High Arctic Q2 Snubbing Hours Up, Looks To U.S. For More Jobs
High Arctic Energy Services Inc.’s second quarter revenue took a hit as a result of slow activity in Canada and longer than anticipated ramp up times in the United States.
However the company is in it for the long game with its acquisition of Powerstroke, which opened the doors to snubbing and well services opportunities in the U.S. The acquisition of Precision Drilling Corporation’s snubbing assets also provided the company additional equipment and access to experienced personnel and crews to continue to move under utilized assets in Canada into the United States where there is better utilization and day rates. The $8.3 million deal was finalized in the second quarter.
Canadian well servicing demonstrated strong performance with both operating hours and revenue per hour being marginally above the same period last year. This increase was offset with non-recurring expenses associated with absorbing the snubbing acquisition and startup costs for two additional units deployed to the United States.
Increased quarter over quarter activity for High Arctic’s Concord Well Servicing rigs and snubbing operations resulted in $21 million in revenue generated in the quarter versus $18 million in the second quarter of 2018.
The average fleet of 57 service rigs in Canada operated for 27,889 hours (54 per cent utilization) in the quarter compared to 27,420 hours (53 per cent utilization) in Q2 2018. The 18 snubbing rigs had a 10 per cent utilization operating for 1,565 hours versus 996 hours (14 per cent utilization) in Q2 2018.
Pricing remains competitive but with an increased exposure to higher rate operating areas, rig mix allowed the average revenue per hour for the Concord rigs to increase to $606 per hour in the quarter from $600 per hour in the comparative quarter in 2018.
In the second quarter High Arctic has spent $4.3 million in capital expenditures primarily related to maintenance capital and upgrades to the company’s well servicing rigs.
Revenue for High Arctic’s oilfield rental equipment in Canada was down due to lower activity levels. The company reported $5.9 million in quarterly revenue compared to $6.8 million in Q2 2018.
High Arctic generated total revenue of $46.6 million in the second quarter of 2019, compared to $47.1 million in the comparative period of 2018. The results were driven by low customer demand in Canada carried over from 2018 and the Q4 2018 take or pay contract expiry for Rig 116 (Papua New Guinea).
The company incurred a net loss of $4 million in the quarter, compared to a net income of $1.8 million in Q2 2018. Funds provided from operations totalled $2.1 million, down from $8.6 million reported in Q2 2018.
With overall activity levels in Canada expected to be lower year over year for the balance of 2019, High Arctic is maintaining a strong balance sheet and strict cost control.
High Arctic continues to examine opportunities to deploy existing assets from Canada into more active resource plays in the United States.
The company now has two well service packages and five snubbing units providing completion and production well servicing in the DJ Basin and the Williston Basin.
- Oilfield Services
- High Arctic Energy Services Inc.