Alaska Native Regional Corporation Review
Reaching for the future where “opportunity abounds”
Shareholders from seven of the twelve ANCSA Regional Corporations display traditional clothing, jewelry, and headdresses: (left to right) Francisca Demoski, Bristol Bay Native Corporation; Ana Swanson, Bering Straits Native Corporation; Elena Kosbruk, Koniag, Inc.; Tatiana Ticknor, Sealaska; Zachariah Martin, Ahtna, Inc.; Ashley Christensen, Chugach Alaska Corporation; Kally Greene-Gudmundson, NANA Regional Corporation.
Fiscal year 2017 marked another year of growth for Alaska’s Native Regional Corporations, which brought in billions of dollars to the state and employ tens of thousands of Alaskans.
The corporations were created under the 1971 Alaska Native Claims Settlement Act (ANCSA), which sought to answer aboriginal land claims and allow the construction of the Trans-Alaska pipeline to proceed. Under ANCSA, Alaska’s Native peoples were given title to 44 million acres of land and $963 million. Twelve regional corporations and more than 200 village corporations were formed and tasked with dual mandates: create economic opportunities through for-profit enterprises and support shareholders through educational opportunities, scholarships, elder benefits, and social and cultural programs.
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Know of any other highlights from Alaska’s twelve regional native corporations?
#AlaskaNative Regional Corporations are also perennial members of our annual #Top49ers list. Read more about how @NANACorporation fared in 2017 by checking out our corporation round-up: https://t.co/L01MNCnRZy pic.twitter.com/RGm0cBhi4q— Alaska Business (@AKBusinessMonth) September 19, 2018
Only one company ranked above Bristol Bay Native Corporation (@BristolBayToday) in 2017's #Top49ers. Next week we'll reveal their 2018 rank. Until then, here's what BBNC and all 11 other #AlaskaNative Regional Corporations were up to this year: https://t.co/9Rmk1fh3gG pic.twitter.com/Tb87WjCcI6— Alaska Business (@AKBusinessMonth) September 19, 2018
In 2017, Bering Straits Native Corporation (@BSNC_HR) cracked the top ten of our #Top49ers list. Read more about how what BSNC achieved over the past fiscal year in our #AlaskaNative Regional Corporation review: https://t.co/XE3xNoO2b7 pic.twitter.com/gYK4xScdif— Alaska Business (@AKBusinessMonth) September 19, 2018
Today, their reach both extends around the globe and focuses on business opportunities that directly benefit shareholders within their respective regions. Some have even set up funds to invest in local businesses.
Presented here are some highlights from fiscal year (as determined by each corporation) 2017.
Glennallen-based Ahtna, Inc. recorded another successful year in 2017. Its revenues reached $238 million, a 9 percent increase compared to 2016, and its $7 million in net income is the highest in the corporation’s forty-five-year history. It is owned by more than 2,000 shareholders, the majority of whom are Ahtna Athabascan.
Ahtna’s subsidiaries are grouped into four industry segments: government and technical contract services, construction and pipeline services, resource development, and real estate. Government service contracts form the bulk of Ahtna’s revenue, 82 percent. The corporation also provides services to commercial customers. Its 2017 revenue increased due to the continuation of existing contracts and additional contract rewards primarily in its government and technical sector.
Ahtna continues to look for ways to diversify its portfolio, with the aim that no one sector comprises more than 50 percent of its business.
One of Ahtna’s biggest local projects was the Tolsona No. 1 natural gas exploration well that it drilled near Glennallen in an effort to diversify its business activities and provide a local energy source. That effort was unsuccessful, however, and Ahtna has discontinued exploration activities.
The organization’s 1.77 million acres of land remains its greatest resource. Ahtna plans to develop those lands for tourism and recreation, mineral extraction, oil and gas development, timber, land trusts, and carbon sequestration. A forest carbon offset program would continue over the course of a century and provide job opportunities for generations.
Ahtna acquired AAA Valley Gravel in 2016, which is strategically located to support transportation projects in the Matanuska-Susitna Valley.
In FY2017, Ahtna reported spending $12.8 million on shareholder benefits, including $1.5 million in dividends, $8.7 million in wages and benefits, and $2.2 million for charitable contributions, burial assistance, cultural camps, and scholarships.
Ahtna is also exploring the possibility of opening a year-round resort outside Denali National Park.
Zachariah Martin of AHTNA, Inc. shows off a pair of mittens given to him at a potlatch.
While 2016 was a good year for The Aleut Corporation, 2017 was even better. Total revenue reached $211.8 million, the highest in its history and 53 percent more than its 2015 results. The corporation, with a land base on the Alaska Peninsula and Aleutian Islands and headquartered in Anchorage, reports a net income of $11.1 million. Every Aleut Corporation was profitable in 2017, the first time since 2011.
In a letter to its shareholders, CEO Matthew Fagnani says the board of directors and management met two years previously to focus on how to rebuild its subsidiaries so their management teams would be more profitable. Their focus was on increasing subsidiary operating income by improving gross margin at the project level; streamlining administrative services; and increasing business development.
Subsidiaries operate in several business lines: government operations, maintenance contracting, civil construction, real estate, fuel sales, gravel sales, and mechanical contracting. Contract revenues provide the largest share of revenue, with Aleut Management Services at the forefront. In FY2017, Aleut Management Services reported contract revenue of $113.6 million, about 31 percent of the corporation total.
The Aleut Corporation has nearly 4,000 shareholders. The corporation made $1.163 million in donations to charitable and not-for-profit entities that benefit shareholders and descendants, including $900,000 to The Aleut Foundation. In FY2017, the Aleut Foundation awarded 198 scholarships totaling $667,417. The foundation also provides career develop-ment opportunities, internships, and leadership opportunities.
The Aleut Corporation distributed more than $2.5 million in dividends and elder benefits in FY2017.
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Arctic Slope Regional Corporation
Arctic Slope Regional Corporation (ASRC) is one of the state’s most successful businesses. The corporation, with a land base on Alaska’s North Slope and corporate offices in Utqiaġvik and Anchorage, reports total revenue of $2.6 billion in FY2017.
Nearly half of ASRC’s revenue comes from government services, with petroleum refining and marketing accounting for another quarter. Energy support services, industrial services, construction, and resource development make up the rest of its diverse portfolio. In late 2017, the corporation marked another milestone by surpassing $1 billion in dividend payments to shareholders since the corporation was formed in 1972. ASRC has more than 12,000 Iñupiat shareholders.
In 2017, ASRC won a long-fought victory when the coastal plain of the Arctic National Wildlife Refuge was opened to responsible oil and gas development under a provision in the Tax Cuts and Jobs Act. The corporation, along with Alaska’s congressional delegation and other key players, fought to open the coastal plain for nearly forty years.
ASRC also won an Emmy Award for its long-format documentary “True North, the Story of ASRC” from the Northwest Chapter of the National Academy of Television Arts & Sciences. The documentary shares the story of the company’s early leaders, from their fight for land before statehood to the signing of the Alaska Native Claims Settlement Act to today’s planning process to expand opportunities for ASRC’s shareholders, the corporation’s president and CEO says in a news release.
“In the fewer than fifty years since our incorporation, ASRC has grown into the largest locally-owned and -operated business in Alaska, and that was no accident,” says Rex A. Rock Sr., ASRC president and CEO. “This production really highlights the decision-making process from our early leaders, based on their Iñupiaq values, that led to our success, and I’m honored the documentary is being so well received.”
Bering Straits Native Corporation
Nome-based Bering Straits Native Corporation (BSNC) is looking to the future and asking shareholders to establish the Bering Straits Beringia Settlement Trust this fall. The trust would allow the corporation to set aside funds for the distribution of benefits, with favorable tax treatment.
“We have been fortunate that our business development and support staff have had success in securing both government and commercial work, which has allowed us to focus on shareholder hire and development, hire and retain top quality employees, and increase the benefits we provide to our shareholders and region,” President and CEO Gail R. Schubert says in a letter to shareholders.
The corporation, which has an office in Anchorage, issued a record-high dividend to shareholders in FY2017, as well as a special elder dividend. BSNC has distributed $23 million in dividends to its shareholders since its inception.
BSNC provides substantial financial support to the Bering Straits Foundation, which offers scholarship, fellowship, and mentorship oppor-tunities to shareholders and descendants.
For the 2017/2018 academic year, Bering Straits Foundation awarded a total of $238,650 in educational funding. Since its inception in 1991, Bering Straits Foundation has provided more than $2.8 million to BSNC shareholders and descendants for post-secondary education.
BSNC extends hiring preference to qualified shareholders, descendants, and shareholder spouses. BSNC is also helping prepare tomor-row’s leaders for the workforce by providing paid internships and professional development training to qualified shareholder or descendant students each summer.
BSNC values and supports programs and organizations that make a positive difference in the region’s communities and the lives of Alaska Native people. BSNC is a major supporter of in-region nonprofits, including the Bering Straits Foundation, NACTEC, the Bering Sea Women’s Group, and the Nome Emergency Shelter Team.
Ana Swansen, Bering Straits Native Corporation
Bristol Bay Native Corporation
In its 2017 annual report, Bristol Bay Native Corporation (BBNC) notes that its “Fish First” philosophy, on which its culture is based, has been a guide for the corporation’s operations.
“In many ways, BBNC is still in startup mode. We’re still exploring, discovering, and identifying new opportunities. And opportunity abounds. Now that we’re a global company, we get to think globally. And the traits that have guided us from the start continue to resonate as we reach for the future.”
Government contracting remains a core growth area for BBNC, which partners with village corporations in the Bristol Bay region to help them “compete and thrive” in the federal marketplace.
BBNC has a diverse portfolio, including government services, petroleum distribution, construction, and tourism. It plans to further explore renewable energy prospects in the region in an effort to lower the cost of living for residents.
BBNC started with three million acres of land and $33 million and now has businesses with about $600 million in assets, 4,300 employees, and 10,000-plus shareholders. Today, the corporation has business ties to all fifty states and eleven foreign countries. Its investment portfolio’s market value is $200 million and BBNC has distributed more than $200 million in shareholder dividends.
For 2017, BBNC reported $1.659 billion in corporate revenues, with net earnings of $41.1 million. It paid $18.8 million in dividends.
Two subsidiaries in BBNC’s petroleum distribution sector brought in revenue of $592.7 million and its industrial services component, which services the oil and gas industry in Alaska and North Dakota, showed a loss in FY2017, in part due to the global decline in oil prices and a “fixed abandonment loss” of $8.9 million from Peak.
In 2017, BBNC acquired a number of tourism-related businesses in the Katmai region that are renowned for their world-class fishing and bear-viewing opportunities. The corporation continues to look for opportunities to grow its tourism operations in the Bristol Bay region.
Francisca Demoski, Bristol Bay Native Corporation
Over the past eight years, Bethel-based Calista Corporation has more than doubled its annual revenue, which exceeded $480 million in FY2017, slightly less than 2016. Pre-tax income was $33.4 million. The corporation has thirty-five subsidiaries in military defense contracting, construction, heavy equipment sales, rental and service, real estate, environmental and natural resource development, and telecommunications.
Calista is the second-largest of the twelve regional corporations, with more than 6.5 million acres that include fifty-six villages, all off the road system. In 2017, the corporation expanded its enrollment beyond those born as of 1971 when ANCSA was passed. Now, with more than 25,000 shareholders, Calista is looking for ways to maximize shareholder benefits. The corporation is asking shareholders to approve the creation of a Settlement Trust, which could save the corporation millions of dollars in federal and state taxes.
In FY2017, Calista paid $8.3 million in shareholder dividends and provided $739,700 to the elders benefit program. It also provided more than $207,000 in internships and apprenticeship opportunities. Since its inception, Calista has paid $61.4 million in dividends and $4.6 million in scholarships. The majority—92 percent—of Calista’s shareholders live within the state.
Calista owns the mineral rights and some surface rights on the Donlin Gold project, which could dramatically reshape the economy of Southwest Alaska if developed. Over the years, Calista has worked closely with the tribes in the Yukon-Kuskokwim region, Donlin Gold, and federal and state agencies to ensure responsible development.
In a letter to shareholders in its spring Storyknife newsletter, Calista writes, “The original Calista Board, including Chief Eddie Hoffman and others, selected this land under ANCSA to provide economic opportunities for our region while safeguarding our resources for future generations. We intend to continue to do so while providing future opportunities for our youth. We asked Donlin Gold to help us develop our land because we trust they will do it right. Additionally, qualified Calista shareholders and descendants will be doing much of the work—our iluqs, our neighbors, our friends.”
Chugach Alaska Corporation
In FY2017, Chugach Alaska reached a pivotal point in its long-term diversification strategy, with nearly 20 percent of its contract revenue coming from sources other than federal government contracting. The corporation, with a land base in Prince William Sound and headquarters in Anchorage, has long been a leader in government contracting. Over the past several years, the corporation has leveraged its history in facilities management and maintenance work for federal contracting customers and brought its expertise to the commercial facilities services and energy services sectors. Chugach Alaska now has a diverse portfolio of operating businesses in multiple industries and regions.
Chugach Alaska reports its 2017 revenue increased 9.2 percent compared to 2016 to approximately $920 million. Operating profit climbed to $35.8 million, a measurable increase of $10 million over 2016.
Looking toward the future, Chugach is monetizing its ANCSA land assets. In 2016, Chugach sold the “below-ground” coal rights in the Bering River Coal Field. The transaction protects the land from coal mining development, and Chugach retains full rights to any other minerals or subsurface development in the area. Chugach is also participating in an “above-ground” carbon offset program on 115,000 acres of timberlands. Under this program, Chugach maintains and protects commercial timber on certain lands and sells carbon credits to companies looking to offset their carbon emissions under California’s cap-and-trade program. The project will benefit shareholders by generating significant revenue over the life of the project while maintaining the land for cultural and subsistence use.
Chugach is also pursuing the development of a granite quarry in Port Gravina. In 2017, Chugach submitted permit applications related to the development of the project. The quarry development will continue this year and beyond as part of Chugach’s one-hundred-year plan for resource and regional economic development.
In 2017, Chugach invested $2.6 million in shareholder programs and benefits. Over the past decade, the corporation has invested $57.6 million in benefits for its approximately 2,200 shareholders and their descendants. The corporation put $11.5 million into an endowment for its nonprofit arm, Chugach Heritage Foundation. That brings the endowment balance to $18.5 million. Chugach also has pledged an additional $12.5 million through a new trust that will allow any follow-on contributions to the Chugach Heritage Foundation endowment pledge to be tax-deductible.
The corporation reinvested $1.2 million in 2017 toward cultural events, artifact repatriations, and regional economic development efforts. Last year also marked the 23rd anniversary of its annual Nuuciq Spirit Camp, which brings youth and elders together to rediscover the origins, history, and culture of their ancestors.
Shareholders and descendants have access to a range of professional development opportunities through Chugach. The corporation has sponsored one hundred participants in Training Without Walls, a two-year training and mentorship program designed to foster future Alaska Native leaders.
Ashley Christensen, Chugach Alaska Corporation
Cook Inlet Region, Inc.
Anchorage-based Cook Inlet Region, Inc. (CIRI) delivered one of its strongest financial performances in a decade in 2017. The corporation has subsidiaries in real estate, oilfield and construction services, land and natural resources, energy and infrastructure, environmental services, government services, and private equity.
CIRI reported total revenue of $439 billion in 2017. One notable business move was the completion of the acquisition of Portage, Inc., a former competitor to the corporation’s North Wind Group, which specializes in environmental remediation in the energy and defense sectors. In 2017, thanks to the Portage acquisition and other factors, North Wind’s revenue increased 65 percent over a one-year period, from $161.7 million in 2016 to $266.7 million in 2017.
CIRI expects to pay $23.4 million in dividends.
In a letter to shareholders, CIRI President and CEO Sophie Minich also noted major contract wins for subsidiaries Silver Mountain Construction and Weldin Construction; refinancing one of the Arizona multifamily properties CIRI owns in partnership with Dean Weidner; and the company’s investment securities and private equities segments, which each delivered its best performance in three years.
“CIRI marked 2017 as one of its most profitable in a decade,” according to Minich. “The challenge now is to continue the upward momentum and grow in a way that adds value to shareholders’ equity into the future. We can achieve this by identifying new opportunities and harnessing the strength CIRI has established both internally and with our expert partners.”
In fiscal year 2017, Fairbanks-based Doyon, Limited achieved its second highest income in the company’s history, despite Alaska’s challenging economic conditions. The corporation, with more than 19,000 shareholders, operates a diverse family of subsidiaries in oil field contracting, government services, utility management, information technology, real estate, and resource development. Doyon reported revenue of $290.5 million in 2017, with net income of $28.7 million.
Despite the downturn in oil prices, Doyon Drilling continues to be an economic engine for the corporation. Doyon invested in a new extended-reach drilling rig, Rig 26, which is under construction in Edmonton, Canada, and is expected to join Doyon Drilling’s fleet in 2020. Doyon has also been exploring the Nenana basin for commercial oil and gas potential and drilled a fourth well, Totchaket #1, in summer 2018.
For the 2017-2018 school year, Doyon awarded more than 400 scholarships. Doyon also announced its 38th roustabout training program for entry-level positions on Doyon’s rigs. Hundreds of shareholders have graduated from the program.
Doyon is also a major contributor for the Morris Thompson Memorial Golf Classic, which raises nearly $100,000 annually for a scholarship program in Thompson’s name. Thompson was an Alaska Native leader and Doyon head who died in a 2000 plane crash. Doyon also offers the Daaga’ Awards—grants to organizations that promote drug- and alcohol-free events in the Doyon region, which encompasses 12.5 million acres in Interior Alaska. Doyon also contributes to the Doyon Foundation’s language revitalization program, the purpose of which is to develop a program that will ensure the cultures and languages of the Doyon region are taught, documented, and easily accessible.
Kodiak-based Koniag, Inc. continues to build on its success in the past several years. Koniag, which ended its 2018 fiscal year on March 31, reported total revenue of $267 million and $271 million for fiscal year 2017, with pre-tax earnings of $11.7 million and $6.5 million respectively.
Koniag, which has approximately 4,000 shareholders, operates three main business lines: commercial IT services that are based in Michigan; government contracting services, based in Chantilly, Virginia; and its Alaska-based businesses, says Chairman and Interim CEO Ron Unger.
The majority (90 percent) of Koniag’s operating revenue comes from professional services, split between its commercial IT services and government contracting. The remaining 10 percent is derived from its energy and water services sector, a Kodiak-based granite quarry, and tourism operations.
“Our focus has been to grow benefits for our shareholders,” Unger says. “The largest percentage of our shareholders is concentrated on Kodiak and Kodiak is our homeland, so we make a concerted effort to have a strong presence on Kodiak.”
Although the corporation maintains offices in Anchorage, Koniag relocated its headquarters to Kodiak in 2010. Koniag is also developing a granite quarry in Shakmanof Cove, on the northern end of Kodiak Island, and has established the Kodiak Brown Bear Center on its lands.
Elena Kosbruk, Koniag, Inc.
NANA Regional Corporation
NANA Regional Corporation has been ramping up its investment in Alaska and retooling its business structure. The Kotzebue-based corporation divides its business operations into two categories: federal and commercial. The federal group, which is based in Virginia, provides a variety of services to the US government, according to a news release. The commercial group comprises all other subsidiaries, including NANA Management Services, NANA WorleyParsons, NANA Lynden, and others.
With its focus on Alaska, NANA reacquired WHPacific Alaska, a company that provides transportation, facility engineering, and rural development services. It will be rebranded as Kuna Engineering. With offices in Anchorage and Utqiaġvik, the commercial group employs more than 2,500 Alaskans and more than 500 NANA shareholders, providing camp services, security, logistics, engineering and design, general construction, drilling, and other resource development support services.
In FY2017, NANA reported $850 million in federal sector revenue and $206 million in commercial sector revenue, with $77.2 million in operations. Mineral exploration continues in the region, with Trilogy Metals spending $17 million.
“NANA has supported the resource development industry for over forty years, and our investment in Alaska is at an all-time high,” says Wayne Westlake, NANA president and CEO, in a news release. “Kuna Engineering and NANA Construction’s expertise and experience will help create new opportunities and employment for our shareholders and will fuel growth for Alaska’s economy.”
In 2017, NANA Management Services was selected by BP to continue food services, housekeeping, facilities management, security services, and logistics on the North Slope. The BP contract continues a forty-year relationship between the companies, one of the most enduring contracts on the North Slope.
NANA has 14,300 Iñupiat shareholders from Northwest Alaska, many of whom work in the Red Dog zinc mine north of Kotzebue. Red Dog is run as a partnership between NANA and Teck Alaska. The mine creates more than 600 jobs in the region. NANA has received more than $1.3 billion in net proceeds from the mine, distributing more than $820 million to other regional corporations through the 7(i) resource sharing provision under ANCSA. Of the $480 million NANA retained, more than $221 million in dividends has been distributed to shareholders.
In FY2017, NANA received $247 million in net proceeds from Red Dog Mine and $154.4 million was shared through 7(i). The corporation gave $838,000 to the Aqqaluk trust, distributed $13 million in shareholder dividends, and awarded 330 scholarships.
Kally Greene-Gudmundson, NANA Regional Corporation
For Juneau-based Sealaska, 2017 was a strong year; the corporation retooled its businesses after losses in 2013 to closer align with its cultural heritage and traditional values. It is owned by approximately 22,000 shareholders of Tlingit, Haida, Tsimshian, and Unangax heritage.
Its businesses are in three core areas: natu-ral resources, government services, and foods. Sealaska acquired Independent Packers Company, a value-added seafood processor in 2016. In 2017, it invested in seafood com-panies Odyssey Foods and Orca Bay Seafoods. Sealaska Foods is now the corporation’s larg-est operational group. Sealaska also has an investment portfolio that is also showed strong returns in 2017.
Sealaska’s operations earned revenue of $293.4 million in 2017, significantly higher than its 2016 tally of $145.5 million. Sealaska’s combined net revenue exceeded $43 million in FY2017, a significant increase compared to 2016’s $14 million.
Shareholder equity rose by $35.3 million in 2017 over 2016. It has increased by $61.5 million over the past four years, a significant recovery from losses in 2013.
In its 2017 annual report, CEO Anthony Mallott writes, “Our natural resource busi-ness focuses on small-scale timber harvest and creates economic value from new oppor-tunities like carbon markets. We shifted our government contracting businesses to focus on environmental services and water-quality work. We have invested in growth areas of the seafood industry that recognize the historic tie our people have to the ocean and the ocean’s bounty. We are proud to say we operate busi-nesses that both protect our environment and responsibly harvest.”
In 2016, Sealaska initiated a carbon sequestration project on about 155,000 acres that continued in 2017. The project is part of an effort to develop long-term storage of carbon to mitigate or defer global warm-ing. Once its carbon project application is approved, Sealaska can sell credits to buyers seeking to offset carbon emissions.
Sealaska is boosting its scholarship program by $10 million, bringing its total endowment to $15.7 million. Scholarships are paid from earnings from its fund and timber revenues. To date, Sealaska has awarded about 11,000 scholarships totaling $16.4 million.
The corporation also contributed $1.5 million in cash and in-kind donations to the Sealaska Heritage Institute. Since 1972, Sealaska has paid $643.1 million in shareholder dividends and ANCSA 7(i) distributions.
Tatiana Ticknor, Sealaska
Setting the Price at the Pump
Gasoline and diesel prices fluctuate with the crude oil market and refinery capacity, and not always to the advantage of gas stations. “Whether the price of oil is low or high, it’s not necessarily driving profit,” Vitus Energy Co-founder Mark Smith says. “In fact, high prices consume more working capital, so we’re not a big fan of high prices, either.”