High Arctic founder sells shares
The founder and former CEO of High Arctic Energy Services Inc. (TSX: HWO) has sold off a big piece of the Red Deer company. But Jed Wood insists his actions do not reflect a lack of confidence in High Arctic.
On Nov. 29, Wood issued formal notice of his intention to sell the 10.5 million common shares in High Arctic that he had beneficial control over — a total that represented about 23 per cent of the company’s issued common shares.
He confirmed on Monday that he’s now sold about 20 per cent of his holdings in High Arctic, but added that he plans to retain the balance.
“It’s still a really great solid company,” he said, explaining that he simply didn’t want to be so heavily invested in one public company.
“I’m just rebalancing my portfolio. It’s not that I don’t believe in the company.”
In fact, said Wood, the outlook for High Arctic — which provides specialized oilfield equipment and services in Western Canada and Papua New Guinea — is bright.
The company has established itself as the dominant drilling contractor in Papua New Guinea, which has significant natural gas reserves and is developing a liquefied natural gas export industry.
“They’ve got a very strong business in Papua New Guinea.”
Wood started High Arctic with a business partner in 1993. The company grew into a world-class provider of underbalanced drilling, workovers, completions and other services, but was hurt by the federal government’s controversial 2006 decision to tax income trusts — which High Arctic was at the time — in a similar fashion to corporations, after 2010.
The value of High Arctic’s units fell to $6.19 from $8.76.
“Three days later, you’ve got the bankers calling and wondering what’s happening,” said Wood.
High Arctic announced in March 2008 that it would undergo a massive restructuring.
Nine months later, Wood resigned as president and CEO. A release by the company said he planned to work with an investor group to acquire control of the public company and take it private.
“I felt at the time it was just the best thing for the shareholders, and obviously the employees of the company.”
Ultimately, this plan proved unsuccessful. Wood remained a shareholder in the company, but turned his attention to residential and commercial property development in California.
“That’s been going really well, because the market has turned,” he said. “I always knew it would.”
Wood and Kyle Makofka, his former general manager at High Arctic, started private equity investment firm Drive Capital Corp. last year. Through it, they help small and middle-market companies develop their business systems so that they can grow to the next level.
One company in Drive Capital’s portfolio is Quantum Petrophysics Inc., a Red Deer business that provides high-tech well-logging technology with open-hole and cased-hole applications.
“We’ve got to a point where we feel very comfortably that we can get open-hole quality logs looking through casing and cement, which is not capable in today’s logging industry,” said Wood.
That means well bores that were long ago cased and cemented can be reassessed to determine if they still have producing formations.
“We are now capable of getting high-quality open-hole logs through drill pipe in horizontal wells,” added Wood, who thinks Quantum Petrophysics could be at the leading edge of a technological revolution in the industry.
“We have a great base to start another High Arctic with Quantum.”