4 November 2016, Limassol, Cyprus
2016 SUMMARY OBSERVATIONS FOR THE
THIRD QUARTER
- Revenues for the quarter were $20.4 million, a
decrease of 12% compared to Q3 2015 and down 8% relative to Q2
2016.
- Contract revenues for the period were $20.1
million, down 13% from Q3 2015 and a decrease of 6% from Q2
2016.
- Multi-client revenues were $0.3 million, up from
$0.1 million reported in Q3 2015 and down from $0.8 million
reported in Q2 2016.
- Adjusted EBITDA of $6.9 million. Reported EBITDA
was $10.7 million compared to $4.6 million for Q3 2015 and $6.3
million for Q2 2016.
- Adjusted EBIT of $3.1 million. Reported EBIT for
the quarter was negative $3.0 million compared to $0.0 million for
Q3 2015 and positive $1.9 million for Q2 2016.
- Net non-recurring charges of $4.6 million
relating to reversal of bad debt charges and change in provisions
for laid-up vessels, vessel impairment and financial gain on the
Hawk Explorer lease.
- Vessel utilization for the period
was 84.0%. Contract surveys during the third quarter represented
78.6% of vessel capacity compared to 86.2% during the third quarter
2015. Multi-client surveys accounted for 5.4% of vessel capacity
compared to 0% in the third quarter 2015.
- 7.0% technical downtime in the quarter compared
to 9.0% for Q3 2015.
- Zero lost time injury frequency (LTIF) in the
quarter.
KEY HIGHLIGHTS
Operational review
The third quarter of 2016 was challenging with
weak seismic market demand. Although there are signs of a market
stabilization, total vessel utilization is reduced and the timing
of a sustained market recovery is still highly uncertain.
Active vessel utilization for the third quarter of
2016 was 84.0%, up from 82.0% in the second quarter. Contract
surveys represented 78.6% of vessel capacity compared to 74.9% for
the second quarter of 2016. Technical downtime for the fleet was
7.0% in Q3 2016, up from 5.8% in Q2.
Hawk Explorer, Aquila Explorer and Northern
Explorer were in production on the Mexico Gigante project during
the quarter. Hawk Explorer and Aquila Explorer left Gigante and
transited to the Caribbean mid-quarter while Northern Explorer was
in production on the Mexico Gigante project during the whole
period. The Mexico Gigante project was 99.9% completed at the end
of the quarter. Osprey Explorer finished its source project in
North West Europe before commencing and completing an undershoot
survey in the North Sea. Harrier Explorer completed a 2D contract
survey in the Barents Sea and commenced a new multi-client survey
in the same area.
Voyager Explorer was redelivered to its owner in
September. The Munin Explorer remained stacked. On 1 September, the
company acquired the Hawk Explorer along with all seismic equipment
on the vessel, further cancelling all future lease payments and
additional obligations. Subsequent to quarter end, SeaBird
announced that it had entered into an agreement for the sale and
decommissioning of the Hawk Explorer. The decommissioning of the
vessel will effectively improve the cash position and is a part of
the company's efforts to reduce cost and adjust fleet capacity to
better reflect current market demand. The company will retain the
vessel's seismic equipment.
Voyager Explorer completed its scheduled docking
in Singapore in September. Yard stay represented 0.0% of active
vessel capacity during the quarter.
Multi-client surveys represented 5.4% of vessel
utilization in the quarter, compared to 7.0% in the previous
quarter and nil the same quarter last year. Multi-client revenues
were $0.3 million in the period, compared to $0.8 million in the
previous quarter.
The company announced one new prefunded 4,000 km
multi-client survey in the Barents Sea during the quarter. The
company commenced operation on this survey in September and will
complete the project in the fourth quarter.
Operational expenses were reduced during the third
quarter relative to previous quarters as a result of ongoing cost
cutting initiatives.
Total net non-recurring charges were $4.6 million
in the quarter. Of this amount, $3.3 million represented a reversal
of bad debt costs and was charged to SG&A in the period.
Additionally, the company booked an impairment of $9.9 million on
the Hawk Explorer. Further, the company reported a $1.4 million
gain in relation to the purchase of Hawk Explorer and settlement of
the Hawk Explorer financial lease. Net non-recurring cost of sales
in the quarter amounted to positive $0.5 million, which mainly
relates to a $1.4 million cost reversal for Geo Pacific in relation
to the final commercial settlement with its owner, partly offset by
a $0.5 million charge for the planned sale and decommissioning of
the Hawk Explorer and additional Voyager Explorer redelivery costs
of $0.4 million.
Capital expenditures were $0.7 million during the
quarter compared to $1.7 million Q3 2015.
Lost time injury frequency (LTIF) rate for the
quarter was zero.
Regional review
North and South America (NSA) continued to be the
most active region during the quarter. NSA revenues of $13.3
million represented 65% of total revenues for the quarter, all of
which were related to Mexico Gigante.
Europe, Africa and the Middle East (EAME) revenues
of $7.2 million represented 35% of total Q3 revenues. Osprey
Explorer completed a source job and an undershoot project in the
quarter, while Harrier Explorer completed a 2D contract and
commenced a prefunded multi-client project.
No SeaBird vessels worked in Asia Pacific (APAC)
during the quarter and revenues were nil in the region.
Outlook
Global seismic demand continued to be weak in the
third quarter. Oil industry exploration spending is anticipated to
remain depressed for the foreseeable future and this is likely to
continue to negatively impact seismic activity.
The company's fleet capacity has been reduced to
better reflect current market demand. The company continues to
evaluate and execute savings initiatives to reduce the company's
overall cost level, and this may include temporary stacking of
additional vessels.
The fourth quarter is expected to be negatively
impacted by idle periods as well as the potential repositioning of
vessels before start-up of new projects. We expect the current
seismic market softness to continue to impact the seismic sector in
2017. The company is reviewing a number of survey
opportunities. However, the current market uncertainty makes
it difficult to predict the level of contract coverage that is
possible to obtain.
FINANCIAL REVIEW
Financial comparison
All figures below relate to continuing operations
unless otherwise stated. For discontinued operations, see note 1.
The company reports net loss of $3.0 million for Q3 2016 (net loss
of $1.7 million in the same period in 2015).
Revenues were $20.4 million in Q3 2016 ($23.2
million). The decreased revenues are primarily due to lower
utilization and reduced fleet size.
Cost of sales was $10.2 million in Q3 2016 ($14.5
million). The decrease is predominantly due to fewer vessels in
operation, lower operating expenses and non-recurring restructuring
charges for onerous long-term lease contracts taken in 2015.
SG&A was $3.1 million in Q3 2016, down from
$4.3 million in Q3 2015. The decrease is principally due to cost
saving initiatives, reduced headcount and bad debt charges incurred
in Q3 2015.
Reversal of bad debt charges was $3.3 million in
Q3 2016.
Other income (expense) was $0.2 million in Q3 2016
($0.1 million).
EBITDA was $10.7 million in Q3 2016 ($4.6
million).
Depreciation, amortization and impairment were
$13.7 million in Q3 2016 ($4.6 million). This increase is largely
due to an impairment on the Hawk Explorer taken in the quarter.
Finance expense was $1.3 million in Q3 2016 ($1.6
million).
Other financial items were $1.4 million in Q3 2016
($0.0 million). The increase is due to the financial gain recorded
in relation to the settlement of the Hawk Explorer finance lease
that was booked in the quarter.
Income tax expense was $0.1 million in Q3 2016
($0.2 million).
Capital expenditures in the quarter were $0.7
million ($1.7 million).
Multi-client investment was $0.6 million in Q3
2016 ($0.1 million).
Liquidity and financing
Cash and cash equivalents at the end of the period
were $11.8 million ($5.4 million in Q3 2015), of which $0.4 million
was restricted in connection with deposits and tax. Net cash from
operating activities was $7.6 million in Q3 2016 ($1.0 million in
Q3 2015).
The company has one bond loan, one secured credit
facility and one unsecured note. The Hawk Explorer finance lease
was settled during the quarter.
The SBX04 secured bond loan (issued as "SeaBird
Exploration Finance Limited First Lien Callable Bond Issue
2015/2018") is recognized in the books at amortized cost of $27.2
million per Q3 2016 (nominal value of $29.3 million plus accrued
interest of $0.2 million plus amortized interest of $2.1 million
less fair value adjustment of $4.4 million). This bond has been
issued in two tranches; tranche A amounting to $5.0 million and
tranche B amounting to $24.3 million. The SBX04 bond tranche A is
carrying an interest rate of 12.0% and Tranche B is carrying an
interest rate of 6.0%. Interest is paid quarterly in arrears with
first interest instalment paid on 3 June 2015. The bond matures on
3 March 2018, with principal amortizations due in quarterly
instalments of $2.0 million starting at 3 June 2017. The
outstanding loan balance will be paid at the maturity date.
Interest paid during Q3 2016 was $0.5 million. The bond is listed
on Nordic ABM, and it is traded with ticker SBEF01 PRO and SBEF02
PRO for the respective two bond tranches.
The three-year secured credit facility is
recognized at amortized cost of $2.1 million (initial nominal value
of $2.3 million plus accrued interest of $0.02 million plus
amortized interest of $0.2 million less fair value adjustments of
$0.4 million). Coupon interest rate is 6.0%. Interest is to be paid
quarterly in arrears and the first interest amount was paid on 3
June 2015. The facility matures at 3 March 2018 with quarterly
instalments of $0.2 million starting on 3 June 2017. The
outstanding loan will be repaid in full at maturity. Principal
repayments during Q3 2016 amounted to $0.6 million and additional
amounts drawn on the credit facility during the period was $0.6
million. Interest paid during Q3 2016 was $0.03 million.
The three-year unsecured loan is recognized at
amortized cost of $1.1 million (initial nominal value of $2.1
million plus amortized interest $0.2 million less fair value
adjustment and accrued interest of $0.3 million less principal
repayments of $0.9 million). Coupon interest rate is 6.0%. Stated
maturity date is on 1 January 2018. Interest is paid quarterly in
arrears and the first payment was due on 1 April 2015. The
principal is payable in nine equal quarterly instalments of $0.2
million commencing on 1 January 2016. Interest paid during Q3 2016
was $0.02 million and principal repayments during Q3 2016 was $0.2
million.
On 1 September, the company acquired the Hawk
Explorer along with all seismic equipment on the vessel and an
agreement to cancel all future lease payments and additional
obligations that were a part of the original charter agreement. The
final Hawk lease settlement, instalments and interest amounting to
$1.5 million were paid during Q3 2016 ($0.6 million in Q3
2015).
Net interest bearing debt was $18.6 million as at
the end of Q3 2016 ($28.3 million in Q3 2015).
Accrued interest on the bond loan, credit facility
and the unsecured note for Q3 2016 was $0.2 million ($0.2
million).
The company was in compliance with all covenants
as of 30 September 2016.
The total outstanding amount of common shares in
the company is 3,065,434. The company has also issued 884,686
warrants, convertible into 884,686 ordinary shares. The warrants
are listed on the Oslo Stock Exchange with ticker SBX J.
The company's accounts have been prepared on the
basis of a going concern assumption. In the view of the board of
directors, the continued very challenging market conditions and the
company's limited working capital creates a material risk to this
assumption. In the event that new backlog cannot be secured on
satisfactory rates or at all, project performance is significantly
worse than expected or contracts and other arrangements in respect
of the employment of SeaBird's vessels are cancelled, or
significantly delayed, the company would need to sell assets or
raise additional financing, which may not be available at that
time. Reference is made to the Going Concern section in selected
notes and disclosures for further details on the financial position
of the company.
The Board of Directors
and
Chief Executive Officer
SeaBird Exploration Plc
3 November 2016
The third quarter 2016 presentation will be
transmitted live at
http://www.sbexp.com/investor-relations
This information is subject
to the disclosure requirements pursuant to section 5-12 of the
Norwegian Securities Trading Act.
Q3-16 Report
Q3-16 Presentation
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: SeaBird Exploration Plc via Globenewswire
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