High Arctic Energy Services Q1 2024 Earnings Report

High Arctic Energy Services EPS Results

• Actual EPS: C$0.07
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

High Arctic Energy Services Revenue Results

• Actual Revenue: $18.01 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

High Arctic Energy Services Announcement Details

• Quarter: Q1 2024
• Date: 5/16/2024
• Time: N/A
• Conference Call Date: Thursday, May 16, 2024
• Conference Call Time: 1:00PM ET

High Arctic Energy Services (TSE:HWO) is engaged in providing contract drilling, well servicing, completion services, equipment rentals, and other oilfield services to the oil and natural gas industry in Papua New Guinea and Canada. The operating segments of the company are Drilling Services segment which consists of the drilling services; Production Services segment which consists of the well servicing and snubbing services; Ancillary Services segment which provides rental equipment and engineering consulting to various companies within the oil and gas sector and Corporate segment. The Production Services segment generates most of the company's revenue.

High Arctic Energy Services Q1 2024 Earnings Call Transcript

Key Takeaways

• In Papua New Guinea, Rig 103 ran at full utilization during Q1, boosting rental deployments, completed its fourth approved well, and remains contracted through July 2025 with no confirmed work thereafter.
• The Delta Rental Services acquisition closed in December 2023 and was seamlessly integrated into High Arctic’s Canadian rentals under the Delta brand, delivering expected revenue growth and positive cash flow.
• High Arctic reported Q1 revenues of CAD 18 million, Adjusted EBITDA of CAD 4.5 million (25% margin), and net income of CAD 3.5 million (CAD 0.07 per share), driven by PNG drilling operations, the Delta business, and investment income.
• A court-approved plan will spin off the PNG business into a new entity, High Arctic Overseas Holdings, enact a 4-for-1 share consolidation, and distribute up to CAD 38.2 million in tax-efficient return of capital.
• Through PIMS, High Arctic expanded manpower solutions in PNG by adding safety training, competency verification, and staffing services to prepare local workers for anticipated LNG and infrastructure projects.

Presentation

[Operator]

Good morning, ladies and gentlemen. Welcome to the High Arctic Energy Services 2024 Q1 Results Conference Call. I would now like to turn the meeting over to High Arctic's Chief Executive Officer, Mike Maguire. Please go ahead, Mr. Maguire.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Thank you, Melanie, and good morning to everyone. Welcome to High Arctic's Q1 Conference Call. Today, I'll be providing an update on the press release we issued after markets closed yesterday, May fifteenth, including discussion of our financial performance for the Q1 of 2024. Following my remarks, I'll hand the call over to our Interim Chief Financial Officer, Lonn Bate. Lonn will be discussing our financial performance for the quarter in more detail.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

After our formal comments, we'll open the call to answer any questions that you may have. Before we begin, I'd like to remind you that certain information presented today may include forward-looking statements. Such statements reflect High Arctic's current expectations, estimates, projections, and assumptions.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

These forward-looking statements are not guarantees of future performance, and they are subject to certain risks which could cause actual performance and financial results to vary materially from those contemplated in the forward-looking statements. For additional information on these risks, please take a look at our management's discussion and analysis and the 2024 annual information form available on our website or on SEDAR+. Look under the heading Risk Factors.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Starting with operations in Papua New Guinea, and during the quarter, Rig 103 had strong operational performance. This represents the fourth full quarter of drilling activity for the corporation since the suspension of operations in early 2020. As well as the full quarter of drilling operations with Rig 103, we again saw strong deployment of rental assets through the quarter, including those pulled through by drilling operations, as well as rentals to the wider market.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

High Arctic also provided rental material handling equipment, a 100-man mobile camp, and a large quantity of work site matting to support other ongoing field activities with our two main customers in PNG. Full utilization of our drilling services and asset rentals associated with customer-owned Rig 103 had a significant impact on our earnings when compared to the same period in 2023, when we were mostly preparing for drilling operations.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

We have completed the drilling of the fourth and final of the approved wells in our customer's program, and as at today, we are transporting the rig and associated equipment packages for them to be placed into cold stack storage. The term of the Rig 103 contract runs through to July 2025, with options for the customer to extend.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Presently, there is no confirmed drilling activity in the remaining contract period, but we continue to work with our customer to advance plans for potential future work. At the macro scale, we are optimistic for future drilling in PNG. This optimism is based upon an expectation that advancement of the Papua LNG project, led by French multinational TotalEnergies, will stimulate exploration and appraisal activity in much the same way as the first PNG LNG project did a decade ago.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

We are, however, disappointed that a final investment decision on the Papua LNG project has been pushed out into 2025. This follows the joint statement in April, reaffirming commitment to the project by the government of Papua New Guinea and the project operating partner, TotalEnergies.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

The Papua LNG project is expected to be followed by the PNG gas field development in the Western Province of PNG, which is anticipated to result in addition of further gas liquefaction capacity in the world-class PNG LNG export facility. State-owned Kumul Petroleum is advancing appraisal of other gas discoveries onshore PNG, to progress their aim to contribute to growing domestic energy needs and additional LNG export processing facilities.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

ExxonMobil and their partners are also advancing the backfill of the PNG LNG plant and have announced intentions to appraise a significant prospect that they have named Wildebeest. These LNG projects and other large-scale mining and infrastructure projects moving through the pipeline will require tens of thousands of new workers and more skilled and supervisory personnel that do not exist in PNG today.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Through PIMS, PNG Industry Manpower Solutions, we have added the provision of recognized safety training, competency verification, and equipment licensing services. We have long provided these training and competency solutions in-house. PIMS, PIMS also taps into our large pool of talent to provide manpower, skilled and semi-skilled labor, trades qualified personnel, and professionals in PNG.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

We are excited to be playing a significant role in preparing Papua New Guinean citizens to be job ready for the major projects we anticipate in the latter part of this decade and beyond. In Canada, we have completed the Q1 of activity, which includes the business of Delta Rental Services. The acquisition of Delta in late December last year, its amalgamation with High Arctic, and its integration with our legacy rentals business in Canada, has delivered the scale for a cash-positive operation.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Delta has blended seamlessly with High Arctic's rentals, and the combined rentals business is now marketed under the Delta brand. The Q1 results are in line with our pre-acquisition expectations, with a strong contribution to revenue and positive cash flow. The Delta acquisition contemplated and the structure of the consideration with a large earn-out, was reflective of High Arctic's intention to reorganize and separate the Canadian and PNG businesses.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

The success of this modest but important growth step, provides us with confidence that this transaction is symbolic of the prospects for a purely Canadian entity, and how additional accretive transactions could be realized. Over the past two years, the corporation has divested underperforming and non-core assets and businesses.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Now, the corporation's Canadian business consists of a high-margin equipment rental business centered on pressure control, a minority interest in Team Snubbing Services Inc., Canada's largest oil field snubbing services business, and industrial properties at Clairmont and Whitecourt in Alberta, Canada. High Arctic has a 42% equity stake in Team Snubbing. Team has had another outstanding quarter in Q1, setting new high watermarks in terms of hours worked, snubbing packages deployed, and available crews.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

This is transposed into a sizable equity pickup for High Arctic. During the quarter, Team completed a reorganization of its international partnership. The result of this cashless arrangement sees Team holding a fraction over 90% of the Team Snubbing Services international business and complete control of all decision-making. The result is a more efficient overall team structure and overhead.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

After shutting down in December, the two snubbing packages deployed in Alaska under remaining remained shut down through much of the quarter through the deepest parts of the cold weather, with both packages recommencing operations in March. I'd now like to pass the call over to Lonn Bate, High Arctic's interim Chief Financial Officer, to discuss key financial highlights from the quarter in more detail.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

Great. Thank you, Mike, and good morning, afternoon to you all joining the call today. Just before I begin, just want to state that all the dollar amounts mentioned on this call for me will be in Canadian dollars, unless otherwise mentioned. So looking at our Q1 financial results from continuing operations and on a consolidated basis, High Arctic generated revenues of CAD 18 million, adjusted EBITDA CAD 4.5 million or 25% of revenue. In the quarter, High Arctic generated net income of CAD 3.5 million, which equates to 7%, CAD 0.07, pardon me, per share.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

This improvement in profitability for High Arctic was a result of the continued full utilization of our drilling services and asset rental business in PNG that Mike already mentioned, combined with the full quarter results from the Delta Rental Services business we acquired in late December 2023. In addition, the positive quarterly results were driven by meaningful investment income from short-term investments we hold, and the strong quarterly contribution from Team Snubbing's Q1 results, recorded as income from equity investment on our income statement.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

In the quarter, a great deal of effort was undertaken by the Canadian operations team to integrate the operational aspects of the Delta Rental Services business. As mentioned, our Canadian rentals business now operates under the Delta Rental Services banner in Canada, leveraging the platform we acquired.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

In combining the two business, we've been able to acquire new customers in the space, and in doing so, deploy a meaningful amount of rental assets that were idle prior to the acquisition. Now, turning back to the quarter itself, as mentioned, the business performed well, generating CAD 4.5 million in Adjusted EBITDA, 40% more than the CAD 3.2 million in Adjusted EBITDA reported in Q4 2023. Consistent with the past three consecutive quarters, customer-owned Rig 103 from Papua New Guinea continued to be fully utilized.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

Our ancillary services segment continues to perform at or above expectations, and as a result, High Arctic produced a consolidated oil field services operating margin of over 40% in the quarter, well above the 33% margin achieved from the prior quarter, and higher than any other consolidated operating margin for High Arctic for quite some time.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

This margin performance of over 40% has been achieved through the culmination of strategic efforts taken at High Arctic to shed underperforming businesses over the past few years, adding Delta services into the portfolio, and through excellent operational execution in PNG, that in the quarter saw exceptional margin performance driven by excellent operational execution at the rig site and disciplined cost controls. G&A costs were CAD 2.8 million in the quarter, consistent with prior quarter spend.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

The costs for the quarter represent 15.6% of revenues, again, consistent with both Q4 and Q3 2023. G&A for the business has remained elevated as High Arctic has incurred corporate professional fees related to its work towards the recently announced reorganization plan. Some additional one-time costs to integrate Delta are also included in the quarter as of the result of the meeting the corporation held on January 10th. As and where possible, management continues to evaluate its G&A burn and right size the administrative support to align with the expected operations going forward in both PNG and Canada.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

That being said, it is anticipated that with the recently announced reorganization plan, Q2 2024, our G&A will likely be a high-water mark in our spending at High Arctic. Now, assuming the reorganization goes ahead, as per our current timelines, meaningful G&A reductions will be realized in the second half of 2024, collectively. As mentioned earlier, Adjusted EBITDA was CAD 4.5 million in Q1, or 25.2% of revenues, comparing favorably to Adjusted EBITDA of just CAD 1 million, just shy of CAD 1 million, or 11% of revenues in Q1 2023.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

This better performance in 2024, again, was due primarily to the fact that we were considerably busier in 2024 versus last year, plus some of the additional optimization mentioned earlier. Specifically, in the drilling services segment, we generated CAD 12.4 million of revenue in the quarter, higher than the CAD 6.3 million in Q1 2023. This increase was due primarily to the fact, as mentioned, our customer-owned Rig 103 was only operational for one partial month in Q1 of last year.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

Preparatory work to ready that rig for service last year is captured in the PNG revenue tally for 2023 Q1, but this activity was nowhere near the revenue level we experience when Rig 103 is fully operational. As expected, our Q1 2024 operating margins in the drilling services segment were also higher at over 29% in the quarter, driven by this increased activity, and considerably better than the 19% achieved in Q1 2023.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

Our ancillary services segment spans both PNG and Canada and continues to be our highest operating margin generator. We achieved operating margins of 66% on CAD 5.6 million of rev in Q1 2024, as compared to the 68% margin achieved in Q1 2023. The increased revenue is a result of increased deployment of our rental equipment in PNG and the additional revenue driven from the Delta business impacting the Canadian results.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

There was no activity in our production services segment, again, this quarter, with only a small expense being booked related to storage and preservation cost for the remaining assets in this segment. Including our production services segment, just for our readers, for everybody's benefit, is our 42% equity investment in Team Snubbing and our involvement in the Sikanni Partnership, where High Arctic holds a 49% stake.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

The Sikanni Partnership has experienced limited business activity since the 2022 Canadian sales transactions, but the partnership does still remain active, and we, along with our partner, continue to work to reposition its customer offerings and are exploring other avenues for this business activity in this platform. On the CapEx side, during the quarter, CapEx totaled just over CAD 1 million.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

This spending was focused on both growth and capital upgrades performed in our rental equipment fleet, both in PNG and Canada, plus costs associated with building out and modernizing our financial and operating systems, again, both in PNG and Canada. We expect to continue with only modest capital spending in 2024 as it stands right now, and that will mostly be focused on maintaining and growing our rental fleet, both here and abroad.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

The company ended the quarter with CAD 57 million of cash on hand and with over CAD 40 million of that invested in secure interest-bearing short-term investments, which generated interest income for us of CAD 570,000 in the quarter. Our working capital position improved slightly in the quarter at the end of March and stood at CAD 67.6 million on March thirty-first.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

Our reported cash and working capital balances did experience a positive translation impact at the end of March 2024. This was due to the appreciation of the US dollar vis-a-vis the Canadian dollar in the quarter just reported. Consistent with past quarters, our only source of debt is the mortgage financing we hold. At the end of March, in total, long-term, short-term portion combined to total CAD 3.5 million, and that's secured against our land and buildings that we hold in Alberta. That is my report, and with that, I'll turn this back over to Mike.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Thank you, Lonn. A couple of days ago, we announced the setting of June seventeenth, 2024, for an annual general and special meeting of shareholders for the purpose of, among other things, approving the reduction of the capital account maintained by the corporation in respect of the High Arctic common shares in an amount of up to CAD 0.76 per share, multiplied by the number of common shares issued and outstanding, and the distribution of a tax-efficient return of capital to shareholders to a maximum of CAD 38.2 million.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

The maximum distribution relates to the sale of High Arctic's Canadian well servicing assets in July 2022. Further, at the meeting, the shareholders have been asked to vote upon the reorganization of the corporation via a court-approved plan of arrangement.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

The arrangement will transfer High Arctic's PNG business to a separate, dedicated and independent, publicly traded company named High Arctic Overseas Holdings Corp. While the corporation will continue to own and operate the existing North American business, including Delta Rentals, each of the two companies will have its own management and operational teams and separate board of directors.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Under the proposed arrangement, for each common share of High Arctic held, every shareholder of High Arctic will receive one quarter of one common share of the new company, High Arctic Overseas Holdings Corp., and one quarter of one new common share of the corporation post-arrangement. This separation is aimed at addressing the lack of synergies and inefficiencies of managing two small businesses on opposite sides of the world and allowing senior management to concentrate where they have had the most success in the past.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

High Arctic's board and management believe value can be created for shareholders. For the holders of SpinCo common shares, separation provides the opportunity for High Arctic International, or High Arctic Overseas Holdings to consider transactions with a wider group of PNG-focused companies, and greater flexibility to relocate in the future to a market that better understands Papua New Guinea and is likely to ascribe greater value to it, to the company.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

For the holders of post-arrangement High Arctic common shares, the transaction opens up opportunities for High Arctic to participate in Canadian mergers and acquisition activities, where the PNG business may have been perceived as an impediment to accretive transactions. Both the return of capital and the reorganization by Plan of Arrangement require approval by a minimum of 2/3 of the votes cast by High Arctic shareholders, voting in person at the meeting or by proxy.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

The arrangement is also subject to the approval of the Toronto Stock Exchange and the Court of King's Bench of Alberta, and applicable regulatory approvals and certain other conditions customary for transactions of this nature. An application has been made to the TSX Venture Exchange for the listing of the new company's common shares upon completion of the arrangement, while we expect High Arctic to maintain its listing on the main Toronto Stock Exchange board. I will now turn the conference over to Melanie, the operator, who will open the line for questions.

[Operator]

Thank you. We will now take questions from the telephone lines. If you have a question, please press star one on your device's keypad. If at any time you wish to cancel your question, please press star two. Please press star one at this time, if you have a question. There will be a brief pause while the participants register for questions. We thank you for your patience. The first question is from?

[Analyst]

Mike Schmidt.

[Operator]

Please go ahead. Your line is now open.

[Analyst]

Yeah, hi. I have a question with regards to the deferred tax asset. Is the deferred tax asset perceived as having monetary value in discussions with potential M&A partners? And the second part to that question is, would the realization of the value of that asset be most easily achieved through merger with a large partner?

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

Mike, it's Lonn, the CFO. I'll, I'll take that. So perceived value, I just wanna make sure that, we haven't recorded a deferred tax asset on the books of, of High Arctic.

[Analyst]

Yep.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

So, I mean, it was historically, right? But the last few years, it's, it's we take something called a valuation allowance against it. So obviously, we do have non-capital losses in the Canadian entity, the parent company that's listed in the TSX. And certainly, there is, I'm not gonna speculate on what the perceived value of those of those tax non-capital loss carryforwards are.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

Is there a market for them generically? Yes. It is something, obviously, in our press releases we talk about. It is factual. They do exist, and under the right structure, going forward into a into a transaction, or just through organic growth in the Canadian business, as as we build out the Canadian platform, assuming the transaction and the reorganization goes ahead, they certainly will have value.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

Certainly, Delta, the acquisition we did there in December of last year, they were cash taxable upon, you know, the day before we completed that transaction and subsequent to the amalgamation. You know, they're folded in with the operations here, and the Canadian, Canadian operations are no longer subject to tax on that business. So the perceived, the perceived value, we're not marketing these tax losses carried forward.

[Lonn Bate, CFO at High Arctic Energy Services Inc.]

We don't do that. That's just gonna be part of the, of the go-forward entity and just, call it a, you know, a feature for the entity going forward, and it will, you know, it will be there on any transaction we do. There are a lot of regulations around how those are used in with change of control and, and the like, going forward into certain transactions. So you referenced a large transaction. Again, depending on the regulation, whether those survive or not is sort of up to the regulations and CRA's view.

[Analyst]

Great. Okay.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Just tack on to the end of that, Mike, I think that to be clear that we intend to take steps aimed at protecting and retaining those non-capital tax loss carryforwards, and we do believe that it could be potentially attractive to other businesses, like it was for Delta Rental Solutions, or Delta Rental Services, I should say, to be amalgamated in or merged with a company such as ours, where those tax losses then provide some further protection, for the distribution of earnings out of the business.

[Analyst]

Great. Thank you very much. That's pretty much how I perceived everything, and that confirms what I thought. Thank you.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Thanks, Mike.

[Operator]

Once again, please press star one on your telephone's keypad if you have a question. The next question is from?

[Analyst]

Ken Strand.

[Operator]

Please go ahead. Your line is now open.

[Analyst]

Hello, guys. Good progress, so thanks for that. I've got two questions. The first one, can you give a little bit of reasoning behind, kind of, the short share rollback we're going to do if the organization goes through? That's one. The second question is, could you give a little bit of background and reasoning on the two new directors, Craig Nieboer for Canada and Bruce Apana for the SpinCo?

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Sure, Ken. Mike here. Thanks, thanks for your questions. And, yeah, we'll start with the first one, the reasoning behind the, share rollback. Yeah, it was our view, and, discussed with, our financial advisor, that on the post-arrangement, trade potential trading values of the two corporations, following what we expect to be a, a sizable cash distribution out of the business or out of the corporation, that, we didn't wanna see them trading down as, as, as, you know, low, low, low digit, low cent stocks.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

We determined that a 1-for-4 or a 4-for-1, sorry, 4-for-1, exchange, would, mean that they should list in a manner that would, be much more of a meaningful figure to be trading on the stock exchange.

[Analyst]

Okay, and the follow-up question on that: is there also in the, in the back of your mind, reasoning that if there's less shares and potentially, especially for a Canadian company, easier to pay dividends on?

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

I don't think the fact of aiming for less shares was at all part of the consideration. It was more about, you know, after that cash comes out of the business and the two pieces separate, you know, what, where do we wanna see the two companies trading at as far as like a, you know, a dollar figure-

[Analyst]

Okay.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

on the exchange?

[Analyst]

Clear.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Okay, so the second question, a bit of background on the two directors. So, I was intending on closing remarks to reflect upon Joe Oliver, the Honorable Joe Oliver's service as a director of High Arctic for the past eight years, joining in 2016. And, you know, he has determined that, having reached the point now where we do look likely, subject to those remaining shareholder approvals and other regulatory hurdles, that we're likely to end up with the reorganization in place, and this was an ideal time for him to step off the board.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

And in that regard, having concluded the business associated with approving our Q1 financial results and the release then yesterday, Joe has provided us with his resignation. For a compliant board structure for the TSX, that is, as lean and cost effective for our shareholders as possible, we did need to have. We believe we did need to have four directors, with at least a minimum of those having three independent directors to form an audit committee and to meet other TSX rules and regulations.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

So we, the board has conducted a short search and identified Craig Nieboer as a suitable candidate to step in and take the fourth director seat, replacing Joe Oliver. Craig has consented then to being put forward as a nominee for election at the shareholder meeting. Craig's got a lot of experience. He's a Canadian, he's resident in Alberta, in Calgary, where the corporation's headquarters is. He's got a lot of experience as a professional in the energy sector, both from the energy producers as well as services and other related sub-industries within the energy sector. Lengthy career there.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

I think that he's speaking on behalf of the board, but to say we're excited about, you know, what Craig could bring to discussions in the boardroom. The other director for the Papua New Guinea business is Bruce Apana. I've known Bruce for over 10 years. Bruce Apana is a legal professional. He's educated in Australia and has served as a solicitor in the Australian Capital Territory. But for the majority of his career as a Papua New Guinean citizen, he's worked in Papua New Guinea.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

He is resident in Port Moresby. He's well connected in the business and in the political circles and has been a long-term associate of High Arctic's. He acts as a resident director of our subsidiaries there, and as company secretary to those subsidiaries, and has done so for the entire period I've been associated with the company. I'm excited about the idea here of a Papua New Guinean citizen, a man with an impressive background, such as Bruce, and a strong association with our company, being on the board of the Canadian parent entity.

[Analyst]

Okay. Clear. Thank you.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

You're welcome, Art.

[Operator]

There are no further questions registered at this time. I would now like to turn the meeting over back to Mr. McGuire.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

Well, I must admit, I am a little surprised. I thought there might be more questions about our reorganization and the shareholder meeting, and I'm gonna choose to take that as meaning that the materials that we distributed in our press release have very clearly outlined what our intentions are. It has been a long process for us to get to this point. Appreciate the patience of our shareholders, particularly those who've been in with us for a long period and have held High Arctic.

[Mike Maguire, CEO at High Arctic Energy Services Inc.]

I'm excited about what the potential is for the two separated entities. Our timeline sees us moving towards having the return of capital distributed to shareholders in the second half of July, and to complete the reorganization by the end of that month. And in doing so, you know, starting the exciting new chapter of High Arctic Energy Services and High Arctic Overseas Holdings. Thank you for your time this afternoon, and have a great day.

[Operator]

Thank you. The conference has now ended. Please disconnect your lines at this time. We thank you for your participation.

Participants

Executives

• Lonn Bate, CFO
• Mike Maguire, CEO

Analysts

• Analyst
• Analyst