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Good afternoon, ladies and gentlemen, and welcome to the High Arctic Energy Services 2023 Q1 Results Conference Call.
I would now like to turn the meeting over to High Arctic's Chief Executive Officer, Mike Maguire. Please go ahead, Mr. Maguire.
Thank you, Paul, and good afternoon to everyone. Welcome to High Arctic’s first quarter conference call. Today, I will be providing an update on the press release we issued yesterday, May 11. Following my remarks, I will hand the call over to our Chief Financial Officer, Lance Mirendorf. Lance will be discussing our financial performance for the first quarter of 2023. As usual, after our formal comments, we'll open the call to answer any questions that you may have.
Before we begin, though, I'd like to remind you that certain information presented today may include forward-looking statements. Such statements reflect High Arctic's current expectations, estimates, projections and assumptions. These forward-looking statements are not guarantees of future performance and they are subject to certain risks, which could cause actual performance and financial results to vary materially from those contemplated in the forward-looking statements.
For additional information on these risks, please take a look at our management's discussion and analysis and the 2022 Annual Information Form, both of which are available on our website or on SEDAR, look under the heading Risk Factors. Following the collection last quarter of the final $28 million payment associated with the sale of our Canadian well servicing business, we exited Q1 with an overcapitalized balance sheet and High Arctic placed at a strategic crossroads.
Having liquidated our underperforming well servicing business, the company remains focused on the positive opportunities in Papua New Guinea. Reinvestment in Canada remains competitive in our area of expertise and we believe that further Canadian sector -- service sector consolidation is needed to balance supply with customer demand over the business cycle. For yesterday, the corporation announced an intention to make a $38.2 million cash return of capital to shareholders and an intention to reorganize the legal entity structure.
The recommendation to reorganize is expected to include the following elements: one, a spin-off of the international business to shareholders as a private company; two, maintaining the Canadian publicly listed company, focused on growing the Canadian business and utilizing the available $130 million non-capital tax loss carry forwards; and three, rightsizing the general and administrative infrastructure to align with the new corporate structure. The High Arctic Board of Directors intends to recommend the reorganization of the corporation at a Special Meeting of the Shareholders to be held before the end of September 2023.
Turning to operations. During the first quarter, Rig 103 was placed on to the contract operational rate structure and commenced drilling operations during March. Drilling of the first well has now been completed, and we are moving to the next location. High Arctic anticipates Rig 103 will operate consistently through the term of the contract, which runs through to July 2025. As well as the return to full drilling operations with Rig 103, we have steadily increased deployment of rental assets month-on-month through the quarter.
While the deferral of other projects pushed the redeployment of Rig 115 out from this year, there is a growing catalog of projects under discussion for potential rig deployment in 2024 and beyond. And our optimism for future drilling in PNG is underpinned by the advancement of the TotalEnergies-led Papua LNG project, which announced last week, upstream facilities FEED contract award, continuing the progress towards a final investment decision expected later this year.
Project is expected to be followed by the P’nyang Pin yang gas field development in the Western province of PNG, which is anticipated to result in the addition of further gas liquefaction capacity in the world-class PNG LNG export facility. State-owned Kumul Petroleum is advancing appraisal of other gas discoveries in P&G and have recently stated their desire to contribute to growing domestic energy needs and additional LNG export processing facilities.
These LNG projects and other large-scale mining and infrastructure projects moving through the pipeline will require tens of thousands of new workers and more skilled and supervisory personnel that do not exist in PNG today. Through PIMS, PNG Industry Manpower Solutions, we have added the provision of recognized safety training, competency verification and equipment licensing services. We have long provided these training and competency solutions in-house. PIMS taps into our large pool of talent to provide manpower, skilled and semi-skilled labor, trades qualified personnel and professionals in PNG. We are excited to be playing a significant role in preparing PNG citizens to be job-ready.
In Canada, our operations were marginally impacted by severe cold weather events, however, delivered a result consistent with our expectations. Our pressure control-focused rentals is fielding inquiries from an increasingly broad range of customers, and we look -- we took opportunistic decision to invest in additional blowout preventers to augment our rental offerings.
Team Snubbing is Canada's largest snubbing provider, and we have a 42% equity stake in Team. They have almost tripled their active Canadian snubbing activity since the transaction with High Arctic last July. They have used their dominant position, coupled with great customer relations, to deliver both market share growth and increased pricing. Team has a 50% interest in an international partnership, marketed under the name Team Snubbing International. This partnership commenced their first services this week under a contract to a large U.S. independent in Alaska, where Team Snubbing units have now been domiciled.
I would now like to pass the call over to Lance to discuss key financial highlights from the quarter in more detail.
Good afternoon to those joining in on the call today. Looking at our first quarter results. On a consolidated basis, High Arctic generated revenues of $9.5 million, incurred a net loss of $625,000 or a loss of $0.01 per share. As Mike mentioned, the commencement of the full drilling operations of customer-owned Rig 103 occurred in March, and this activity will have a significant impact on revenues and earnings during Q2 and for the remainder of 2023.
During the first quarter, High Arctic mobilized a significant amount of equipment and personnel to support this drilling campaign. also provided materials handling equipment, rental equipment including a 100-man wellsite camp, a large quantity of well site matting to support ongoing field activities with our two main customers in Papua New Guinea.
Oilfield service operating margins were higher in Q1 2023 of 32.3% compared to 18.5% in Q1 of 2022. The increase is primarily related to the corporation's shift to higher-margin businesses in Canada after the sales transactions in Q3 2022 as well as the start-up of Rig 103 operations during the quarter and an increase in the supply of technical and operational manpower services customers in PNG.
G&A costs were $2.1 million in Q1, lower than the $2.4 million experienced in the previous quarter. G&A is still relatively high in the quarter at 21.7% of revenue, which we expect will decrease and trend lower as we move throughout 2023 as higher revenues realized from our operations in PNG. we'll continue to evaluate G&A costs and rightsize the support to align with the expected operations in both Canada and PNG.
Adjusted EBITDA was $1.3 million in Q1 or 10% of revenue compared to $2.9 million or 10% of revenue in Q1 of last year. The largest revenue contributed to High Arctic during the quarter, of course, was our Drilling segment. Drilling Services activity accounted for $6.3 million of revenue compared to $9.6 million in Q1 of 2022, when Rig 115 was. Q1 '23 operating margins were 19%, in line with the 21.9%.
Our Ancillary Services segment spreads across both PNG and Canada, continues to be our highest margin -- operating margin generator, 58% Operating margin on $3.2 million revenues in Q1 compared to 63% margin or $4.7 million of revenue in the Q1 of 2022. -- that Q1 margins and the activity levels that delivered this highly profitable segment to continue throughout the remainder of 2023.
During the quarter, capital expenditures were $400,000 and focused mainly on the growth in our pressure control rentals equipment in Canada. We expect to continue with modest capital spending in 2023, mostly directed at maintaining and growing our rental fleet in both Canada and PNG.
We ended the quarter with $46.7 million of cash on hand with approximately $35 million invested in secure interest-bearing short-term investments, which generated $417,000 during the quarter. Interest income partially funded our monthly $0.05 a share dividend while we evaluate the best use of the excess funds following receipt of the $28 million final payment -- cash payment for the Concord well servicing sale that took place in January.
Working capital position remained unchanged during the quarter and it sat around $60 million at March 31. The only source of debt is mortgage financing of $4.2 million on our land and buildings.
I'll pass it back over to Mike.
Thank you, Lance. I'm excited about the reorganization of the corporation, starting with tax-efficient return of cash to shareholders. The proposed spin-off of the Papua New Guinean business will allow senior management to concentrate where we have had the most success in the past. The remaining publicly listed company with Canadian assets and tax pools creates an attractive vehicle for future growth and transactions.
Our PNG business has been consistently undervalued by the public market, and we believe that the current market conditions make it appropriate to take steps to unlock value. We intend to put the recommendation to shareholder vote before the end of September. I believe our customers and employees in both PNG and Canada will appreciate and benefit from a locally managed business.
I'll now turn the conference back over to Paul, the operator, who will open the line for questions.
Thank you. Yes, we will now take questions from the telephone lines. [Operator Instructions] We now have a first question. And the first question is from Joseph Schechter. Please go ahead. Your line is open.
Thank you very much. Thanks, Mike and Lance for taking my questions. I might assume that if this is approved at the shareholder meeting in September, they were going to be getting, number one, a very significant dividend, $0.78 with interest, it may be more. And then we're going to get two pieces of public paper listed on Canadian exchanges or will the Papua New Guinea company no longer be listed in Canada?
Thanks, Josef. Glad to take your questions. I can confirm that in September, our intent will be to put to vote the return of capital and the spinoff of the PNG business or more specifically our international business, which is focused on PNG. The manner of that is not finalized at this time. We are working through the most tax-efficient and appropriate mechanism to deliver upon it. And once we have concluded those investigations and prepared the documentation, we will issue them to shareholders so that they can contemplate those ahead of the vote.
And just adding to it, if you're still looking at options, are you looking at keeping -- or having, let's say, a venture relationship for the Papua New Guinea as well as an Aussie public listing? And does Papua New Guinea have exchange as well?
Good questions. I'm going to answer them in reverse order. Papua New Guinea does have a stock exchange. It's the POMSOX, Port Moresby Stock Exchange. At this time, we do not -- we have any intention of listing any entity on any other stock exchange.
Okay. Good. Now if the upside that we're all optimistic about for PNG occurs, will you need to have a certain amount of capital in the spin-off company of some magnitude to provide for upgrading of equipment, paying bills, while there's a ramp-up in putting more equipment to work?
Really good question. The -- our anticipation of return to work in Papua New Guinea continues to be slow. That we're anticipating that we'll operate this year with Rig 103, but we're not anticipating returning any additional rigs to work during 2023. In 2024, we're optimistic about the return to work of one or possibly more rigs in Papua New Guinea. The rigs that we are contemplating that may be called to return to service have been maintained in very good condition while they've been idle, and we do not anticipate any substantive refurbishment costs to return them to service.
That said, those projects may require specific upgrades or modifications to suit customer program intentions, drilling program intentions, and it would be our intention to align our pricing to recoup any such modification cost at time of mobilization. This should mean that we do not need to retain a substantive amount of access to capital to return the rigs to work. However, we continue to explore our options for access to capital, both sources of capital and debt to ensure that the company will have an adequate line of liquid liquidity.
Okay. Well, I look forward to seeing the documents when it comes out. And hopefully, Canadians will be able to participate on a Canadian exchange and growth potential of the PNG in the years ahead. That's it for me. Thanks so much Mike.
Thanks for your comments and questions, Joseph.
Thank you. The next question is from [indiscernible] Please go ahead. Your line is open.
Branko Jankovic (ph). Good afternoon, gentlemen. I think Josef kind of asked some of the stuff I was going to ask around. But I was sort of assuming this being a private company that there wouldn't be a listing. But I was curious if you're aware of whether there is any possible liquidity avenues available. Like I know in Canada, we used to have an over-the-counter listing where companies didn't have the full public status, but some of these things could still be traded in there.
Thanks, Branko. Appreciate your question. At this point in time, we have not got -- we're not able to provide any guidance on how we may arrive at and the spin-off or possible avenues of liquidity. We may, however, have further information that we can include in the shareholder circular that will be distributed once we're ready to call for a vote.
Okay. And then I guess my other question was the international operations, which sort of looks like the old High Arctic, which was a good cash flow machine. And dividends to shareholders, could you see that sort of intent with the company there that even if it's private, it's sort of an income-generating vehicle for investors?
I think, Branko, the thing that I can do to try to address that question is to reflect on the performance of the Papua New Guinean in operation back in the years through, say, 2010 to 2017, 2018, where it did generate a substantive amount of free cash flow and that, that free cash flow essentially financed our share buybacks and dividends in Canada.
I would anticipate that if we are able to realize the level of activity that we've seen in the past, which we do expect, management does expect in the latter years of this decade that as these projects move forward, we expect that we could be as busy or busier than we've ever been before. And under such circumstances, I'd expect that shareholders could expect a reasonable return on their investment.
Okay. Great. Thanks very much. I think that’s all for me and good luck going forward. Thanks.
Thank you, Branco and you too.
Thank you. The next question is from Dave Plum (ph). Please go ahead. Your line is open.
I think Branco just sort of asked my question. I'm not that sophisticated investor, but if I end up with shares in a private company based on Papua New Guinea, how do I get rid of them if I don't want them?
Yeah. It's a very straightforward question you've asked there, Dave. And at the moment, I cannot give you a direct answer to that question. If there is a buyer and there is a seller, a transaction can be made. As far as an intermediary to potentially facilitate such transaction, that is something I'm not able to answer at this time.
Okay. And then we'll move on to that to a couple of other questions. Yesterday at the annual meeting, you mentioned eight or nine large bore wells being drilled. What would be the revenue from each one of those wells?
That would be speculating, I guess. My answer to that question is that I haven't speculated on that internally, let alone to speculate on it externally. But I can inform you that the time taken to drill the wells at hides, which we expect to be -- the Antelope wells will be designed in a similar manner, took on average between 65 to 100 days. And if you look at our drilling services reporting, you can probably make some form of estimate then of what that might look at as total revenue.
Okay. And I think I have another question, but I can't remember it at the moment. So I'll pass the line over to somebody else.
I'm sure that Paul will be happy to return to you if you think of your question again, Dave.
Yeah. Thank you.
Operator (Operator)
Yes. No problem. Thank you very much. Great. So we'll get to the next question. And the next question is from [indiscernible] Please go ahead. Your line is open.
Thanks, but I’m private investor. Hi, guys. My question -- the first question is, will the current dividends remain in place?
The current dividend, we've not made any decision to cancel that at this point in time. So I would say our expectations, current dividend will continue until such time as the directors deemed it is not appropriate to continue. That might be something that they contemplate when issuing the information memorandum to shareholders for the purpose of vote.
Okay. And with regard to the [indiscernible] plan, because I'm not sure if there's any Board members available, but otherwise, maybe you can answer or maybe one of them. As it goes private, we plan to buy as much of the PNG shares as possible or would they want to uphold their 45%?
There are no directors here with us at the moment. And I'm, at this time, unable to comment as to the intentions of any particular directors or shareholders. However, that may be revealed as part of the documentation issued when calling for the special meeting to have a vote on the intention to proceed.
Okay. Maybe you can answer the technical question then. Is there a maximum percentage threshold size can buy shares on the open market for they need to make an offer?
If they need to make an offer, sorry?
An offer, yes, is there a percent? Yeah, exactly. I'll elaborate on it. Basically, they are now only 45%, let's say, they keep buying. Is there a certain threshold that they can before they need to make an offer to everyone?
Right. For compulsory acquisition?
Exactly.
I'm going to hand over to Lance because I don't know the answer to that.
Well, if I just take a step back, our largest shareholder has had its ownership percentage retained or maintained for a significant period of time, and they're not active right now to changing that ownership structure. So they're not participating, if any, it's left up to the company to participate as with an NCIB that we have that even with our repurchases, it will not result in them being over 50%. The -- over 50% is a threshold which will require them to -- it's a stepping on the investment in a company. So it will require them. It will be a change in control of High Arctic. So that is certainly not contemplated, hasn't been contemplated or discussed at all in the past. So I don't see that being a trigger between now and when we put forth this or the information to shareholders that relates to this transaction we're talking about.
Okay. And if you can stay with you then, Lance, if you look at the current quarter, it's about $8 million for PNG. This is with the rig only starting at end of the quarter. So what would be an average quarter compared to the $8 million with the rig running full time in the quarter?
I think we're -- I think you're right. It started at the latter part. We were building it up -- building up activity in PNG up to that commencement of full drilling operations. So there is revenue generated throughout the first quarter related to Rig 103. I could see that stepping up at full activity. You're going to be upwards of U.S. dollars, I think, $10 million top line revenue for a quarter. So I anticipate our revenue to be upper between $13 million to $15 million, up from its, what's now, $9.5 million consolidated revenue we could be up to $14.5 million, $15 million of revenue consolidated for quarters going forward.
Okay. That makes sense. And then my last question because I don't always -- I'm Dutch and I don't always get the circulars. So with regard to international people and with everything going on and ultimately the transfer of, let's say, the private company, how will that work or will you come back to that?
So Mike here. I'm in the same boat as you. I'm not Dutch, I'm Australian. And so I'm not...
They get along well. That's good, Mike.
Yes, some of my best friends, people have Dutch to send -- so yes, I'm in the same boat as you, and I'd be keen to ensure that all of our international shareholders have adequate time to receive the documentation to participate in the vote.
Okay. Well, that’s’ clear. Thank you for all your answers.
Thanks. Appreciate your questions.
[Operator Instructions] The next question is from Dave Reed (ph), Retail Investor. Please go ahead. Your line is open.
Hi, guys. Thanks for giving us the time for the call. I think this was touched on a little bit earlier. It sounds like there's a lot of elements to this that aren't fully defined. But you must have some color from Cyrus in terms of what their long-term plan is. Are they hoping to make an offer to take out the minority shareholders or what is the -- what is sort of the plan as we go towards? I do know you need to flesh out the deals, but what's sort of the superstructure of the plan?
Yeah. Thanks, Dave. Thanks for the question. I'm unable to answer on behalf of Cyrus and what their intentions may be. And they've not indicated to me or to the Board of any intent to take out minority shareholders in any discussions we've had related to the announcement from yesterday or in any other manner. But they not are controlled by High Arctic. And so they will, like all shareholders, I believe, make their own decision with regards to the voting intentions when we table the resolution to shareholders. Just -- historically, Cyrus has been a shareholder of ours over a decade, and Cyrus has twice participated in capital raisings in that period as well. They've been a long-term supporter of High Arctic and they've had directors on our Board for many years. I find working with the Cyrus directors to be rewarding and also informative, but certainly, I don't know what their voting intentions would be.
No, I'm not surprised. But I had to ask the question on west. Well, yes, no, I anticipated your response. In any event, just to get some sort of color -- and it was good to hear that they were a long-term investor. That was actually my next question. So let me ask in the numerous buybacks that we've done over the last four years or five years -- well, certainly not in the last two years, but say, in the previous five years, did they tender in line or did they stick and slowly see their percentage rise?
Yeah. I'm not -- I cannot recall Cyrus actively participating in selling their holding in our NCIB in recent years. Albeit in recent years, we have not done a substantive amount of buybacks with the NCIB. We have been active. We have issued instruction. The Board of Directors do consider that instruction when they meet and we have adjusted our instructions to our bankers from time to time based on the Board's view of value for the corporation. But yes, I'll just come back to the really part of the answer. I can't recall them participating. Their holding has slowly ticked up, not in a meaningful amount, but that also is due to the fact that we haven't bought back a meaningful amount of shares either.
Sure. Well, the -- I guess, the elephant in the room, and I'll go ahead and say it. We've, shareholders, have held out over the last three years because we know fundamentally that this is a sound business, particularly with respect to PNG. I mean one only needs to look at the gross margin differential on a $1 of revenue. And here we are going into, your own words, a fairly substantial uptick in revenue over the next couple of years, assured, the only thing not sure is how many rigs get activated in 2024. It appears exceptionally opportunistic.
And while I don't expect you to provide any kind of response to this because you're in a delicate position, I wanted clearly stated for the record, and I'm sure Cyrus is listening that there is definitely a view that this is exceptionally opportunistic. So I'm going to be looking very closely at what I provided and making decisions from that point forward, just putting that out there in the most respectful way possible, Mike.
Thanks for your comments, Dave.
Fair enough. Thanks. That’s my comments.
Thank you. The next question is from Dave Plum. Please go ahead. Your line is open.
Okay. I remembered my question. You announced the distribution of $38.2 million in cash, right? And the market reaction basically is about $9 million. Do you have a reaction to that?
Well, I'm pleased to see that there's a lot of buying in our shares, a lot of appetite for buying our shares today over the past few weeks, having an investor, and we don't know who they are, who has been selling into the market and did see the price pushed down substantively. Pleased to see the price returning back to -- I think there's still movement that could -- there could be more movement there, but please the price moving back in the right direction.
Part of the reason that we articulated our position here is that having looked at opportunities to deploy this cash for -- to grow the business and to improve returns for shareholders and not being able to get to the finish line on something that made sense. We thought it would be appropriate that we point out to the market that we're not going to just sit on it. And in doing so, make it very clear that there's a lot of value in our business that hasn't been unlocked when you look at the share price that was trading out only a handful of days ago.
Can I say that -- I hope that shareholders who are on the call today who were not in the blackout, did get the opportunity to take advantage of buying into High Arctic stock at very attractive prices through that period. But I do note that today, the volumes are somewhere in the realm of 160,000 shares turning over. And even in the selling period there, we were averaging only around 35,000 shares per day. And prior to that seller getting into the market and disposing of their shares, we were averaging around 15,000 shares a day and trading between about $1.40 and $1.55.
I think there's still room, Dave, for that price to appreciate, given the announcement we've made as investors look at what we've put out into the public domain and do their own calculations on value of the components of High Arctic. And I'm hoping that pretty soon that I'll be able to get back in and buy some as we exit a black out here this week.
Well, people would be watching you on that, and I just hope it's a typical small-cap lag on news.
Any other questions, Dave?
No, I'm done. Thank you. Have a good weekend.
Thanks. You too.
Thank you. The next question is from Luke. Please go ahead. Your line is open.
Yeah. Hi, guys. Can you hear me okay?
Yeah. Hearing you loud and clear, Luke.
Perfect. Yeah. I just want to say congrats on the announcement. And obviously, you guys have been thinking long and hard what to do with the capital. My question, I guess, is regarding -- I'm not a lawyer, and I don't pretend to be one. But I just was wondering from a governance standpoint, how High Arctic will kind of review this, whether you'll set up kind of an independent committee, whether there's a requirement for a fairness opinion? And I apologize in advance, I joined the call about 10 minutes late, so if you've addressed this, just say so.
No, good questions, Luke. And full disclosure -- I'm not a lawyer or neither Lance as well. We will be getting a valuation done on the Papua New Guinean business, and we'll be disclosing that as part of the Information Memorandum when it gets distributed. As far as whether an independent committee on the Board or a fairness opinion is needed, we will take our advice also from our legal advisers. And that probably is going to be dependent upon the mechanism or mechanisms that are finally arrived on once we complete our full view here of the most tax efficient and effective way of completing this transaction for the benefit of shareholders. The other thing I'd just like to add is it would be our intention that all shareholders are treated equally.
Yeah. Thanks. And just an unrelated but follow-up question on, let's call it, the Canadian or North American operations in recognition that there's some substantial residual tax losses. What kind of has to happen in order for you guys to be able to realize on that as a very real asset on the balance sheet?
Yeah. Excellent question and something that we have been doing a bit of research on and bearing in mind, again, I said I'm not a lawyer of things, too. So this is not legal advice. But my understanding here is that there's a few rules that we will need to stay on site to ensure that we don't damage that availability of those tax losses, capital and operating tax losses. The -- two of them that stick immediately in my mind are that we need to maintain an essentially similar business so that we can utilize those tax losses, and there can't be an acquired change of control. And so we'll be keen to make sure we stay on side with those as we detail out our business plans.
That's great. I don't have any other questions, but just appreciate what you guys are doing and going through in this transaction and whatever follows in the future.
Thanks for those kind words Luke. Have a good weekend.
Thank you. The next question is from [indiscernible] Please go ahead. Your line is open.
Hey, Mike. And I think you answered the question, one of the gentlemen earlier, I think it was Dave, was saying this transaction could be seen as very opportunistic for Cyrus, and I don't understand the thought process that because in your comment, and then you answered it, I was going to talk about it for a second. You said that all shareholders would be treated equally. So just thinking out loud here, I create SpinCo, SpinCo goes into PrivateCo. I, as a shareholder, get my pro rata shares of PrivateCo, Cyrus gets their pro rata shares of private co, i.e., 45%.
So unless I'm missing something, and I guess, educate me if I am, PrivateCo, as you anticipated today, and I know you have to flush a bunch of things out. I would end up owning my number is 100,000 shares or whatever the number ends up being in PrivateCo, representing the same percentage I own today in PubliCo and Cyrus would also own 45% of PrivateCo on that transaction. There's no -- you're not going through a process where Cyrus can come in and acquire 100% of the company. Each shareholder collectively owns their same percentage post transaction. Am I correct in my understanding?
Yeah. Murray, as you said, we're still to work through some of the final details. But in essence, yes, what you've outlined is in line with what we're contemplating. We don't -- we're not contemplating putting something out there that would see one shareholder have the ability to have preferential treatment over another.
Right. Okay. That was my understanding as well. And as I understand this transaction, there's really three components to it. There's cash. Everybody gets their pro rata share of the cash. There's a public company listing, which has $130 million in tax pools -- noncapital tax pools in it. And to your point, the answer there is you cannot trigger an acquisition of control, which is different than a change in control -- change, you just can't have an acquisition of control. And if you don't, you don't necessarily have to have the same line of business.
If you trigger an acquisition of control, it streams those tax pools so that they can only be used in the same type of business. I know it's a nuance, but that is how CRA is going to look at it. So the three components, again, are cash. We all get pro rata. A ownership in an entity which may be still listed on the TSX Senior Board, the Venture Exchange may have requirements in there that say you don't meet certain thresholds or you get pushed from the senior to the junior Board. But again, that will be in the detail.
And the third component is a piece of PNG co. So again, everybody, every shareholder owns the same thing today or after the transaction as they do currently, it's just in different buckets. Is that -- is my understanding correct on that?
Thanks, Murray. I'll address, I think, the two points there. So yes, thank you for clarifying on the acquisition of control and the use of -- forward use of the noncapital tax loss carryforwards. And on that second point, I agree that is a reasonable read of what we have announced is that essentially every shareholder we'll have what they have today, but it will be in the form of cash, listed public co and shares in private PNG Co.
Okay. Thank you. No further questions.
Thank you, Murray.
Thank you. There are no further questions registered at this time. I will return the call back to Mr. Maguire. Please go ahead.
Based on today's questions, both the number of them and the number of people asking them and the number of people who are on the call, I can -- I'm getting a lot of understanding there's tremendous amount of interest in what we've announced, interest both from those who analyze and advise in our business and those who are shareholders of it today. I'd like to thank you for participating in today's call and for the questions that you posed. I look forward to taking this forward and then bringing to shareholders the Information Memorandum to enable us to move forward to a vote. Thank you, and a good week and a good weekend to all.
Thank you. The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.