Mr. Mike Maguire reports

HIGH ARCTIC ANNOUNCES 2023 FIRST QUARTER RESULTS, AN INTENTION TO RETURN CAPITAL AND REORGANIZE

High Arctic Energy Services Inc. has released its first quarter financial and operating results. The unaudited interim consolidated financial statements, and management discussion and analysis (MD&A), for the quarter ended March 31, 2023, will be available on SEDAR, and on High Arctic's website. All amounts are denominated in Canadian dollars, unless otherwise indicated.

The corporation announces that the board of directors intends to recommend to shareholders a tax-free cash return of capital equal to $38.2-million relating to the sale of Canadian Well Servicing. The board further intends to recommend a reorganization of the corporation at a special meeting of the shareholders to be held before the end of September, 2023. The recommendation to reorganize is expected to include the following elements:

• A spinoff of the international business to shareholders as a private company;
• Maintaining the Canadian publicly listed company focused on growing the Canadian business and utilizing the available $130-million non-capital tax loss carryforwards;
• Right sizing the general and administrative infrastructure to align with the new structure.

The corporation is working with DLA Piper as legal adviser on the reorganization plan and is in discussions with financial advisers to facilitate the reorganization, the completion of which is subject to all applicable regulatory approvals.

Mike Maguire, chief executive officer, commented: "I am excited that the board intends to reorganize the corporation, starting with a tax-efficient return of cash to shareholders. The proposed spinoff of the Papua New Guinean business will allow senior management to concentrate where we have had the most success in the past. The remaining publicly listed company with Canadian assets and tax pools creates an attractive vehicle for future growth and transactions.

"Our PNG business has been consistently undervalued by the public market, and we believe that the current market conditions make it appropriate to take steps to unlock value.

"I believe our customers and employees in both PNG and Canada will appreciate and benefit from a locally managed business."

Highlights

The following highlights the corporations results for Q1 2023:

• PNG Rig 103 resumed drilling operations toward end of quarter under a three-year contract renewed in August, 2022.
• Achieved oil field services operating margins as a percent of revenue of 32.3 per cent on revenues of $9.5-million.
• Generated funds flow from operations of $1.4-million and incurred capital expenditures of $400,000.
• Improved liquidity with a working capital balance of $59.7-million, increased cash balance of $46.7-million and long-term debt of $4.0-million.
• After the final payment from the sale of well servicing, the board of directors is assessing the merit of a substantive cash return to shareholders including the optimal capital and cost structure.

Strategy

High Arctic's 2023 strategic objectives build on the platform the company created in 2022, and include:

• Safety excellence and quality service delivery;
• Return idled assets in PNG to service;
• Scaling the company's Canadian business;
• Opportunities for growth and corporate transactions that enhance shareholder value;
• Examination of the corporation's optimal capital and overhead structure.

Results overview

The attached table is a summary of select financial information of the corporation.

Outlook

The corporation exits Q1 2023 with an overcapitalized balance sheet having collected the remaining proceeds from the well servicing transaction. This positions High Arctic with a reduced business footprint compared with a year ago and a substantial working capital position.

High Arctic is at a strategic crossroads. Having liquidated the company's underperforming well servicing business in Canada, the company remains focused on the positive opportunities in PNG. Reinvestment in Canada remains competitive in its area of expertise, and further Canadian service sector consolidation is needed to balance supply with customer demand over the business cycle.

Accordingly, the corporation today has announced an intention to make a $38.2-million cash return of capital to shareholders and an intention to reorganize the legal entity structure.

The opportunities for growth in PNG include: building on the return to drilling operations of Rig 103, deploying idle heli-portable drilling rigs 115 and 116; supply services to the Papua-LNG project; and, the substantive need for workers and machinery necessary for the contemplated major capital and infrastructure projects. The company's optimism is underpinned by the advancement of the TotalEnergies led Papua-LNG project with the announcement last week of upstream facilities FEED contract award. The project is expected to be followed by the P'nyang gas field development in the western province of PNG, which is anticipated to result in the 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 in PNG and have recently stated their desire to contribute to growing domestic energy needs and additional LNG export processing facilities.

High Arctic maintains a presence in the Canadian market, through its investments in Team Snubbing, HAES rentals and nitrogen pumping operations. Each of these positively contributed to High Arctic's Q1 2023 results, the company continues to evaluate opportunities for investment as they arise in the Canadian market, while remaining attentive to opportunities to best realize a return on the investments in its existing Canadian service lines, and the inactive snubbing assets in the United States.

About High Arctic Energy Services Inc.

High Arctic is an energy services provider. High Arctic is a market leader in Papua New Guinea providing drilling and specialized well completion services and supplies rental equipment including rig matting, camps, material handling and drilling support equipment. In Western Canada High Arctic provides nitrogen services and pressure control equipment on a rental basis to exploration and production companies.

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