- High Arctic Energy Services (TSX:HWO) announced they are suspending monthly dividends
- Monthly dividends have previously amounted to C$0.0165 per share
- Company expects oilfield activity will slow imminently
- High Arctic have committed to reducing overheads and administrative expenses during this period
- High Arctic Energy Services (HWO) are trading at C$0.57 per share before open with a market cap of $28 million
High Arctic Energy Services Inc (TSX:HWO) announced it will suspend monthly dividends immediately, as the company foresees an imminent oilfields shutdown.
Monthly dividends, most recently a $0.0165 per share dividend announced at the end of February, have been suspended effective immediately.
The Alberta based oilfields services industry expects its client base is about to constrict rapidly, as COVID-19 shutdowns begin to bite.
As of yet, no oilsands operations, offshore rigs or onshore oil operations have been closed due to COVID-19 outbreaks.
High Arctic have taken the step to reduce overheads and general administrative burdens, to ensure it survives the uncertain future.
The company doesn’t believe it will need to fully shutdown, and in fact expects demand will be strong for equipment rentals as comes begin to stockpile critical materials.
The company maintains it has the resilience to survive the downturn, with no net debt, C$19 million in cash and working capital of $38 million available.
The company has stated this resilience will be necessary to take advantage of opportunities that will arise during the outbreak.
There is an argument to be made that with the looming shutdown, operations and projects will begin building bigger camps to house workforces for longer, as the two weeks quarantine required for travel will play havoc with rosters.
That, and the need for equipment hire, could work in High Arctic’s favour.
Most mining and energy companies around the globe have started to lockdown production sites to prevent COVID-19 outbreaks at sites.
Oil prices have rebounded slightly, from a record low yesterday. Prices rebounded after U.S President Donald Trump announced the country would involve itself in the ongoing oil price war.
The price war started two weeks ago when OPEC and Russia couldn’t come to an agreement on production for the year.
This led to Russia and Saudi Arabia both uncapping production, which sent prices plummeting to record lows.
The Brent Price hit its lowest price on record, and the West Texas Index fell to its lowest price since the War on Terror began in 2001.
High Arctic Energy Services Inc (HWO) are trading at $0.57 per share before open.
