High Arctic Energy Services Inc.

High Arctic Energy Services Inc.

September 01, 2005 15:52 ET

High Arctic Acquires Air Drilling Company

RED DEER, ALBERTA--(CCNMatthews - Sept. 1, 2005) - High Arctic Energy Services Trust (TSX:HWO.UN) ("the Trust") announced today that it has acquired Alberta Mobile Air Services 1998 Inc. ("AMA") of Edmonton for total consideration of $7.5 million. The acquisition is expected to close on September 9, 2005, pending TSX approval.

AMA has serviced the oil and gas industry in Western Canada for more than 21 years. It provides portable compression services to the drilling and pipeline industries, including underbalanced drilling with air-generated nitrogen from skid-mounted units and the purging and air drying of pipelines.

The $7.5 million purchase price comprises $3.5 million in cash and $4 million in Trust units that will be issued at a 15 per cent discount to their current trading price on the TSX. The Trust expects the transaction will contribute approximately $1.7 million annually to EBITDA based on historical results. It will also allow the Trust to bundle the air underbalanced drilling equipment with its new patent pending surface recovery equipment, rotating flow diverters, and 250K CDWS rigs to provide a complete underbalanced drilling package. This should provide additional incremental earnings to the Trust by increasing demand and utilization for these equipment lines.

"The addition of Alberta Mobile Air directly complements our existing operations and allows us to offer our customers a more comprehensive bundling of underbalanced services." said Jed Wood, President and Chief Executive Officer of the Trust. "This acquisition also meets our criteria for being accretive to cash flow."

Trent Jefferies, Vice President and General Manager of AMA, will become the manager of High Arctic's air drilling business unit. AMA brings with it a solid and established management team anchored by Mr. Jefferies. The addition of Mr. Jefferies to the High Arctic team should facilitate the integration of AMA into the current management systems. He and the two other AMA shareholders have signed a three-year non-compete agreement with High Arctic.

About High Arctic

The Trust, through its subsidiaries, is a global provider of underbalanced oilfield equipment and services, including drilling, completion and workover operations. High Arctic's new underbalanced drilling technology and equipment is recognized for its ability to improve oil and gas production capabilities and is expected to develop greater acceptance in international markets. Based in Red Deer, High Arctic has domestic operations in Alberta, British Columbia and the Northwest Territories. International operations are currently active in the Middle East and certain former Soviet Republics.

Forward-Looking Statements

This press release may contain forward-looking statements relating to expected future events and financial and operating results of the Trust that involve risks and uncertainties. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed in the Trust's prospectus filed with the Canadian securities regulatory authorities. Due to the potential impact of these factors, the Trust disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

Contact Information