High Arctic Energy Services Inc. (TSX: HWO) appears poised to sell its stake in a joint venture with the Schlumberger group.
High Arctic, which is based in Red Deer, entered into a joint venture agreement with Schlumberger in October 2007 to create an underbalanced and managed pressure drilling company called Optimal Pressure Drilling Services. It gained a 51 per cent interest in the joint venture and was to provide equipment and technology.
Optimal commenced business operations on Jan. 1, 2008, and was to support the drilling operations of Schlumberger.
This week, High Arctic announced that it has signed a “non-binding expression of interest” to sell its interest in Optimal to Schlumberger. The proposed purchase price is US$21.8 million, with a remaining cash call commitment by High Arctic of US$4.7 million to be extinguished as part of the deal.
The anticipated closing date is May 31.
High Arctic said its share of revenue from Optimal for 2008 was $8.1 million, and a loss for 2008 of $4.8 million. The company added that it wants to sell its share of the joint venture rather than fund further operating losses and commit capital to expansion in other countries.
High Arctic provides specialized oilfield equipment and services, including drilling, completion and workover operations. It is active in Alberta, British Columbia and the Northwest Territories and internationally in Mexico, the Middle East and Asia.