I hope everyone’s New Year is off to a positive start. 2017 was quite a year for all of us at the Ahtna family of companies. We took on some of the largest projects in our history, established new joint ventures, certified a new HUBZone subsidiary and secured new long-term contracts.
Ahtna Construction and Primary Products (AC&PPC) won a new $11 million project with the U.S. Army Corps of Engineers as a follow-on to their Texas-based Oxbow project. The new Onion Creek Watershed Protection project is a collaborative effort between AC&PPC and Ahtna Design-Build (ADB). We are excited to be able to tap into our full company capabilities to win new types of work. The project looks to address solutions to flooding in the Onion Creek area. Ultimately, 190 acres of former floodplain residential area will be restored to its natural state and converted to open space which will help to improve water quality, prevent erosion and provide animal habitat.
APSI is expanding their work with a U.S. Marshals Service (USMS) Court Security Officer (CSO) Contract for services in Northern Florida and Central Illinois. This unique and specialized security work includes securing Federal Court Houses and providing protection for judges, attorneys, witnesses and others. APSI is also providing a spectrum of security and access control services at The Center for Domestic Preparedness (CDP), a component of the Federal Emergency Management Agency (FEMA). This Federal training center provides high-level training to first responders, as well as first receivers such as doctors, nurses and medical staff. CDP is the designated federal training center engaged in responders and receivers to combat terrorism including response to weapons of mass destruction and hazardous materials incidents. The APSI-Centerra JV began the year winning one of two nationwide US Coast Guard Security contracts providing security in Alaska, Washington, Louisiana, Alabama, Florida and Puerto Rico. This contract has proved especially challenging in the wake of hurricane Maria’s devastation which resulted in 70% of Puerto Rico being without power for months.
Safety is a cornerstone in our operations, and I would like to commend AhtnaSTS for setting two contract safety records. On the Warfighter FOCUS contract, which AhtnaSTS has been on since May 2008, two sites were recognized by Prime Contractor Raytheon for safety excellence. Our Joint Base Elmendorf-Richardson (JBER) Automated Shoot House (ASH) team has gone nearly 13 years, or over 60,000 man hours without a recordable incident and our Fort Wainwright Combined Arms Collective Training Facility (CACTF) team has almost 10 years, or 145,000 man hours. What an exceptional accomplishment!
On the technology front, Ahtna is working with computer security experts on a Cyber-Security Table Top program with nationally recognized security experts. Ahtna staff will participate in realistic cyber-threat scenarios, and responses will be evaluated so they can learn actionable steps to prevent a cyber attack. Ahtna is always working to upgrade its cyber security by teaming with industry experts and major law enforcement agencies to prevent us from becoming a target and maintain the integrity of Ahtna’s computer assets.
New Bonding Company Brings Greater Capacity
Ahtna has continued to earn and win additional bonded projects, particularly with AES, AEI, ADB and AC&PPC, which required us to secure a new bonding company. Our new surety, Great American, has six times the overall capacity of our previous provider which will allow us to grow with them for many years to come.
Tolsona Gas Well Update
The Alaska Oil and Gas Conservation Commission (AOGCC) has issued a new decision, in which it reduced the fines issued to Tolsona Oil and Gas Exploration from $380 thousand to $92 thousand. However, the Commission did not respond to the legal weaknesses we pointed out in our response, but those points may not have any bearing on the final outcome. We are considering our response to the Commission’s revised findings for reporting error violations and appreciate the substantial reduction in penalties. Our leaders were not aware of the initial reporting deficiencies, and once known undertook a comprehensive internal review using the full resources of Ahtna to address all of the Commission’s concerns.
The Ahtna Board of Directors and leadership has made the difficult decision to Plug and Abandon (P&A) the Tolsona well. We did not wish to expend any additional money for testing and possible well bore stimulation as the opportunity for commercial gas was limited. The P&A work is scheduled to take place February-March of 2018. We will be working with qualified long-term companies to complete the work with 100% Alaska hire and an Ahtna shareholder hiring preference. Ahtna plans to contract with many of the same companies that were involved during the exploratory phase. We have learned valuable knowledge about gas prospects on Ahtna lands outside of Tolsona which was drilled on State of Alaska (SOA) land. Ahtna has signed a term sheet with an oil and gas developer for a future opportunity on Ahtna lands.
Ahtna has received zero funds from the State of Alaska related to tax credits due to the SOA’s severe budget shortfalls. Ahtna expects to monetize our tax credits in the near future by completing a tax transaction with a major oil company.
We are proud that the Tolsona project delivered an outstanding safety record, provided a boost to the local economy, created new employment opportunities for Ahtna shareholders and Alaskans, and that we were able to reach and evaluate the targeted zone. Thank you to everyone that was involved in this historic Ahtna project.
New Ahtna Engineering Services (AES) President is Familiar Face
I am happy to announce Tim Gould as the new Ahtna Engineering Services, LLC President. Tim has served as the Vice President of AES and Ahtna Environmental, Inc. since 2014 and is a registered Civil and Environmental Professional Engineer. This decision came after evaluating AES’s business needs and the many qualified candidates who applied for the position. Tim has worked closely with AEI/AGL President Tim Finnigan to understand the complexities of the company and build a strong team. AES will continue to be the Team that delivers for its many customers. We are happy to be able to benefit from the intimate knowledge and expertise Tim brings to our operations and many customers.
Palmer-based AAA Valley Gravel recently earned their HUBZone certification and has applied for 8(a) status which will open up additional contracting opportunities throughout the country. HUBZone is a United States SBA program for small companies that operate and employ people in Historically Underutilized Business Zones (HUBZones) such as Palmer. The important classification allows for sole source contracting and Ahtna Global, LLC will be pursuing HUBZone certification in the near future as well.
It was wonderful to see such a large turnout for our shareholder reception in Anchorage and enjoyed being able to visit with many of you and your families during AFN week. I hope that you all enjoyed the holidays and I would like to extend a special appreciation for all of our employees who worked through the holidays for Ahtna.
Chief Executive Officer