2016 Q2 Resultshttps://www.marketwired.com/press-release/high-arctic-reports-2016-second-quarter-results-2150434.htm High Arctic Energy Services Inc. (TSX:HWO) "High Arctic" or the "Corporation" is pleased to announce its 2016 second quarter results with revenue of $43.5 million and Adjusted EBITDA of $15.1 million.
Tim Braun, High Arctic's Chief Executive Officer, stated: "The contracted revenue generated from the two rigs we added to our PNG business in 2015 has provided High Arctic with financial stability in an otherwise challenging global oilfield services market. We continue to build upon our strong balance sheet and exited the second quarter with $37.7 million in cash and no debt. This strong financial position will assist in navigating through the current industry weakness and provide the means to execute on opportunities to further grow and diversify High Arctic's business operations."
Highlights
High Arctic's contracted heli portable drilling rig operations in PNG combined with ongoing cost management and a favorable U.S. dollar exchange rate have positively contributed to the growth in High Arctic's adjusted EBITDA to date in 2016. These results have been achieved in an otherwise challenging global market for the oil and gas industry, which is adapting to an extended low commodity price environment.
Second Quarter 2016:
- Contribution from the second new contracted heli-portable drilling rig which was added to High Arctic's fleet in the third quarter of 2015 partially offset lower activity levels for the Corporation's remaining operations in PNG and Canada, resulting in an 11% decrease in revenue to $43.5 million in the quarter from $48.7 million in the second quarter of 2015.
- Margin contribution from the new drilling rigs in PNG and proactive cost management initiatives offset lower revenues, resulted in a 7% increase in adjusted EBITDA to $15.1 million from $14.1 million in the second quarter of 2015.
- The Corporation received an interim extension of its drilling and related services contract for Rig 104 until October 31, 2016 and remains in discussions with its customer for renewals of its contracts for Rigs 103 and 104. Consistent with steps being undertaken throughout the global oilfield services industry during the current downturn in the market, the Corporation's customer has indicated that they will canvas the market, which is expected to result in competitive bids being received for these contracts. Due to the current weakness in the global oilfield services industry, High Arctic anticipates material price concessions will be made for these contracts which would be partially offset by reduced operating costs.
- A total of $6.7 million was returned to shareholders during the quarter through $4.1 million in share repurchases under the Corporation's normal course issuer bid ("NCIB") and $2.6 million in dividends ($0.05 per share).
- High Arctic received the International Association of Drilling Contractors award for the Australasia Onshore region for the best safety statistics for 2015.
Year to Date 2016:
- Full contribution from High Arctic's two contracted drilling rigs and an 8% increase in the U.S. dollar exchange rate has offset lower activity in Canada and the Corporation's remaining PNG operations resulting in a 5% increase in revenue to $98.2 million in the first six months of 2016 versus $93.4 million in the comparable period in 2015.
- Additional margin contribution from the Corporation's new rigs increased adjusted EBITDA by 51% to $36.9 million year to date in comparison to $24.5 million earned in the first six months of 2015.
- High Arctic has distributed a total of $11.7 million to shareholders year to date via $6.5 million in share buybacks under the Corporation's NCIB and $5.2 million in dividends which represents 16% of funds provided from operations year to date.
Increased amortization expense associated with the capital cost of the two rigs added to High Arctic's fleet in 2015 partially offset High Arctic's increased EBITDA in the second quarter, resulting in net earnings of $6.3 million ($0.12 per share) in the quarter versus $7.2 million ($0.13 per share) in the second quarter of 2015. Year to date, the EBITDA contribution from the two owned drilling rigs offset increased amortization expense associated with the rigs, which resulted in net earnings increasing 46% year to date to $17.5 million ($0.33 per share) from $12.0 million ($0.22 per share) in the first six months of 2015. Earnings in the comparative period of 2015 only included four months of income contribution from Rig 115 and none from Rig 116 as this rig did not enter the country until August 2016.
High Arctic continues to maintain a strong balance sheet exiting the quarter with a positive net cash position of $37.7 million, with no amounts outstanding on its $45.0 million credit facilities. Funds provided from operations was $13.4 million in the quarter and $32.3 million year to date, an increase of 28% and 73%, respectively, over the comparative periods in 2015. High Arctic's strong balance sheet provides a total potential liquidity of $82.7 million to assist the Corporation in pursuing growth opportunities which may arise during the current industry downturn.