High Arctic Energy Services Inc · TSX:HWO
High Arctic Energy Services — Investor Presentation (May 2015)
24 slides from High Arctic Energy Services's investor presentation, May 2015
Slide 1: High Arctic Energy Services Investor Presentation
High Arctic Energy Services Investor Presentation Symbol: HWO
Slide 2: Disclaimer
Disclaimer This presentation may contain information which is forward-looking and is subject to important risks and uncertainties. The results or events predicted in this information may differ from actual results or events. Actual results may differ materially from management expectations, as proje
Slide 3: Introduction
Introduction High Arctic: • Is an international oilfield services company with operations in Papua New Guinea (PNG) and Canada • Operates in PNG’s emerging LNG industry, reducing the impact of short- term oil & gas price volatility. • Has a leading market position for contract drilling, well complet
Slide 4: Financial Overview
Financial Overview Shares outstanding (as at Mar 31, 2015): 55,301,252 Financial Highlights Share Price (as at May 25, 2015): $4.04 • Strong liquidity Market Cap : $223.4 million • Pristine balance sheet Net Cash (as at Mar 31, 2015): $28.4 million with no long-term debt. Enterprise Value: $195.0 mi
Slide 5: Locations
Locations Calgary Grande Prairie Corporate Office Red Deer Papua New Guinea Brisbane Office 2014 Revenue Split Canada: Snubbing & Nitrogen Services & Equipment Rentals 28% Papua New Guinea: Drilling Services & 72% Equipment Rentals PNG Canada Page 5
Slide 6: History of Stable Growth
History of Stable Growth $200 Purchased 2 new $60 Canada Revenue Third renewal of Rigs for deployment PNG Revenue three year contracts in 2015 $180 EBITDA for Rig 103 & 104 $160 Expanded PNG rental business & commissioned a new rental camp $140 $40 Revenue (CAD $ Millions) EBITDA (CAD $ Millions) $1
Slide 7: Papua New Guinea
Papua New Guinea PNG Overview • Independent, established democracy and a stable business jurisdiction • Part of the British Commonwealth with a parliamentary government • Welcomes foreign capital and investment • Currently experiencing rapid growth from resource exports PNG LNG • Exxon is the operat
Slide 8: LNG Supply & Demand
LNG Supply & Demand Global LNG Capacity versus Demand • The current LNG capacity is not sufficient to service the anticipated growth in global demand for LNG. • The majority of the growth in demand for LNG is expected to come from Asia, in particular China. • The demand for LNG in China is expected
Slide 9: PNG Advantage
PNG Advantage • There are over 20 tcf of discovered gas in PNG, Natural Gas / LNG Prices of which 9 tcf is under development 18.00 16.00 • Asian LNG market has been resilient relative to 14.00 Natural gas, US 12.00 Natural gas, Europe US $ / MMbtu decline in crude and North American gas 10.00 LNG, J
Slide 10: PNG Exploration & Development
PNG Exploration & Development Highlands Elk /Antelope : Total (40.1%) / Exxon (33.2%) / OSL (29.0%) InterOil (36.5%) / OSL (22.8%) Supporting current LNG Plant Reserves for major LNG expansion P’nyang : Forelands : Exxon (49.0%) /OSL Repsol, Santos, Mitsubishi, Heritage, Horizon (38.5%) Reserves for
Slide 11: PNG Drilling & Work Over Services
PNG Drilling & Work Over Services Rig 103 / 104 (leased from OSL) • Under contract with OSL through June 30, 2016 (three year term) • Renewed 3 year contracts with OSL twice. Rig 115 / 116 (High Arctic owned) • AC self-erecting 1500 HP heli-portable triple • 2 year drilling services contract with In
Slide 12: PNG Drilling Landscape
PNG Drilling Landscape Type of Rigs Owner / Operator Details Classification OSL / High Arctic 2 Rigs (103 / 104) Tier 1 High Arctic 2 Rigs (115 / 116) Tier 1 Tier 2 Heli Portable Drilling Contractor A 1 Rig circa mid 1970's Tier 2 Tier 1 Rigs Contractor B 1 Rig modified for limited heli use Tier 2 H
Slide 13: Equipment Rentals
Equipment Rentals Matting • Approximately 9800 rental mats in PNG • High Arctic has PNG distributor rights • The largest rental supplier of Dura-Base mats outside of the USA • Possible expansion into other countries with similar challenging environments 2015 Matting Contract Overview 28% Term Contra
Slide 14: Equipment Rentals
Equipment Rentals Camp Services • HWO owns and manages; Two 103 man Heli-portable man camps • HWO operates and manages; Two 93 man Heli-portable drilling rig camps Two 32 man Heli-portable leap frog camps Other Rental Equipment • cranes (ranging from 30 ton to 160 ton) • rig moving trucks • fo
Slide 15: Canadian Operations: Snubbing Nitrogen
Canadian Operations • 15 Stand Alone Units Snubbing • 3 Rig Assist Units • Currently marketing 9 units • 11 Low Rate Unit Nitrogen • 1 High Rate N2 Pumper • 5 Nitrogen Transport Rental • High pressure BOP’s • Boiler Equipment Page 15
Slide 16: Canadian Operations
Canadian Operations What is Snubbing? Jointed Pipe Snubbing • Snubbing is the use of hydraulic force to push pipe against the snub force created by the PIPE well pressure. SLIPS • Snubbing permits live operations without killing the well thus avoiding formation damage and bringing the well on stream
Slide 17: Snubbing Growth Opportunities
Snubbing Growth Opportunities Overview of LNG Projects in Canada • There has been 22 announced LNG export projects in Canada. • 18 of the LNG export projects are along Canada’s west coast in British Columbia, 8 of which have National Energy Board export licences. • High Arctic is well positioned to
Slide 18: Solid Financial Performance
Solid Financial Performance Percentage Change in Share Price Historical Return on Equity 10% 35.00% Competitors Average Competitors High / Low 0% High Arctic 30.00% High Arctic -10% 25.00% -20% 20.00% -30% 15.00% -40% 10.00% -50% 5.00% -60% 0.00% -70% 2012 2013 2014 May-14 Jun-14 Jul-14 Sep-14 Oct-1
Slide 19: Dividend History
Dividend History 0.020 Monthly Dividend 0.019 Payout Ratio Approx. 24% 0.018 Payout Ratio 0.017 Approx. 24% Monthly Dividend 0.016 0.015 Payout Ratio Approx. 22% 0.014 0.013 Payout Ratio 0.012 Approx. 18% 0.011 0.010 0.009 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14
Slide 20: Historical Financial Summary
Historical Financial Summary Financial Performance (TTM) Mar, Jun, Sep, Dec, Mar, Jun, Sep, Dec, Mar, (in $ CDN millions) 2013 2013 2013 2013 2014 2014 2014 2014 2015 CDN Revenue 43.4 43.5 38.9 40.8 40.9 44.3 45.6 48.3 42.8 PNG Revenue 105.4 108.6 113.7 111.9 111.5 115.0 118.7 123.5 129.2 Total Reve
Slide 21: Conclusion
Conclusion High Arctic: • Is the leader in PNG for contract drilling, well completions and rentals. • Is the leader in Canada for snubbing services. • Has a proven record of operational and financial performance • Has a management team with a strong track record and international experience. • Is in
Slide 22: Appendix A: Experienced Board
Appendix A: Experienced Board Michael Binnion, • President and CEO of Questerre Energy Corporation Chairman of the Board • Chartered Accountant Daniel Bordessa, • Partner, Cyrus Capital Partners L.P. Independent • Managing Director, Cyrus Capital Partners Europe LLP Thomas Alford • Independent busin
Slide 23: Appendix B: Experienced Management Team
Appendix B: Experienced Management Team • Over 30 years of oilfield services sector experience, primarily with Tim Braun large drilling contractors. CEO • 10+ years with Precision Drilling’s International drilling division • Former COO of Saxon Energy Services • Over 20 years of experience in corpor
Slide 24: Corporate Directory
Corporate Directory Head Office Analyst Coverage 444 – 5th Avenue SW, Suite 2010 • AltaCorp Capital Inc. Jason Sawatzky Calgary, AB Canada T2P 2T8 • Industrial Alliance Elias Foscolos Auditors • National Bank Greg Colman PricewaterhouseCoopers LLP • PI Financial Brian Purdy Legal Website Davis LLP w
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