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RED DEER, AB, June 4 /CNW/ - High Arctic Energy Services Inc. (TSX: HWO) ("High Arctic" or "the Company") today has been awarded its fourth drilling services contract (the "Contract") with a subsidiary of Oil Search Limited (ASX: OSH) ("OSL") in Papua New Guinea. The Contract is for Rig 104, which is a state-of-the art heli-portable drilling rig.
Rig 104 is currently under construction by OSL in China. Under the Contract, High Arctic is providing project management services in China with respect to the construction, commissioning and mobilization of the rig to Papua New Guinea, with an anticipated first spud date in the fourth quarter of 2008.
The initial term of the Contract is for two years from completion of mobilization, with two successive one-year option terms. Revenues are estimated to be over US$25 million per annum. As a condition of the contract, High Arctic and OSL will enter into a lease agreement under which High Arctic will lease the rig and assume full management responsibility. This latest award follows the previously announced contracts with OSL in February and August 2007 for the management and operation of Rigs 101 and 103 respectively, as well as a contract for a Hydraulic Workover Rig announced in March 2008. The annualized revenue for all contracts is estimated at US$80-million.
"Papua New Guinea is one of the world's premier exploitation areas and we are very proud to be exceeding our expectations through the Rig 104 contract," said Jed Wood, President and Chief Executive Officer of High Arctic. "Beyond the significant revenue already being generated with OSL, the latest contract award further demonstrates our ability to operate in the international arena. As the primary drilling contractor in Papua New Guinea, High Arctic is well-positioned to benefit from increased exploration and production activity in this exciting region, particularly in light of the recent Liquefied Natural Gas and exploration announcements by a consortium of major integrated oil companies."
OSL is the fourth-largest listed exploration and production company on the Australian Stock Exchange. It is the largest oil and gas exploration and production company operating in Papua New Guinea, with production currently averaging 54,000 bbls/per day. OSL has recently announced a record exploration and production investment program that will require a significant increase in production support and drilling related services.
Forward-Looking Statements
This news release may contain forward-looking statements relating to expected future events and financial and operating results of the Company 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 Company's Management Discussion and Analysis for the year ended December 31, 2007 found on SEDAR (www.sedar.com) and in the Company's Annual Information Form for the year ended December 31, 2007 that is also filed on SEDAR. Due to the potential impact of these factors, the Company 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 Mexico, the Middle East, Northern Africa and Asia.
The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of this news release.
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