26 February 2016, Limassol, Cyprus
2015 SUMMARY OBSERVATIONS FOR THE FOURTH
QUARTER
- Revenues for the quarter were $27.1 million, a
decrease of 3% compared to Q4 2014 and up 17% relative to Q3
2015.
- Contract revenues for the period were $26.6
million, up 13% from Q4 2014 and an increase of 15% from Q3
2015.
- Multi-client revenues were $0.5 million, down 90%
from $4.6 million reported in Q4 2014 and an increase of 424% from
$0.1 million reported in Q3 2015.
- Adjusted EBITDA of $8.3 million. EBITDA was $4.6
million compared to negative $28.5 million for Q4 2014 and $4.6
million for Q3 2015.
- Adjusted EBIT of $3.3 million. EBIT for the
quarter was negative $5.6 million compared to negative $68.6
million for Q4 2014 and $0.0 million for Q3 2015.
- Total net non-recurring charges of $9.0 million.
The multi-client portfolio was impaired by $5.0 million while
seismic equipment was impaired by $0.3 million. During the quarter
the company made net a $2.7 million charge related to changes in
estimates of lay-up provisions for onerous long-term lease
contracts. Additionally, $1.0 million in bad debt costs and end of
service benefits were charged to SG&A in the period.
- Vessel utilization for the five vessels active in
the period was 100%. All five active vessels were in operation on
the Mexico Gigante survey. Three vessels remain stacked.
- 9% technical downtime in the quarter compared to
6% for Q4 2014.
- Contract surveys during the fourth quarter
represented 100% of vessel capacity compared to 86% during the
third quarter 2015. None of the company's vessels were utilized for
multi-client surveys during the period, similar to Q3 2015.
- Zero lost time injury frequency (LTIF) in the
quarter.
Key highlights
Operational review
The fourth quarter was characterized by a
continued weakness in oil prices and 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 100% during Q4 2015, up
from 86% in the previous quarter. Technical downtime for the fleet
was 9% in Q4 2015, similar to Q3 2015. The current technical
downtime is at an unsatisfactory level and the management is
actively implementing measures aimed at improving performance.
Contract surveys represented 100% of vessel capacity compared to
86% for the third quarter of 2015.
Aquila Explorer commenced production on the Mexico
project during the fourth quarter. Harrier Explorer, Hawk Explorer,
Northern Explorer and Osprey Explorer were in production on the
Mexico Gigante project the whole quarter. Munin Explorer, Geo
Pacific and Voyager Explorer remained stacked during the
period.
Multi-client surveys represented 0% of vessel
utilization in the quarter compared to 5% in the same quarter
previous year. Multi-client revenues were $0.5 million in the
period. The multi-client portfolio was impaired by $5.0 million.
This includes an impairment of $2.6 million charged to the 3D
multi-client survey in West Africa resulting in zero book value at
31 December 2015. Further, increased market uncertainty and reduced
revenue forecasts from selected 2D multi-client surveys triggered
an additional impairment of $2.4 million during the quarter.
The company continued its cost reduction effort
and standard vessel operating expenses excluding fuel have been
reduced by approximately 17% on a comparable basis relative to
fiscal 2014, in line with the previously communicated cost savings
target. Run-rate SG&A expenses have been reduced by
approximately 25% relative to fiscal 2014, ahead of the savings
target.
Operating costs were also reduced due to the
lay-up of two chartered 3D vessels (Geo Pacific and Voyager
Explorer) and one chartered 2D vessel (Munin Explorer), reduced
vessel charter rates and lower crew headcount. The company will
continue its review of additional savings initiatives. In addition
to cost reductions, the company is actively focusing on cost
flexibility measures as well as improving operational
efficiency.
The company redelivered the Geo Pacific to its
owners on 30 December 2015. SeaBird has unsuccessfully tried to
redeliver the Kondor Explorer to its owners since the end of the
bareboat charter in February 2014. Subsequent to quarter closing,
SeaBird's contractual obligations related to the Kondor Explorer
were terminated.
Net non-recurring cost of sales in the quarter
amounted to $2.7 million, which mainly relates to a $3.7 million
charge for Munin Explorer onerous lease contract partly offset by a
$1.0 million cost reversal for the Kondor Explorer. Furthermore,
the company booked $1.0 million in non-recurring charges related to
doubtful debts and end of service benefits in the period reported
under selling, general and administrative expenses.
Capital expenditures were $0.5 million during the
quarter, which is in line with the lower spending estimates
communicated earlier in the year.
Lost time injury frequency (LTIF) rate for the
quarter was zero. The company continued to focus on maintenance of
its 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 fourth quarter. NSA revenues of $26.6
million represented 98% of total revenues for the quarter. Sales in
this region increased as Aquila Explorer joined the rest of the
active fleet on the Mexico Gigante survey.
Sales in Europe, Africa and the Middle East (EAME)
was $0.02 million during the quarter while sales in Asia Pacific
(APAC) amounted to $0.5 million (2% of total revenues for the
quarter). No SeaBird vessels worked in either APAC nor EAME during
the quarter, and revenues recorded in these regions represented
multi-client sales.
Outlook
Global seismic demand continued to be weak in the
fourth quarter and there are no signs of market improvement. Oil
industry spending is anticipated to remain depressed through 2016
and the seismic sector is expected to remain under pressure as a
result.
The Mexico Gigante project continues to represent
the main part of the company's current backlog. A significant
portion of the company's fleet is expected to be employed on the
Mexico Gigante project into the second half of 2016 assuming the
full project size of approximately 186,000 kilometers is to be
completed. The company has submitted proposals for source vessel
and 2D contracts for both oil companies and other seismic industry
market players. While there are a number of opportunities under
review, contracting has generally been delayed due to permitting,
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 loss of $6.5 million for Q4 2015
(net loss of $71.2 million in the same period in 2014).
Revenues were $27.1 million in Q4 2015 ($28.1
million).
Cost of sales was $18.2 million in Q4 2015 ($40.1
million). The decrease is predominantly due to fewer vessels in
operation and provisions taken in Q4 2014 for laid-up vessels.
SG&A was $4.5 million in Q4 2015, down from
$15.6 million in Q4 2014. The decrease is principally due to cost
savings, significant bad debt and restructuring charges taken in Q4
2014 as well as savings related to the closing of the Dubai office
and reduced onshore headcount.
Other income (expense) was $0.2 million in Q4 2015
(negative $1.0 million).
EBITDA was $4.6 million in Q4 2015 (negative $28.5
million).
Depreciation, amortization and impairment were
$10.3 million in Q4 2015 ($40.1 million). This decrease is due to
the significant vessel, multi-client and goodwill impairments taken
in Q4 2014 partially offset by multi-client impairments charged in
Q4 2015.
Financial expenses were $1.0 million in Q4 2015
(2.3 million). The decrease is largely due to reduced debt
levels.
Other financial items were positive $0.1 million
in Q4 2015 (positive $0.2 million).
Income tax expense was positive $0.01 million in
Q4 2015 ($0.5 million).
Capital expenditures in Q4 2015 were $0.5 million
($0.1 million).
Multi-client investment was nil in Q4 2015 ($1.6
million).
Liquidity and financing
Cash and cash equivalents at the end of the period
were $6.3 million ($7.0 million), of which $0.4 million was
restricted in connection with deposits and tax. Net cash from
operating activities was $2.4 million in Q4 2015 (negative $2.1
million).
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 $26.1
million per Q4 2015 (nominal value of $29.3 million plus accrued
interest of $0.2 million less fair value adjustment of $3.4 million
including amortized interest). 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 Q4 2015 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 $2.4 million less net amortized cost of $0.3 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. Effective interest booked for Q4 2015 was $0.1
million. Principal repayments during Q4 2015 amounted to $0.3
million and additional amounts drawn on the credit facility during
the period was $0.3 million. Interest paid during Q4 2015 was $0.03
million.
The three year unsecured loan is recognized at
amortized cost of $2.0 million (initial nominal value of $2.1
million less net amortized cost of $0.1 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
instalments of $0.2 million commencing on 1 January 2016. Interest
paid during Q4 2015 was nil.
The lease of Hawk Explorer is recognized in the
books as a finance lease at $3.5 million per Q4 2015. Instalments
and interest amounting to $0.6 million were paid during Q4 2015
(nil in Q4 2014).
Net interest bearing debt was $27.5 million as at
the end of Q4 2015 ($95.2 million in Q4 2014).
Accrued interest on the bond loan, credit facility
and the unsecured note for Q4 2015 was $0.2 million ($2.7
million).
The company was in compliance with all covenants
as of 31 December 2015.
During the quarter the company completed a
consolidation of shares whereby 1,000 old shares were converted
into 1 new share. The total outstanding amount of common shares in
the company after the share consolidation 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 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.
Subsequent events
Subsequent to quarter closing, the company
announced that Mr. Christophe Debouvry was appointed as new Chief
Executive Officer of SeaBird effective from 18 January 2016. The
current Chief Executive Officer, Mr. Dag Reynolds, 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.
Subsequent to quarter closing, SeaBird's
contractual obligations related to the Kondor Explorer were
terminated.
The Board of Directors and
Chief Executive Officer
SeaBird Exploration Plc
25 February 2016
The fourth 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.
Q4-15 Presentation
Q4-15 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#1989706
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