Odyssey Marine Exploration, Inc. (NASDAQ:OMEX), a pioneer in the
field of deep-ocean exploration, reports results for full year
ended December 31, 2016.
2016 Highlights
- Generated $4.7 million in revenue from operations, compared to
$3.4 million in revenue from operations in 2015, a 38%
increase.
- Continued to actively manage costs, reducing operating expenses
43% from prior year
- Decreased net loss 65% from $18.2 million in 2015 to $6.3
million in 2016, with the net loss per share decreased from $2.46
in 2015 to $.84 per share in 2016.
- Launched CLIO Offshore, a division of Odyssey, which is focused
on generating cash from the provision of services to the
third-party clients including survey, remotely operated vehicle
(ROV) and recovery services. This allows us to leverage our
seasoned technical team and assets between major projects.
- Completed the first contract for offshore services for our
shipwreck business partner using Odyssey technology and marine
personnel, resulting in revenue of $2.9 million.
- Continued to support subsidiaries’ pursuit of environmental
approval to begin recovery of phosphate sands from the Don Diego
project and development of additional mineral projects.
Seabed Mineral Exploration
Update The “Don Diego” deposit is the main focus of
Odyssey’s mineral exploration division; however, new mineral
projects are also in development. The company believes that the
“Don Diego” deposit contains phosphate rock that can be extracted
on a financially attractive basis and that the product will be
attractive to Mexican and other world producers of fertilizers.
Exploraciones Oceanicas S. R.L. de CV (ExO), the
Mexican operating company with the mining concession containing the
Don Diego phosphate deposit, has conducted extensive scientific
testing of the mineralized phosphate material and the environmental
impact of recovering the mineralized material from the
seafloor. ExO has been working with environmental experts on
the impact assessment and permit process, with potential partners
on the extraction program, and with financial advisors on the
strategic growth alternatives.
In order to move to the next phase of
development of the deposit, Odyssey and its subsidiaries need the
approval of an environmental permit application. An administrative,
legal and political/educational process has been underway to
achieve this goal. This process is expected to conclude in 2017.
Odyssey indirectly owns 54% of the outstanding shares of a
subsidiary, Oceanica Resources S. de. R.L., which owns ExO.
Shipwreck Projects
UpdateOdyssey began conducting offshore services for our
shipwreck business partner, Magellan Offshore Services, in 2016.
Offshore work is currently underway on the second shipwreck
services contract with Magellan which includes multiple targets.
The master services agreement governing these projects states
Odyssey will be paid cost plus a specified profit, and Odyssey will
receive 21.25% of net returns, if any, from these projects.
Odyssey also offers its marine exploration
services to third party companies. This may be for mineral
exploration, environmental studies, subsea surveys, and other
off-shore work requiring specialized vessels, equipment and
personnel.
Management Commentary“We’re
looking forward to an exciting and positive 2017. Our marine
operations team is already offshore working on a new project for
our shipwreck partner, Magellan. This is the second of what we
expect to be many additional fully funded shipwreck projects,” said
Mark Gordon, Odyssey CEO. “We’re focused on increasing cash
generated from marine services, and we’re pursuing an active
pipeline of projects for existing and new clients.
“Our onshore team has been hard at work
developing plans to begin generating revenue from the Don Diego
phosphate deposit as soon as possible after the environmental
approval is obtained. Although we have been disappointed by the
results of the administrative process for environmental approval at
SEMARNAT, it was a necessary step in our multi-pronged strategy to
achieve ultimate approval of the project. We have augmented the
approval process with a legal mechanism that has strict deadlines
and is normally completed within 8 months,” Gordon continued. “We
remain confident in the extensive scientific documentation that
demonstrates the offshore extraction of phosphate can be
accomplished without harming the local environment, fishing and
tourist activities, and we continue to believe in the ultimate
approval of the project.
“As noted in our recent Form 10-K, we have
recently arranged financing under terms that don’t cause dilution
to either Odyssey or our position in Oceanica Resources but instead
provides the lender with an equity opportunity in a new, early
stage mineral development project. We are confident that between
this funding mechanism, cash generated from operations and other
funding available to us, we have the means to adequately fund the
company through to a final decision on this matter.
“We continue to be pleased with the level of
support we are receiving from MINOSA and view the recent
notification from Epsilon Acquisitions of their intent to convert
$3 million of debt owed by Odyssey into Odyssey equity very
positively.” Epsilon is an investment vehicle controlled by Mr.
Alonso Ancira, who is the chairman of MINOSA's parent company,
AHMSA.
2016 Financial Results
Total revenue decreased by $0.6 million from
$5.3 million in 2015 to $4.7 million in 2016. The 2016
revenue is from providing customers deep-sea surveying services as
well as a shipwreck search and recovery operation. $3.4
million of the revenue in 2015 resulted from providing marine
exploration services for a shipwreck recovery project in the fourth
quarter, and $1.9 million of the 2015 revenue resulted from the
sale of inventory items such as coins.
Marketing, general and administrative expenses
decreased from $11.5 million in 2015 to $7.9 million in 2016.
This decrease of $3.6 million in 2016 is primarily due to (i) a
reduction in corporate staffing of $0.9 million, (ii) reduced legal
fees of $0.4 million which were greater in 2015 due to transaction
costs related to the Stock Purchase Agreement with MINOSA, (iii) a
reduction of $0.6 million in share-based compensation primarily due
to the accelerated vesting of restricted stock units related to the
retirement of the Company’s General Counsel in June 2015 as well as
the reduction in outstanding instruments, (iv) a $0.2 reduction is
outside contracted services, (v) a $0.9 million reduction in
professional services primarily related to the asset sale that
occurred on December 10, 2015 and (vi) a $0.5 million decrease due
to our corporate cost reduction initiatives.
Operations and research expenses were $8.3
million in 2016 as compared to $11.4 million in 2015. The
decrease of $3.1 million in 2016 is primarily due to (a) lower
costs in 2016 associated with the Dorado Discovery vessel which
incurred charter related costs in 2015 of approximately $1.0
million, (b) a reduction in outside contract labor due to a greater
amount of 2015 operations of our vessel, Odyssey Explorer, and its
related sale in 2016, (c) a $0.5 million reduction in mineral
professional services that was related to the preparation of our
environmental application in 2015 and (d) a 2015 Odyssey Explorer
dry dock maintenance cost of $1.0 million that did not occur in
2016. Operations and research, other for 2016 of $1.0 million
is a gain resulting from the sale of two marine assets. Of
this gain, $0.8 million is a non-cash gain resulting from the
settlement of trade debt.
The net loss for 2016 was $6.3 million or
$(0.84) per share, as compared to a net loss of $18.2 million or
$(2.46) per share in 2015.
Consolidated financial statements as well as
Odyssey’s Annual Report on Form 10-K for the year ended December
31, 2016, are available on the company's website at
www.odysseymarine.com as well as at www.sec.gov.
Shareholders with questions about Odyssey’s
fourth quarter and full year 2016 results may submit inquiries by
emailing IR@odysseymarine.com.
About Odyssey Marine
Exploration Odyssey Marine Exploration, Inc. (Nasdaq:OMEX)
is engaged in deep-ocean exploration using innovative methods and
state-of-the-art technology for shipwreck projects and mineral
exploration. For additional details, please visit
www.odysseymarine.com.
Forward Looking
InformationOdyssey Marine Exploration believes the
information set forth in this Press Release may include "forward
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933 and Section 21E of the Securities Act of 1934. Certain factors
that could cause results to differ materially from those projected
in the forward-looking statements are set forth in "Risk Factors"
in Part I, Item 1A of the Company's Annual Report on Form 10-K for
the year ended December 31, 2016, which was filed with the
Securities and Exchange Commission on March 10, 2017. The financial
and operating projections as well as estimates of mining assets are
based solely on the assumptions developed by Odyssey that it
believes are reasonable based upon information available to Odyssey
as of the date of this release. All projections and estimates are
subject to material uncertainties, and should not be viewed as a
prediction or an assurance of actual future performance. The
validity and accuracy of Odyssey's projections will depend upon
unpredictable future events, many of which are beyond Odyssey's
control and, accordingly, no assurance can be given that Odyssey's
assumptions will prove true or that its projected results will be
achieved.
Cautionary Note to U.S.
Investors The U.S. Securities and Exchange Commission
(SEC) permits mining companies, in their filings with the SEC, to
disclose only those mineral deposits that a company can
economically and legally extract or produce. We use certain terms
in this press release, such as “measured”, “indicated,” “inferred”
and “resources,” which the SEC guidelines strictly prohibit us from
including in our filings with the SEC. "Inferred mineral resources"
have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot
be assumed that all or any part of an inferred mineral resource
will ever be upgraded to a higher category. U.S. investors are
cautioned not to assume that part or all of the inferred mineral
resource exists, or is economically or legally mineable, and are
urged to consider closely the disclosures in our Form 10-K which
may be secured from us or from the SEC’s website at
http://www.sec.gov/edgar.shtml.
CONTACT:
Laura Barton
Odyssey Marine Exploration, Inc.
(813) 876-1776 x 2562
laura@odysseymarine.com
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