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KATE CLARK

Graphic Designer


ANNUAL REPORT

2015 Alaska Permanent Fund Corporation (AIGA Silver Print Award)


ANNUAL REPORT CONCEPT

Arctic Slope Regional Corporation (2017)

TABLE OF CONTENTS

ASRC’S MISSION is to actively manage our businesses, our lands and resources, our investments and our relationships to enhance Iñupiaq cultural and economic freedom – with continuity, responsibility and integrity.

2

Chairman and President’s Message

9

Management Discussion and Analysis

32

Financial Statements

64

Glossary

REVENUES (in thousands) $2,711,164

$2,665,295 $2,515,377 $2,525,615 $2,371,164

2017

5-YEAR FINANCIAL SUMMARY

2016

2015

2014

2013

Years ended December 31 (in thousands other than shares outstanding and dividends paid per share)

2017

2017 ANNUAL REPORT

2016

2015

2014

2013

Revenues

$

2,371,164

2,515,377

2,665,295

2,525,615

2,628,929

Adjusted EBIT1

$

115,388

164,440

132,927

127,274

1 1 9 ,281

Adjusted EBITDA2

$

178,010

225,242

185,067

169,287

165,446

Total Assets

$

2,151,857

1,790,881

1,794,942

1,733,682

1,660,706

Debt and Lines of Credit

$

300,152

4,538

8,438

11,569

14,835

ASRC Shareholders’ Equity

$

1,379,472

1,370,859

1,295,094

1,224,701

1,188,696

1,331,750

1,306,800

1,277,500

1,244,600

1,208,900

48.00

60.00

57.50

110.00

50.38

Shares Outstanding Dividends Paid Per Share

re a c h i n g t h e n ex t l eve l

$

1 — Earning Before Interest and Taxes (EBIT) adjusted for goodwill amortization, non-cash impairment charges and insurance settlements. 2 — Earning Before Interest, Taxes, Depreciation and Amortization (EBITDA) adjusted for non-cash impairment charges and insurance settlements.

-1-


TWENTY EIGHTEEN BUSINESS SEGMENT REVIEW

TAX STRATEGY Senior leaders continue to develop tax strategies to maximize the Corporation’s profits for reinvestment, acquisitions and dividends.

PETROLEUM REFINING AND MARKETING Petro Star is the only Alaskan-owned refining and fuel marketing company. Petro Star’s two refineries, located in North Pole, Alaska and Valdez, Alaska, draw their crude supply from the Trans

MERGERS AND ACQUISITIONS

Alaska Pipeline System (TAPS) and produce highway, off-road and marine diesel, as well as jet fuel and home heating oil. The North Pole refinery supplies the mining industry and U.S. military

The Corporation’s acquisition strategy is designed to diversify revenue streams,

operations at Eielson Air Force Base, and provides heating oil to communities throughout Interior

increase earnings and generate new job opportunities for shareholders.

Alaska. The Valdez refinery is one of only two refineries in Alaska that produce ultra-low sulfur diesel, including marine fuels for subsequent transport to coastal communities as far away as St. Paul in the Pribilof Islands, 1,000 miles west of Anchorage. It also supplies jet fuel to commercial

OPERATIONAL EXCELLENCE

cargo carriers at Ted Stevens Anchorage International Airport and to the U.S. military at Joint Base

Operational excellence is critical to reduce costs, improve profits and

to the largest commercial fishery in the United States. In addition to its refining and distribution

increase competitiveness.

assets, Petro Star also operates fueling stations, convenience stores and heating oil distributorships.

Elmendorf-Richardson. Through its operations in Dutch Harbor, Petro Star supplies fuel and services

Petro Star is currently operating in a very challenging environment, as its financial results are directly linked to commodity prices and refining margins. These prices and margins are subject to global market factors beyond our control and have experienced enhanced volatility in recent years.

SUBSIDIARY STRENGTHS

Alaska North Slope (“ANS”) crude, which Petro Star uses to produce its refined products, is more

We leverage our subsidiaries’ strengths to position for future growth

expensive than West Texas Intermediate (“WTI”) and other crude oils of comparable or higher

and provide shareholder employment and development.

quality. Petro Star’s competitors, both West Coast and foreign refiners, use these less expensive fuels to produce the same products as Petro Star, resulting in smaller net margins on the majority of Petro Star’s sales. Furthermore, these market conditions have been accompanied by the worsening of the current TAPS Quality Bank methodology, which assesses penalties against Petro Star refinery

VILLAGE & COMMUNITY ECONOMIC DEVELOPMENT

return streams. We believe the TAPS Quality Bank contributed to Flint Hills Resources, a major

By strengthening and growing local businesses, the Corporation seeks to integrate

We continue to work with the state of Alaska and North Slope producers to seek a resolution for

culture and economy, empower community-based organizations, expand partnerships

TAPS Quality Bank methodology that will provide long-term stability and reduced costs for in-state

and strengthen village economies.

refiners of ANS crude oil.

competitor in Interior Alaska, closing its refinery in May 2014 after 37 years of continuous operation.

RESULTS OF OPERATIONS (In millions)

SHAREHOLDER EMPLOYMENT

2017

ASRC is committed to growing a talented pipeline of young Iñupiat whose career

2016

2015

Revenues

$

960.6

962.0

1,023.7

EBIT

$

4.3

0.7

14.5

(1.0)

1.0

4.3

0.7

14.5

20.0

19.4

21.6

24.3

20.1

36.1

paths align with the Corporation’s holdings, as a way of developing the next generation of leaders and employees.

Insurance gains and settlements Goodwill amortization

TWENTY TWENTY-THREE

Adjusted EBIT

$

Depreciation and amortization (excludes goodwill amortization) Adjusted EBITDA -7-

-8-

$

-9-


REPORT TO ALASKANS BOOKLET ConocoPhillips

Exploration & Production… It’s Being What Accountable… We Do. It’s How We Do It.

REPORT TO ALASKANS

…noitcudorP & noitarolpxE …elba.tonD uoecW cAtganhiW eB s’tI .… tI eolD WuowcocA H gs’ntIieB baetn .tI oD eW woH s’tI

S N A KS A L A OT T R O PE R

Being Accountable… It’s How We Do It.


100%

$2B

$120M

Owner of Kenai Liquefied Natural Gas Plant since 1969

Spent with Alaska-based companies for goods, services & transportation

Donated to Alaska non-profits since 2000

Where We Operate

Investment & Economy

Community

• • • • • • • •

Kenai Liquefied Natural Gas Plant since 1969, 100% owner Tyonek Platform in Cook Inlet since 1969, 100% owner Greater Kuparuk Area since 1981, 52.2%-55.5% owner The Beluga River Gas Field since 1986, 33% owner The Colville River Unit (Alpine) since 2000, 78% owner Alaska headquarters in Anchorage 100% owner of subsidiary Polar Tankers 50% owner/operator in Shared Services Aviation

184,000

Owner in the Prudhoe Bay Unit

2014 ConocoPhillips Alaska, Inc. Production

Other Alaska Assets

REPORT TO ALASKANS

• Total philanthropic spend for 2014 was nearly $6 million • Nearly $120 million donated to Alaska non-profits since 2000 • More than 6,000 employee volunteers hours in 2014

36.1%

Barrels of oil equivalent per day (net)

• 175,000 barrels of oil and natural gas liquids per day (net) • 49 million cubic feet of natural gas per day (net) • 184,00 barrels of oil equivalent per day (net)

3

• The 1.5 billion capital spend for 2014 is almost double the capital spent in 2012 in Alaska • Approximately 1,300 direct employees • Paid nearly $1.9 billion in taxes and royalties to the State of Alaska in 2014 • Also paid more than $1 billion in taxes to the federal government • $2B spent with Alaska-based companies for goods, services & transportation

• 36.1% owner in the Prudhoe Bay Unit • 29% owner in the Trans Alaska Pipeline System

4

2015

Future The year 2015 promises a historic first for the oil industry in Alaska: the first commercial production of oil from the first oil development within the boundaries of the National Petroleum Reserve-Alaska, a huge area in Northwest Alaska first set aside for oil development by President Warren G. Harding in 1922. ConocoPhillips has a long and proud tradition of oil exploration and production in Alaska. In addition to exploring in frontier areas, ConocoPhillips continues to expand its existing fields. During the SB21 oil tax debate, we told Alaskans that passage should lead to increased production investment and more oil for the Trans-Alaska Pipeline System. In 2014 we demonstrated progress toward that goal – and in 2015 there’s more to come.

More Alaska Production Act The passage of tax legislation, SB21 (More Alaska Production Act), prompted the addition of drilling rig Nabors 7ES in the spring of 2013. The improved business climate enabled the arrival of a second rotary rig – Nabors 9ES – in January 2014. These rigs are drilling new wells and repairing existing wells to help increase Greater Kuparuk Area production. Together, Nabors 7ES and 9ES have added approximately 9,000 bopd to North Slope production.

25

REPORT TO ALASKANS

2015

New Rotary Rig In July 2014, ConocoPhillips Alaska announced that a new contract had been signed with Doyon Drilling to build a new rotary rig for the Kuparuk River Unit. This will be the first new-build rotary rig to be added to Kuparuk since 2000. Drilling is scheduled to begin in early 2016.

New Coiled Tubing Drilling Rig In November 2014, ConocoPhillips Alaska announced that it had signed a contract with Nabors Alaska Drilling for a new Coiled Tubing Drilling (CTD) rig for use at Kuparuk. The new CTD rig is expected to double our capacity to economically develop the types of challenging oil reserves that can be accessed with this technology. The new Nabors CDR3 CTD rig is scheduled to begin drilling in late 2016.

New Kuparuk Drill Site In October 2014, ConocoPhillips announced that the Kuparuk field expansion project Drill Site 2S (DS2S) was sanctioned for funding. This is the first new drill site at Kuparuk in nearly 12 years, and it is expected to add about 8,000 barrels of oil per day (gross), at peak production. The approximately $500 million (gross) DS2S project includes a new gravel road and a new drill site, power lines, pipelines and other new surface facilities. ConocoPhillips began laying gravel for the project in the first quarter of 2014 in order to initiate facility construction in late 2014. First oil is expected in late 2015.

“ConocoPhillips has a long and proud tradition of oil exploration and production in Alaska. In addition to exploring in frontier areas, ConocoPhillips continues to expand it's existing fields.”

26


TRI-FOLD MAILER ConocoPhillips

ALASKA’S OIL TAX REFORM In May 2013, Senate Bill (SB) 21, the More Alaska Production Act, was signed into Alaska state law. The goal of the new law is to create an investment-friendly tax structure to generate more oil production on Alaska’s North Slope. The tax change is already resulting in new production-increasing investments.

There are efforts underway to repeal the new tax law, and the public will have an opportunity to vote on the repeal at the primary election on Aug. 19, 2014. This is a critical issue for ConocoPhillips that will affect our future investments.

Check out some

benefits of oil tax reform New projects such as Drill Site 2S at Kuparuk, GMT 1 in the NPRA and 1H NEWS represent about

$2 billion in investments.

Since the passage of SB 21, ConocoPhillips has added two drilling rigs at Kuparuk, a

two-thirds increase in rig count.

ConocoPhillips Alaska is a supporter of, and active participant in, the Vote No on 1 Campaign. The Alaska Department of Revenue estimates that in fiscal year 2015, at forecasted oil price, expenditure and production levels, SB 21 will generate similar revenues as the previous tax system.1 By 2018, at $100 per barrel oil prices and with increased production from additional rigs and projects similar to those recently announced by the major oil producers coming online, the state estimates it will earn more from SB 21 than under the previous tax regime.2

More than

1,000

new positions supporting ConocoPhillips’ 2014 winter Slope activities.

The planned addition of an estimated

40,000 bopd

(combined monthly peak rate) in 2018 from these new projects.

The industry has already responded to SB 21 with significant commitments for new projects, including four additional drilling rigs in the next two years.3 This is not a giveaway – new investment is critical to Alaska’s future.

Visit benefitsofoiltaxreform.com for more information. State of Alaska Revenue Source Book press release, Dec. 4, 2013 2 SB 21 Fiscal Note, Alaska Department of Revenue, April 12, 2013 3 BP press release, June 3, 2013 announcing new drilling rigs in 2015 and 2016 at Prudhoe Bay; and ConocoPhillips press release, Nov. 20, 2013, announcing the addition of a second rig at Kuparuk by January 2014 after adding one earlier in 2013. 1

Paid for by Vote No on 1, Anchorage, AK 99509. Bob Berto, Rick Boyles, Leslie Hajdukovich, Linda Leary and Rick Mystrom, co-chairs, approved this message. Top contributors are BP, Anchorage, Alaska, ConocoPhillips, Anchorage, Alaska, and ExxonMobil, Anchorage, Alaska.

This is not a giveaway –

new investment

is critical to

Alaska’s future

Oil Production

is Key to Our Future


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2015 OFFICIAL STATE VACATION PLANNER State of Alaska Tourism

ALASKA Wildlife

YOU Don’t want to miss

THIS

ALASKA Adventure

“The moose crossed the road right in front of us. I’ll never forget it… it was a mother and her calf.” - Nicky W., Fernley, NV

Fishing, Hope

Moose, Chugach State Park

Watchable Wildlife

• Dawn and dusk are the best times to view most wildlife

Join a guided tour through a national or state park to look for bear, caribou or moose, or take a day cruise to spot pu�ns, sea otters, and humpback and killer whales. Even a leisurely stroll along one of Alaska’s many trails can offer a chance to see wildlife, whether it’s Dall sheep kicking up their heels along a rock face or a bald eagle soaring high above.

• Watch from a distance so both you and the animal remain safe

• Visit wildlife refuges or parks for best chance to see wildlife • Use binoculars and a telephoto lens for great close-up views and photos

“The trip to Alaska was, by far, the most memorable vacation of my life.” - Cindy S., Loveland, CO

• Be patient. Even when wildlife is abundant, it may take time to spot • Make noise traveling in thick brush or near spawning salmon to avoid surprising moose and bears

Consider a flightseeing trip for a bird’s-eye view of wildlife beyond the road system or visit the Alaska Wildlife Conservation Center in Portage, the Alaska SeaLife Center in Seward or the Alaska Zoo in Anchorage for a closer look.

Alaska offers some of the most diverse and incredible fishing in the world. You can pull off the road and drop a line into a roadside river or charter a boat and reel in one of Alaska’s enormous halibut. Fly-in fishing, wilderness lodges and fish camps offer once-ina-lifetime experiences. In all, more than 601 fish species inhabit Alaska’s salt and fresh waters. A complete guide to freshwater and saltwater fishing regulations is available from the Alaska Department of Fish and Game, Division of Sport Fish. For contact information, sf.adfg.alaska.gov

Ecotourism

Hunting in Alaska provides a full range of guided and unguided experiences. Alaska is famous for its huge moose, vast caribou herds, brown bears, Dall sheep, mountain goats and Sitka blacktailed deer. The Alaska Department of Fish and Game, Division of Wildlife Conservation provides information on hunting regulations at wildlife.alaska.gov

Ecotourism is responsible travel to natural areas, preserving the environment and improving the well-being of local people. Alaska is a prime year-round destination for visitors seeking a more personal connection with nature, culture and wilderness. Ecotourism means you leave little or no impact during your visit so that future visitors can enjoy the same beauty and quality experience of Alaska’s special places. Using established paths rather than disturbing vegetation, limiting campfires and being careful not to litter are all highly recommended.

Wildlife viewing takes on a whole new dimension in winter, when animals are easier to see against a backdrop of white snow. Early winter draws more than 3,000 bald eagles to feed on salmon at the Chilkat Bald Eagle Preserve near Haines. Moose, fox and various species of birds can also be spotted more easily. While viewing opportunities abound, one thing is for sure: no matter which path you choose, you’ll remember it for a lifetime. For more information on wildlife viewing, visit

Official state vacation planner

wildlifeviewing.alaska.gov

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Travel A la ska .c om

Bear Bearcub cub

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Sportsman’s Paradise

Alaska has some of the most incredible scenery to be found in the United States. In order to enjoy all the state has to offer, visitors must get out and experience it for themselves. Even if you don’t have a lot of outdoor experience, day excursions and guided tours allow you to discover true Alaska wilderness during the day and sleep in a comfortable bed at night. For the seasoned outdoor expert, Alaska is teeming with opportunities for rugged, backcountry treks. Whether you prefer to hike on an Ice Age glacier, skim the wilderness in a “Bush” plane or take a dog sled ride, you’ll find plenty of options for experiencing the Alaska you’ve always dreamed about. The state’s many famous rivers, lakes and protected coastal waters offer the chance to experience ra�ing, kayaking or jet boat rides from mild to wild. No matter what your interest, you’re sure to find adventures tailor-made for you.

Viewing Tips

A magnificent grizzly roaming an untamed landscape, great herds of caribou migrating across the tundra, millions of salmon spawning up rivers and the haunting cries of sandhill cranes streaming overhead: these and many other wildlife-viewing opportunities await you in Alaska.

From the Mild to the Wild

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Travel A la ska .c om

Ziplining, Ziplining,Icy IcyStrait StraitPoint Point

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The Kenai The Kenai Peninsula, just south of Anchorage, is known as “Alaska’s Playground.” You’ll find spectacular scenery, wildlife, rich culture and legendary fishing. The Kenai Mountains, which span the Chugach National Forest, Kachemak Bay State Park, Kenai Fjords National Park and Kenai National Wildlife Refuge, contain the easily accessible Exit Glacier and hundreds of miles of trails. Experience wild whitewater and placid scenic waterways or paddle more than 100 miles (161 km) of canoe trails.

Fairbanks

Witness calving glaciers and marine wildlife on a sightseeing cruise from Seward, gateway to Kenai Fjords National Park. The Alaska SeaLife Center also offers up-close viewing of marine mammals and sea birds. From the highway, enjoy the turquoise color of the rivers and lakes surrounding Cooper Landing. Four species of salmon spawn on the peninsula. Soldotna boasts the world record king salmon (97.25 lbs) and more than 2,800 feet of elevated Kenai River boardwalk. The central peninsula is home to four caribou herds, one near the city of Kenai, known for its historical sites and cultural heritage.

The Heartland Fairbanks to Anchorage

Whether you fly into one of Alaska’s biggest cities or drive in through Tok, the road from Fairbanks to Anchorage is big on culture, history and scenic wonders. DAY 1

Inside Passage Southern Region

One option for traveling to Alaska is via the state ferry system from Bellingham, Washington or Prince Rupert, British Columbia. Either way, travelers can see glaciers, wildlife and wilderness as they glide between forested islands on the route known as the “Inside Passage,” stopping at unique coastal towns along the way. On the west coast of Annette Island, the town of Metlakatla is accessible by air or state ferry. The island is a federal reservation for the Tsimshian Indians and long-term visits require a permit. Ketchikan is Alaska’s southernmost port of call for the majority of the Inside Passage, located within the heart of the Tongass National Forest. The multi-island community, surrounded by mountains and water, is served by daily jet service. Local museums and attractions highlight the town’s heritage. Visitors can explore the history of the area’s traditional Native culture, fishing and timber industries. Activities include camping, boating, ziplining and sport fishing excursions. Visitors will find an array of shops and art galleries downtown and while strolling along the boardwalks of historical Creek Street. From Ketchikan, travel by boat or plane into Misty Fiords National Monument. The 2.3-million-acre glacially carved �ords shelter many species of land animals and sea life. Four distinct groups of people shaped the history of Wrangell: Russians, the English, Americans and the Tlingit. While in town, learn the area’s history by visiting the newly-restored Tribal House on Chief Shakes Island or by exploring Petroglyph Beach State Historic Park and searching for prehistoric rock carvings. The Wrangell Museum offers interactive

displays of Wrangell’s colorful history. When prospectors first came to the area, they sought out the “gateway to the Stikine,” a river with exciting tours of wildlife, glaciers and hot springs. Visit Anan Bear and Wildlife Observatory for an up-close view of black and brown bears feasting on wild salmon. Petersburg residents celebrate their Norwegian culture with decorative rosemaling (traditional Norwegian painting) on houses and storefronts, and a rousing Little Norway Festival every May. Enjoy an excursion to LeConte Glacier, the southernmost active tidewater glacier in North America. Step back in time and experience the abundant wildlife, rugged mountainous terrain and uncrowded waters of Prince of Wales Island. Located just 600 miles (965 km) north of Seattle, fly or ferry to the fourth-largest island in the U.S. Fish the pristine salt and fresh waters for king salmon, halibut or steelhead. Hunt black bear or black-tailed deer in the unspoiled terrain. Explore a network of 2,000 miles (3,219 km) of roads including 200 miles Matanuska (322 km) ofGlacier, paved Glenn AlaskaHighway Scenic Byway, improved gravel roads along the shoreline and old logging roads that criss-cross the island. Or boat around 990 miles (1,593 km) of shoreline and outlying islands. Visitors enjoy kayaking, camping, whale and bird watching, totem parks and fishing villages rich Wrangell-St. in Native culture. Elias 2-DAY ADD-ON

Preserve Ferries provide service from Ketchikan to HollisNational and fromPark thereand visitors a great adventure such in theaslargest can easily travel by road toFor other communities, Craig,national Klawock, the country, the Edgerton Highway Thorne Bay, Coffman Covepark andinHydaburg. Thetake northern end of the and McCarthy turnoffThfor an exciting island is known for its limestone caves andRoad grottoes. e most popular drivetours on aoff93ered mileby(150 km) Forest paved/gravel cave is El Capitan, with daily the U.S. Serviceroad to the old mining towns of McCarthy and during the summer months. Kennicott. Stay overnight.

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Collaboration with Brilliant Media Strategies design team

Fairbanks

Southcentral

A�er arriving in Fairbanks, the gateway to Alaska’s Interior and the Arctic, rent a car or RV and visit the University of Alaska Museum of the North, one of the state’s top 10 visitor attractions. See musk ox, an Ice Age survivor, and reindeer on a tour of the University’s Large Animal Research Station.

Alaska Native Heritage Center, Anchorage

DAY 2

Fairbanks

Start the morning with a riverboat cruise along the Chena or Tanana Rivers, lunch on the deck at a riverside restaurant and try your hand at gold panning on an a�ernoon gold mining tour. Stop for a view of the trans-Alaska oil pipeline on the Steese Highway. DAY 3

Fairbanks - Denali

Anchorage

Alaska’s largest city, Anchorage (pop. 300,950), is a thriving metropolis. Surrounded by wilderness and six mountain ranges, Anchorage boasts luxury hotels, delectable restaurants, art galleries and specialty shops. The city has a vibrant arts and music scene, featuring world-class dance, theater and Broadway performances. The Chugach Mountains provide a striking backdrop that can be viewed from anywhere in the city and along 250 miles (402 km) of local trails.

Talkeetna

Enjoy a 2-hour drive south to Denali National Park and Preserve, home to Mount McKinley, North America’s tallest peak. Take a full-day guided tour to see sweeping landscapes and incredible wildlife. DAY 4

Denali

Denali National Park offers a variety of activities. Take a flightseeing tour via small plane or helicopter or try a whitewater ra�ing excursion. Stay in the area for an evening program. DAY 5

Anchorage is rich in history and culture. The Anchorage Museum showcases an impressive collection depicting 10,000 years of Alaska history. Experience the state’s distinctive Native culture through storytelling, song and dance as you explore five traditional villages at the Alaska Native Heritage Center.

Denali - Talkeetna

Continue south to the town of Talkeetna to see majestic views of Mount McKinley. Flightseeing tours provide dramatic views and a unique perspective of the mountain. Experience a guided fishing trip or wildlife and scenic jet boat tour. DAY 6

Talkeetna - Eklutna - Anchorage

Enjoy a scenic drive south to Eklutna Historical Park. Tour St. Nicholas Orthodox Church, and view brightly painted “spirit houses.” Experience a canoe and bike excursion at Eklutna Lake or hike majestic Thunderbird Falls. Learn about local wildlife at the Eagle River Nature Center or walk through the scenic river valley on nearby trails. Continue to Anchorage to enjoy a meal of exquisite fresh seafood (wild Alaska salmon is a local dining specialty). DAY 7

Anchorage

Anchorage, Alaska’s largest city, has world-class theater, a vital arts and culture scene, outdoor markets, music in the park and up to 1,000 resident moose. Visit Lake Hood, the busiest float plane harbor in the world or fish for salmon in downtown Ship Creek. Try an award-winning brewpub or see a baseball game under the midnight sun.

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Flightseeing, Denali National Park

RAIL OPTIONS

Rather than traveling by car or RV, take a scenic railway tour of Alaska from Fairbanks to Anchorage, stopping overnight in Denali and Talkeetna.

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the community’s shops and restaurants. Take a ride up Alyeska Resort’s passenger tram for panoramic views of mountains, glaciers and Turnagain Arm.

Prince William Sound Prince William Sound encompasses 3,125 square miles (8,100 square km) of protected waterways, islands, �ords and over 100 glaciers. The region is home to whales, porpoise, sea otters, sea lions and seals. Bear, deer, mountain goats and sheep inhabit the mainland. Three communities provide access to adventure via day cruises, charter boats, flightseeing tours and the state ferry.

From Whittier, cruises and charters offer access to some of Prince William Sound’s most spectacular sights. Sit in front of a tidewater glacier, kayak Visitors can enjoy a wide variety of wildlife within Anchorage, including a a sheltered cove, explore a tide pool or secluded beach. Whittier offers a resident moose population up to 1,000. Wildlife watching is always easy at unique mixture of WWII history and small coastal town charm. the Alaska Zoo, Alaska Wildlife Conservation Center and Potter Marsh. Just outside Valdez, you can see the magnificent Columbia Glacier, one Enjoy the scenery along the 11-mile (18-km) Tony Knowles Coastal Trail, of the best places to see a glacier calving into the ocean. Activities are accessible from downtown. Fishing for salmon in downtown Anchorage abundant in Valdez throughout the year. You can also enjoy glacier is an unexpected surprise at Ship Creek. The city’s surrounding lakes and trekking, kayaking, ra�ing, skiing, snowmobiling, sightseeing and tax-free rivers are rich with chum, sockeye, king, silver and pink salmon. shopping. See towering waterfalls or visit the town’s museums. Experience Take in the alpine scenery of Chugach State Park from Flattop Mountain, colossal salmon runs from shore or take a charter. Powerline Pass or the Eagle River Nature Center. Learn about Russian Visitors from around the globe trek to Cordova to view glaciers, fish for and Alaska Native culture at the St. Nicholas Russian Church and view salmon, explore Orca Inlet and the Copper River Delta, or see thousands brightly painted spirit houses at the Eklutna Historical Park. Stop by of shorebirds at Hartney Bay. Eklutna Lake, a popular recreation site known for its emerald-blue waters. Head south to Crow Creek Mine in Girdwood and pan for gold or enjoy

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Copper River Valley & WrangellSt. Elias National Park & Preserve The Copper River Valley is home to the Copper River red salmon and Wrangell-St. Elias National Park and Preserve, the largest national park in the United States. The valley is a popular destination for backcountry recreation, sport fishing, river ra�ing, hiking, glacier climbing, flightseeing and Native culture. Glennallen is the informational hub of the region. Copper Center lies a few miles south of Glennallen, home to the visitor center for Wrangell-St. Elias. The historical mining towns of McCarthy and Kennicott lie at the heart of the park.

A shoreline drive showcases four active volcanoes across Cook Inlet and, at the end of the road, the Homer Spit extends five miles out to sea with breathtaking views of mountains, glaciers and Kachemak Bay. The gateway to Katmai National Park and the Alaska Maritime National Wildlife Refuge, Homer offers unrivaled bear viewing, kayaking and birding.

Mat-Su Valley

Hiking, Kennecott Copper Mine

Located approximately 45 miles (72 km) north of Anchorage on the Glenn Highway National Scenic Byway, the Matanuska Valley is a fertile farmland settled by families from the Midwest as part of a New Deal relief program in 1935. Tour Palmer to discover the history of these early “colonists” and see the legendary, gigantic vegetables at the Alaska State Fair in August. In the neighboring Susitna Valley, explore Wasilla, home of the Iditarod Trail Sled Dog Race®. Visitors can learn from an Iditarod veteran what it takes to complete the “Last Great Race®” at the area’s local dog kennels. A few miles west is Big Lake, a popular destination for boating and salmon fishing. Farther north is Talkeetna – known as the staging site for climbers as they begin their trip up Mount McKinley. Flightseeing tours of the mountain are a local specialty. On clear days, Denali State Park offers breathtaking vistas of Mount McKinley, North America’s highest peak. A 50-mile (80-km) scenic loop between the George Parks and Glenn Highways takes you to Hatcher Pass and the Independence Mine State Historical Park. Visit the park’s interpretive center and explore abandoned buildings and equipment in the old gold mines.

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NORTH TO ALASKA GUIDE AND MAP Welcome The Ultimate

What to Pack Dressing appropriately can be a challenge in this region because the weather changes quickly. In addition, average temperatures vary widely. Generally, expect warm days and cool nights during spring and summer. But when you’re on the move, it is possible to encounter temperatures as high as 95°F (35°C) and as low as 35°F (2°C) within the same 24 hours. The solution? Layering. Wear clothes that can be removed or added as required. And don’t forget to bring rain gear!

You’re invited to embark on the Ultimate North American Road Trip — to Alaska via Alberta, British Columbia and the Yukon. Today the primary routes are paved the entire way. So whether you travel by RV, car or motorcycle and via highway, Nothing ferry or satisfi both, es you soon add this trip to the list of your life’s most thewill need for freedom memorable andexperiences. the desire to chart your own course like taking off on a grand adventure, stopping whenever and wherever you want, sharing stories and making new ones while on the road.

Road Trip

So, if this road trip is not on your bucket list, it should be!

theon north, vastcan expanses of such highway Nowhere In else earth you find a unique combination of wilderness unwind to the horizon, surrounded by civilized, down-home and uptown, and culture, geology and history, rugged and so big, so wild itand willphotographs take which willwilderness provide years of stories and a lifetime of memories. your breath away. We call it the Ultimate This publication is designed explain primary routes and help you get North American Road to Trip, and wethe think started onyou’ll your agree. planning. For more route options, side trips, information, photos, traveler stories and firsthand accounts, visit us online at NorthtoAlaska.com or on Facebook at Travel North to Alaska. In one journey, you will experience some of the most dramatic national, state and provincial parks in the United States and Canada, inhabited by critters you’ve maybe only seen in the media. Moose, caribou, bears, wolves, bald eagles, whales and many other species make their homes in the north country, and you’ll see most – if not all – of them along the way.

Start Planning! Here are the Basics Medical Facilities

The roads along all three of the routes outlined in this guide are paved and well maintained, suitable for cars, RVs and motorcycles. Along the way you may encounter sections of older pavement or road construction although delays are usually minimal. Facilities and services along the way are ample. However, some sections are narrow and winding, particularly those traversing high mountain passes.

Emergency medical crews are on duty throughout Canada and Alaska, but response times may be longer in the more remote areas. Most small towns have clinics and the regional hubs have modern hospitals.

Places to Stay

Services

Lions Head, Glenn

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There are plenty of gas stations, restaurants and accommodations along the way, approximately 25-50 miles (40-80 km) apart. While the majority are open yearround, some do close during the winter, so it is important to plan accordingly.

The easiest way to find details on accommodations is by visiting the website of the province, territory or state you will be visiting or order a printed guide using the business reply card on page 25.

View of Dawson City from The Dome (R Hartmier, Yukon Government)

Riverboat Discovery, Fairbanks (Michael DeYoung, State of Alaska)

State of Alaska) (Michael DeYoung,

way Alaska High Famous

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Barkerville Historic Town

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seriously, and a stop is well worth the time. Check out the Pedro Gold Dredge and get a bite to eat before getting back on the road.

The Gold Rush Route

will take you from one of Canada’s largest cities to some of the least populated places in North America, all while enjoying views of mountains, glaciers and wildlife. After traversing through central British Columbia along the Cassiar Highway, you will follow the trail of hopeful prospectors to the epicenter of the Klondike Gold Rush in Dawson City, Yukon, before crossing into Alaska and heading north to Fairbanks and on to Denali National Park and Anchorage.

At Tetlin Junction, you’ll reach the Alaska Highway and head north toward Interior Alaska’s gold rush epicenter, Fairbanks. The landscape of eastern Interior Alaska is much like that in neighboring Yukon – boreal forest and rolling hills, rivers, lakes and bogs where moose lazily chew on grasses. Keep an eye out for bison grazing along the roadway as you approach Delta Junction. These prehistoric-looking beasts were once native to the area and a herd was later successfully reintroduced.

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Official Website: NorthtoAlaska.com At NorthtoAlaska.com you will find expanded information and links to other resources such as: • Route guide and photo gallery • Planning tips • Things to see and do along the way • Interactive maps • Reports from people who’ve made the journey • Answers to frequently asked questions NorthtoAlaska.com

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Delta Junction: The End of the Alaska Highway

Vancouver's Chinatown

Find tips, stories, photos and maps online!

10 10 || The TheUltimate UltimateRoad RoadTrip Trip

"Love every mile of the trip. I've taken it several times & will do so again."

Must See

Many areas require headlights to be on at all times. Regardless, when driving on the highway, it’s a very good idea to keep your headlights on day and night.

Follow us on Facebook. You will find photos, links, current information from the road and communities along the way. Plus the comments and feedback of fellow travelers.

Gold Rush Route Ruthanne T. – via Facebook

Children under the age of 8 must be in a federally approved child safety seat.

Facebook.com/travelnorthtoAlaska

TravelAlberta.us TravelAlaska.com TravelYukon.com HelloBC.com

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Delta Junction

Delta Junction is located at the end of the famous Alaska Highway. Delta Junction was chosen as the terminus due to its proximity to several nearby military airfields, including Fort Greely, a short distance from town. In 2017, Alaska and Canada will celebrate the 75th anniversary of construction of the highway. Before leaving town, look for the “End of the Alaska Highway" sign.

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Fairbanks, and soon prospectors poured into the area. Today, Fairbanks’ Pioneer Park preserves much of this history as well as displaying information on modern gold mining, as the industry is still alive and well in the area. Visitors also enjoy a visit to Gold Dredge No. 8, a National Engineering Landmark that once extracted millions of ounces of gold from the frozen ground. Other fun things to do in Fairbanks include soaking at nearby Chena Hot Springs, a stern-wheeler ride on the Chena River as it winds through town, golfing at midnight under the summer sun or dining out on the deck of one of several riverfront restaurants. You also won't want to miss the Museum of the North on the campus of the University of Alaska Fairbanks, and the Morris Thompson Cultural Center in downtown Fairbanks. Spending several days is well warranted, and hotels, public and private camping, bed and breakfasts and other options are plentiful.

DETOUR Dalton Highway Want to cross the Arctic Circle and see the Brooks Range? The drive up the Dalton Highway, also known as the “Haul Road,” is one of the most rugged and remote in North America, and takes you from Fairbanks all the way to Alaska’s northern coastline, through millions of acres of wilderness lands. But be prepared: the 414-mile (662km) road is mostly gravel, with very limited facilities. And remember: the “Ice Road Truckers” have the right of way! The Bureau of Land Management has more details at blm.gov. At the home page, search for “Dalton Highway."

From Fairbanks, you’ll head south toward one of Alaska’s most popular visitor destinations – Denali National Park and Preserve.

“The High One,” Mount McKinley In the local Athabascan language, Mount McKinley is called Denali, which means “The High One,” and it is! At 20,320 feet, it is the tallest mountain in North America. The mountain sits in the midst of 6 million

Between Delta Junction and Fairbanks, you’ll pass several small fishing holes along the road, with signage visible indicating stocked lakes. Before entering Fairbanks, Alaska’s second-largest city, be sure to take some time in North Pole, where it’s Christmas all year. Santa Claus Lane, Kris Kringle Road and candy-striped light poles are just the beginning. The Santa Claus House, a toy store and local institution, and its 42-foot fiberglass Santa statue are must-sees.

Alaska’s “Golden Heart” Fairbanks is known as the Golden Heart City, and the slogan holds multiple meanings. It refers both to the city’s gold rush history and its warm and welcoming residents. An Italian immigrant named Felix Pedro discovered gold in Fairbanks in 1902. Business interests in the area sent runners to Dawson City to spread the word that new claims were available around

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Inside Passage Route "The scenery is beautiful between here and there, if you take your time and enjoy it. We had to hurry once and I won't do that again. Six weeks is not long enough.” Mary D. – via Facebook

Victoria Harbour, Vancouver Island (JF Bergeron, Destination BC)

Your journey along the coasts of British Columbia and Alaska begins in Vancouver, one of Canada’s largest and most diverse cities, steeped in maritime and First Nations culture. (To read more about Vancouver, see page 28.) From the city of Vancouver, you’ll take a short ferry trip across the Strait of Georgia to Victoria on Vancouver Island. The Tsawwassen ferry terminal for BC Ferries is located just south of Richmond, a suburb of Vancouver.

Road Ferry

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The Inside Passage Route

glides quietly past the dense spruce forests of the British Columbia coastline, and along the shores of Alaska’s Inside Passage, a fleet of ferries carries passengers and vehicles along what is known as a marine highway – an interconnected network of communities accessible by sea. If you like the idea of getting on and off when you please, staying for a few hours or several days in each port of call, taking your RV, car or motorcycle with you, and meeting and sharing stories with your fellow travelers, read on to learn how you can incorporate this unique route into your Ultimate North American Road Trip.

Victoria is British Columbia’s capital city and one of the oldest cities in the Pacific Northwest. Named for Great Britain’s Queen Victoria, evidence of the British era and role in the city’s founding is easily seen in its buildings, famous gardens and pedestrian amenities. Two of the most notable architectural landmarks are the British Columbia Parliament Buildings, completed in 1897, and the Empress Hotel, built in 1908 and still serving high tea each afternoon. From Victoria, spend a day or two enjoying the drive north to catch your ferry in Port Hardy, at the island’s northern tip. Along the way, you’ll encounter rocky beaches, moss-laden spruce trees towering overhead, jagged coastal mountains and the crisp, clean ocean air. Places like

Qualicum Beach and Hornby Island are wonderful beachcombing, hiking and kayaking destinations along the way, and towns like Nanaimo and Courtenay offer lots of quaint shops and restaurants. The totem poles in Duncan and the U’mista Cultural Centre in Alert Bay offer a glimpse into Aboriginal culture. Stop in Telegraph Cove for whale watching and bear viewing. As you venture farther north on the island, you get a sense of what the entire island must have once looked like – dense forests, lakes, streams and waterfalls.

Port Hardy to Prince Rupert In Port Hardy, you’ll board BC Ferries for the voyage to Prince Rupert, a 15-hour sailing that typically leaves early in the morning and reaches Prince Rupert in the evening. Prince Rupert is situated along the Inside Passage, and its landscape is typical of the region – tall coastal mountains, islands, ocean, rain forest, and a charming small boat harbor and downtown. Check out the shops in the Cow Bay district and visit any of several excellent local museums, including the Museum of Northern British Columbia, the Kwinitsa Railway Museum and the North Pacific Cannery, a Parks Canada-designated National Historic Site. Prince Rupert is also a popular place to take a bear viewing tour; several local tour companies offer these excursions. A lucky few will spot one

poles, among other cultural attractions. The wild and raucous Great Alaskan Lumberjack Show showcases acrobatic skills and athleticism and gives audiences a chance to take part. In the mountains and along the coasts, hiking trails abound, and opportunities to fish for salmon and other species are also plentiful. Ketchikan has both public and private campgrounds and plenty of hotels and other accommodations and could easily hold your interest for several days.

of the region’s rare Kermode bears, which are black bears with a genetic mutation that renders them completely white, although they are not albinos. Known as “spirit bears” to the local First Nations people, the bears are thought to have survived due to the indigenous peoples’ reverence for them. From Prince Rupert, the sailing to Ketchikan is just six hours aboard an Alaska Marine Highway System ferry.

Alaska’s First City – Ketchikan Welcome to Alaska’s First City! Based on your mode of transportation, this name is easy to understand – Ketchikan is the first place you reach in Alaska when traveling by ferry (or cruise ship). This former gold camp and logging town embraces its history and heritage in a number of visitor-friendly sites. Among the must-sees are Creek Street, a boardwalk pedestrian “street” situated on pilings above Ketchikan Creek. Creek Street is lined with art galleries, restaurants and shops along with Dolly’s House Museum, which pays homage to the “gold rush girls” who earned their livings at the former brothel during the late 1800s. Totem Bight State Park features 14 large totem poles and an intricately decorated Tlingit clan house situated along the coast, and Saxman Native Village south of town offers visitors the opportunity to watch Tlingit artisans at work carving totem

BC)

British Columbia’s island and coast culture

Vancouver Island (Destination

2015/2016

Highway (Michael

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How long it will take to complete the trip depends on you. While it’s possible to make the drive in five days we recommend scheduling a week to 10 days each way. With all there is to see and do, you could easily take longer.

Back Cover: Vancouver Island (Hubert Kang, Destination BC) Inside Cover: Hikers, Jasper (Travel Alberta)

In Canada, fuel is sold by the liter; multiply the cost by a little less than four (3.785) to get the price per U.S. gallon.

There are many hotels, motels and lodges, particularly in larger cities and towns, but it is advisable to make reservations and to know exactly where each is and how long it will take you to travel from one to the next. If you prefer to sleep under the stars, there are camping areas at both private and public locations, many of which offer fullservice RV sites. Reservations are accepted at most and are recommended.

When to Travel

" That was the most wonderful trip we've taken, and we want to do it again." Annette S. – via Facebook

Conversions

The Routes are Paved

Are We There Yet?

NorthtoAlaska.com

British Columbia and Yukon are in the same time zone as the U.S. West Coast (Pacific time). Alaska is an hour earlier, and Alberta is an hour later.

Jones Beach, Lake Isle (George Simhoni, Travel Alberta)

The easiest time for road travel is from mid-May to early September because more facilities are open for business, more wildlife is out and there is less chance of inclement weather.

Picture PERFE CT!

Rules of the Road Seat belts are required while driving in Alaska and Canada. Drivers must also carry a valid driver’s license and proof of insurance.

What Time is it?

yours This trip is ng. for the taki

Cover: Haines Junction (Yukon Government)

Canada also has its own currency which has been close to par with the U.S. dollar in recent years. A quick Internet search will give you the latest exchange rate. Keep in mind that Canadian money includes not only paper bank notes but also coins, known as “loonies” and “toonies,” worth $1 and $2 respectively.

Orca dreams...

Carmanah Walbran Provincial Park, Vancouver Island (JF Bergeron, Destination BC)

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QUARTERLY NEWSLETTER Kinross Bald Mountain

R E N I M S W E N E TH er Summ

2017

Message from the GM . . . . . . . . . . 1-2 Health & Safety Update . . . . . . . . . 3-4 HR News . . . . . . . . . . . . . . . . . . . . . . .5 Continuous Improvement (CI) . . . . . . .6 Welcome to Bald Mountain . . . . . . . .7 Employee Spotlight . . . . . . . . . . . . . .8 Community Relations . . . . . . . . . . . . .9 Environmental Update . . . . . . . . . . .10

R E N I M S W E N E H T

2017 Winter

Message from the GM . . . . . . . . . . . .1 Operations Update . . . . . . . . . . . . . . .2 CI/HR News . . . . . . . . . . . . . . . . . . . . .3 Employee Spotlight . . . . . . . . . . . . . .4 Manager Spotlight . . . . . . . . . . . . . . .5 Environmental/Safety News . . . . . . . .6


MESSAGE FROM THE GENERAL MANAGER

HEALTH & SAFETY UPDATE By Eric Endy

BALD MOUNTAIN’S FIRST YEAR – “QUITE AN ADVENTURE!”

My name is Eric Endy, and I’m the Interim Health & Safety Manager. I came to Bald Mountain as a Mine Ops Supervisor in 2011. I previously worked at Cortez for 15 years, and 3 of those years were in Health & Safety. I started my career at Golden Sunlight in Montana, operating equipment, and I’ve been in Ops for most of my career. I’ve been married for 30 years and we have 2 kids and 1 grandson. In my spare time, I like to hunt and fish and shoot my bow and guns. I love Bald Mountain Mine. It’s a fun place to work, and I enjoy the wildlife we can see while we’re working - it’s a beautiful place. How many other workplaces can you see deer, elk, and a mountain lion at work?

By Randy Burggraff

Congratulations to everyone at Bald Mountain Mine! We have grown enough to have our very first newsletter, and it has been quite an adventure. As those of you who have been here from the start know, Kinross took ownership of Bald Mountain Mine (BMM) on January 11, 2016. On that day, I was the only “Kinross import” on site. My instructions were simple, if daunting. “Establish Kinross processes and values at Bald Mountain by June 30th, and increase production to 170,000 oz of gold, while you’re at it.” I started to wonder what I had gotten into. Bald Mountain Mine was already a quality operation with established rules, policies, and procedures, and a strong site-specific culture. Any time a company buys a new operation, they will naturally instill their own rules, systems, and ways of doing things. Basically, I was tasked with evolving Bald Mountain from its Barrick roots to its Kinross future.

“Thanks to everyone on site for helping us get off to a strong start in 2017. There are great things ahead for Kinross Bald Mountain!”

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We had some really great things happen for us in our first year! Injuries were cut in half, as we went from eight in 2015 to only four last year. “Half” is a great achievement, but we still have more work to do. Four of our co-workers were injured, and that’s still four too many. We pushed through some key permits and experienced no serious environmental incidents. The new leach pad at the Bald Plant was built. We moved a LOT of muck! Barrick had saddled us with a difficult budget (not uncommon when mines are put up for sale), but we came within 3% of making it. To do that, we moved 89.5 million tons of material! Let’s look forward! Kinross has big plans for Bald Mountain. We did a massive amount of exploration drilling, which doubled our ore reserve, and led to plans that have us producing record numbers of ounces of gold for the next few years. That means

we need more miners, though we’ve already grown by about 150 people. 550+ people now work at Bald Mountain. There is more to come! We continue to drill and to look for more reserves. We will be opening another new pit later this summer – Poker. We are building two new leach pads at the Mooney site. We are completing plans to start constructing the Vantage Complex, a new set of pits about eight miles south of Mooney. Thank you! To all of you who have been here from day one, helping us through the transition, I appreciate all of your patience and dedication. And thanks to everyone on site for helping us get off to a strong start in 2017. There are great things ahead for Kinross Bald Mountain Mine!

Our message this month is TEAMWORK. We all bring different experiences and strengths with us to the table, and it’s only by working TOGETHER that we can harness those strengths. Also, it’s important to look out for each other. Let people know you care about their safety as much as you care about your own.

This transition was made more complicated by the fact that Barrick did much of the administrative work, like accounting, payroll, and hiring, from their office in town. Kinross has no such office, so all of these systems needed to be put into place at the mine. Most of that has been completed, but not without some growing pains along the way! There were some paychecks that were late or were wrong. We didn’t pay a few bills on time. We were often without enough parts and supplies, or were short on manpower in some areas. We have overcome most of these obstacles, though, and I thank you personally for bearing with us when you were impacted personally.

I’d like to tell you a little about each of our team members. They’ve worked really hard to become a team through lots of changes in the past year! Annie McWilliams has been at Bald Mountain for 6 years. She started out as an operator for C crew, moving to the Safety Department in December of 2015. While on C crew, she was an active member of Mine Rescue as the Team Captain & Co-Captain of the Competition Team. She has continued to remain active on the Mine Rescue & the Competition Teams. In her off-time she enjoys spending time with her husband of 25 years, her 3 children and her grandson. As a family, they enjoy spending time together outside, hunting and firewood cutting! She and her husband own an audio and staging business that has provided a lot of fun opportunites to interact with countless bands though the years. Stefanie Sisk joined Bald Mountain as the Executive Assistant for Randy Burggraff, GM and Clint Nebeker, Operations Manager, in February 2016. In late February 2017, Stefanie transitioned to a new role as the Industrial Hygiene Specialist within the Health and Safety Department. She possesses 15 years of experience in Occupational Medicine and is excited to apply her knowledge to the mine site in an effort to continuously improve the health of employees.

“Our message this month is TEAMWORK. We all bring different experiences and strengths with us to the table, and it’s only by working TOGETHER that we can harness those strengths.” – Eric Endy

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MOST IMPROVED SAFETY AWARD

During the Leadership Summit in Toronto, May 8-12, CEO Paul Rollinson presented BMM with the “most improved safety award.” We were the most improved site from 2015 to 2016 in regards to safety. Stop by the front office to see the plaque that was awarded.

Jennifer Morreale has been at Bald Mountain as a Health & Safety Trainer for just over a year. In the past, she worked for a contractor for a few years and at Jerritt Canyon. She has mill and environmental experience, as well as finance and business experience. Jennifer earned a Master’s in Business Administration in 2012. She is married to C-Crew Operator, John Morreale. In her spare time, Jennifer enjoys boating, sewing, and doing work for several charities in the local community. She is the proud mama of three boys. Jason Cooley came to Bald Mountain from Round Mountain almost one year ago to work as the Permitto-Work Specialist. He worked as a mill operator and trainer and was part of the mine rescue program during his eight years at Round Mountain. He is married and has three boys. In his spare time he enjoys hunting, sports, and whatever else his wife tells him he likes. Jalene Church joined the Safety team in October as the Health & Safety Admin. She previously worked in the AP department at Barrick. She is married to Tanner Church, who is a surveyor here at Bald Mountain. She enjoys archery and going on adventures on her motorcycle.

Bushra Rashid joined the Health and Safety Team at Bald Mountain on March 20, 2017. She is a Canadian Generation Gold employee with two years’ experience designing the Industrial Hygiene Program for the Kupol and Dvoinoye mine sites in Russia. She holds a Master of Public Health from the University of Toronto and enjoys conducting risky culinary experiments in her spare time. Tim Chapman started at Bald Mountain in 2007 in Mine Ops, running almost everything onsite. He has always loved equipment. He has been on Mine Rescue for 8 years and was Captain for seven years. He enjoys competing on the Mine Rescue Competition Team. He is married and has two boys. He is active in the community and enjoys coaching in Spring Creek. Tim is the new Safety Specialist and looks forward to the new opportunities he will have in the Safety Department. Craig Thompson is our newest team member. Read more about him in our Employee Spotlight on page 8.

NUGGET FINDS A HOME A roughly 2-week-old foal was abandoned by her herd on the mine site. Unlikely that she would survive without care, Jolynn Bruner and her husband Robert Bruner, both Mine Ops employees on crew A, volunteered to adopt her. After talking to their shift supervisor, they contacted Josh Roderick, Environmental Manager, who informed them that permission would need to be granted by the Bureau of Land Management (BLM) in order to rescue the foal. After only 24 hours, permission was granted and they successfully removed her from site. She is now healthy and content, living in the stables at their home. The foal was named Nugget, a tribute to where she came from.

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ANNUAL FUR RONDY FIREWORK SHOW COLLATERAL AT&T

Watch the Fireworks from the Top of the World! Be our guest for the 2017 AT&T Fireworks Extravaganza during Fur Rendezvous. Watch the show and enjoy appetizers and beverages, all from the warmth and comfort of the Top of the World at the Hilton Anchorage. 5:30 – 8pm Saturday, February 25, 2017 Top of the World, Hilton Anchorage

Celebration in the sky

Please RSVP to 264-7382 or kb468x@att.com by Thursday, February 23rd. Families are welcome, but space is limited and tickets are non-transferable. Reservations by first call basis, as seating is limited. Must provide number of guests at time of reservation.

Sponsored by

Celebrate the festival’s 82 nd year at the AT&T Fireworks Extravaganza

©2017 AT&T Intellectual Property. All rights reserved. AT&T, and Globe logo, are registered trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners.

6:45 pm Saturday, February 25, 2017 Ship Creek, Downtown Anchorage

Visit a local AT&T store to best serve your communication needs. Anchorage 5th Avenue Mall 2220 Abbott Road 4711 Business Park Blvd. Dimond Center Mall Tikahtnu Commons The Mall at Sears

1.866.MOBILITY - ATT.COM

Eagle River 11432 Business Park Blvd.

Juneau 9400 Glacier Hwy.

Soldotna 35553 Kenai Spur Hwy.

Fairbanks Teddy Bear Plaza Aurora Center, 407 Merhar Ave.

Ketchikan 2417 Tongass Ave.

Wasilla 1865 E. Parks Hwy.

© 2017 AT&T Intellectual Property. All rights reserved. AT&T, and Globe logo, are registered trademarks of AT&T Intellectual Property and/or AT&T affi liated companies. All other marks are the property of their respective owners.

Celebrate Fur Rondy’s 82nd year at the AT&T Fireworks Extravaganza 6:45 pm Saturday, February 25, 2017 Ship Creek, Downtown Anchorage


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Get your FREE AT&T Alaska 2017 Calendar at participating AT&T stores

10

Bull Moose in Denali National Park © 2015-2016 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property.

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A group of Orca whales come to the surface on a calm day in Lynn Canal, Inside Passage, Alaska. © John Hyde All rights reserved. AT&T and Globe logo are registered trademarks of AT&T Intellectual Property. All other marks are the property of their respective owners.

The AT&T Alaska 2017 calendar has arrived and is a beautiful way to view the year at a glance. Get your free copy at participating AT&T stores while supplies last! att.com/alaska

Anchorage 5th Avenue Mall, 1st Floor 2220 Abbott Rd. 4711 Business Park Blvd., Bldg. 1 Dimond Center Mall Tikahtnu Commons The Mall at Sears

Eagle River 11432 Business Park Blvd.

Juneau 9400 Glacier Hwy.

Soldotna 35553 Kenai Spur Hwy.

Fairbanks Teddy Bear Plaza Aurora Center, 407 Merhar Ave.

Ketchikan 2417 Tongass Ave.

Wasilla 1865 E. Parks Hwy.

©2016 AT&T Intellectual Property. All rights reserved. AT&T, and Globe logo are registered trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners.

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Iceberg in Bear Glacier Lake – Kenai Fjords National Park © Michael DeYoung

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ATT-1113-1708 2018 Calendar.indd 1

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8 15

All rights reserved. AT&T and Globe logo are registered trademarks of AT&T Intellectual Property. All other marks are the property of their respective owners.

10/4/17 12:22 PM


ANNUAL REPORT CONCEPT AND POP-UP BANNERS Alaska Gasline Development Corporation

Message from the Chairman

Table of Contents

2017 Annual Report

2

Message from the Chairman

3

Message from the President

5

Board of Directors

7

Executive management

9

Alaska’s natural Gas Infrastructure Project

11

Year in Review

13

Corporate Milestones

15

Corporate Leadership

23

Strategic Priorities

25

Financial Highlights

2017 | Alaska Gasline Development Coorporation

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Dave Cruz,

Chairman of the Board

2


235 Tcf Conventional Gas Alaska’s integrated natural gas infrastructure and LNG export project is a world-class facility designed to maximize the value of Alaska’s vast North Slope natural gas resources. Alaska Gasline Development Corporation is leading the project on behalf of the State of Alaska. The project will create up to 12,000 jobs during construction and approximately 1,000 jobs during operation.

Proven Gas Resource and Existing Infrastructure Market Proximity and Arctic Climate Stable and Reliable Supply

800 Miles of 42-inch Pipeline 20 Million Tons Per Annum of LNG 1

State

Significant Business Advantages

The project will generate billions of dollars in new revenue for Alaska. The project will provide Alaskans with a long-term supply of clean energy.

www.agdc.us

ALASKA’S INTEGRATED NATURAL GAS PROJECT INCLUDES 800

MILES OF PIPELINE AND A NEW LIQUEFACTION FACILITY.

www.agdc.us

Alaska’s Integrated Natural Gas Pipeline and LNG Export Facility

www.agdc.us


BRANDING

Imaging Associates Imaging Associates Locations

Patient Services Sterling Grover

Jeana Rhinehart

Physician Relations

Imaging Associates offers the most advanced imaging technology services in Alaska, with leading radiologists and easy, non-hospital billing.

sterling.grover@gci.net

6901 Debarr Rd. Suite 201 Anchorage, AK 99504

Patient Assistance

sliding fee scale • 25% discount to uninsured, self-pay patients • Global billing – one bill, with both facility and radiologist fees included

In-Network PPO for:

Mat-Su Trunk Road

2280 South Woodworth Loop T: 907-631-IMAGE (4624) F: 907-746-4640

Mat-Su Bogard Road

East Anchorage

1751 East Gardner Way, Suite B T: 907-631-IMAGE (4624) F: 907-746-4640

6911 Debarr Road T: 907-222-IMAGE (4624) F: 907-222-4651

EAST ANCHORAGE

MAT-SU BOGARD ROAD

• AETNA • Alaska BCHC • Anchorage Project Access • BC Federal Employee Program • Beechstreet • Blue Cross Blue Shield • CIGNA • First Choice Health • Medicaid • Medicare • One-Call Medical • Providence Health Plans • Tricare • TriWest Healthcare Alliance • Wells Fargo Administrators

Also Participates with:

• All commercial insurance carriers • All Workers’ Compensation (with open claim/coverage confirmation/authorization)

• Liability insurance carriers (accepted with open claim coverage)

Services Offered:

6911 Debarr Road 222-IMAGE (4624)

• Non-invasive prostate imaging • Imaging featuring MAVRIC

metal-suppression software for joint replacement patients

• Digital Mammography,

breast MRI and biopsies

• MRI • CT Scans • Musculoskeletal imaging and interventions

• Ultrasound • X-ray • Bone densitometry • PET/CT & Nuclear Medicine • Comprehensive vein treatments

www.imagingak.com

www.imagingak.com

www.imagingak.com

Your appointment is on

2280 S Woodworth Loop 631-IMAGE (4624)

georgjeana.rhinehart@imagingak.com t. 907-330-1235 f. 907-222-4651

• Financial assistance, based on

2000 Abbott Road, Suite 102 T: 907-222-IMAGE (4624) F: 907-222-4651

MAT-SU TRUNK ROAD

Insurance Coordinator

c. 907-841-9741 3701 E. Tudor Rd. #205 t. 907-352-9233 Anchorage, AK 99507 f. 907-352-9232

South Anchorage

SOUTH ANCHORAGE

2000 Abbott Road, Suite 102 222-IMAGE (4624)

at

¨ AM ¨ PM

If you need to reschedule, please let us know 24 hours in advance.

www.imagingak.com

Collaboration with Brilliant Media Strategies design team

1751 E Gardner Way, Suite B 631-IMAGE (4624)


IA Services Advanced technology

g and

Alaska’s first non-invasive prostate imaging and MAVRIC Metal Suppression system

ging

Mammography Accredited Breast Imaging Center of Excellence

psies

Digital mammography, breast MRI and biopsies

MRI

s

3T & 1.5T Wide-bore, high field options

CT Scans

alization

Low-dose, 64-slice & 40-slice CT with 3D visualization

ons

Musculoskeletal Imaging & Interventions Diagnostic & therapeutic services

Ultrasound

Including 3D/4D technology

X-Ray

Digital imaging & quick results

Bone Densitometry

gy

Precise images with one-pass technology

Comprehensive vein treatments

varicose r veins

At Imaging Associates, we search out answers – and find them quickly. With the most advanced MRI and CT technology in Alaska and a radiologist in every subspecialty, we can find what matters most. It’s why doctors recommend us and patients prefer us.

Welcome to Imaging Associates If you have any questions, feel free to give us a call.

Anchorage 222-IMAGE (4624) Mat-Su Valley 631-IMAGE (4624)

We have a specialist for that.

Jeana Rhinehart

Insurance Coordinator georgjeana.rhinehart@imagingak.com t. 907-330-1235 f. 907-222-4651

6901 Debarr Rd. Suite 201 Anchorage, AK 99504

IA Advantages Same day appointments Four convenient locations Easy parking Comfortable, friendly atmosphere Non-hospital setting A radiologist in every subspeciality

Fast, effective, non-surgical laser treatment for varicose veins & sclerotherapy for reduction of spider veins

PET/CT & Nuclear Medicine

Diagnostic & therapeutic applications

www.imagingak.com


PHOTOSHOOT Kenai Fjords Tours


QUARTERLY FINANCIAL NEWSLETTER Arctic Slope Regional Corporation

$181.7M

1st QUARTER 2016 FINANCIAL RESULTS

$123.2M

$605.6M

ADDRESS SERVICE REQUESTED

$44.9M

In an effort to provide our shareholders with additional information regarding the Corporation’s results as determined by Generally Accepted Accounting Principles (“GAAP”), the Corporation also discloses certain non-GAAP financial measures. Management utilizes these non-GAAP financial measures to assess recurring performance and believes these measures provide useful information to shareholders regarding baseline operating results. Earnings Before Interest and Taxes (“EBIT”) and Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) are both non-GAAP financial measures commonly used. The calculation of EBIT includes depreciation and amortization expenses, while EBITDA excludes these noncash expenses. After delivering record earnings in 2015, the First Three Months of 2016 provided for a challenging operating environment. Our Petroleum Refining and Marketing segment saw decreased earnings from reduced refining margins due to significant volatility in commodity and product prices, specifically impacting ultra-low sulfur diesel sales. Our Energy Support Services segment was negatively impacted by a decrease in oil prices which caused price concessions to key clients in 2016, above what was provided in 2015, as well as project cancellations and delays in Alaska and the Gulf of Mexico. The average Alaskan North Slope crude price was $33.79 per barrel for the First Three Months of 2016, at one point hitting a 10 year low for the index, as compared to $52.32 per barrel for the same period in 2015. These market conditions have also resulted in reduced royalty earnings from Alpine and equity earnings at Badami impacting our Resource Development segment. As a result of the challenges posed to our 2016 financial performance, the board of directors declared a $40 per share dividend for 2016, down from an overall $60 per share dividend in 2015, although the Board can raise this amount if our financial position improves from current forecasts.

On a positive note, the Corporation is benefiting from the acquisitions of Arctic Pipe Inspection (Energy Services segment - “API”) and Data Networks Corporation (Government Services segment - “DNC”) in 2015 as well as growth at our Government Services segment and continued improvements at our Industrial Services and Construction segments in 2016. As we continue to pursue our growth goals outlined in the 20122017 Strategic Plan, ASRC is working diligently to identify areas to grow and diversify our portfolio. We remain committed to delivering sustainable financial results to fund dividends to our shareholders, ongoing operations and investments to expand and sustain our portfolio. An example of this is the recently approved commitment through ASRC Capital, LLC to a new alternative investment fund that invests in collateralized loan obligations. The loan obligations the fund will be investing in are generally investment grade and with multi-national corporations. We believe this investment aligns with ASRC’s risk tolerance and desire for durable and predictable earnings and cash flows while further diversifying our portfolio. We have also approved an investment in refurbishing and expanding Petro Star’s fuel storage capabilities in Kodiak, Alaska. In spite of the challenges during the First Three Months of 2016 as compared to the same period in 2015, we are pleased with the Corporation’s financial performance. Our diversification, scale, recent investments and prudent management of our businesses has limited the downside of this current economic environment. ASRC has remained profitable in this difficult time for Alaskan owned businesses and is positioning to emerge from this down cycle stronger and more focused; however, we expect to be affected by the current low oil price environment through year end and into 2017. As reported in the 2015 Annual Report, we will also be negatively impacted by Shell’s departure from Alaska and are actively monitoring the State of Alaska’s response to the forecasted budget deficits and the impact to our business; specifically, increased taxes on the oil and gas industry, capital spending and the future of the Alaska liquefied natural gas project. We continue to be a participant in the “Alaska’s Future” initiative which is a diverse, bipartisan group made up of large and small businesses, organized labor and individuals across the State who are advocating for meaningful change to address Alaska’s fiscal challenges. ASRC’s focus is on contributing to the discussion by identifying solutions that not only make financial sense for our shareholders, but also leverage our operations to address the needs of the State economy. While this is clearly a difficult time for certain industries we operate in and our State, we remain committed to the initiatives outlined by our 20122017 Strategic Plan and creating value beyond 2017 for our shareholders.

Collaboration with Brilliant Media Strategies design team

$59.7M

Ü$13.9M

2015

2016

Ü$14.3M

45.8M

$30.6M

2015

2016

CONSOLIDATED REVENUES

2015

2016

CONSOLIDATED ADJUSTED EBIT*

CONSOLIDATED EBITDA

* Earnings Before Interest and Taxes, adjusted for goodwill amortization

Revenues from contracting, sales and services (“Operating revenues”) Operating revenues decreased for the First Three Months of 2016 as compared to the same period in 2015. This is a result of: • The impact of the lower current oil prices on our Petroleum Refining and Marketing segment’s product prices • Decreased work volumes at Operations and Maintenance, Houston Contracting, Omega and Engineering combined with rate concessions to key customers at our Energy Support Services segment The above negative variance is partially offset by: • Increased revenue at our Government Services segment primarily from the acquisition of DNC

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) The decrease in EBITDA for the First Three Months of 2016 as compared to the same period in 2015 was primarily the result of: • Decreased refining margins from our Petroleum Refining and Marketing segment as a result of less favorable product markets impact on margins • Decreased earnings from our Energy Support Services segment as a result of the decreased revenue described previously • A decrease in Resource Development earnings of $2.4 million due to the decline in the price of oil, which was somewhat offset by increased production from the CD 5 development coming online in late 2015

These negative variances were partially offset by: • The increase in revenue’s impact on our Government Services segment along with an award fee true-up. The acquisition of DNC provided an additional $1.4 million in EBITDA • Process improvements that have reduced the amount of fixed price contracting issues at our Industrial Services and Construction segments • The acquisition of API provided an additional $1.3 million in EBITDA

Depreciation and amortization Depreciation and amortization was $20.5 million for the First Three Months of 2016 as compared to the $17.8 million of expense recognized for the same period in 2015. The increase is primarily due the acquisitions of API in July 2015 and DNC in November 2015 which resulted in $0.2 million of additional depreciation and $2.3 million of additional goodwill amortization.

Administration and general costs Administration and general costs were $36.7 million for the First Three Months of 2016 as compared to the $33.7 million recognized for the same period in 2015. The increase is primarily due to the timing of benefit related expenses as well as the addition of DNC and API which added $1.4 million of expense. Also contributing is a reduction of $0.6 million in the deduction for administrative and general costs under the provisions of section 7(i) in relation to the decrease in natural resources earnings. These additional costs were partially offset by $1.3 million in cost saving initiatives across the Corporation.

The Petroleum Refining and Marketing segment’s revenues have been negatively impacted by the current oil prices’ impact on sales price. Less favorable product margins, most significantly for ultra-low sulfur diesel have resulted in decreased overall profitability from this segment for the First Three Months of 2016 as compared to the same period in 2015 which was one of the highest performing quarters in this segment’s history. With that said, the $14.3 million in EBITDA delivered this quarter is still well above this segment’s historical average. As this segment’s financial results are directly linked to commodity prices and refining margins, which are subject to global market factors beyond our control, earnings for this segment are highly volatile. Based on current market projections, we believe this segment will continue to deliver strong results in the near-term. We continue to construct the new asphalt unit while beginning construction on a naphtha

2016

EBITDA

We operate the following lines of business: Petroleum Refining and Marketing, Government Services, Energy Support Services, Industrial Services, Construction and Resource Development. In addition to our core operating segments, we provide a number of services across the North Slope of Alaska through our subsidiaries, Eskimos, Inc. (“EI”) and Tundra Tours, Inc. (“TTI”). Also, our subsidiary Alaska Growth Capital (“AGC”) provides loans to underserved borrowers throughout Alaska and outside the State. These businesses are referred to as our “Other Operations”.

splitting unit at our North Pole refinery. With investment economics supported through Alaska’s in-State refiner tax credit program (passed in 2014) the asphalt unit will supply less costly product to interior Alaska customers; the unit is expected to be online in June 2016. The naphtha splitter will provide a lower cost fuel (called LSR) to the local utility and construction will run through the end of the year with an anticipated start-up by January 2017. Also, as previously noted, we are investing in our Kodiak, Alaska facilities and expanding our product storage capacity which should provide for logistical efficiencies. We are actively monitoring what ultimately the State of Alaska does with the in- State refiner tax credit program as credits such as these are currently being debated as a result of the State’s budget crisis. The ceasing of the in-State refiner tax credit will have a significant impact on our evaluation of future investments in this segment.

Û$20.0M $217.8M

Û$3.5M

$197.8M $14.4M 2015

2016

$17.9M

2015

REVENUES

2016

EBITDA

GOVERNMENT SERVICES (ASRC Federal Holding Company) The Government Services segment experienced increased revenues for the First Three Months of 2016 as compared to the same period in 2015 primarily from the acquisition of DNC in November 2015. The acquisition of DNC also accounts for approximately half of the increase in earnings, contributing $1.4 million in EBITDA. The remainder of the positive variance in earnings is from an award fee true-up and slightly improved margins. We continue to see symptoms of uncertainty and tightening within this industry through award protests, award delays $166.1M

$120.7M

2015

and a notable shift to “lowest price technically acceptable” bids. The Government Services segment continues to address these challenges by optimizing its cost structure, business development functions and contract mix. Additionally, we are committed to growing this segment through acquisitions as noted by our purchase of DNC, discussed previously. Growing through acquisitions will allow this segment to leverage core capabilities and qualifications while diversifying our customer base and services provided.

Ü$45.4M

2016

REVENUES

OPERATING SEGMENT REVIEW

The following is a year-over-year review of our operating segment’s revenue and EBITDA contribution:

MAY 2016

Ü$11.4M

2015

PETROLEUM REFINING & MARKETING (Petro Star Inc.)

$508.9M

This Management Summary of Financial Results (“Summary”) of the consolidated financial position and results of operations as of and for the three months ended March 31, 2016, which we refer to throughout as the “First Three Months,” is intended to assist Arctic Slope Regional Corporation shareholders in better understanding the financial position and results of operations of the Corporation, and to provide additional information to shareholders regarding the Corporation’s activities. This Summary includes the results of ASRC’s operating segments, which are consolidated with ASRC’s financial results for financial reporting purposes. These statements should be read in conjunction with the Management Discussion and Analysis, Consolidated Financial Statements and notes thereto included in the Company’s Annual Report for the year ended December 31, 2015. When we refer to “us,” “our,” the “Corporation,” “ASRC” or similar language, we are referring to ASRC and its subsidiaries collectively.

2016

REVENUES

Ü$96.7M

EXECUTIVE SUMMARY Statements in this Management Summary of Financial Results that are not historical facts are forward-looking statements based on current expectations of future events. These forward-looking statements are subject to assumptions, risks and uncertainties that could change at any time and could cause actual results to differ materially from those expressed or implied by such statements. We therefore caution against placing substantial reliance on the forward-looking statements contained in this Summary. All forward-looking statements included in this Summary are made only as of the date of this Summary, and we assume no obligation to update any written or oral forward-looking statements made by us or on our behalf as a result of new information, future events or other factors.

$25.7M

$14.3M 2015

SUMMARY OF FINANCIAL RESULTS

for 3 months ended Mar. 31, 2016

P.O. Box 129 Barrow, AK 99723

Ü$58.5M

$16.4M

Ü$5.0M $11.4M

2015

2016

EBITDA

ENERGY SUPPORT SERVICES (ASRC Energy Services; Little Red Services) Extremely challenging market conditions caused by reduced oil prices has negatively impacted our Energy Support Services segment's revenue and earnings for the First Three Months of 2016 as compared to the same period in 2015. Revenue decreased due to reduced work volumes and cost concessions across the business with the Operations and Maintenance, Houston Contracting, Omega and Engineering being impacted the greatest. This segment’s current focus is working with key customers and maintaining market share through this low oil price environment while continuing to provide quality

and safe services. Challenging market conditions have caused both Energy Support Services companies and our customers to make some extremely difficult decisions in the past year. Most notably are Shell’s departure from Alaska, the closure of our North Dakota operations and reductions in workforce across the industry. Despite this uncertainty, we remain committed to completing the new 40 thousand square foot Deadhorse maintenance facility which should be completed mid-2016. We expect this segment will continue to be negatively impacted by low oil prices and Shell’s departure from Alaska through year end and into 2017.

ASRC Financial Results — First Quarter (for 3 months ended March 31, 2016) — May 2016


$14.7M

Ü$2.3M

FINANCIAL INFORMATION

$12.4M

Û$1.3M $0.5M

2015

2016

REVENUES

CONSTRUCTION (ASRC Construction Holding Co.)

Selected Balance Sheet Data (Unaudited)

2016

March 31, 2016 and 2015

EBITDA

2016

2015 $(0.8)M

LIQUIDITY/CASH FLOWS/BALANCE SHEET

The Construction segment’s revenues for the First Three Months of 2016 decreased slightly compared to the same period in 2015 primarily due to timing of contract performance; however, earnings improved. As noted in previous reports, we have wound down operations at ASRC McGraw and were still incurring costs to close out remaining projects in the First Three Months of 2015 where none of these charges were present in 2016. Also contributing are other timing and contract margin/mix factors. This segment remains focused on improving its backlog in this highly competitive environment through increased efficiency and improved processes while seeking to be a value-added partner to our customers.

$39.1M 2015

Ü$2.6M Û$2.0M

$36.5M

$1.2M 2016

2016

REVENUES

INDUSTRIAL SERVICES (Petrochem)

EBITDA 2015 $(0.8)M

The Industrial Services segment experienced relatively flat revenues for the First Three Months of 2016 as compared to the same period in 2015; however, our efforts in refocusing and improving the business have resulted in an increase in overall earnings. With the addition of new leadership in 2015, Petrochem directed its focus on improving internal processes, systems and cost structure. Although there is still much work to be done, we are pleased with the progress to date. We expect this segment to continue to see low EBITDA margins as we invest in improving the business; however, we remain committed to the long-term growth and success of this segment.

Û$0.2M 0.5M 2015

$7.0M

2016

Ü$2.4M

$44.14 Ü$21.18

$4.6M

0.7M 2015

BARRELS

2016

EBITDA

$22.96 2015

2016

AVG PRICE/BARREL, NET

RESOURCE DEVELOPMENT (Natural Resources, ASRC Exploration, LLC) The decrease in earnings from our Resource Development segment for the First Three Months of 2016 as compared to the same period in 2015 is primarily due to the decrease in the average price of crude oil which is somewhat offset by an increase in overall production from the Alpine and related satellite oilfields. We have particularly benefited from the start-up of the CD5 satellite field in late 2015. The First Three Months of 2016 have been a busy time for this segment's Oil and Gas Exploration division with the drilling of the Placer #3 appraisal well. To date, the project has come in under budget and we are now in the evaluation stage of the data obtained from the well. Given the unpredictability of spot prices, we expect continued earnings volatility in this segment, particularly over the near-term.

Overall, the Corporation’s financial position at March 31, 2016 remains strong, with total available liquidity of $446.1 million from available cash and our line of credit. This provides significant flexibility to address operating, investing and financing needs. Operating cash comes from normal business operations and is primarily a result of net income adjusted for depreciation and amortization, deferred taxes and the change in working capital. Our operating activities provided more cash for the First Three Months of 2016 as compared to the same period in 2015. The increase is primarily due to a significantly smaller 7(i) payment to other regional corporations due to reduced oil prices. Also contributing is timing factors related to the collection of accounts receivable and payment of accounts payable. Our investing activities include acquisition and divestiture activities, capital expenditures, loan activity as well as the purchase and sale of our investments in unconsolidated affiliates and marketable securities. Investment-related activities utilized less cash for the First Three Months of 2016 as compared to the same period in 2015 due primarily to 2015 having more purchases of marketable securities which is somewhat offset by 2016 having significantly increased expenditures for property and equipment. Significant uses of cash in the First Three Months of 2016 include capital expenditures for the construction of the asphalt unit and naphtha splitter unit at our North Pole refinery (Petroleum Refining and Marketing segment), the continued construction of the Deadhorse maintenance facility (Energy Support Services segment) and expenditures associated with the Placer #3 appraisal well (Resource Development segment). Significant uses of cash in First Three Months of 2015 include the purchase of $30.6 million of short-term marketable securities as we often invest excess cash to provide a higher return on excess liquidity. Financing activities include cash paid for dividends, repayment of debt and distributions to noncontrolling interests. Financing activities utilized slightly less cash for the First Three Months of 2016 as compared to the same period in 2015 which is due to fewer payments to noncontrolling interests at our Government Services segment.

As noted previously, in January 2016, the Corporation’s board of directors declared a $40 per share dividend for 2016 payable quarterly with increments of $10, $7.50, $7.50 and $15. The lower dividend in 2016 is reflective of our lower overall earnings forecast for the year caused by the various challenges facing the Corporation noted in this document. The board of directors will reevaluate dividend levels in the fourth quarter and may make adjustments. There are several key balance sheet variances worth noting between March 31, 2016 and 2015. Changes to the balance sheet financial statement line items are largely due to revenues and earnings changes as well as investment activity as discussed throughout this document. A few noteworthy items include:

2016

REVENUES

Administration and general costs

614,857,000

530,393,000  

570,923,000

36,694,000

Amortization of goodwill and intangibles Operating income

33,712,000  

29,148,000

7,872,000

5,749,000

2,640,000

19,436,000

35,779,000  

12,146,000

2,493,000

(617,000)  

18,000

Natural resources, net of 7(i) obligations & expenses

5,358,000  

Insurance gains and settlements

Net Income attributable to ASRC shareholders

• Total Shareholders’ equity increased by $67.6 million as a result of earnings exceeding dividends declared.

Cash and cash equivalents, partially restricted

2014

605,633,000

444,888,000

Earnings (losses) from unconsolidated affiliates

• Property, plant and equipment, net increased by $91.5 million mainly due to the acquisition of API, construction of capital assets in our Energy Services and Petroleum Refining and Marketing segments, the purchase of the Captains Bay facility (Petroleum Refining and Marketing segment) and expenditures associated with the Placer #3 appraisal well (Resource Development Segment), net of current year depreciation expense.

• Total liabilities decreased by $22.9 million. This is primarily due to the decrease in revenue along with a decrease in payables to other regional corporations for 7(i) payments, as a result of the decline in ANS price .

2015

508,890,000

7,970,000

17,274,000

5,616,000

(209,000)

73,000

1,587,000

Net income attributable to noncontrolling interest

(1,802,000)

(1,371,000)

(997,000)

EBIT

25,276,000

41,834,000

35,644,000

Interest and marketable securities earnings

181,000

Interest expense, net of capitalized interest Income before taxes Income tax expense $

207,000

349,000

(327,000)

(434,000)

(279,000)

25,130,000

41,607,000

35,714,000

(6,228,000)

(10,025,000)

(9,236,000)

18,902,000

31,582,000  

26,478,000

$

Receivables, net

162,360,000  

53,356,000

Other current assets* Total current assets Property, plant and equipment, net of accumulated depreciation Goodwill, intangibles and other assets, net

497,191,000 $

$

Long-term debt

Net cash provided by (used in) operating activities

$

Net cash provided by (used in) investing activities

52,375,000

Net cash used in financing activities

(15,881,000)

Net increase (decrease) in cash and cash equivalents

600,000

Cash and cash equivalents January 1, Cash and cash equivalents March 31,

68,282,000   $

68,882,000

(77,155,000)

(26,771,000)

(43,027,000)  

42,463,000

(16,814,000)  

(20,270,000)

(136,996,000)  

341,644,000

3,634,000

103,926,000

67,095,000  

389,471,000

412,373,000  

Shareholders' equity:

Common stock, no par

Total Liabilities and Shareholders' Equity

 

Paid in capital

—  

5,000  

439,954,000  

(1,218,000)

(999,000)

866,318,000

6,662,000

$

5,000  

478,148,000

1,343,253,000

Noncontrolling interest

(35,894,000)

1,694,729,000  

285,545,000

Total Liabilities

Total Shareholders' Equity

2014

187,293,000 478,985,000  

1,739,386,000

Other accrued obligations

Retained earnings

2015

413,753,000

Liabilities and Shareholders' Equity Total current liabilities

Total ASRC Shareholders' Equity

2016

59,397,000   614,698,000   

254,452,000

Other long-term assets (investment, loans, and deferred tax assets)* Total Assets

69,128,000  

28,356,000 482,444,000    505,299,000

Accumulated other comprehensive loss

Three months ended March 31, 2016, 2015, 2014

120,295,000 203,518,000  

139,185,000

Inventories

Contributions to capital

Selected Cash Flow Statement Data (Unaudited)

68,882,000 192,665,000

Cost and earnings in excess of billings on uncompleted contracts (unbilled)

839,735,000 1,278,695,000 3,661,000

1,349,915,000

1,282,356,000

1,739,386,000

1,694,729,000

*Certain prior year amounts have been reclassified to conform to the 2016 presentation. Other current assets and other long-term assets were impacted by the adoption of Accounting Standards Update 2015-17 Balance Sheet Classification of Deferred Taxes.

(4,578,000)

257,291,000  

173,939,000

120,295,000  

169,361,000

Key Financial Measures (Unaudited) Three months ended March 31, 2016, 2015, 2014

$8.6M

Û$0.9M $0.6M

2015

Costs of contracting, sales and services

Other income (expense), net

Û$0.8M $7.8M

2016 $

Operating expenses:

• Total current assets decreased $132.3 million. Cash and cash equivalents decreased primarily due to our investing activities and financing activities exceeding operating cash flows over the year. Costs and earnings in excess of billings on uncompleted contracts (unbilled) decreased due to timing factors. Lastly, other current assets decreased due to the liquidation of the majority of our short-term investments in marketable securities since March 31, 2015.

• Goodwill, intangible and other assets, net increased by $67.2 million mainly due to the acquisition of API and DNC in 2015, offset by current year amortization expense.

Current assets:

Three months ended March 31, 2016, 2015, 2014

Revenues from contracting, sales and services

2015

Assets

Selected Income Statement (Unaudited)

2015

2016

$1.5M

EBIT

$

Goodwill amortization

2016

Adjusted EBIT*

EBITDA

Depreciation and amortization (excluding goodwill amortization) EBITDA

OTHER OPERATIONS (Alaska Growth Capital; Eskimos, Inc.; Tundra Tours, Inc.) Revenues and earnings from Other Operations increased for the First Three Months of 2016 as compared to the same period in 2015 due to increased loan sales activity and loan volume at AGC.

$

25,276,000

2015 41,834,000

2014 35,644,000

5,296,000

3,038,000  

1,625,000

30,572,000

44,872,000  

37,269,000

15,234,000

14,804,000

10,664,000

45,806,000

59,676,000

47,933,000

*Earnings Before Interest and Taxes, adjusted for goodwill amortization

ASRC Financial Results — First Quarter (for 3 months ended March 31, 2016) — May 2016

ASRC Financial Results — First Quarter (for 3 months ended March 31, 2016) — May 2016


ANNUAL REPORT

Arctic Slope Regional Corporation (2016)

OPERATING SEGMENT REVIEW GOVERNMENT SERVICES ASRC Federal and its subsidiaries deliver engineering, information technology, infrastructure support, professional and technical services and solutions to civil, intelligence and defense agencies throughout the United States. ASRC Federal provides services through three operating groups; these include Engineering, Aerospace and Mission Systems, Infrastructure Support and Professional Services, and Information Systems and Technology Solutions. ASRC Federal’s enterprise strategy is Customer-Focused, Operationally Excellent. This strategy reflects the commitment of management and the workforce within this segment to build long-term, missionfocused customer relationships by delivering creative, tailored solutions at competitive prices. The budget caps established by the Budget Control Act of 2011 and the continued debate related to Alaska Native Corporation participation in the Small Business Administration’s (“SBA”) 8(a) Business Development Program continue to constrain contract spending and inject uncertainty in our Government Services segment through award protests, award delays and a notable shift to “lowest price technically acceptable” procurements. Increased competition continues to put margin pressure on contracts subject to recompete as well as new contract “wins.” In light of these factors, we believe it is critical to ASRC Federal’s long-term success that the Company remains flexible, continues to diversify and positions itself to be able to quickly react to the changing environment in the government services industry.

Annual Report

Despite these challenges, during 2016 ASRC Federal captured 81% of recompetes, based on the number of recompete opportunities, and was awarded multiple new programs, mainly in our Engineering, Aerospace and Mission Systems Operating Group. We believe these awards provide a foundation for future growth as well as reflect the positive impact of ASRC Federal’s investment in business development capabilities. In continued pursuit of our growth goals outlined in the 2012-2017 Strategic Plan, on August 16, 2016, ASRC Federal completed the acquisition of 100% of the outstanding stock of Vistronix. Headquartered in Reston, Virginia, Vistronix has over 700 employees and has been providing a broad range of information technology services to federal agencies across the mission assurance and national security spaces for over 25 years. Vistronix prides itself on being a value-added service provider, focused on solving customers’ most complex data challenges. The acquisition of Vistronix immediately broadens ASRC Federal’s advanced technology capabilities and will contribute to diversifying ASRC Federal’s customer portfolio and provide a platform for long-term higher margin growth.

Results of Operations (in millions) 2016

2016

2015

2014

Revenues

$

1,048.6

845.4

792.5

EBIT

$

53.2

50.8

48.9

12.8

3.5

3.1

$

66.0

54.3

52.0

8.0

7.8

7.3

74.0

62.1

59.3

Goodwill amortization Adjusted EBIT Depreciation and amortization (excludes goodwill amortization) Adjusted EBITDA

$

15


ARCTIC SLOPE REGIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income

Consolidated Balance Sheets

Notes to Consolidated Financial Statements December 31, 2016, 2015 and 2014 (Dollars in thousands)

Years ended December 31, 2016, 2015 and 2014 (in thousands)

Years ended December 31, 2016 and 2015 (in thousands)

2016

2015

2016

Assets

2015

2014

Government contract services

Cash and cash equivalents (including restricted balances of $849 and $710 in 2016 and 2015, respectively)

$

54,028

68,282  

137

1,228  

Receivables, net

268,701

267,206  

Costs and earnings in excess of billings on uncompleted contracts

160,346  

131,076  

70,229  

63,680  

22,761  

20,976  

Investments in marketable securities

Inventories Prepaid expenses and other current assets Assets held for sale

1,910

Elders’ Trust investments

3,171  

Total current assets Property, plant and equipment, net of accumulated depreciation

— 3,395  

48,588  

48,121  

2,371,164  

2,515,377  

2,665,295  

Government contract services

898,627  

722,997  

675,814  

Energy, industrial and construction services

662,406  

836,909  

790,697  

493,834  

598,799  

942,985   39,117   

37,987   25,750

Impairment charges, net

501  

Administration and general costs

158,773  

143,671  

120,973  

185,925

Selling and business development costs

35,245

91,909  

76,384

Total operating expenses

2,322,148  

301,434  

304,204 1,790,881

Operating income Earnings from unconsolidated affiliates Natural resources, net of 7(i) obligation and expenses

Liabilities and Shareholders’ Equity

Interest and marketable securities earnings (losses)

Current liabilities: $

Accounts payable and accrued liabilities

1,085  

3,781  

331,762  

280,516  

25,279  

29,369  

Billings in excess of costs and earnings on uncompleted contracts Total current liabilities

358,126  

Capital lease obligations

313,666  

Other accrued obligations

108,005  

Long-term debt

299,067

Total liabilities

765,198  

757   99,183    — 413,606   

Shareholders’ equity:

Interest expense, net of capitalized interest Insurance gains and settlements (including business interruption settlement of $499 in 2014) Other income (loss), net Income before income taxes and noncontrolling interest Income tax expense Net income

—    

Paid in capital

—    

5  

5  

501,298  

472,086  

Accumulated other comprehensive loss

(1,361)

(1,217)

879,530  

899,985  

1,379,472  

1,370,859  

7,187  

6,416

Noncontrolling interest

1,386,659  

1,377,275  

2,151,857

1,790,881  

1 1 8 ,9 1 1  

51 ,1 4 5  

4,763  

6,344

(921)  

1,255  

(1,768)

(1,531)

450

1,538

7,706

3,573  

(1,333)  

$

32

since this initiative was incorporated into our Strategic Plan. A great example is the “Too Driven” program, which works

characterization, long-term stewardship and project controls.

with our schools to focus on anti-bullying, suicide prevention,

With the creation of AIS and our acquisition of RSI, we

self-worth and creating a positive mental attitude for our

intend to expand our service offerings to existing and new

youth. Through these types of programs we believe we

customers in the Lower 48 to provide additional earnings

can continue to have meaningful and lasting impacts on

to benefit our shareholders. As detailed in this report, we

our communities.

made several other investments throughout the year that we and providing long-term growth.

intercompany transactions and balances have been eliminated in consolidation.

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Significant

100,244

value of long-lived assets including goodwill and intangible assets, costs to complete and anticipated future losses

accounting estimates include those for the allowance for doubtful accounts, loan loss allowance, asset retirement

(2,813) 97,431   

Other comprehensive income, net of tax:

Change in unfunded status of postretirement benefits Other comprehensive income (loss) Net comprehensive income attributable to ASRC shareholders

$

26

(154)  

(226)  

1,213

(144)

(200)  

1,420

43,377

112,137  

98,851  

Property

range of any potential additional loss.

Similar investments held in the Elders’ Trust portfolio (Trust) (see Note 5), the Supplemental Executive Retirement 31, 2016 and 2015, the Corporation’s restricted cash of $849 and $710, respectively, consisted of cash equivalents on deposit with a third party financial institution related to operating leases.

36 STRATEGIC PLAN

of engaging with our communities and residents on key

looking statements are subject to assumptions, risks and uncertainties that could change at any time and therefore caution against placing substantial reliance on the forward-looking statements contained in this MD&A. All forward-looking statements included in this MD&A are made only as of the date of this MD&A, and we assume no obligation to update any written or oral forward-looking statements made by us or on our behalf as a result of new information, future events or other factors.

and to ensure alignment on a variety of issues important to

to address the market challenges in Alaska. These efforts included reinvesting in our refinery operations in North history. Much of this investment was targeted at diversifying

financial results included in this annual report. At a time when

our earnings profile outside of markets with exposure to the

our state and some of our businesses have been challenged by

oil and gas industry in Alaska. This includes the acquisition

the lowest oil prices in over a decade, we are proud to report

of Vistronix Intelligence & Technology Solutions, LLC

what we believe is a solid financial return with $178 million

("Vistronix") by our wholly-owned subsidiary, ASRC Federal

in adjusted earnings before interest, taxes, depreciation

Holding Company, LLC ("ASRC Federal"). Headquartered

and amortization ("EBITDA"). In addition, we have made

in Reston, Virginia, Vistronix has provided a wide range

significant progress in achieving our goals established

of information technology services to federal agencies

in our 2012-2017 Strategic Plan with targeted capital

across the mission assurance and national security spaces

deployment. While several of our segments face difficult

for over 25 years. The acquisition of Vistronix immediately

market conditions, we are focused on organic growth and

broadens ASRC Federal’s advanced technology capabilities

new opportunities that will enable us to meet our established

and increases ASRC Federal’s annual revenue to over

goals. The theme of this report is “Transformational,” which

$1 billion, making Government Services ASRC's largest

we feel appropriately reflects efforts to diversify our earnings

business segment. We are also pleased to report we established a new platform company to pursue growth with the creation of ASRC Industrial Services, LLC ("AIS"). AIS currently includes

In 2016 we deployed over $300 million, our highest level

the operations of Petrochem Insulation, Inc., as well as

of capital deployment in any single year in our Company’s

recently acquired Restoration Services, Inc. ("RSI"), which

Pole to add an asphalt oil plant, through which we hope to address an underserved market in Interior Alaska. We have also completed construction of the Deadhorse shop for ASRC Energy Services ("AES"), which adds to our service offerings on the North Slope. We believe these reinvestments, along with steps made to increase efficiencies at AES, will position our key Alaska operations to be responsive to market conditions. We continue to work on a number of projects that have a direct, positive impact on the communities on the North Slope. Most notably is our collaboration and direct investment to bring high-speed broadband to our communities. This exciting project is expected to be completed in 2017 and we believe it will significantly affect our communities in the areas of education, emergency response, health care and many others. In addition, during this past year we continued to expand our Paannaq Initiative to build our capacity, entrepreneurship, social investment and in-region economic opportunities. We have now completed over 450 projects

Revenues

$

2,371,164,000

2,515,377,000

$

115,388,000

164,440,000

132,927,000

$

178,010,000

225,242,000

185,067,000

Cash provided by operating activities

$

1 9 1 ,613,000

116,412,000

257,712,000

Dividends declared

$

63,589,000

77,969,000

72,860,000

participate in discussions regarding important developments

Dividends paid per share

$

48.00

60.00

57.50

in our region.

Shares outstanding

1,331,750

1,306,800

1,277,500

Additionally, we continue to advocate for reasonable

Average shareholder hire

484

599

565

regulation while supporting the responsible development of the Alpine field, opportunities for offshore development, and a renewed focus on exploration of the 1002 Area within

1 — Earning Before Interest and Taxes (EBIT) adjusted for goodwill amortization, non-cash impairment charges and insurance settlements. 2 — Earning Before Interest, Taxes, Depreciation and Amortization (EBITDA) adjusted for non-cash impairment charges and insurance settlements.

TAX STRATEGY Senior leaders continue to develop tax strategies to maximize the Corporation’s profits for reinvestment, acquisitions and dividends.

revenue streams, increase earnings and generate new job opportunities for shareholders.

.

.

Qiksiksrautiqagniqput Avanmun

Pilgusivut . Our Values

Respect for Each Other

earnings and providing jobs and infrastructure within our

December 31, 2016, which we refer to throughout as “2016”, is intended to assist Arctic Slope Regional Corporation shareholders to better understand the financial position and results of operations of the

Despite the challenging market in Alaska, we continue to

This MD&A includes the results of ASRC’s operating segments, which are consolidated with ASRC’s

focus on strengthening ASRC to provide long-term value

financial results for financial reporting purposes. These statements should be read in conjunction with the

Corporation, and to provide additional information to shareholders regarding the Corporation’s activities.

to our shareholders in the form of dividends, opportunities

Consolidated Financial Statements and notes thereto for the year ended December 31, 2016 at the end

and development. We are excited to implement our plans

of the Annual Report. When we refer to “us,” “our,” the “Corporation,” the “Company,” “ASRC” or similar

to strengthen our core, diversify our earnings and grow our

language, we are referring to Arctic Slope Regional Corporation and its subsidiaries collectively.

Operational excellence is critical to reduce costs, improve profits and increase competitiveness.

We leverage our subsidiaries’ strengths to position for future growth

Qutchiksuakun Savagniq High Performance

This MD&A of the consolidated financial position and results of operations as of and for the year ended

shareholder communities.

OPERATIONAL EXCELLENCE

SUBSIDIARY STRENGTHS Ilumun . Atuumaninit . Pilgusivut .

Integrity

the Arctic National Wildlife Refuge. We believe these important opportunities support our focus on increasing

2012

The Corporation’s acquisition strategy is designed to diversify

2,665,295,000

Adjusted EBITDA2

of our lands. This includes our efforts for further expansion

Iñupiaq cultural and economic freedom – with continuity, responsibility and integrity.

2014

Adjusted EBIT1

We hope these efforts ensure we have an opportunity to In addition to our acquisitive growth, over the past year

2015

were very active in addressing challenges to further natural interests in offshore oil and gas leases, among other efforts.

investments and our relationships to enhance

MERGERS AND ACQUISITIONS 2016

resource development at Alpine, as well as to protect our

our region, our state and our nation. During the past year we

businesses, our lands and resources, our

Corporate Overview

these channels we regularly meet with our communities, village corporations and government agencies for their input

we made great strides in protecting our core operations

ASRC’s mission is to actively manage our

could cause actual results to differ materially from those expressed or implied by such statements. We

and provide shareholder employment and development.

VILLAGE AND COMMUNITY ECONOMIC DEVELOPMENT By strengthening and growing local businesses, the Corporation seeks to integrate culture and economy, empower community-based

.

Iñuuniagniqput Iñupiaguvluta

.

Atisiñiagniq Resolution of Conflict

Our Culture as Iñupiat

organizations, expand partnerships and strengthen village economies.

SHAREHOLDER EMPLOYMENT ASRC is committed to growing a talented pipeline of young Iñupiat whose career paths align with the Corporation’s holdings, as a way of developing the next generation of leaders and employees.

business in 2017. We believe we have the right team in place to continue to accomplish our goals.

In an effort to provide our shareholders with additional information regarding the Corporation’s results as determined by Generally Accepted Accounting Principles (“GAAP”), the Corporation also discloses certain non-GAAP financial measures. Management utilizes these non-GAAP financial measures to assess

Qaunaksriñiqput

recurring performance and believes these measures provide useful information to shareholders regarding

Stewardship

baseline operating results. Earnings Before Interest and Taxes (“EBIT”) and Earnings Before Interest,

Ilagiinñivut .

Our Relationships

2017

Taxes, Depreciation and Amortization (“EBITDA”) are both non-GAAP financial measures commonly used by public and privately held companies similar to ASRC. The calculation of EBIT includes depreciation and amortization expenses, while EBITDA excludes these non-cash expenses.

2

3

9

6

At times

or the e

activities, with original maturities of less than three months from their date of purchase to be cash equivalents.

Statements in this Management Discussion and Analysis (“MD&A”) that are not historical facts are forward-

modified

fair value

The Corporation considers all highly liquid investments, maintained as part of the Corporation’s cash management

looking statements based on current information and expectations of future events. These forward-

line meth

under ca

D. CASH AND CASH EQUIVALENTS

See accompanying notes to the consolidated financial statements.

the lowe

H. PR

whether additional loss, due to such changed circumstances, will occur or to reasonably estimate the amount or

207  

Inventor

of litigation, claims and self-insurance.

significantly change in future periods to reflect new laws, regulations or information. It is not possible to determine 10

G. IN

on uncompleted contracts, realization of deferred income taxes and reserves for the ultimate cost of the settlement

The recorded amounts are currently believed by management to be sufficient. However, such estimates could

Particularly in these times, we recognize the importance initiatives. It is for this very reason the Voice of the Arctic

“Despite the challenging market in Alaska, we continue to focus on strengthening ASRC to provide long-term value to our shareholders in the form of dividends, opportunities and development.”

In many ways, this was truly a historic year for our Company.

The Corp

after all

in the United States of America requires management to make estimates and assumptions that affect the reported

obligations, useful lives of property and equipment and the related accumulated depreciation and amortization, fair

Unrealized holding gains on available-for-sale securities

experien

All other

132,769  

(5,133)

Corpora

The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted

(32,525)

112,337  

for doub

least qua

153,276  

43,521

F. TR

C. USE OF ESTIMATES

(35,806)

(7,486)

The spec

Trade ac

81,158  

Iñupiat and Arctic Iñupiat Offshore were formed. Through

our business.

at fair va

a controlling financial interest. The cost method is used when we do not have significant influence. All significant

MANAGEMENT’S DISCUSSION AND ANALYSIS provides a variety of services related to environmental remediation, including regulatory strategy, comprehensive

believe will contribute to further diversifying our portfolio

and reduce the impact of volatile commodity prices on

Debt and

The equity method is used to account for investments in affiliates in which we exert significant influence but not

2,679  

117,470  

in which

entities (VIEs), as defined by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)

CORPORATE OVERVIEW

CRAWFORD PATKOTAK Chairman

recomm

general, we consolidate majority owned, controlled subsidiaries. Entities that are determined to be variable interest

33

2016 CHAIRMAN AND , MESSAGE PRESIDENT’S

We are pleased to share with you our 2016 operating and

been les

Plan or the Deferred Compensation Plan (see Note 11) are not included in cash and cash equivalents. At December

Total liabilities and shareholders’ equity

REX A. ROCK SR. President & CEO

the Corp

to the VIE.

Commitments and contingencies

See accompanying notes to the consolidated financial statements.

marketa

(30,151) 51,007

Less: net income attributable to noncontrolling interest

results in

United States. The Corporation also participates in various partnerships, joint ventures and other business activities.

has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant

2,029  

374

holding

A decline

that entity. The Corporation determines if it is the primary beneficiary by assessing whether it has the power to direct

49,016  

65,171  

securitie

resource development, commercial lending, and tourism. The Corporation and its subsidiaries operate throughout the

the activities that most significantly impact the VIE’s economic performance as well as assessing whether or not it

32,086  

investme

petroleum refining and marketing, energy, industrial and construction services, government contract services, natural

Topic 810- Consolidation, will be consolidated if the Corporation is considered the primary beneficiary, as defined, of

2,614,150  

27,866  

securitie

stock pr

25,742

2,396,466  

(2,150)

Net income attributable to ASRC shareholders

Common stock, no par

30,353

are cons

Business activities of Arctic Slope Regional Corporation and its subsidiaries (the Corporation or ASRC) include

Consolidation decisions are based on the voting rights, risks and rewards associated with our interest in an entity. In

—    

consider

A. OPERATIONS

B. PRINCIPLES OF CONSOLIDATION

18,321

275  

388,013  

2,151,857

accordan

1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Operating expenses:

39,591  

Intangible and other assets, net

Total shareholders’ equity

43,098  

33,397  

35,243

Total ASRC shareholders’ equity

960,625  

Amortization of goodwill and intangibles

35,646  

Retained earnings

677,320  

Other

1,355

Loan and lease portfolio, net of allowance for loan losses of $1,501 and $980 in 2016 and 2015, respectively

Contributions to capital

556,358  

481,534  

150,393  

Current portion of capital lease obligations

865,403  

538,354  

215,218  

$

Total revenues

79 1 ,1 4 6  

945,833  

Petroleum refining and marketing

Investments and advances, net

Total assets

Other

843,636  

726,113  

555,843  

Deferred tax assets

Petroleum refining and marketing

1,045,595  

581,283

Investments in marketable securities

Goodwill, net

$

Energy, industrial and construction services

Investme

than thre

Revenues:

Current Assets:

E. INV

7

amortiza


ANNUAL REPORT

Arctic Slope Regional Corporation (2014)

TABLE OF CONTENTS

.

Qiksiksrautiqagniqput Avanmun Respect for Each Other

Our Values

lands and resources,

~

integrity.

.

$2,663,540

5-Year Financial Summary

Years ended December 31 (in thousands other than Shares Outstanding and Dividends Paid Per Share) 2014

2013

2012

2011

2010

Revenues

$

2,663,540

2,525,615

2,628,929

2,549,993

2,331,681

Adjusted EBIT1

$

132,927

127,274

119,281

115,029

145,070

Adjusted EBITDA2

$

185,067

169,287

165,446

157,941

179,193

Total Assets

$

1,794,942

1,733,682

1,660,706

1,587,663

1,622,354

Debt and Lines of Credit

$

8,400

11,569

14,835

28,955

43,500

$

1,294,900

1,224,701

1,188,696

1,124,132

1,119,081

1,277,500

1,244,600

1,208,900

1,178,400

1,145,200

57.50

110.00

50.38

50.84

64.26

ASRC Shareholders’ Equity Shares Outstanding Dividends Paid Per Share

2

Ilumun Atuumani it Pilgusivut . . Integrity

(In thousands)

economic freedom responsibility and

Qutchiksuakun Savagniq High Performance

REVENUES

cultural and – with continuity,

Atisiñiagniq Resolution of Conflict

$2,331,681

to enhance In upiaq

.

Iñuuniagniqput Iñupiaguvluta Our Culture as Iñupiat

Qaunaksriñiqput Stewardship

our investments and our relationships

Ilagii ñivut . Our Relationships

.

$2,549,993

2014 Annual Report

. PILGUSIVUT

$2,628,929

our businesses, our

34 Financial Statements

$2,525,615

to actively manage

8 Management Discussion and Analysis

66 Glossary

.

ASRC’s mission is

4 Chairman & President’s Message

$

1 — Adjusted EBIT - EBIT before insurance settlements, non-cash impairment charges, goodwill amortization, gains on divestitures of subsidiaries and unconsolidated affiliates, losses on acquisitions of noncontrolling interests and the retroactive impact of Quality Bank and tariff judgments. 2 — Adjusted EBITDA - EBITDA before insurance settlements, non-cash impairment charges, gains on divestitures of subsidiaries and unconsolidated affiliates, losses on acquisitions of noncontrolling interests and the retroactive impact of Quality Bank and tariff judgments.

3


December 31, 2014 and 2013

I am a father.

Years ended December 31, 2014, 2013 and 2012

Consolidated Statements of Income and Comprehensive Income (In thousands)

(In thousands) 2014

2013

2014

Assets Arctic Slope Regional Corporation and Subsidiaries

And like my father before me, I have dreams. I have vision. I am a hunter with a deep respect for nature and

BUSINESS SEGMENT REVIEW

Cash and cash equivalents (including restricted balances of $582 and $496

$

in 2014 and 2013, respectively)

Investments in marketable securities

257,291

173,939  

1,903

76,521  

Petroleum Refining and Marketing

227,689 Petro Star is the only Alaskan-owned refining and fuel marketing company. Petro Star’s Costs and earnings in excess of billings on uncompleted contracts 122,583   two refineries, located in North Pole, Alaska and Valdez, Alaska, draw their crude supply Inventories 75,331    from the Trans Alaska Pipeline System (TAPS) and produce highway, off-road and

230,332  

marine diesel,and as well jet fuelassets and home heating oil. The North Pole refinery supplies Prepaid expenses otherascurrent 21,655  

24,215  

Receivables, net

the mining industry and U.S. military operations at Eielson Air Force Base, and provides 3,832   heating oil to communities throughout Interior Alaska. The Valdez refinery is one of Deferred only tax twoassets refineries in Alaska that produce ultra-low sulfur diesel, including marine 7,216   

Elders’ Trust investments

763,937  

Pribilof Islands, 1,000 miles west of Anchorage. It also supplies jet fuel to commercial 416,568   cargo carriers at Ted Stevens Anchorage International Airport and to the U.S. military

364,776  

Investments in marketable securities 18,535   at Joint Base Elmendorf-Richardson. Through its operations in Dutch Harbor, Petro

61,666  

Star supplies fuel and services to the largest commercial fishery in the United States. 127,526 In Investments and advances, net  

110,090  

Property, plant and equipment, net of accumulated depreciation

Goodwill, netStar is currently operating in a very challenging environment, as its financial 111,621   Petro

65,401 39,294 

margins are subject to global market factors beyond our control and have experienced 293,815   enhanced volatility in recent years. Alaska North Slope (“ANS”) crude, which Petro Star

uses assets to produce its refined products, is more expensive than West Texas Intermediate Total $ 1,794,942

2014

2013

2012

960.6

962.0

1,023.7

$

4.3

0.7

Contributions to capital EBIT

(1.0)

Insuranceother gainscomprehensive and settlements Accumulated loss

Like my father before me,

Goodwill amortization Retained earnings Adjusted EBIT Total ASRC shareholders’ equity Depreciation and amortization Noncontrolling interest (excludes goodwill amortization)

~ I am Inupiaq.

Total shareholders’ Adjusted EBITDA equity

$

$

997,566  

754,023  

754,194  

Government contract services

675,814  

580,124  

605,672  

39,117  

42,045  

43,360  

18,321  

4,740

706,331  

—    

214  

146,715  

134,006  

133,066  

2,612,395  

2,464,620  

2,540,715  

51,145  

60,995  

Earnings (losses) from unconsolidated affiliates

6,344  

10,823  

(9,641)

Natural resources, net of 7(i) obligation and expenses

65,171  

56,940  

42,940  

1,255   (1,531)  

settlements of $499 in 2014) Other income, net Income before income taxes and

78,696  

Less: net income attributable to noncontrolling interest

496,411  

2,132  

1,700   (2,833)  

7,706

— 1,712  

(32,525)

Net income

88,214  

(1,646)

2,679   132,769   

noncontrolling interest Income tax expense

8,139  

6,643

501  

Interest and marketable securities earnings

27,438  

— 3,610  

130,956  

123,990  

(30,062)

(10,772)

100,244

100,894  

113,218  

(2,813)

(3,196)

(6,056)

97,431

97,698  

Net income attributable to ASRC shareholders

107,162  

Other comprehensive income, net of tax:

—     5   

5   385,204   

– (1,017)

on available-for-sale securities

– 0.7

20.0

19.4

21.65,243  

12,570  

24.3

20.1

1,300,337   36.1

1,237,271  

15 1,794,942 

1,733,682  

207

Change in unfunded status of postretirement benefits

1,213  

Other comprehensive income (loss)

(2,437)

1.0 4.3

– 866,040   14.5 1,295,094   

Unrealized holding gains (losses)

—    

430,066   14.5

Paid in capital

as my father lived.

949,682  

788,942  

Operating income

409,576  

494,605  

$

942,985  

Energy and construction services

Total operating expenses

3,430  

North Slope producers to seek a resolution for TAPS Quality Bank methodology that 4,538   will provide long-term stability and reduced costs for in-state refiners of ANS crude oil. Other accrued obligations 64,032   

Results of Operations (In millions)

Petroleum refining and marketing

Administration and general costs

378,708  

37 years of continuous operation. We continue to work with the state of Alaska and Total current liabilities 426,035  

Common stock, no par Revenues

2,628,929  

Insurance gains and settlements (including business interruption

Capital lease obligations

Shareholders’ equity:

2,525,615  

Interest expense, net of capitalized interest

of the current TAPS Quality Bank methodology, which assesses penalties against Petro 395,679   Star refinery return streams. We believe the TAPS Quality Bank contributed to Flint Hills Billings in excessaofmajor costs competitor and earningsinon uncompleted 26,456    Resources, Interior Alaska,contracts closing its refinery in May 2014 after

my father lived but not

51,977  

2,663,540  

Impairment charges, net

1,733,682

Accounts payable and accrued liabilities

Total liabilities

49,676  

Amortization of goodwill and intangibles

294,856

sales. Furthermore, market conditions have been accompanied by the worsening Current portion of capitalthese lease obligations $ 3,900  

I live in a place where

48,121  

Other

(“WTI”) and other crude oils of comparable or higher quality. Petro Star’s competitors, Liabilities and Shareholders’ Equity both West Coast and foreign refiners, use these less expensive fuels to produce the same

we are all family.

846,915  

680,177  

Operating expenses:

Current liabilities:as Petro Star, resulting in smaller net margins on the majority of Petro Star’s products

And here,

1,023,706  

833,773  

791,146  

Total revenues

33,662

results directly Intangible andare other assets,linked net to commodity prices and refining margins. These prices and 81,507  

961,989  

863,648  

Other

6,175  

Deferred tax assets

to my family.

2012

960,625  

Government contract services

4,149  

fuels current for subsequent transport to coastal communities as far away as St. Paul in the Total assets 717,500  

$

Energy, industrial and construction services

116,447  

in 2014 and 2013, respectively

in harmony. I have a responsibility

Petroleum refining and marketing

132,159  

addition to its refining and distribution assets, Petro Star also operates fueling stations, Loan and lease portfolio, net of allowance for loan losses of $1,046 and $999 27,870   convenience stores and heating oil distributorships.

a desire to live

2013

Revenues:

Current Assets:

Arctic Slope Regional Corporation and Subsidiaries

Consolidated Balance Sheets

Net comprehensive income attributable to

841,929  

ASRC shareholders

$

(259)

154  

309  

1,420

50  

98,851

97,748  

(234) (80)   107,082   

1,224,701   See accompanying notes to the consolidated financial statements.

Commitments and contingencies

14

34

Total liabilities and shareholders’ equity

$

35

See accompanying notes to the consolidated financial statements.

2014 CHAIRMAN & PRESIDENT’S MESSAGE It is with great pride that we present our 2014 annual report to share with you the successes and challenges

Corporation distributed over $76 million in dividends

of this past year for our Corporation, as well as provide

to our shareholders, declaring $57.50 per share. We

a backdrop of expectations for things to come. In many

believe with our continued financial strength supporting

ways, 2014 was a year of significant accomplishment,

strategic investments like LRS we can continue to provide

including being recognized as the largest Alaskan-owned

sustainable, meaningful dividends to our shareholders.

company for the 20th straight year. Although current successes are important, our eyes continue to be on the future as we continue to take the critical steps that we believe are necessary for the economic prosperity of our Corporation for generations to come. Through actions like the formation of Arctic Iñupiat Offshore, LLC (AIO) and various other initiatives, we have taken important steps to try to provide opportunities and improve the quality of life for our entire region for the future. A key to our success has been allowing our Iñupiaq values to guide our business decisions. We look forward to continuing our journey of growth and opportunity.

We ended 2014 with nearly $2.7 billion in annual revenues, our highest ever. As you review our annual report, you will note that during the year we also adopted a new accounting standard that requires the amortization of the Corporation’s goodwill account balances. As more fully discussed in the accompanying financial statements, the adoption of this new standard resulted in an additional $9.9 million of amortization expense in 2014. However, it is important to point out that this additional non-cash charge has no impact on our overall financial condition, cash flow or dividends. On an adjusted basis, our operations earned $132.9 million in earnings before interest and taxes (EBIT)

Chairman

Rex A. Rock Sr.

President & CEO

to Arctic Education Foundation which helped push the amount invested in the nonprofit to more than $30 million for the first time in its history. Additionally, we are proud to report that 2014 was our most successful Paannaq Program ever, completing in excess of 100 projects focusing on economic development, entrepreneurship, capacity building, collaboration and social investment in North Slope villages. We are now over half way through our 2012-2017 Strategic Plan

in 2014, as compared to $127.2 million in 2013. We also

and have made significant progress toward each of the targets

village

consider earnings before interest, taxes, depreciation

established in the areas of Financial, Shareholder Hire and

corporations, formed AIO. The primary focus of AIO is to

and amortization (EBITDA) a useful measure because it

Community Economic Development. We remain as committed

with

six

North

Slope

create alignment for responsible development within the

removes certain non-cash charges and provides a more

as ever to achieving the goals established in the plan; however,

Arctic Slope region, ensure that our people have a voice

accurate picture of our operating cash flow, which is

similar to challenges facing our Corporation and our state over

with a seat at the development table and provide for

the basis for our dividends. During 2014 our operations

20 years ago, we are again faced with an uncertain energy

future economic stability. AIO and Shell entered into an

generated $185.1 million in adjusted EBITDA, as compared

marketplace. The price of Alaska North Slope crude has dropped

agreement that provides AIO an option for investment in

to $169.3 million in 2013, due primarily to increased

from a high of over $110 per barrel in mid-2014 to just over $50 per

Chukchi Sea leases if development occurs. This agreement

Resources Development earnings and the acquisition

barrel at the end of the year. This not only has a direct impact on

is the product of years of stakeholder engagement and

of LRS. Given our continued capital reinvestment in our

our royalties from Alpine and satellite fields, but also influences

intensive effort to develop long-lasting relationships with

operating segments and the adoption of the new goodwill

the level of activity on the North Slope as a whole and impacts

North Slope communities and key outside parties based

amortization standard, we will continue to provide both

other businesses operating throughout the state of Alaska. In

on mutual understanding and honest dialogue about the

EBIT and EBITDA but will concentrate on EBITDA, which

addition, we believe that recent challenges by environmental

future of the Arctic. We believe that this arrangement

we believe to be a better measure of operating cash flow.

organizations as well as increased governmental regulations are

We recognize that equally as important as providing

subsistence livelihood of our people. We will utilize our position

balances the risk of OCS development borne by our necessary to support our communities and our people. We believe that the Corporation’s overall financial condition

sustainable dividends is the need to deliver strong economic

development

to

our

communities

and

employment opportunities to our shareholders. Through

impeding the growth of our local economy and impacting the as a leader in our region and across the state to ensure that our voice is heard.

remains very strong as our operating cash flow, favorable

collaboration and partnerships with organizations on the

For thousands of years we have been able to adjust to change

tax position and investment strategy have continued

North Slope and our customers, we have been able to

and will continue to use our Iñupiat values to guide us through

to strengthen our balance sheet. We have significant

both build capabilities in our communities and provide

these times. We will continue to have an active role in shaping

liquidity and access to financial markets to provide capital

the training necessary to promote the next generation of

our region and our state’s future and will work to ensure that we

to support our operations and capital deployment plan.

ASRC employees. Prime examples of the accomplishments

meet these challenges head-on in order to grow jobs, services

During 2014 we acquired Little Red Services, Inc. (LRS)

in these areas are our utilization of sponsorship funds

and dividends for our shareholders. We remain committed to

which has been in operation for more than 30 years

from our partners to provide training and educational

delivering results based on the values and principles passed

providing hot oil and other well services on the North

opportunities for careers on the North Slope and teaming

down by our elders. It truly is an exciting time for our Corporation.

Slope. We believe the nature of LRS’ services provides

with Junior Achievement to expand our presence at

the Corporation additional sustainable earnings, as well as

schools across our region. Recognizing the importance of

long-term growth opportunities as North Slope producers

providing direct scholarships to our shareholders, during

than three months from their date of purchase and maturities less than one year from the balance sheet date are

Notes to Consolidated Financial Statements December 31, 2014, 2013 and 2012 (Dollars in thousands)

backed securities, government agency bonds and equity securities. The Corporation has classified all short and

(1) Operations and Summary of Significant Accounting Policies

Tax Strategy Crawford Patkotak

2014 the board of directors approved a $1 million contribution

After five years of discussion and negotiation, the along

ARCTIC SLOPE REGIONAL CORPORATION AND SUBSIDIARIES

(a) Operations

Corporation,

coastal communities with the potential economic benefits

4

THE 2012-2017 STRATEGIC PLAN

seek to increase production. In addition, during 2014 the

Business activities of Arctic Slope Regional Corporation and its subsidiaries (the Corporation or ASRC) include petroleum refining and marketing, energy, industrial and construction services, government contract services, natural resource development, commercial lending and tourism. The Corporation and its subsidiaries operate

Senior leaders continue to develop tax strategies to maximize the Corporation’s profits for reinvestment, acquisitions and dividends.

throughout the United States. The Corporation also participates in various partnerships, joint ventures and other business activities.

(b) Principles of Consolidation Consolidation decisions are based on the voting rights, risks and rewards associated with our interest in an entity. In

Mergers and Acquisitions

general, we consolidate majority owned, controlled subsidiaries. Entities that are determined to be variable interest

The Corporation’s acquisition strategy is designed to diversify revenue streams, increase earnings and generate new job opportunities for shareholders.

entities (VIEs), as defined by Financial Accounting Standards Board (FASB) Accounting Standards Codification

Operational Excellence

potentially be significant to the VIE.

(ASC) Topic 810- Consolidation, will be consolidated if the Corporation is considered the primary beneficiary, as defined, of that entity. The Corporation determines if it is the primary beneficiary by assessing whether it has the power to direct the activities that most significantly impact the VIE’s economic performance as well as assessing whether or not it has the obligation to absorb losses or the right to receive benefits from the VIE that could

The equity method is used to account for investments in affiliates in which we exert significant influence but not

Operational excellence is responsible for reducing costs, improving profits and increasing competitiveness.

a controlling financial interest. The cost method is used when we do not have significant influence. All significant intercompany transactions and balances have been eliminated in consolidation.

(c) Use of Estimates

Subsidiary Strengths

The preparation of the Consolidated Financial Statements in conformity with accounting principles generally

We will look to our subsidiaries’ strengths to position for future growth and provide shareholder employment and services.

uncompleted contracts, realization of deferred income taxes and reserves for the ultimate cost of the settlement of litigation, claims and self-insurance. The recorded amounts are currently believed by management to be sufficient. However, such estimates could

By strengthening and growing local businesses, the Corporation seeks to integrate culture and economy, empower community-based organizations, expand partnerships and strengthen village economies.

significantly change in future periods to reflect new laws, regulations or information. It is not possible to determine

165,446,000

233,874,000

182,679,000

72,860,000

61,814,000

60,658,000

74,682,000

$ $

Dividends per share

$

Shares outstanding Average shareholder hire

57.50

110.00

50.38

1,277,500

1,244,600

1,208,900

565

581

587

The specific identification method is used to compute the realized gains and losses on debt and equity securities.

I am a child of the Arctic. I stand on the shoulders

experience by industry and national economic data. The Corporation reviews its allowance for doubtful accounts quarterly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All

of those who came before me.

other balances are reviewed on a pooled basis by industry. Account balances are charged off against the allowance after all reasonable means of collection have been exhausted and the potential for recovery is considered remote.

Raised by tradition,

Inventories consist primarily of petroleum products and contracting supplies, which are valued at the lower of

I will succeed for my family,

current market value or cost using the first-in, first-out method.

(h) Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation on plant and equipment is calculated on the

for my community, for myself.

straight-line method over the estimated useful lives of the assets. Useful lives are periodically evaluated, and depreciation is modified prospectively based on changes in estimated useful lives.

I share all that I’ve learned

At times the Corporation leases equipment and buildings under capital lease agreements. The assets and liabilities

with those who follow.

terms or the estimated productive lives. Amortization of assets under capital leases is included in depreciation and amortization expense.

And what I do here will have

(i) Oil and Gas Exploration Costs Oil and gas exploration and production activities are accounted for under the successful-efforts method of accounting. Costs incurred in connection with the drilling and equipping of exploratory wells are capitalized as

31, 2014 and 2013, the Corporation’s restricted cash of $582 and $496, respectively, consisted of cash equivalents

incurred. If proven reserves are not found, such costs are charged to expense. Other exploration costs are expensed

on deposit with a third party financial institution related to operating leases.

as incurred. All costs related to development wells, including related production equipment and lease acquisition

(e) Investments in Marketable Securities

costs, are capitalized when incurred. Unproved properties are evaluated annually, or as conditions warrant, to

accordance with ASC Topic 320- Investments- Debt and Equity Securities. All investments with maturities greater 38

119,281,000

169,287,000

257,712,000

reported at fair value. Unrealized holding gains and losses on these securities are included in earnings.

for doubtful accounts is the Corporation’s best estimate of the amount of probable credit losses inherent in the Corporation’s existing accounts receivable. The Corporation determines the allowance based on historical write-off

Plan or the Deferred Compensation Plan (see Note 14) are not included in cash and cash equivalents. At December

Investments in marketable securities include investments in both debt and equity and are accounted for in 5

127,274,000

185,067,000

$

Debt and equity securities actively traded by the Corporation are considered to be trading securities and are

(f) Trade Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and generally do not bear interest. The allowance

under capital leases are initially recorded at the lower of the present value of the minimum lease payments or the

Similar investments held in the Elders’ Trust portfolio (Trust) (see Note 6), the Supplemental Executive Retirement

132,927,000

$

Cash provided by operating activities

industry in which the investee operates.

fair value of the assets at the inception of the lease. The assets are amortized over the lesser of their related lease

The Corporation considers all highly liquid investments, maintained as part of the Corporation’s cash management

ASRC is committed to growing a talent pipeline of young Iñupiat whose career paths align with the Corporation’s holdings, as a way of developing the next generation of leaders and employees.

2012 2,628,929,000

$

ASRC adjusted EBITDA

Regular dividends declared

events or other factors.

2013 2,525,615,000

$

ASRC adjusted EBIT

Special dividend declared

looking statements made by us or on our behalf as a result of new information, future

analyst recommendations, any news that has been released specific to the investee and the outlook for the overall

2014 2,663,540,000

ASRC revenues

materially from those expressed or implied by such statements. We therefore caution

date of this MD&A, and we assume no obligation to update any written or oral forward-

investment has been less than the original cost, its ability and intent to hold the investment, the performance of the investee’s stock price in relation to the stock price of its competitors within the industry and the market in general,

Corporate Overview

against placing substantial reliance on the forward-looking statements contained in this MD&A. All forward-looking statements included in this MD&A are made only as of the

declines in value, the Corporation considers, among other things, such factors as how long the market value of the

whether additional loss, due to such changed circumstances, will occur or to reasonably estimate the amount or

activities, with original maturities of less than three months from their date of purchase to be cash equivalents.

Shareholder Employment

temporary, results in an impairment to reduce the carrying amount to fair value and is reflected as a reduction

range of any potential additional loss.

(d) Cash and Cash Equivalents

of future events. These forward-looking statements are subject to assumptions, risks and uncertainties that could change at any time and could cause actual results to differ

of interest and marketable securities earnings. When assessing marketable securities for other-than-temporary

(g) Inventories

asset retirement obligations, useful lives of property and equipment and the related accumulated depreciation and

facts are forward-looking statements based on current information and expectations

A decline in market value of any available-for-sale security below its cost, that is deemed to be other-than-

The Corporation does not have any off-balance-sheet credit exposure related to its customers (see Note 7).

amortization, fair value of long-lived assets including goodwill, costs to complete and anticipated future losses on

Statements in this Management Discussion and Analysis (MD&A) that are not historical

unrealized holding gains (losses) on investment as a separate component of accumulated other comprehensive income (loss).

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting

Management’s Discussion and Analysis

long-term investments in marketable securities, except for those actively traded, as available-for-sale. Availablefor-sale securities are reported at fair value, with any unrealized holding gains and losses, net of tax, included in

accepted in the United States of America requires management to make estimates and assumptions that affect

period. Significant accounting estimates include those for the allowance for doubtful accounts, loan loss allowance,

Village and Community Economic Development

CORPORATE OVERVIEW

considered short-term investments. Investments with maturities greater than one year from the balance sheet date are considered long-term investments. Such investments include commercial paper, corporate bonds, asset-

an impact around the world. I am Inupiaq.

determine any impairment in carrying value. Depreciation, depletion and amortization are provided under the units

~

of production method on a field basis. 39

8

9


KATE CLARK

kateclark907@gmail.com 907-854-2136

Kate Clark - Graphic Design Portfolio  
Kate Clark - Graphic Design Portfolio  
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