High Arctic Energy Services Inc · TSX:HWO

High Arctic Energy Services — Investor Presentation (March 2016)

21 slides from High Arctic Energy Services's investor presentation, March 2016

  1. Slide 1: Investor Presentation March 2016

    High Arctic Energy Services Inc. Investor Presentation March 2016

  2. Slide 2: Disclaimer

    DISCLAIMER Certain information contained within this presentation and statements made in conjunction with this presentation, including information and statements that contain words such as “seek”, “anticipate,” “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential

  3. Slide 3: Introduction

    INTRODUCTION  High Arctic is an international oilfield services Papua New Guinea company with operations in Papua New Guinea (PNG) and Canada.  PNG:  Has a dominant market position for contract drilling, well completion and rental services in Brisbane PNG.  Provides services in PNG to regional a

  4. Slide 4: Financial Overview

    FINANCIAL OVERVIEW Shares outstanding (Mar 16, 2016): 53.8 million Financial Highlights Share Price (Mar 16, 2016): $3.45  Healthy balance sheet. Market Cap : $185.5 million  Attractive dividend yield. Net Cash & Marketable Securities (Dec 31, 2015): $22.1 million  Conservative payouts ratio. Ent

  5. Slide 5: History of Stable Growth

    HISTORY OF STABLE GROWTH HISTORICAL FINANCIAL PERFORMANCE 70 35.0% Canada Revenue Adjusted EBITDA 30% $210 PNG Revenue 60 Adjusted EBITDA (%) 29% $64 30.0% $172 27% 27% 27% 50 26% $146 $153 $49 25.0% $127 40 $119 $42 $40 30 $33 $32 20.0% 20 15.0% 10 0 10.0% 2010 2011 2012 2013 2014 2015 2010 2011 20

  6. Slide 6: Papua New Guinea

    PAPUA NEW GUINEA PNG Overview – Stable and Growing GDP Growth Forecast  Independent, established democracy and a stable 18% 16% business jurisdiction. 14%  Part of the British Commonwealth with a 12% parliamentary government. 10% 8%  Currently experiencing rapid growth from resource 6% exports. 4

  7. Slide 7: Global LNG Development – The PNG Advantage

    GLOBAL LNG DEVELOPMENT – THE PNG ADVANTAGE Destination Sources: Wood Mackenzie Sources: Wood Mackenzie, cost to Japan with 10% return (US $/mmbtu)  Globally contracted LNG supply is expected to be short of total anticipated global demand in the long-term with the largest growth in demand for LNG ex

  8. Slide 8: PNG Exploration & Development

    PNG EXPLORATION & DEVELOPMENT PNG LNG:  Exxon is the operator.  Total forecast production includes 9.0 tcf of natural gas and 200+ million bbls of associated liquids over 30 years.  Shipments began Q2 2014.  Exploration to support expansion (e.g. P’nyang) Elk / Antelope (Papua LNG):  Ownership:

  9. Slide 9: PNG Drilling & Work Over Services

    PNG DRILLING & WORK OVER SERVICES Rig 103 / 104 (leased from OSL)  Drilling services and support contracts with OSL through mid to late 2016 (three year term).  Strong relationship with OSL with a history of two 3 year contract renewals. Rig 115 / 116 (High Arctic owned)  AC self-erecting 1500 HP

  10. Slide 10: PNG Drilling Landscape

    PNG DRILLING LANDSCAPE Tier 2 Tier 1 High Arctic Competitors -10-

  11. Slide 11: PNG Equipment Rentals

    PNG EQUIPMENT RENTALS Matting  Inventory of approximately 10,000 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. Camp Services  Owns an

  12. Slide 12: Canadian Operations

    CANADIAN OPERATIONS • 15 Stand Alone Units Snubbing • 3 Rig Assist Units • Currently marketing 9 units • 2016 addition of high capacity 285k unit • 11 Low Rate Unit Nitrogen • 1 High Rate N2 Pumper • 5 Nitrogen Transport Rental • High pressure BOP’s • Boiler Equipment -12-

  13. Slide 13: Canadian Snubbing Market

    CANADIAN SNUBBING MARKET WESTERN CANADA SNUBBING MARKET LANDSCAPE AVERAGE WELL DEPTH (WESTERN CANADA) 100% 2,100 Number of Snubbing Units Available 90% 2,000 2 80% 2 High Arctic 70% 1,900 Well Type (%) 70% Well Depth 6 Precision 60% 63% 60% 58% 18 Quattro 50% 1,800 40% Powerstroke 1,700 30% 8 Northe

  14. Slide 14: Financial Summary – Growth & Financial Strength

    FINANCIAL SUMMARY – GROWTH & FINANCIAL STRENGTH 1 Financial Performance (TTM ) Mar, Jun, Sep, Dec, Mar, Jun, Sep, Dec, (in $ CDN millions) 2014 2014 2014 2014 2015 2015 2015 2015 CDN Revenue 40.9 44.3 45.6 48.3 42.8 41.2 39.6 32.1 PNG Revenue 111.5 115.0 118.7 123.5 129.2 139.7 158.5 177.8 Total Rev

  15. Slide 15: Financial Performance

    FINANCIAL PERFORMANCE Indexed Share Price Performance Historical Return on Equity 300% 35% High Arctic Competitors High / Low Competitors 30% 250% High Arctic 25% 200% 20% 150% 15% 100% 10% 50% 5% 0% 0% Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 2012 2013 2014 2015 Enterpr

  16. Slide 16: History of Shareholder Distributions

    HISTORY OF SHAREHOLDER DISTRIBUTIONS DISTRIBUTIONS TO SHAREHOLDERS THREE YEAR DIVIDEND GROWTH 1 Dividends per share 80% Repurchases per share 65% $0.20 60% Arctic HighARCTIC $0.17 40% Canadian Energy $0.15 Services Yield Cos 2 HIGH 20% 0% $0.10 (20%) $0.07 (40%) (60%) $0.01 $0.00 (80%) (100%) 2012 2

  17. Slide 17: Growth Strategy

    GROWTH STRATEGY  Strong balance sheet and cash flows provides fuel for growth.  Continue to strengthen position in PNG through operational excellence and strong customer relationships.  Organic growth of Canadian snubbing operations. Fit for purpose solutions to meet customer needs.  Diversifica

  18. Slide 18: Why Invest in High Arctic

    WHY INVEST IN HIGH ARCTIC  The leader in PNG for contract drilling, well completions and rentals.  The leader in Canada for snubbing services.  Strong balance sheet and financial performance.  Disciplined management team with a strong track record and international and North American experience.

  19. Slide 19: Appendix A: Board of Directors

    APPENDIX A: BOARD OF DIRECTORS 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 busi

  20. Slide 20: Appendix B: Management Team

    APPENDIX B: MANAGEMENT TEAM • Over 35 years of oilfield services sector experience, primarily with large Tim Braun drilling contractors. CEO • 10+ years with Precision Drilling’s International drilling division • Former COO of Saxon Energy Services • Over 15 years of experience in corporate finance,

  21. Slide 21: Corporate Directory

    COPORATE DIRECTORY Head Office Analyst Coverage 444 – 5th Avenue SW, Suite 2010 AltaCorp Capital Inc. Mark Westby Calgary, AB Canada T2P 2T8 Industrial Alliance Elias Foscolos Auditors National Bank Greg Coleman PricewaterhouseCoopers LLP PI Financial Brian Purdy Legal Website DLA Piper (Canada) LLP

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