Mr. Mike Maguire reports

HIGH ARCTIC ACQUIRES PRIVATE RENTAL BUSINESS IN CANADA

High Arctic Energy Services Inc. has closed the acquisition of Delta Rental Services Ltd. for aggregate purchase consideration of $7-million subject to earnout provisions, pursuant to a share purchase agreement between High Arctic and the shareholders of Delta.

Delta is a privately owned rental company headquartered in Red Deer, Alta., Canada, founded in 2016. Delta's business is focused on pressure control equipment and equipment supporting the high-pressure stimulation of oil and gas wells, along with other well-site rental equipment. Delta supports a range of customers, including top-tier multinational and domestic energy producers and their contractors.

The Delta acquisition includes all of the assets, personnel and contracts of Delta, including the retention of Delta's current yard and office lease in Red Deer. The consideration includes $3.43-million in cash paid at closing, with the remaining $3.57-million payable as 75 per cent in cash and 25 per cent in High Arctic common shares to the selling shareholders as an earnout over three years, subject to achieving certain financial performance targets. Each annual earnout payment is adjusted up or down depending upon the amount of overperformance or underperformance of the Delta business to the targets. Issuance of the common shares pursuant to the earnout would be subject to regulatory approvals, including the approval of the Toronto Stock Exchange.

In its most recently completed financial year, Delta recorded over $8-million in revenue at margins consistent with High Arctic's Canadian business. The total consideration represents a multiple of three times to 3.5 times of the corporation's estimated annual after-tax cash flow contribution from Delta.

Mike Maguire, chief executive officer of High Arctic, said: "Delta is an important strategic development for High Arctic. We are excited to be bringing co-founder Mr. J.D. Morrical and the Delta team into High Arctic. The Delta brand is a strong one synonymous with quality and service. The combination of Delta and High Arctic expands geographical coverage in Alberta and offers both operational synergies and potential for cross-deployment of underutilized assets. I am confident the combined HAES Rentals and Delta team will deliver performance greater than the sum of its parts.

"The Delta acquisition addresses strategic objectives of scaling our Canadian business and pursuing opportunities for growth that enhance shareholder value. The Delta acquisition is expected to increase Canadian revenues three- to fourfold and contribute strongly to positive cash flow. The Delta acquisition contemplates and the structure of the consideration is reflective of High Arctic's intention to reorganize and separate the Canadian and PNG [Papua New Guinea] businesses and maximize a return of capital to shareholders. I am confident that this transaction is symbolic of the prospects for a purely Canadian entity and how additional accretive transactions can be unearthed."

J.D. Morrical, president of Delta, said: "I am keen to start the next part of the Delta story as a substantive part of High Arctic's Canadian business. We have enjoyed a good relationship with the HAES Rentals team built on mutual respect and shared values. I am very happy that the small business that Scott Odegard and I created has grown to the point that High Arctic wants us to be part of their group. It also represents a cash realization as we honour Scott, his family and transition the business with his passing in 2021. I am thankful for the support of our loyal customers and staff, who are more like family to us, and I am glad that they will all become part of the High Arctic team. I look forward to playing a key leadership role in forging these two rentals businesses together and continuing their growth."

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 pressure control and other oil field equipment on a rental basis to exploration and production companies from its bases in Whitecourt and Red Deer, Alta.

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