High Arctic Energy Services Inc T.HWO

Valuation Attempts

[impega]

I appreciate all the efforts at the "sum of the parts " valuation of the company. With a value indicated at $2.00 and much higher it is hard to believe the stock is languishing at $1.20.

There really is no following or analyst coverage so it is not even on radar screens of investors.

My question is: Amazing opportunity or trap? I say opportunity but who knows for sure.

[Stonksonlyup90]

I would say it's hard to argue 'value trap' given the efforts of management to surface value and return capital to shareholders. The stock is basically fully de-risked at these prices given the massive cash balance and pending ROC + w/c + Team Snubbing investment/note.

[AVALONSHARK]

The stock is at this level because market has no confidence in management and board. I dont know about regulations of being a public company in Canada. Is it technically possible for management to take the PNG business private at say $20-$25 mil (which is 2x EBITDA) which is roughly 0.50/share ?. Market can value Canadian business at roughly $10-$12 mil based on market conditions and uncertainty

[Stonksonlyup90]

Per your above analysis: $0.78 return of capital $0.50 PNG  $0.20 Canadian business = $1.48 ** So still 23% upside to that baseline valuation (I'm of the opinion value is much higher). If management wanted to take private I'm under the impression that a 3rd party/independent valuation would need to be performed for reasonable valuation.. otherwise they'd risk a lawsuit

[JonathanJSmith]

If they give prorata shares to the current stockholders, then the valuation of the PNG business is irrelevant. If not, then a "purchase" is occurring in which case they'd need minority stockholders to vote on the matter. For said transaction, Cyrus would not be considered a minority holder as it would be they who would be providing the tender offer in the first place. I can't

[DudeRancher1953]

Avalon, There are certain protections aimed at ensuring that minority shareholders are treated fairly and equally. It gets complicated. All the big M&A legal firms publish guides. Here's a useful one: Public Company M&A Guide: Canadian Public Companies (osler.com) I was once invested in a public small cap that was taken public at what I considered to be a way too low price. They had an

[AVALONSHARK]

Thank you- this is indeed helpful.

[colourama]

Stonks, I agree. I'm not sure how much more "de-risked" an investor wants. Looking to add more on continued weakness next week.

[impega]

Agree with the de-risked comments here. Everything other than cash is valued by the market at $0.40. PNG will be cash flow positive with only 1 rig working so the prospect of re-activating up to 3 more rigs provides massive upside. The remaining Canadian ops are profitable at with high margins. The sum of the parts has to be at least book value of around $2.35 but likely much more.

[Possibleidiot01]

Derisked, yes. Catalysts, many , check. Going to disagree with you on valuation and make it even cheaper, $48 million in cash after the nitrogen sale on 48 million plus shares gives you a valuation of a dime a share. This is all things to everybody deal - formation with the most valuable part of the company of a private  company in PNG ,  a return of capital and utilization of non