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RED DEER, AB, May 15 /CNW/ - High Arctic Energy Services Inc. (TSX: HWO) (the "Corporation" or "High Arctic") today announced its results for the first quarter ended March 31, 2008.
First Quarter Highlights:
- A 4% increase in revenue from $44.2 million in the quarter ending
March 31, 2007 to $46.2 million in the quarter ending March 31, 2008.
- A 1.0% increase in EBITDA from $10.3 million in the quarter ending
March 31, 2007 to $10.4 million in the quarter ending March 31, 2008.
- The net loss in the three months ended March 31, 2008 was
$2.2 million, compared to net earnings of $5.0 million in the same
period last year.
- International revenue increased by approximately 105% to $25 million
for the quarter ended March 31, 2008, as compared to $12.2 million
for the quarter ended March 31, 2007. The increase in international
revenue was primarily due to the success the Corporation is having in
penetrating the Papua New Guinea market.
- The Corporation's domestic revenues decreased by $10.8 million to
$21.2 million for the quarter ended March 31, 2008, compared to
domestic revenues of $32.0 million for the quarter ended March 31,
2007. The reduction in revenue was primarily due to the Corporation
shutting down the domestic drilling division. Across the domestic
product lines the Corporation's equipment utilization rates increased
from 64% in the quarter ending March 31, 2007 to 73% in quarter
ending March 31, 2008.
- The Optimal Joint Venture with the Schlumberger group began
operations in Mexico on January 1, 2008. The Corporation's 51% share
of revenue from the joint venture was $1.5 million.
The first quarter EBITDA of $10.4 million represents a promising start to the year as the Corporation focuses on returning to profitable operations. The domestic market continued to be challenging in the face of lower oilfield activity so High Arctic was pleased to hold its market share in its core snubbing activities while seeing improvements in its support services. The emphasis in Canada will continue to be on controlling costs heading into the seasonally slower second quarter.
The results reflect a full quarter of operations for the two heli-portable drilling rigs in Papua New Guinea. The start up of both rigs in the remote country demonstrates the capabilities of High Arctic and its people. The Corporation expects to see continued growth in Papua New Guinea in 2008 with the mobilization of the Cadomin, a Hydraulic Workover Rig, that should commence operations in June, 2008.
The Optimal Joint Venture is off to a successful start of its activities in Mexico. The Corporation anticipates that activity will build through the year. Management is looking at opportunities in other countries as part of a conservatively managed growth plan.
High Arctic continues to deal with its high debt levels and believes the results for the 1st quarter will help pave the way for a longer term extension with its lenders. Controlling debt service costs will continue to be a challenge and the Corporation is in the process of selling under utilized assets to address the debt levels.
"Increasing commodity prices should positively impact activity levels in Canada and leverage the operational improvements recently made," said Jed Wood, President and CEO of High Arctic. "I am very pleased with both the operational and financial results in Papua New Guinea as our investment in this area in 2007 is now paying dividends."
"Over the coming quarters, our focus will be on ensuring that we are operating efficiently and effectively in our targeted three core areas of operation," said Mr. Wood.
The Financial Statements and Management Discussion and Analysis dated May 14, 2008 can be viewed on SEDAR at www.sedar.com under High Arctic Energy Services Inc.
Non-GAAP Measure
EBITDA (being earnings before the deduction of depreciation, amortization, interest expense or income taxes) is not a recognized measure under GAAP. Management believes that, in addition to net earnings, EBITDA is a useful supplemental measure of the Corporation's performance prior to consideration of how operations are financed or how results are taxed. Investors are cautioned that this should not be construed as an alternative to net earnings determined in accordance with GAAP as an indicator of the Corporation's performance. The Corporation's method of calculating EBITDA may differ from the methods used by other issuers and, accordingly, it may not be comparable to similarly titled measures used by other issuers.
Forward-Looking Statements
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 the Corporation's Management Discussion and Analysis for the three months ended March 31, 2008 and in the Corporation's Annual Information Form for the year ended December 31, 2007, all 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, High Arctic has domestic operations in Alberta, British Columbia and the Northwest Territories. International operations are currently active in the Middle East region, Asia and Mexico.
The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of this news release.
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