Shares in SAExploration Holdings, Inc. (NASDAQ:SAEX) were up nearly 56% yesterday on news that the company had received about $24.4 million worth of tax credit certificates from the Alaskan Government.
Of course, the good times did not last because investors (read: bagholders) quickly moved to dump stocks into the rally. As a result, a trading session that started with a bang ended with a whimper; the stock closed Tuesday at $7.95 with a measly 6.28% gain.
To be fair, in these days when oil service bankruptcies are rife, a 6.28% gain is not to be sneezed at. Still…that’s a long shot from 56%.
SAExploration Holdings, Inc. (NASDAQ:SAEX): Tax credit bonanza
The company said it had been successful in obtaining $24.4 million worth of tax certificates from the Alaskan Department of Revenue.
Those tax certificates came with a silver lining – their receipt qualified SAEX for access to $15 million of financing remaining to be availed under its Senior Loan Facility.
What’s encouraging is that ultimately, SAEX could obtain an additional $60.5 million in Alaskan tax credits once all the applications are filed by the company and processed by the Department.
“We are very pleased that we have begun to receive tax credit certificates from the State of Alaska sooner than expected and access to the remaining $15.0 million under our Senior Loan Facility ensures our ability to progress through the receipt and monetization of the remaining tax credits,” said Jeff Hastings, Chairman and CEO. “We believe the value that can ultimately be derived from these tax credit certificates, and those yet to be issued, will be highly accretive to the company and to our stockholders.”
SAExploration Holdings, Inc. (NASDAQ:SAEX): Could Alaskan laws change?
The current system of tax credits has been proving expensive for the Alaskan government given the low prices of oil. Yet the incentives have succeeded in galvanizing exploration for, and discovery of oil in the state.
On the other hand, the government may be forced to increase taxes on oil companies on budgetary concerns. It has already taken measures to ramp down its tax incentive program.
Which is why there is a qualifier in the SAEX release: “While the method, terms and conditions are not certain, the company remains optimistic that it will be able to ultimately monetize a significant portion of its tax credit certificates absent material changes in Alaskan laws and further believes this process could begin before the end of this year.”