CANADIAN oil and gas drilling rig provider High Arctic reports that it has received formal notification from its main customer in Papua New Guinea that it is suspending all drilling operations in the country until further notice.

High Arctic said the customer’s decision to suspend and defer operations is in reaction to the current low oil and gas prices and the COVID-19 pandemic.

The company is now working with the customer to safely conclude work on active sites including suspension of a well currently under construction.

“We are releasing effected personnel under a joint plan and expect to phase-down rig operations for this customer by the end of April.  With the current outlook for continued low oil and gas prices it is unclear when any PNG drilling activity might re-commence,” the company stated.

High Arctic has implemented plans to reduce the dependence on international rotational staff for the remainder of its business operations in PNG.  The company’s focus on developing a strong National workforce positions us well to provide labour solutions for both short term work and on-going essential operations.

“High Arctic remains under contract through mid 2021 for drilling services and these recent developments are expected to defer drilling into 2021, at a minimum. Long term, it remains encouraging that customer dialogue with the PNG Government on the P’nyang Gas Agreement, which is required for LNG expansion and higher industry well site activity, is reportedly ongoing at this time.

“While these developments negatively impact Drilling and Ancillary Services operating segments for High Arctic, business continuity remains a fundamental priority. High Arctic is positioning its PNG business to preserve its excellent workforce, maintain quick rig reactivation capabilities and control costs to maintain financial flexibility,” the company said.