Golconda Gold Ltd. press release
High Arctic Earns 9 cents per Share in the Quarter ended March 31, 2010
TSXV - TSX Venture Exchange · Gold · Silver · Canada
May 17, 2010 (Canada NewsWire Group) --
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High Arctic Energy Services Inc. (TSX: HWO) ("High Arctic" or the "Corporation") today announced its results for the quarter ended March 31, 2010.
Commenting on the results, Bruce Thiessen, CEO, said, "I am very pleased with the 1st quarter operating results. Our Canadian operations, in particular, were well ahead of plan in a challenging environment. With an anticipated successful completion of the recently announced debt restructuring plan, we will have a platform to take advantage of future opportunities and to continue to improve our financial results."
Selected Comparative Financial Information
<<
Three Months Ended March 31 $ millions (except per share amounts) 2010 2009 Change
Revenue 34.6 41.8 (7.2)
Operating earnings 7.4 7.4 -
Net earnings from continuing operations 3.9 2.6 1.3
Loss from discontinued operations (0.1) (0.7) 0.6
Net Income 3.8 1.9 1.9
Per share (basic) $0.09 $0.04 $0.05
EBITDA - continuing operations 9.4 10.0 (0.6)
Cash and cash equivalents 32.1 26.7 5.4
Credit facility and bridge loan 50.7 92.0 (41.3) >>
Overview of Results for Three Months Ended March 31, 2010
The Corporation was able to gain market share in Canadaresulting in quarterly revenue that was largely flat and robust operating margins for the quarter, despite oil and gas drilling activity in Canadabeing at levels lower than in the first quarter of 2009. Equipment utilization for the quarter was 65% in Canada. Revenue did decrease by 24% in Papua New Guineaexplaining the drop in overall revenues for the quarter compared to 2009. The decrease in Papua New Guinearevenue is mainly attributable to a hydraulic workover rig not operating in the first quarter of 2010. The services in Papua New Guineaare provided under longer term contracts but remain vulnerable to fluctuations in the drilling activities of the primary customer.
The Corporation generated $34.6 millionin revenue from continuing operations during the quarter ended March 31, 2010; a decrease of $7.2 million(17%) from revenue of $41.8 millionin the quarter ended March 31, 2009. Revenue from the Canadian operations was $12.7 millionduring the first quarter of 2010 which was comparable with the 2009 first quarter revenue of $12.9 million. Revenue from continuing international operations decreased by $6.9 million(24%) to $21.8 millionfor the quarter ended March 31, 2010as compared to revenue of $28.7 millionduring the quarter ended March 31, 2009.
Equipment maintenance schedules, upgrades and refurbishment plans are being reviewed to ensure that High Arctic remains the service provider of choice in its markets. Management continues to carefully manage the Corporation's input costs so as to keep them in line with the current activity and pricing levels. The Corporation took steps in early 2009 to adjust its cost structure, which included headcount reductions, wage and benefit reductions as well as engaging our vendors to help reduce overall costs. These initiatives continue to help the Corporation to control its oilfield expense and lessen the impact of revenue reductions on operating earnings, EBITDA and net income. Operating earnings from continuing operations was $7.4 millionfor both the quarters ended March 31, 2010and March 31, 2009. Continuing operations had EBITDA of $9.4 millionin the first quarter of 2010 compared to $10.0 millionin the first quarter of 2009.
The Corporation recorded net income of $3.8 million($0.09per share) in the first quarter of 2010, as compared to net income of $1.9 million($0.04per share) in the same period of 2009. Continuing operations had a net income of $3.9 million($0.09per share) during the first quarter of 2010 as compared to net income of $2.6 million($0.06per share) in the first quarter of 2009.
During first quarter of 2010 the Corporation sold three rigs which were not being actively utilized in the business and were classified as assets held for sale. The proceeds of $14.7 millionwere used to reduce the senior debt of the Corporation. The senior debt level was $50.7 millionat March 31, 2010as compared to a senior debt level of $65.4 millionat December 31, 2009and $92.0 millionat March 31, 2009. The reduction in debt has resulted in interest expense decreasing by $1.5 million(44%) from $3.4 millionin the first quarter of 2009 to $1.9 millionin the first quarter of 2010.
The cash and cash equivalents balance increased $4.5 million to $32.1 millionat March 31, 2010as compared to $27.6 millionat December 31, 2009. After consideration of working capital adjustments, cash provided by operating activities in the quarter ended March 31, 2010was $5.9 million, compared to cash provided by operating activities of $6.8 millionin the quarter ended March 31, 2009(see Cash Flow). Capital spending related to continuing operations was $1.5 millionfor the first quarter of 2010 which was primarily for new revenue generating assets for the Corporation's Papua New Guineaoperations. This compares to capital spending of $0.7 millionin the first quarter of 2009 which was primarily on maintenance capital projects.
Non-GAAP Measure
EBITDA (being earnings before the deduction of depreciation, amortization, interest expense and 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 both the Corporation's Management Discussion and Analysis for the year ended December 31, 2009and in the Annual Information Form for the year ended December 31, 2009found 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, Alberta, High Arctic has domestic operations throughout Western Canada. International operations are currently active in Papua New Guinea.