6 May 2015, Limassol, Cyprus
2015 SUMMARY OBSERVATIONS
FOR THE FIRST QUARTER
-
Revenues for the quarter were $24.2 million, a
decrease of 28% compared to Q1 2014 and down 14% relative to Q4
2014.
-
Contract revenues for the period were $23.0
million, down 25% from Q1 2014 and a decrease of 2% from Q4
2014.
-
Multi-client revenues were $1.2 million, down
62% from $3.2 million reported in Q1 2014 and a decrease of 74%
from $4.6 million reported in Q4 2014.
-
EBITDA was $8.2 million compared to $10.2
million for Q1 2014 and negative $28.5 million for Q4 2014.
-
EBIT for the quarter was $3.7 million compared
to $2.4 million for Q1 2014 and negative $68.6 million for Q4
2014.
-
Vessel utilization for the period was 58%.
Contract surveys during the first quarter represented 58% of vessel
capacity compared to 52% during the fourth quarter 2014. None of
the company's vessels were utilized for multi-client surveys during
the period, compared to 5% of vessel capacity in Q4 2014.
-
The company completed its financial
restructuring in the quarter. A non-recurring financial
restructuring gain net of advisory fees of $61.3 million was
reported, resulting from creditor debt forgiveness and partial
conversion of debt to equity. Additionally, a non-recurring
restructuring gain on leases of $4.7 million was reported as a
result of debt forgiveness of outstanding operational lease
payables.
-
Issued a 3-year secured bond in two tranches
("SBX04") raising gross proceeds of $5 million in tranche A and
$24.3 million in tranche B originating from a debt conversion of
existing outstanding debt and payables.
-
Completed private placement of 1.8
million preference shares and warrants, generating gross proceeds
of NOK 88.5 million ($11.6 million).
Key highlights
Operational review
First quarter revenues decreased from the prior
period due to continued softness in seismic market demand.
Vessel utilization was 58% during Q1 2015, up from
57% in the previous quarter. Technical downtime for the fleet was
5%, down from 6% for Q4 2014. Yard stay represented 2% of vessel
capacity.
Contract surveys represented 58% of vessel
capacity compared to 52% for the fourth quarter of 2014. Aquila
Explorer was employed on its 2D survey in Australasia, while Osprey
Explorer continued working on several 2D surveys in the Gulf of
Mexico throughout the quarter. Northern Explorer performed a 2D
contract survey in West Africa and was in transit to Las Palmas for
planned maintenance and class certification towards the end of the
quarter. Munin Explorer continued its long-term source contract.
The vessel was in South America throughout the period. Harrier
Explorer was off hire early in the quarter and finished the quarter
in scheduled maintenance in Dubai, en route to a source contract in
South East Asia. Hawk Explorer remained off hire during the
quarter. Geo Pacific finished its 3D survey in West Africa and then
transited to Norway for cold stacking.
During the quarter the company implemented
measures to reduce costs. The lay-up of Geo Pacific, lower project
activity, reduced vessel charter rates and lower crew headcount
contributed to bring down costs of goods sold relative to 2014. The
company also benefited from reduced bunker fuel prices and
favorable exchange rates. Administrative costs were reduced as a
result of the implementation of the closing of the Dubai office and
reduced onshore headcount.
Multi-client surveys represented 0% of vessel
utilization. Multi-client revenues were $1.2 million during the
quarter.
Lost Time Injury Frequency (LTIF) rate for the
quarter was zero. Industry-leading HSSEQ processes continue to
ensure that the company provides a safe and healthy work
environment both offshore and onshore while continuously improving
operational performance and quality.
Regional overview
Revenues in the first quarter represented a
geographical shift from Europe, Africa and the Middle East (EAME)
towards Asia Pacific (APAC) and North and South America (NSA).
Sales in APAC of $10.6 million, an increase of 89%
from the previous period, accounted for 44% of total revenues for
the quarter. APAC revenues increased mainly due to Aquila being
employed on a contract survey in Australasia during the
quarter.
NSA revenues of $9.0 million represented 37% of
total revenues for the quarter. Sales in this region increased by
79% compared to previous quarter due to higher contract
utilization. Munin Explorer worked in the region under its
long-term charter agreement and Osprey Explorer continued working
on several contract surveys in the Gulf of Mexico.
Sales in EAME of $4.6 million accounted for 19% of
total revenues. EAME revenues were down compared to Q4 2014 due to
the decline in seismic demand. Northern Explorer completed a
contract survey in West Africa and Geo Pacific finished its 3D
contract survey in the region during the quarter.
Outlook
Global seismic market demand continued to show
weakness in the first quarter. Reduced oil prices and increased
market uncertainty impacted capital spending in the sector and
selectively delayed or postponed contract start-ups.
In light of the challenging market conditions, we
continue to evaluate and execute savings initiatives to reduce the
company's overall cost level. We expect the current market softness
to continue to negatively impact the seismic sector throughout
2015.
Multi-client demand was soft in the first quarter
and available prefunding for new projects was limited. We
anticipate that this weakness will persist over the foreseeable
future and will impact multi-client sales.
Financial
review
Financial
comparison
All figures below relate to continuing operations
unless otherwise stated. For discontinued operations, see note 1.
The company reports a net profit of $63.3 million for Q1 2015 (net
loss of $0.6 million in the same period in 2014).
Revenues were $24.2 million in Q1 2015 ($33.7
million). The decreased revenues are primarily due to reduced
number of vessels in operation and lower multi-client activity
during the period.
Cost of sales was $17.0 million in Q1 2015 ($19.7
million). The decrease is predominantly due to fewer vessels in
operation as the Geo Pacific and Voyager Explorer are laid up,
reduced charter hire and lower fuel cost.
SG&A was $3.8 million in Q1 2015, down from
$4.9 million in Q1 2014. This is principally due savings related to
the closing of the Dubai office and reduced onshore headcount.
Other income (expense) was positive $0.1 million
in Q1 2015 (positive $1.1 million).
Restructuring gain on leases of positive $4.7
million in Q1 2015 (nil) as a result of negotiated debt forgiveness
as a part of the company's financial restructuring that was
completed during the quarter.
EBITDA was $8.2 million in Q1 2015 ($10.2
million).
Depreciation, amortization and impairment were
$4.5 million in Q1 2015 ($7.8 million). This decrease is largely
due to lower vessel book values and lower multi-client sales
amortization.
Finance expense was $1.0 million in Q1 2015 ($3.0
million).
Other financial items, net expense, of negative
$0.2 million in Q1 2015 (positive $0.2 million).
Restructuring gain of positive $61.3 million in Q1
2015 (nil) as a result of the completion of the company's financial
restructuring during the quarter.
Income tax expense was $0.5 million in Q1 2015
($0.3 million in Q1 2014).
Capital expenditures in the quarter were $0.2
million ($2.4 million).
Multi-client investment was nil in Q1 2015 ($7.8
million).
Financial restructuring
During the quarter the company announced and
reached agreement on a financial restructuring to reduce
indebtedness and provide additional funding:
-
Issue of new equity for a total of
approximately $11.6 million or 884,687,500 new shares and
884,687,500 new warrants to acquire one share per warrant at an
exercise price of NOK 0.10 per share.
-
Issue of a new 3-year secured bond in
two tranches ("SBX04") subscribed by TGS-NOPEC Geophysical Company
ASA for $5 million in tranche A and $24.3 million in tranche B
originating from a debt conversion of the existing SBX03 bond,
Perestroika convertible bond, charter hire and financial advisory
payables.
- Approximately $16.2 million of the outstanding
amount under the SeaBird Exploration Plc Senior Secured Callable
Bond Issue 2011/2015 ("SBX03") was converted into SBX04 and the
remaining approximately $64.7 million of SBX03 was converted into
equity at NOK 0.30 per ordinary share.
-
The outstanding charter hire for the
Munin Explorer, Geo Pacific, Hawk Explorer and Voyager Explorer
(the "Charterers") was partially converted into SBX04, a loan,
partially converted into equity and partially written down. The
ongoing charter obligations were amended including a reduction in
total charter hire of above $25,000 per day, yielding an annual
pre-tax cash flow improvement of above $9 million. Fuel vendors'
outstanding balances of $3.4 million were converted into SBX04
Tranche B and $2.4 million was converted to the secured credit
facility described above.
The issue of new equity and warrants was booked
directly to equity $10.9 million net of transaction cost, of which
$8.2 million of the overall amount was accounted for in paid in
capital (the preference shares issued) and $2.7 million was booked
in equity component of warrants listed under the equity section in
the balance sheet (warrants issued). The company has obtained
external advice to correctly account for the fair value of
preference shares and warrants, new debt instruments issued to
investors and creditors at the 2 March 2015 transaction date. The
fair value of preference shares issued have been set at NOK 38.2
per preference share (NOK 0.076 per ordinary share after the
conversion) while the fair value of issued warrants have been set
at NOK 11.8 (NOK 0.024 per warrant to acquire one ordinary share
after the conversion). In total, the company has issued
approximately 4.2 million preference shares (convertible to 2,123.2
million ordinary shares) to creditors, which have been valued at
$21.4 million. In addition, the company issued SBX04 bond, the
secured credit facility and the unsecured loan to creditors. The
par value of the outstanding debt and liabilities from creditors of
approximately $116.3 million (prior to creditor debt forgiveness
and conversion) were converted to the preference shares and debt
instruments listed above.
At 31 March, SBX04 bond, the 3-year secured credit
line facility and loan have been valued at nominal value less
amortized cost using an effective interest rate of 14%. The
amortized cost positive fair value adjustment for the debt
facilities has been recognized as a restructuring gain, of which
$1.4 million has been allocated to restructuring gain on leases and
$3.7 million has been booked to the restructuring gain account
under the finance cost section.
The issue of preference shares to individual
creditors, partial debt forgiveness of outstanding principal, issue
of the new bond SBX04 and converting outstanding payables to
loans/credit facility was accounted for through the restructuring
gain account in the other finance income section of the profit and
loss statement. Outstanding debt and payables at the transaction
date have been derecognized while the issued equity and debt
instruments have been booked as described above net of advisory
fees. The total gain resulting from the financial restructuring was
$66.0 million, of which $4.7 million was reported under
restructuring gain on leases and $61.3 million was reported as
restructuring gain under the financing section.
On 18 February 2015, the bondholders of SBX03
approved the restructuring proposal with the requisite majority in
a bondholder meeting. Furthermore, on 3 February 2015, the company
called for an extraordinary general meeting ("EGM1") on 19 February
2015, for the creation of a new Class A of shares, conversion of
debt into equity and exclusion of preemption rights in relation to
new shares, all in order to carry out the restructuring as
proposed.
Additionally, on 11 February 2015, the company
called for a second extraordinary general meeting ("EGM2") that was
held on 5 March 2015 to approve conversion of Class A shares into
ordinary shares and reduction in capital with simultaneous increase
of authorized capital to its former amount. In the general meetings
all proposals on the agenda were adopted with requisite
majority.
On 3 March 2015, the company announced that the
conditions for the restructuring were fulfilled. Further, preferred
shares were issued to certain creditors and the restructuring as
set out in the preceding paragraphs was implemented. As a part of
the transaction, the company issued 6,015,693 preference shares
each with a par value US$0.1. Each preference share carries 500
times the rights of the common shares. The preference shares are to
be converted into common shares following the approved reduction of
the company's authorized and issued share capital, through the
reduction of the nominal value of its shares from US$0.1 to
US$0.0001 (the "reduction"). The conversion of the shares is
estimated to occur during Q2 2015. After confirmation of the
reduction, the preference shares will be converted at an exchange
rate of 500:1 common shares per preference share, hence a total of
3,007,846,500 shares will be issued to preferred shareholders
following the reduction. Post conversion of the preference shares,
the total outstanding amount of common shares in the company will
be 3,065,427,746. The company has also issued 1,769,375 warrants,
convertible into 884,687,500 ordinary shares after the
reduction.
Liquidity and
financing
Cash and cash equivalents at the end of the period
were $15.9 million ($16.0 million), of which $0.2 million was
restricted in connection with deposits and tax. Net cash from
operating activities was negative $6.2 million in Q1 2015 ($14.9
million).
The company has one bond loan, one secured credit
facility, one unsecured loan and the Hawk Explorer finance
lease.
-
The SBX04 secured bond loan is
recognized in the books at amortized cost of $25.1 million per Q1
2015 (nominal value of $29.3 plus accrued interest 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 will be paid quarterly, commencing 3 June 2015.
The bond's stated maturity is 3 March 2018 and has principal
amortization due in quarterly instalments of $2.0 million starting
at 3 June 2017 with a balloon repayment to be made at
maturity.
-
The three year secured credit facility
is recognized at amortized cost of $1.9 million (nominal value of
$2.4 million). Coupon interest rate is 6% whereas effective
interest is 14%. Interest will be paid quarterly, commencing 3 June
2015. The facility's stated maturity date is 3 March 2018 and has
principal amortization due in quarterly instalments of $0.2 million
starting on 3 June 2017 with a balloon repayment to be made at
maturity. Effective interest booked for Q1 2015 was $0.02
million.
Net interest bearing debt was $17.5 million as at
the end of Q1 2015 ($83.5 million in Q1 2014).
Accrued interest for Q1 2015 was $1.2 million
($1.4 million).
The company was in compliance with all covenants
as of 31 March 2015.
The company's accounts have been prepared on the
basis of a going concern assumption. In the view of the board of
directors, the company does not have sufficient working capital for
its current requirements, being understood as the requirements for
a minimum of 12 months. In making such statement, the board of
directors has taken into consideration working capital requirements
in various scenarios, and in particular, in the event that
contracts and other arrangements in respect of the employment of
SeaBird's vessels are cancelled or significantly delayed and
alternative employment cannot be secured at satisfactory rates.
Should these contracts and other arrangements be commenced and
completed in accordance with the plans entered into between SeaBird
and the respective counterparties, SeaBird does not expect a
working capital shortfall. However, in the event of such contracts
being delayed, cancelled or not materializing, SeaBird could have a
working capital shortfall which could result in the need for
significant amounts of additional financing, which may not be
available at that time. The timing of a potential shortfall would
depend on the overall employment of SeaBird's vessels, but in the
event of all contracts being delayed, could occur during the summer
of 2015. The amount of such shortfall would also depend on the
overall and alternative employment of SeaBird's vessels, but in a
worst case scenario, could amount to approximately $50 million for
a 12 month period. Reference is made to the Going Concern section
in selected notes and disclosures and the recently issued
prospectus for further details on the current financial position of
the company.
The Board of Directors and
Chief Executive Officer
SeaBird Exploration Plc
6 May 2015
The first quarter 2015 presentation will be
transmitted live at
http://www.sbexp.com/investor-relations.aspx.
This information is subject of the disclosure
requirements pursuant to section 5-12 of the Norwegian Securities
Trading Act.
Q1-15 Presentation
Q1-15 Report
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX 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
HUG#1919042
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