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High Arctic Energy Services Corporate Presentation

High Arctic Energy Services Corporate Presentation. Symbol: HWO. Disclaimer. This presentation may contain information which is forward-looking and is subject to important risks and uncertainties. The results or events predicted in this information may differ from actual results or events.

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High Arctic Energy Services Corporate Presentation

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  1. High Arctic Energy Services Corporate Presentation Symbol:HWO

  2. Disclaimer This presentation may contain information which is forward-looking and is subject to important risks and uncertainties. The results or events predicted in this information may differ from actual results or events. Actual results may differ materially from management expectations, as projected in such forward looking statements for a variety of factors, including market and general economic conditions and the risks and uncertainties detailed in the most recent Interim Financial Statements along with the Corporation’s Management Discussion and Analysis and the Annual Information form for the year ended December 31, 2013. These documents can be found 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.

  3. Corporate Strategy To safely provide specialized technical oil field services to customers operating in challenging environments, delivering sustainable growth and strong returns for shareholders. Stability & Growth Snubbing & N2 Services Drilling Services Matting & Equipment Rentals

  4. Locations Grande Prairie Calgary Red Deer Papua New Guinea Snubbing, Nitrogen & Rentals Singapore Drilling & Rentals Sydney

  5. Service Locations Papua New Guinea • The leading oil field service provider in PNG • Services include; • Drilling services & Camp management • Matting, Camp and Equipment rentals • Strategically positioned to capitalize on the rapidly expanding capital investments being made in PNG • The preferred service partner to Oil Search Ltd. (OSL) – with opportunities to leverage services into new markets • Existing service contracts with all major operators • Expanding client base Canada • Leading provider of snubbing services in the Western Canadian Sedimentary Basin (WCSB) • A leading provider of low rate nitrogen services in the WCSB • Strategically positioned to capitalize on servicing longer horizontal high pressure wells for both gas & oil • Will benefit from LNG export development • Looking to expand service offerings and/or service locations

  6. Papua New Guinea

  7. Papua New Guinea • Recognized as the 10th fastest growing economy in the world in 2012 • Independent, established democracy and a stable business jurisdiction • Part of the British Commonwealth with a Parliamentary Government • Welcoming to foreign capital and investment • No restrictions on repatriation of foreign profits • Currently experiencing rapid growth from resource exports

  8. PNG Growth Opportunity PNG OSL / Exxon - LNG Project • Commenced in 2010 with first LNG sales on track for 2014 • Project budget: $19.0 USD billion for 2 train liquefaction plant • Exxon is the operator (33.2%) and partners include: • OSL (29.0%) • PNG government (16.8%) • Santos Ltd. (13.5%) • Nippon Oil (Japan) (4.7%) • PNG landowners (2.8%) • 6.9 million tonnes per annum (mtpa) of LNG are fully contracted to TEPCO, Osaka Gas, CPC from Taiwan and Sinopec • Over the project’s expected 30 year timeframe, total forecast production includes 9.0 tcf of natural gas and 200+ million bbls of associated liquids • Significant growth opportunity for aggregating gas reserves for a third LNG train

  9. PNG Drilling • Operate and manage 2 Heli-portable drilling rigs (rigs #103 and #104) for OSL, contracted through June 30, 2016 • Own and manage the only Heli-portable hydraulic workover rig in PNG (rig #102) contracted through May 2014 • With expansion of the LNG plant there are opportunities for growth with additional Heli-portable drilling rigs and associated services.

  10. Dura-Base Matting • Exit 2013 with over 10,000 mats on rental • PNG distributor rights • The largest rental supplier of Dura-Base mats outside of the USA • Evaluating expansion into similar countries with challenging environments

  11. Equipment Rentals Camp services – 5 camps contracted • HWO operates and manages • Two 93 man Heli-portable drilling rig camps • Two 32 man Heli-portable leap frog camps (under contract - OSL owned) • HWO deployed a new double-deck 104 man Heli-portable drilling rig camp in January 2013 (under contract - HWO owned) Rental equipment owned by HWO and under contract includes; • cranes(ranging from 30 ton to 160 ton) • rig moving trucks • forklifts • river pumps • light towers • Dura-Base and Rhino matting

  12. Yavo Staging Site Improvements In 2013 High Arctic was awarded an 18 month “Material Handling Contract” with a major Canadian Oil company to supply Cranes, Forklifts, Trucks, Light Towers, Personnel, Training, and Materials Handling expertise. With High Arctic Before High Arctic

  13. PNG Revenue Performance Drilling Revenue ($M) Drilling and related services have experienced moderate steady growth over the past 4 years. Rental Revenue ($M) Rental services has experienced a Cumulative Average Growth Rate of 34% over the past 4 years. CAGR

  14. PNG Customers • Public oil and gas exploration company (OSH-A) headquartered in Sydney, Australia • Market capitalization of $9.5 billion ($USD) • Operating in PNG since 1929 • PNG’s largest producer and most active operator - 6.38M BOE annual production • PNG government is one of OSL’s largest shareholders (15% of OSL’s outstanding shares) • HWO is OSL’s exclusive PNG drilling contractor • www.oilsearch.com

  15. Canada

  16. WCSB Drilling & Completion Trends • The Western Canadian Sedimentary Basin (“WCSB”) has experienced 3 consecutive years of reduced drilling and well completions. • This is largely due to high natural gas storage levels, reduced demand and associated low commodity prices. • There is growing optimism for increased activity associated with an increase in expected demand from both domestic industrial consumption and significant LNG export opportunities. Source: CIBC World Markets

  17. BC LNG Growth Opportunities • Demand for LNG product in Asia continues to increase. • As such, there are currently over 8 proposals to build LNG liquefaction plants on the BC coast where natural gas from north east BC and Alberta would be compressed for shipment to Asia. • Western Canada is well positioned to capitalize on this demand due to low shipping costs and low cost of supply. Asian LNG Imports (2000 to 2025) Source: Wood Mackenzie

  18. Snubbing Growth Opportunities • Petronas has committed to invest $36B over 30 years into BC LNG exports • This includes terminals, ships, pipelines & development of supply • Shell has also proposed a similar investment strategy in BC LNG • These commitments are evidenced by the well licences purchased in 2013 • High Arctic is well positioned to provide the needed services for the completion of these wells to our existing clients. BC Well Licence Authorizations for 2013 These wells will require snubbing services HWO top clients

  19. What is Snubbing Jointed Pipe Snubbing • Snubbing is the use of hydraulic force to push pipe against the snub force created by the well pressure. • Snubbing permits live operations without killing the well thus avoiding formation damage and bringing the well on stream faster. • Jointed pipe snubbing is stronger than coiled tubing snubbing and allows the unit to rotate the drill string. • It is used both as a completion technique and to work on producing wells under pressure. • More high pressure wells using multi-stage fracturing completion techniques, drive demand for snubbing services. PIPE SLIPS BOP HYDRAULIC FORCE PRESSURE FRICTION

  20. Jointed Pipe and/or Coiled Tubing Jointed Pipe Snubbing Either Coiled Tubing • Run production tubing • Fracturing through coil • Cleanouts • Work-overs • Acidizing through coil • Competitive Advantage: • Long depths achieved > 7000m • Greater push / pull strength • 120K lbs – 250K lbs • Rotating pipe better overcomes friction in tight holes • Broader range of pipe diameters (1.7” – 5.5”) • Placing packers & plugs • Competitive Advantage: • Faster tripping speed • Faster rig up times • Drilling & Milling plugs • Fishing

  21. Canadian Snubbing Services 15 Stand Alone & 3 Rig Assist Units 14 Active Crews 3 UB 250k Units

  22. UB 250k Opportunity

  23. Canadian Nitrogen Services 9Low Rate Nitrogen Pumpers 5 Nitrogen Transports 1 High Rate N2 Pumper

  24. Nitrogen Services Applications: Snubbing Support; • Wellbore displacements • Well head pressure testing • Underbalanced milling & drilling Other Completions work; • Nitrified acid stimulation • Wellbore fracturing and stimulation • Coiled tubing support Plant & Pipeline Applications; • Pressure testing • Plant purges • Plant turnarounds • Accelerated cool downs Characteristics: • Inert gas (non-reactive) • Non-corrosive • Non-explosive • Suitable for higher risk environments

  25. Canadian Equipment Rentals • 15 K BOP packages; • Double gate BOP’s • Single gate BOP’s • Blind shear rams • High temp pipe rams • 10 K BOP packages; • Double gate BOP’s • Single gate BOP’s • Blind shear rams • High temp pipe rams • Boilers • Pumps • Class III Support Trailers Growth opportunity to support the increase in high pressure wells.

  26. Canadian Revenue Performance

  27. Canadian Customers Working with large domestic and multi-national producers provides stability throughout oil and gas pricing cycles

  28. Corporate Strategy Summary • Continue to invest free cash flow into organic growth opportunities delivering strong financial returns including; • Expanding Dura-Base matting client base, • Increasing equipment rental service offering both in Canada and PNG • Maintaining leading edge snubbing technology through continuous investment • Returning profits to shareholders by way of monthly dividends • Use our strong balance sheet and unutilized debt capacity for potential acquisition opportunities, such as; • Complementary services in Canada • Additional equipment in PNG • Expansion into new locations

  29. Investment Highlights Shares outstanding: 50,045,592 Share Price (as at Mar 20, 2014): $4.50 Market Cap : $225.2 million Net Cash*: $26.9 million Enterprise Value: $198.3 million Trailing 12 Month EBITDA: $41.5 million EV / EBITDA Multiple: 4.78x Annual Dividend: $0.18 Payout Ratio 25% Canadian Tax Losses: ~$90.0 million Average Daily Trading Volume: 65,157 Insiders’ Ownership (as at Mar 20, 2014): 68% * Cash less debt Peer Range: 4x - 8x 41% Cyrus Capital 16% Former founder 11% Directors / Officers

  30. Historical Financial Summary

  31. Contact Info High Arctic Energy Services Inc. 8112 Edgar Industrial Drive Red Deer, AB Canada T4P 3R2 Website: www.haes.ca Dennis Sykora, CEO Ken Olson, CFO Ph: (403) 340-9825 Ph: (403) 340-9825 Email: dennis.sykora@haes.ca Email: ken.olson@haes.ca Trading Symbol: HWO - T Banker: HSBC Bank of Canada Auditors: PriceWaterhouseCoopers LLP Legal: Davis LLP

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