Corporate Presentation May 2016 TSX : HWO 2 DISCLAIMER Certain - PowerPoint PPT Presentation

1 Corporate Presentation May 2016 TSX : HWO

2 DISCLAIMER Certain information contained within this These statements are derived from certain this presentation and statements made in presentation and statements made in assumptions and analyses made by the conjunction with this presentation are conjunction with this presentation, including Corporation based on its experience and qualified by these cautionary statements and information and statements that contain words perception of historical trends, current there can be no assurance that actual results such as “seek”, “anticipate,” “plan”, “continue”, conditions, expected future developments and or developments anticipated by the Company “estimate”, “expect”, “may”, “will”, “project”, other factors that it believes are appropriate in will be realized or that they will have the “predict”, “potential”, “targeting”, “intend”, the circumstances. These statements or expected consequences or effects on the “could”, “might”, “should”, “believe”, “forecast”, predictions are subject to a number of known Corporation or its business or operations. “can” and similar expressions, are forward- and unknown risks and uncertainties that could Other than as required by applicable securities looking statements. In particular, forward- cause actual results to differ materially from laws, the Corporation assumes no obligation to looking statements in this presentation include, the Corporation’s expectations. These risks and update publicly any such forward-looking but are not limited to, statements with respect uncertainties include the items discussed under information or statements, whether as a result to future capital expenditures, future financial the heading “Risk Factors” in the Corporations' of new information, future events or otherwise. resources, anticipated equipment utilization most recently filed Annual Information Form as levels, future oil and gas well activity, well as the Corporation’s other public projections of market prices and costs, disclosure documents located on SEDAR outcomes of specific events and trends in the (www.sedar.com). Consequently, all of the oil and gas industry. forward-looking information contained within 2

3 PNG Business • Dominant market position for contract drilling, well Overview completion and rental services in PNG. • Provides services in PNG to super majors and regional energy companies under long-term contracts. • Strong track record of 9 years of operations in PNG. High Arctic Energy Services is • PNG’s developing LNG industry reduces the impact of a market leader with short-term oil & gas price volatility. diversified operations in Papua New Guinea (PNG) and Canada. Canada • Owns and operates Canada’s largest fleet of stand alone snubbing units. • Opportunity to expand organically or through 2015 Revenue acquisition PNG $177.8 mm Canada $32.1 mm

4 Shares outstanding 52.6 million CORPORATE (May 10, 2016): $3.83 Share Price (May 10, 2016): SNAPSHOT $204.5 million Market Cap (May 10, 2016): Net Cash & Marketable Securities $32.4 million (Mar 31, 2016): 94,842 shares 30 Day Average Daily Trading Volume Trailing 12 Month Adjusted EBITDA $75.4 Million (Mar 31, 2016): $0.198 Annual Dividend Cyrus Capital Insiders Public 5.17% Dividend Yield 42% 9% 49%

5 4 T R A C K R E C O R D O F Stable Growth REVENUE ADJUSTED EBITDA (as at March 31, 2016) (as at March 31, 2016) 250 80 35% 34% 30% 75.4 70 29% 200 30% 27% 27% 64 60 27% 150 25% 26% 50 49 100 20% 40 42 40 50 15% 30 33 32 0 20 10% 2010 2011 2012 2013 2014 2015 TTM 2010 2011 2012 2013 2014 2015 TTM Canadian Revenue PNG Revenue Adjusted EBITDA Adjusted EBITDA (%)

6 6 Papua New Guinea Overview – Stable and Growing • Independent, established democracy and a stable business jurisdiction. • Part of the British Common wealth with a parliamentary government. • Government working with industry to develop nation (even in the current environment) Oil and Gas Activities – Long History, with New Growth • Oil exploration activities since 1920’s • Long-term LNG development commenced in 2008 Macro Drivers for Growth • Large un-explored resource base • Low cost source of LNG to Asian markets • High quality operators with financial strength • High quality gas (i.e. high heating content) • Domestic natural gas electricity development to support economic growth

7 Cost of LNG to Japan LNG Development 10% return (US$/mmbtu) THE PNG ADVANTAGE Overview – Stable and Growing • Globally contracted LNG supply is expected to be short of total anticipated demand by 2020 • Largest growth in demand for LNG is expected to come from Asia resulting from changes in: US Gulf Coast PNG • Government policy $10.76 $7.59 • Environmental strategy to replace coal West • PNG’s LNG projects are advantageously situated to West Africa Australia supply Asian buyers $8.76 $8.73 • Large natural gas reserves – current estimates PNG LNG: East Africa East $8.76 Australia 9 tcf, Papua LNG: 8.6 tcf, encourages long-term drilling $14.49 Source: Wood Mackenzie Proximity to growing Asian market’s provides incentive to develop LNG projects despite industry downturn

8 8 PNG Outlook & Development NATURAL GAS + OIL PRODUCTION PNG LNG: Elk / Antelope (Papua LNG): • Exxon is the operator. • Ownership: TOTAL, InterOil and OSL • Total forecast production includes 9.0 tcf • Triceratops Reserve confirmation test underway of natural gas and 200+ million bbls of InterOil New Discovery to size LNG facility associated liquids over 30 years P’nyang • Hides and Development wells required to feed • Shipments began Q2 2014 Juha Angore LNG facility. • Exploration to support expansion Kutubu Elk / (e.g. P’nyang) Gobe Papua LNG Antelope Kopi Proposed Kumul OSL: InterOil: • • PNG LNG Targeting 4 to 6 exploration wells/yr. 14,000 unexplored acres. Operating • Focusing investment in PNG to support 10 year growth platform. Port Moresby • Estimated 5 billion BOE yet to be discovered in PNG. Valve and pigging station Oil export platform Oil/gas fields Oil / gas refinery Customer Base LNG Facility Pipeline Proposed pipeline

9 P A P U A N E W G U I N E A Drilling Landscape Rig Type Owner / Operator Details Classification OSL / High Arctic 2 Rigs (103 /104) Tier 1 High Arctic 2 Rigs (115 /116) Tier 1 Heli Portable Contractor A 1 Rig circa mid 1970's Tier 2 Contractor B 1 Rig modified for limited heli use Tier 2 Heli Portable Work Over Rig High Arctic 1 Rig 102 Tier 1 Contractor C 1 Land based rig Land Rigs Operator 1 Land based rig High Arctic is the dominant Tier 1 drilling provider in PNG

10 PNG Drilling + Work Over Services Rig 103 / 104 (leased from OSL) • Drilling services and support contracts with OSL through mid 2016 (three year term) • Strong relationship with OSL with a history of two 3-year contract renewals Rig 115 / 116 (High Arctic owned) • AC self-erecting 1500 HP heli-portable triple • 2 year drilling services contract with InterOil commencing with spud of first well • Annualized operating revenue per rig of $30M USD • including camp Rig 102 (High Artic owned) • Only hydraulic work over rig in PNG

11 11 PNG Equipment Rentals MATTING CONTRACTS Matting • Inventory exceeding 10,000 rental mats in PNG. • High Arctic has PNG distributor rights. • Possible expansion into other countries with similar challenging environments. 41% Term Contract Prospective Camp Services Idle • Owns and manages two 103 man Heli-portable man camps • Operates and manages two 93 man Heli- portable drilling rig camps 6% 53% Other Rental Equipment • Cranes (ranging from 30 ton to 160 ton) • Rig moving trucks • Forklifts • River pumps 11

12 Canadian Operations Snubbing • 15 Stand Alone Units • 3 Rig Assist Units OUR CUSTOMERS • Currently marketing 8 units • 2016 addition of fully guided 285k and 170k units Nitrogen • 11 Low Rate Unit • 1 High Rate N2 Pumper • 5 Nitrogen Transport Rentals • High pressure BOP’s Dominant Western Canadian Stand Alone Snubbing Position Provides Platform to Expand

13 13 # OF SNUBBING Canadian Snubbing Market UNITS AVAILABLE 2 2 High Arctic Precision 6 19 Quattro • High Arctic is a market leader for stand alone snubbing in Powerstroke Western Canada Northern 8 Snub Co. • Jointed pipe snubbing allows rotation of pipe to over 11 come friction in extended reach horizontal wells Sources: Company Reports, High Arctic • Increasing number of high pressure horizontal wells has AVE VERAGE WELL ELL DEP DEPTH (WESTERN CANADA) resulted in additional demand for higher capacity units 100% 2,100 • Snubbing remains a necessary service for completions of 2,000 80% long-reach horizontal wells 1,900 Well Type (%) 70% Well Depth 60% 63% 60% 58% 1,800 40% 1,700 High Arctic Owns and Operates Canada’s Largest 20% 1,600 Fleet of Stand Alone Snubbing Units 0% 1,500 2012 2013 2014 2015 Horizontal Vertical Other Avg. Depth Sources: Geoactivity