluctuate from these described on this press launch.

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Should a number of of those dangers or uncertainties materialize, or ought to assumptions underlying forward-looking statements show incorrect, precise outcomes might fluctuate materially from these described on this press launch as supposed, deliberate, anticipated, believed, estimated or anticipated. Specific forward-looking statements on this press launch embody, amongst others, statements pertaining to the next: basic financial and enterprise circumstances which can embody, amongst different issues, the outlook for vitality companies; continued impression of Russia-Ukraine battle; the impression of battle within the center east; the Corporation’s means to keep up a USD checking account and conduct its enterprise in USD in PNG; market fluctuations in rates of interest, commodity costs, and international forex alternate charges; restrictions to repatriate funds held in PGK; expectations relating to the Corporation’s means to handle its liquidity threat; increase capital and handle its debt finance agreements; projections of market costs and prices; elements upon which the Corporation will determine whether or not or to not undertake a selected course of operational motion or growth; the Corporation’s ongoing relationship with its main clients; the supposed reorganization of the Corporation together with spinoff of the PNG enterprise to shareholders as a Canadian publicly listed firm and the distribution of a return of capital to shareholders, and acquiring relevant regulatory and shareholder approvals; proper sizing of the overall and administrative infrastructure to align with the brand new company construction; growth of Canadian oil and fuel takeaway capability to international markets; the efficiency of the Corporation’s funding in Team Snubbing, and whether or not Team Snubbing can understand excessive utilization in it’s Canadian operations and for its two snubbing packages in Alaska in 2024; robust demand for the Corporations Canadian rental tools in 2024, Papua New Guinea being on the precipice of a brand new spherical of large-scale tasks within the pure sources sector; if a last funding choice will probably be made on the Papua-LNG mission in 2025; whether or not the event of the P’nyang fuel discipline will observe Papua-LNG;Completion of Rig 103 chilly stack by the tip of Q2 2024; the Corporation’s means to place itself to be a big provider of companies, tools and manpower for different tasks in PNG; deploying idle heli-portable drilling rigs 115 and 116; future work with different exploration firms in PNG; the success in pursuing enterprise alternatives in PNG and within the wider area; the success of any actions taken to guard the Corporation’s functionality to understand the long run potential of the PNG enterprise; scaling the Canadian enterprise; executing on a number of company transactions; estimated credit score dangers and the utilization of tax losses.

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With respect to forward-looking statements contained on this press launch, the Corporation has made assumptions relating to, amongst different issues, its means to: keep its ongoing relationship with main clients; efficiently market its companies to present and new clients; devise strategies for, and obtain its major aims; supply and procure tools from suppliers; efficiently handle, function, and thrive in an surroundings which is going through a lot uncertainty; stay aggressive in all its operations; appeal to and retain expert workers; and procure fairness and debt financing on passable phrases.

The Corporation’s precise outcomes may differ materially from these anticipated in these forward-looking statements because of the chance elements set forth above and elsewhere on this press launch, together with the chance elements set out in the newest Annual Information Form filed on SEDAR+ at www.sedarplus.ca.

The forward-looking statements contained on this press launch are expressly certified of their entirety by this cautionary assertion. These statements are given solely as of the date of this press launch. The Corporation doesn’t assume any obligation to replace these forward-looking statements to replicate new info, subsequent occasions or in any other case, besides as required by legislation.

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About High Arctic Energy Services
High Arctic is an vitality companies supplier. High Arctic is a market chief in Papua New Guinea offering drilling and specialised effectively completion companies and provides rental tools together with rig matting, camps, materials dealing with and drilling assist tools. In western Canada High Arctic supplies strain management and different oilfield tools on a rental foundation to exploration and manufacturing firms, from its bases in Whitecourt and Red Deer, Alberta.

For additional info, please contact:

Mike Maguire
Chief Executive Officer
P: +1 (403) 508-7836
P: +1 (800) 688 7143

High Arctic Energy Services Inc.
Suite 2350, 330 – 5^th Ave SW
Calgary, Alberta, Canada T2P 0L4
web site: www.haes.ca
Email: information@haes.ca

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