OILFIELD services company High Arctic Energy Services has recorded a boost in its first quarter earnings thanks to higher revenue from its Papua New Guinea operations.
Company revenue increased 22 per cent to C$54.7 million, from C$44.7 million in the first quarter of 2015, while adjusted earnings before interest, tax, depreciation and amortisation up 110% to C$21.8 million, from C$10.4 million the year prior.
High Arctic chief executive Tim Braun put this increase down to the contribution from its two new heli-portable drilling rigs operating in Papua New Guinea.
“As a management team, we are proud of these results and believe it reflects the continued positive contributions from our employees and our focus on exceptional performance,” he said.
The revenue contribution from the new rigs offset the rate reduction for the other two rigs operated by High Arctic for Total, as well as lower Canadian revenues which were negatively impacted by lower industry activity levels.
Increases in drilling and rental revenues from PNG had resulted in a 37% increase in total PNG revenue to C$48.2 million in the quarter, from the C$35.2 million generated in the first quarter of 2015.
High Arctic said its PNG-based Rig 115 had been used steadily since it spudded its first well in June 2015, saying it drilled the Antelope 6 well in the Elk/Antelope field during the March quarter before being released in early April.
“Rig 116 remains on standby in Port Moresby awaiting to be mobilised to its first well location,” he said.
“This rig will continue to generate standby revenue until it spuds its first well, which is currently not anticipated to be until late 2016 or early 2017.”
High Arctic says the next well to be drilled by Rig 115 is expected to be in the fourth quarter of 2016, though it will continue to generate its contracted standby revenue until it is mobilised to the well site.
Rig 103 completed drilling Antelope 3 during the quarter and began mobilising to a well in the Western Province for a new customer.
Activities in the quarter for Rig 104 were focused on preparing the rig for a high elevation drilling location in Muruk, with the rig expected to move there in the third quarter.
These delays, along with a further strengthening of the Canadian dollar relative to the US dollar could soften the financial contribution from the High Arctic’s PNG operations relative to the first quarter of 2016, the company said.
The three year operations management contracts for Rigs 103 and 104 are due for renewal at the end of June 2016, High Arctic added, with management progressing discussions with the project operator.
The growth in High Arctic’s drilling operation resulted in a 40% increase in PNG drilling revenue to C$41.1 million in the quarter versus C$29.2 million in comparative quarter in 2015.
High Arctic’s PNG rental operations contributed C$7.1 million in revenue during the quarter which was an 18% increase over the C$6 million recorded in the first quarter of 2015.
The corporation’s rental fleet includes about 10,000 Dura-Base mats, of which an average of 6,450 mats were under contract during the quarter.
High Arctic had earlier recorded an increase in comprehensive income for the 2015 calendar year to C$50.2 million, though net earnings for the year were slightly lower at C$27.1 million, below the C$28.2 million earned in 2014.
This was on the back of an increase in revenue to C$209.9 million, 22 per cent over the C$171.8 million earned in 2014 and the highest level recorded in company history.
Earnings before interest, tax, depreciation and amortisation were also higher at C$56.2 million, up from the previous year’s C$47.2 million.