Q3 2021 High Arctic Energy Services Inc Earnings Call

Yeah.

Yeah.

Okay.

Right.

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Thank you. You will now be placed into conference. Missy was exit. The man this conference is being recorded, that's called fero's attached. Financial assets for signals that reinstatement of a sustainable dividend policy is appropriate.

I'd like to close with a thank you to our employees, as well as our patient shareholders, the past 18 months have been challenging as we dealt with the impacts of the COVID-19 crisis and the oil price collapse. We have confidence that the significantly improving market conditions. In our business, fundamentals will provide for appropriate rewards in the near future that concludes my comments and I'll now turn the conference over to Omar. Who will open the line for questions.

Thank you very much. We will now take questions from the telephone line. If you have a question, and you're using a speakerphone, please left, you answer to before making your selection. If you have a question, please press star 1 on your device. Keypad when prompted by the system, please clearly state your name to register your question, please press star 1 at this time. If you have a question.

Once again, please press star one on your device keypad. If you have any question, and the first question is from Patrick Tang, please, go ahead.

Hey, good afternoon. Everybody. Just want to start in the Canadian Services segments. Are you able to give a sense or quantify? How many hours were lost to COVID-19 related site and shutdowns versus the hours lost it? Your key customer being less active, or was was the key customer being less active, really a function of their own COVID-19 related to say, shut down.

Thanks, Patrick. Yeah question. Okay. So estimate only, I was lost to COVID-19, we'd estimate that up to 1,000 hours across our entire Canadian operation were lost to COVID-19 with the six to seven hundred of that and Well Servicing alone, when it comes to the activity levels of this key customer know that it does not appear to be related to COVID-19. And we quantify the, the estimate, what we the amount of hours that we're

With that customer.

This last Q3 between 34 and 35 Hundred hours compared to last year.

And is this key customer expected to pick that activity back up, or is this something that's longer lasting? And are you over the COVID-19 related disruptions on your own site at this point? Yeah, so I'll take the second part first. Yes. So we believe that the program we've implemented there with the vaccination, requirements and proof or proof of the - antigen test has already stemmed.

The amount of such shut down so that we saw which were particularly peaked in September. So we think we've we've taken appropriate action there and not too dissimilar to many of our peers to minimize the risk, then of any future shutdowns when it comes to activity levels. And that customer, we continue to remain engaged in ongoing dialogue with them regarding birthday, utilization of our services, as well as pricing for those services and the possibility that if they do not intend to raise their utilization,

Ation for the release of some of the contracted rigs for us to redeploy elsewhere.

With what's the rates that you're getting on your service rigs? Do you anticipate that could move up quarter over quarter, and be the strongest in the year? Or is there still a lot of stickiness to that price level right now?

No sword from that one. Customer. We realized pricing increases with all of our customers across across Canada. In the into three. And we expect our pricing for services in Q4 to be the peak, that the 2021.

Okay, so shifting gear to the US service operations that are exited is the leaning right now for the related assets to be relocated to Canada, or or sold. And if it is sold. Do you know as a percentage? How much you think you could recover on these assets relative to their initial purchase price?

If the question again, so we have commenced relocation and we anticipate to relocate back somewhere around a quarter, to a third of the equipment that is sitting there. We believe it's quite has a lot of hours left on certification and is quite marketable in the in Connect Canada. To fulfill some of the the the increased demand that we're seeing from customers the remaining two-thirds of equipment. We have not made a final decision on. What is the best way to manage.

Twice those assets. We would expect that if we have the seldom, fair market value compared to the original purchased, or construction costs somewhere in the order of around, twenty to thirty percent of the original purchase cost would be recouped.

Pretty good color and I just wondering with the PNG developments. It was wondering if you could give me a little bit more color with the timing here. So with the end grey Fields, just want to clarify that. You said that, if I goes ahead development activities, that start in 2023. And if that's the case, how many Wells would be drilled and What's the magnitude of the development? Like would you expect this to if you were awarded the contract provides you with about a few quarters of

Reactivity from a single rig.

So the enhancements only just recently been made by the partners Patrick and in that announcement today did not disclose what the potential start timings for drilling activity or the number of Wells would be, so it be inappropriate for me to speculate that moment on the call, but I certainly take heart from the announcement that we can expect further inquiries for drilling Services coming to us in 2022.

Okay.

Yeah, this is, this is one that's moving fairly quickly it. So to Aaron energy acquired, these assets last year. They already have a development license, which approved development license so that they can move quite quickly. They put out an expression of interest in. In the last quarter. We responded to the expression of interest, and we expect to be invited to it, to, to bid, or to Tender on, on Services. They're not just drilling. We expect to be able to Tender on services.

Shared it with provision of rental equipment, our Well, site mats, and, and say, a large swathe of the service offerings. We have in Papua, New Guinea, what that looks like, is Will materialize. I expect early in 2022, as stated their intention there to make their final investment decision.

Thanks that all great answers. I will turn it back. Thanks guys.

Thanks, Patrick.

Thank you very much. Once again, please press star one on your keypad, if you have any question.

Once again, if you have any question, please press star one on your device keypad.

That we have no further questions at this time. Back to him sir. Mike McGuire.

Thanks very much. I'm going to take that as it that the people on the call are quite satisfied that Lance filled them in with all of the details in the college or in the call. I'd like to thank everybody for for the time this morning this morning or this afternoon. I should say this morning my time on the other side of the planet to third for joining us and wish you all a great day.

Thank you. The girlfriend has no end that please disconnect your lines at this time. Let me thank you for your participation.

Ian.