Alaska Native regional top 10.7 billion in 2008: increased contracting, oilfield work and natural resource revenue sharing help offset stock market declines.

• Author: Liles, Patricia
• Position: ALASKA NATIVE BUSINESS NEWS - Company overview

Alaska Native regional corporations continued to grow their respective business revenues in 2008, specifically in the arenas of government contracting work, oilfield service work, and natural resource revenues stemming from production on Native-owned lands.

Cumulatively, the 12 Alaska Native regional corporations headquartered in the state reported $6.752 billion in total revenues for their fiscal year 2008 reporting periods, growing more than 18 percent over total revenues posted in 2007.

The Alaska Native regional corporations were created in 1971 under the Alaska Native Claims Settlement Act as a structure to manage land and cash received for settling land claims prior to North Slope oilfield development and construction of the trans-Alaska oil pipeline.

Several differing reporting periods are used by the regional corporations. Cumulative and corporate individual statistics in this report all are taken from fiscal year 2008 annual reports released by the regional corporations.

Leading the regional corporations in percentage of revenue growth during 2008 was Calista Corp., representing Alaska Natives in Southwestern Alaska. Calista reported in 2008 a corporate record of $224 million in total revenues, almost 62 percent higher than the previous year.

Increases in contracting work and resource revenue sharing pushed up the revenue total for Calista, according to Dixie Retherford, executive vice president and chief financial officer.

"One of the biggest drivers for our growth was in contracting and professional services," she said. "We did not have any new contracts, but we had full years' worth of revenue from existing contracts and growth in some contracts."

Calista was also one of the leaders among the Alaska Native regional corporations in growth of net income reported in 2008, with $26.5 million in net income, an increase of 43 percent over net income in 2007.

Several regional corporations were impacted negatively by value decreases in their investment portfolios during 2008. Both Sealaska and CIRI reported net losses in 2008, attributed to declines in the stock market.

Their net losses dropped the cumulative net income for the Alaska regional corporations to $258.4 million for 2008, a decline of more than 44 percent from cumulative net income reported in 2007.

Cumulative figures for 2008 and 2007 do not include any financial information for The 13th Corp., headquartered in Seattle. Audited figures for both years were not available from The 13th, a regional corporation created for Alaska Natives living outside of the state.

The 13th did not receive a land grant under ANCSA and does not share resource revenues with other ANCs, a source of funds that increased dramatically for the other 12 regional corporations in 2008.

ANCSA requires that corporations share 70 percent of royalties and other income received from natural resource development on their lands. Large contributors in 2008 to those resource revenues shared were Arctic Slope Regional Corp. and NANA Regional Corp.

"NANA did pretty well, despite some uncertainty in the economy," said Helvi Sandvik, president of NANA Development Corp., the wholly owned subsidiary of NANA that is responsible for overseeing business interests of the regional corporation.

NANA even recorded income from its investment income segment, unlike some of the substantial losses posted by other Alaska Native regional corporations in 2008.

"You can't do apples to apples comparison--every corporation has a different business strategy, and most have different fiscal years," Sandvik said.

"With what is happening in the broader economy, there is tendency to compare, but we really are very distinct companies with different business strategies."

ASRC

A powerhouse among Alaska Native corporations, Arctic Slope Regional Corp. continued its long-running trend of revenue growth in 2008, surpassing the $2 billion revenue mark for the first time ever and growing nearly 30 percent over 2007 revenues.

Petroleum refining and marketing revenues increase substantially, as did the corporation's technical contract services. Natural resource income, net of its sharing obligations with other ANCs, also increased substantially in 2008.

"The revenues are primarily the result of organic growth in each of our subsidiaries - organic meaning not the result of acquisitions," said Kristin Mellinger, executive vice president and chief financial officer at ASRC. "Some is a result of higher commodity prices ... the other part is that we have invested in expansions at our refinery, so we are producing at higher volumes."

One of ASRC's subsidiaries is Petro Star Inc., which operates two refineries in Alaska. The company's Valdez refinery was substantially damaged by fire in late December and has been shut down since. Repairs will put the refinery back on line this fall, according to Mellinger. Meanwhile, the same facility is being upgraded to produce ultra-low-sulfur diesel, a project expected to be completed in mid 2010.

ASRC's government technical services sector also reported significant growth in revenues in 2008, with $650 million in revenues compared to $470 million in 2007. Steady operational growth throughout most of ASRC Federal subsidiaries contributed to the increased revenues, according to the annual report. In addition, ASRC completed a full year of operations of Analytical Services Inc., which was acquired in June 2007, part of the corporation's strategy to grow in new markets and increase participation in competitively bid projects not tied to the 8(a) program.

Another strategic acquisition in 2008 was purchasing 15...