4 May 2016, Limassol, Cyprus
2016 SUMMARY OBSERVATIONS FOR THE FIRST
QUARTER
- Revenues for the quarter were $26.0 million, an
increase of 7% compared to Q1 2015 and down 4% relative to Q4
2015.
- Contract revenues for the period were $26.0
million, up 13% from Q1 2015 and a decrease of 3% from Q4
2015.
- Multi-client revenues were nil, down from $1.2
million reported in Q1 2015 and $0.5 million reported in Q4 2015.
None of the company's vessels were utilized for multi-client
surveys during the period, similar to Q4 2015.
- EBITDA was $7.4 million compared to $8.2 million
for Q1 2015 and $4.6 million for Q4 2015.
- EBIT for the quarter was $3.6 million compared to
$3.7 million for Q1 2015 and negative $5.6 million for Q4
2015.
- Vessel utilization for the five vessels active in
the period was 90.3%. Four vessels were in operation on the Mexico
Gigante survey, and Northern Explorer finished a contract in the
Caribbean. Two vessels remain stacked.
- 6.8% technical downtime in the quarter compared
to 4.7% for Q1 2015 and 9.1% previous quarter.
- Zero lost time injury frequency (LTIF) in the
quarter.
- Mr. Christophe Debouvry appointed as new CEO
replacing Mr. Dag Reynolds.
Key Highlights
Operational review
The first quarter was characterized by continued
weakness in oil prices and very challenging market conditions for
oil exploration. Oil companies have communicated significant
reductions in their exploration and production budgets for 2016 and
seismic tender activity has remained low and marked by substantial
competition. The 2D/source market has continued to experience
significant competition from multi-streamer 3D vessels. However,
the active 3D fleet is now being reduced as less competitive
vessels are being retired or stacked. The reduced 3D vessel
capacity is expected to have a positive impact on the 2D/source
market dynamic. Nevertheless, the negative market sentiment has
exacerbated industry risk factors and increased the uncertainty
related to timing of a market recovery.
Vessel utilization was 90.3% during Q1 2016, down
from 100% in the previous quarter. Technical downtime for the fleet
was 6.8% in Q1 2016, down from 9.1% in Q4 2015. Technical downtime
has been reduced following recent operational changes.
Nevertheless, management is continuing to implement measures aimed
at further improving performance. Contract surveys represented
90.3% of vessel capacity compared to 100% for the fourth quarter of
2015.
Harrier Explorer, Hawk Explorer, Aquila Explorer
and Osprey Explorer were in production on the Mexico Gigante
project during the quarter. Osprey Explorer completed its
demobilization from Mexico due to scheduled maintenance commencing
towards the end of the quarter. Northern Explorer left Gigante
temporarily in January and February to complete a 2D survey in the
Caribbean Sea. The vessel returned to Mexico to replace the Osprey
Explorer during April. Munin Explorer and Voyager Explorer remained
stacked during the period.
Multi-client surveys represented 0% of vessel
utilization in the quarter, similar to the previous quarter and the
same quarter last year. Multi-client revenues were nil in the
period, compared to $0.5 million previous quarter. The multi-client
amortization policy was changed with effect from 1 January 2016.
Please see selected notes for details.
One new significantly pre-funded 2D multi-client
survey in North West Europe and a source vessel contract in the
North Sea were announced during the quarter. The multi-client
survey is scheduled for quarter two with an acquisition period of
two to three weeks and the source project is planned for quarter
three with an estimated duration of three weeks.
Operating costs were reduced due to the lay-up of
two chartered vessels (3D vessel Voyager Explorer and 2D vessel
Munin Explorer) and lower crew headcount. The company will continue
its review of additional savings initiatives as well as measures to
increase cost flexibility.
Capital expenditures were $0.7 million during the
quarter, which is in line with the lower spending estimates
communicated during 2015. Lost time injury frequency (LTIF) rate
for the quarter was zero. The company continued to focus on
maintaining high standards in health, safety, security, environment
and quality (HSSEQ).
Regional review
North and South America (NSA) continued to be the
most active region during the quarter. NSA revenues of $26.0
million represented 100% of total revenues for the quarter. Sales
in Europe, Africa and the Middle East (EAME) and Asia Pacific
(APAC) was nil during the quarter. No SeaBird vessels worked in
either APAC nor EAME during the quarter.
Outlook
Global seismic demand continued to be very weak in
the first quarter. While there has been a modest increase in tender
activity, oil industry spending is anticipated to remain depressed
through 2016 and this will negatively impact seismic activity
during the year.
The second quarter is expected to be negatively
impacted by the repositioning of two vessels for projects in North
West Europe as well as upcoming scheduled docking. The remaining
active fleet will continue its operations on the Mexico Gigante
survey, which is anticipated to be completed by the end of quarter
three.
The Mexico Gigante project continues to represent
the main part of the company's current backlog. While there are a
number of contract opportunities under review, surveys have
generally been delayed due to permitting, lack of prefunding and/or
budget concerns. The current market uncertainty makes it difficult
to predict the level of contract coverage that is possible to
obtain beyond the company's current firm backlog.
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 $1.8 million for Q1 2016 ($63.3
million in the same period in 2015).
Revenues were $26.0 million in Q1 2016 ($24.2
million in Q1 2015).
Cost of sales was $15.0 million in Q1 2016 ($17.0
million in Q1 2015). The decrease is due to fewer vessels in
operation, provisions taken in 2014 and 2015 for laid-up vessels
and cost reduction efforts commencing in 2015.
SG&A was $3.9 million in Q1 2016, up from $3.8
million in Q1 2015.
Other income (expense) was $0.3 million in Q1 2016
($0.1 million in Q1 2015).
EBITDA was $7.4 million in Q1 2016 ($8.2 million
in Q1 2015). The decrease is due to the one-off effect of the $4.7
million operational restructuring gain booked in Q1 2015.
Depreciation, amortization and impairment were
$3.8 million in Q1 2016 ($4.5 million in Q1 2015). The decrease is
due to lower ship and equipment book values in Q1 2016 relative to
Q1 2015.
Financial expenses were $1.4 million in Q1 2016
($1.0 million in Q1 2015). The increase is largely due to one-off
effects in Q1 2015.
Other financial items were negative $0.2 million
in Q1 2016 (negative $0.2 million in Q1 2015).
Income tax expense was $0.2 million in Q1 2016
($0.5 million in Q1 2015).
Capital expenditures in Q1 2016 were $0.7 million
($0.2 million in Q1 2015).
Multi-client investment was nil in Q1 2016.
Liquidity and financing
Cash and cash equivalents at the end of the period
were $10.1 million ($15.9 million in Q1 2015), of which $0.5
million was restricted in connection with deposits and tax. Net
cash from operating activities was $6.1 million in Q1 2016
(negative $6.2 million in Q1 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 $26.5
million per Q1 2016 (nominal value of $29.3 million plus accrued
interest of $0.2 million plus amortized interest of $1.4 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 Q1 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 $2.2 million (initial nominal value
of $2.4 million plus accrued interest of $0.01 million plus
amortized interest of $0.1 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 Q1 2016 amounted to $0.04 million and additional
amounts drawn on the credit facility during the period was $0.1
million. Interest paid during Q1 2016 was $0.03 million.
The three-year unsecured loan is recognized at
amortized cost of $1.6 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 $0.5 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 Q1
2016 was $0.06 million and principal repayments during Q1 2016 were
$0.5 million.
The lease of Hawk Explorer is recognized in the
books as a finance lease at $3.1 million per Q1 2016. Instalments
and interest amounting to $0.6 million were paid during Q1 2016
($0.6 million in Q1 2015).
Net interest bearing debt was $23.2 million as at
the end of Q1 2016 ($17.5 million in Q1 2015).
Accrued interest on the bond loan, credit facility
and the unsecured note for Q1 2016 was $0.2 million ($1.2
million).
The company was in compliance with all covenants
as of 31 March 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.
At the commencement of the quarter, the company
announced that Mr. Christophe Debouvry was appointed as new CEO,
following Mr. Dag Reynolds, who resigned from his position with
effect from 1 January 2016. Ms. Annette Malm Justad, Chairman of
the Board, assumed the position of interim Chief Executive Officer
from 1 January until 18 January 2016.
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 project performance is significantly
worse than expected, contracts and other arrangements in respect of
the employment of SeaBird's vessels are cancelled, or significantly
delayed, new backlog cannot be secured on satisfactory rates or at
all, 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 May 2016
The first 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.
Q1-16 Presentation
Q1-16 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#2009636
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