19 August 2016, Limassol, Cyprus
2016 SUMMARY OBSERVATIONS FOR THE SECOND
QUARTER
- Revenues for the quarter were $22.2 million, an
increase of 14% compared to Q2 2015 and down 14% relative to Q1
2016.
- Contract revenues for the period were $21.4
million, up 14% from Q2 2015 and a decrease of 17% from Q1
2016.
- Multi-client revenues were $0.8 million, up from
$0.7 million reported in Q2 2015 and nil reported in Q1 2016.
- EBITDA was $6.3 million compared to negative $6.5
million for Q2 2015 and $7.4 million for Q1 2016.
- EBIT for the quarter was $1.9 million compared to
negative $15.7 million for Q2 2015 and positive $3.6 million for Q1
2016.
- Vessel utilization for the period was 82.0%.
Contract surveys during the second quarter represented 74.9% of
vessel capacity compared to 68.1% during the second quarter 2015.
Multi-client surveys accounted for 7.0% of vessel capacity compared
to 0% in the prior period.
- 5.8% technical downtime in the quarter compared
to 1.9% for Q2 2015 and 6.8% previous quarter.
- Zero lost time injury frequency (LTIF) in the
quarter.
Key highlights
Operational review
The second quarter of 2016 was challenging with
weak seismic market demand. Timing of a sustained market recovery
is still highly uncertain.
Vessel utilization for the second quarter of 2016
was 82.0%, down from 90.3% in the first quarter. Contract surveys
represented 74.9% of vessel capacity compared to 90.3% for the
first quarter of 2016. Technical downtime for the fleet was 5.8% in
Q2 2016, down from 6.8% in Q1.
Hawk Explorer, Harrier Explorer, Northern Explorer
and Aquila Explorer were in production on the Mexico Gigante
project during the quarter. Osprey Explorer left the Gigante
project at the start of the quarter, completed its scheduled dry
dock in Denmark and mobilized for a source contract in the North
Sea. Harrier Explorer worked on the Mexico Gigante project until
May, then transited to North West Europe to complete a multi-client
survey. The vessel subsequently mobilized for a 2D survey in North
West Europe which commenced in quarter three.
Osprey Explorer completed its scheduled
maintenance in Denmark in June. Yard stay represented 9.9% of
vessel capacity during the quarter.
Munin Explorer and Voyager Explorer remained
stacked during the period. During the quarter the company made the
decision to redeliver the Voyager Explorer to its owners following
the completion of its bareboat charter in August 2016.
Multi-client surveys represented 7.0% of vessel
utilization in the quarter, compared to 0% in the previous quarter
and 0% the same quarter last year. Multi-client revenues were $0.8
million in the period, compared to nil in the previous quarter.
The company signed two new contracts during the
quarter; one for source work in the North Sea and one 2D survey in
the North West Europe region, representing approximately four
vessel months in total.
Operational expenses were reduced during the
second quarter relative to previous quarters as a result of ongoing
cost cutting initiatives.
Capital expenditures were $1.5 million during the
quarter.
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 $21.3
million represented 96% of total revenues for the quarter.
Europe, Africa and the Middle East (EAME) revenues
of $0.9 million represented 4% of total Q2 revenues. Harrier
Explorer completed a significantly prefunded multi-client project
and Osprey Explorer commenced a source project in the region during
the quarter.
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
second 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 Mexico Gigante project is expected to be
completed during the third quarter of 2016, with three vessels
employed on the project in that reporting period. The remaining
active fleet is currently employed in the North West Europe region.
The company is reviewing a number of survey opportunities for
quarter four of 2016 as well as fiscal 2017. However, the current
market uncertainty makes it difficult to predict the level of
contract coverage that is possible to obtain beyond the company's
firm backlog. Consequently, the company is reviewing its fleet
capacity and other measures to further reduce its operating cost
level. This may include stacking of additional vessels and further
fleet reduction.
Financial review
Financial comparison
All figures below relate to continuing operations
unless otherwise stated. For discontinued operations, see note 1.
The company reports net income of $0.1 million for Q2 2016 (net
loss of $16.8 million in the same period in 2015).
Revenues were $22.2 million in Q2 2016 ($19.6
million). The increased revenues are primarily due to higher fleet
utilization.
Revenues for first half of 2016 were $48.2 million
($43.8 million).
Cost of sales was $12.9 million in Q2 2016 ($20.0
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 Q2 2015.
For the first half of 2016, cost of sales amounted
to $27.9 million, down from $37.0 million for same period during
2015.
SG&A was $3.2 million in Q2 2016, down from
$6.1 million in Q2 2015. The decrease is principally due to one-off
bad debt expenses on long-dated receivables incurred in Q2 2015 and
reduced onshore headcount.
SG&A for the first half of 2016 was $7.1
million ($9.9 million).
Other income (expense) was $0.2 million in Q2 2016
(nil).
Other income (expense) for the first half was $0.5
million ($0.1 million).
EBITDA was $6.3 million in Q2 2016 (negative $6.5
million).
EBITDA for first half of 2016 was $13.7 million
($1.7 million).
Depreciation, amortization and impairment were
$4.3 million in Q2 2016 ($9.2 million). This decrease is largely
due to an impairment on the multi-client library taken in Q2
2015.
For the first half of 2016, depreciation
amortization and impairment were $8.2 million ($13.7 million).
Finance expense was $1.5 million in Q2 2016 ($1.3
million).
For the first half of 2016 finance expense was
$2.9 million ($2.3 million).
Other financial items were negative $0.1 million
in Q2 2016 (positive $0.1 million).
For the first half of 2016, other financial items
were negative $0.2 million (negative $0.1 million).
Income tax expense was $0.3 million in Q2 2016
($0.3 million).
For the first half of 2016 income tax expense was
$0.5 million ($0.8 million).
Capital expenditures in the quarter were $1.5
million ($3.1 million).
Multi-client investment was $0.7 million in Q2
2016 ($0.2 million).
Liquidity and financing
Cash and cash equivalents at the end of the period
were $8.1 million ($7.4 million in Q2 2015), of which $0.4 million
was restricted in connection with deposits and tax. Net cash from
operating activities was $1.5 million in Q2 2016 (negative $4.1
million in Q2 2015).
The company has one bond loan, one secured credit
facility, one unsecured note and the Hawk Explorer finance
lease.
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 $26.8
million per Q2 2016 (nominal value of $29.3 million plus accrued
interest of $0.2 million plus amortized interest of $1.8 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 Q2 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 Q2 2016 amounted to $0.7 million and additional
amounts drawn on the credit facility during the period was $0.5
million. Interest paid during Q2 2016 was $0.03 million.
The three-year unsecured loan is recognized at
amortized cost of $1.4 million (initial nominal value of $2.1
million plus amortized interest $0.2 million less fair value
adjustment and accrued interest of $0.2 million less principal
repayments of $0.7 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 will be repayable in nine equal quarterly instalments of
$0.2 million commencing on 1 January 2016. Interest paid during Q2
2016 was $0.02 million and principal repayments during Q2 2016 was
$0.2 million.
The lease of Hawk Explorer is recognized in the
books as a finance lease at $2.8 million per Q2 2016. Instalments
and interest amounting to $0.6 million were paid during Q2 2016
($0.6 million in Q2 2015).
Net interest bearing debt was $25.0 million as at
the end of Q2 2016 ($26.4 million in Q2 2015).
Accrued interest on the bond loan, credit facility
and the unsecured note for Q2 2016 was $0.2 million ($0.2
million).
The company was in compliance with all covenants
as of 30 June 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.
Important events in the first
half of the year
In January 2016, the company announced that Mr.
Christophe Debouvry was appointed as new CEO.
The company signed four new contracts during the
first half of the year; two source work awards, one 2D survey and
one 2D multi-client survey, all in the North West Europe
region.
On 10 May 2016, the annual general meeting of the
company was held. At this meeting, board members Annette Malm
Justad (Chairman), Kitty Hall (Director), Olav Haugland (Director)
and Hans Petter Klohs (Director) were re-elected for a new
term.
Responsibility statement
We confirm that, to the best of our knowledge, the
condensed set of financial statements for the first half year of
2016, which have been prepared in accordance with IAS 34 "Interim
Financial Reporting", gives a true and fair view of the company's
consolidated assets, liabilities, financial position and results of
operations. We also confirm that, to the best of our knowledge, the
first half 2016 report includes a fair review of important events
that have occurred during the first six months of the financial
year and their impact on the condensed financial statements, a
description of the principal risks and uncertainties for the
remaining six months of the financial year and major related
parties' transactions.
The Board of Directors and
Chief Executive Officer
SeaBird Exploration Plc
18 August 2016
The second quarter 2016 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.
Q2-16 Report
Q2-16 Presentation
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#2036052
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