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Be the first with the news that moves the market- High Arctic Energy Services (TSX:HWO) has been forced to cease operations in Papua New Guinea
- The company was recently informed that its chief PNG customer will stop drilling operations due to the recent dramatic drop in oil prices
- High Arctic is continuing to work with the customer until operations finalise around the end of April
- The recent oil price drop began last week, when Saudi Arabia uncapped its oil production
- High Arctic Energy Services (HWO) is down 13.3 per cent, with shares trading for C$0.52 and a market cap of $25.8 million
High Arctic Energy Services (TSX:HWO) has been forced to cease operations in Papua New Guinea for the foreseeable future.
The company was providing services for a customer’s drilling operations in PNG. However, the customer recently informed High Arctic it will be stepping down operations.
This is due to the oil and gas price plunge, which began early last week and has continued to drop.
High Arctic is continuing to work with the customer until operations conclude. Due to the closure, a well development program has subsequently been cancelled. The company expects to finalise the site by the end of April.
The company stated that, at the current oil price, it is unclear if any drilling in PNG will restart.
High Arctic is also reducing its international staff to focus on building a larger national base.
The company’s contract was not due to expire until mid 2021. Regardless, it seems that further services will be indefinitely deferred.
Despite the closure, High Arctic remains in talk with the PNG government. The company is helping to country enact the P’nyang Gas Agreement. The agreement is designed to develop PNG’s gas fields and involves a number of international partners.
In early February, the country postponed talks with ExxonMobil regarding the gas fields. The two parties were unable to come to terms for the development. Talks have been forestalled since then.
Yesterday, common oil-price benchmarks, The Brent Crude and The West Texas Intermediate, felt to their lowest point in almost 20 years. The recent drop was sparked when Saudi Arabia uncapped oil production amid a trade war with Russia.
High Arctic Energy Services (HWO) is down 13.3 per cent, with shares trading for C$0.52 at 9:57am EST.
