SeaBird - Report 2nd quarter 2012
8/17/2012 1:30 AM EST
HIGHLIGHTS FOR THE SECOND QUARTER 2012
* Revenues for the quarter were $48.7 million, an increase of 120% compared to
the comparable period in 2011 and up 42% relative to Q1 2012.
* Contract revenues for the period were $43.6 million, up 126% from Q2 2011
and up 73% from Q1 2012.
* Multi-client revenues were $5.1 million, an increase of 76% from $2.9
million reported in Q2 2011 and a decrease of 44% from $9.1 million reported
in Q1 2012.
* EBITDA was $17.2 million compared to $0.2 million for Q2 2011 and $2.7
million for Q1 2012.
* EBIT for the quarter was $7.7 million compared to negative $8.5 million for
Q2 2011 and negative $8.7 million for Q1 2012.
* Vessel utilization for the period was 74% (excluding GGS Atlantic,
utilization was 85%).
Operational review
Continued strength throughout the operation resulted in a solid second quarter
for SeaBird. Increasing sector demand contributed to robust revenue growth
and continued strong backlog. In addition to growing demand for contract work
from multi-client customers, we have also seen a substantial upturn in
opportunities with oil companies.
Robust sector demand and higher industry utilization rates have increased
requests for longer-term contracts. In light of this, we are selectively
exploring entering into framework agreements as well as longer-dated contracts
with clients. As a part of this effort, we extended our contract with Spectrum
ASA and agreed to an additional $30 million of contract work at rates reflecting
improved market terms. We are also exploring other opportunities.
During the period, we sold three licenses to existing multi-client surveys and
we are seeing good demand for further sales. On a select basis, we will also
review options to sell our interest in underlying libraries. Investment into
new multi-client surveys was modest during the second quarter. However, we are
evaluating investment opportunities on an on-going basis and will continue to
develop our strategy to expand this part of our business.
Vessel utilization has continued to increase and was up significantly from the
beginning of the year as well as relative to quarter one. Average utilization
for the second quarter was 74%, which includes two routine dockings as well as
the dry docking of GGS Atlantic which left this vessel idle for the period. The
GGS Atlantic charter will expire in August 2012 and will not be renewed.
Excluding GGS Atlantic, utilization would have been 85%.
From an operational standpoint, the SeaBird team continued to deliver best-in-
class performance with technical down time for the quarter of less than 4%. In
addition, capital projects related to dockings were completed on budget and on
time.
The company's continued focus on HSSEQ has been a cornerstone of our operation
and has ensured that we maintain our first-rate safety and quality standing in
the industry. During the quarter we completed our OHSAS 18001 certification,
sustaining our industry-leading accreditations. Year to date, we have completed
all projects without any lost time injuries or serious accidents. Our
occupational injury and illness statistics are currently well below industry
levels - running approximately 50% below sector averages and resulting in less
downtime, reduced costs and improved client relations. Reported client
satisfaction has been very strong, with notable commendations from major
customers.
The focus on improving our cost structure is now paying off and we are seeing a
significant reduction in on-going expenses. SG&A has come down considerably and
is now in line with management targets. We will continue our effort to improve
the company's cost position without impacting the high quality of our
operations. As a part of this effort, we are also reviewing the implementation
of a company-wide enterprise resource planning (ERP) system. This should
significantly enhance our ability to analyze our operations, further reduce
costs and position the company to further scale its business.
With respect to fleet composition, we have finalized the sale of Geo Mariner.
Outlook
The company is expecting to see continued solid client demand through the second
half of 2012. We anticipate demand to continue to come from both oil companies
as well as contract work with multi-client customers. Backlog is expected to
remain attractive. However, given the short-term nature of most of our
contracts, we may see significant fluctuations in backlog from time to time.
The company will continue to explore long-term agreements to create a balance
between shorter and longer-dated projects.
We will continue to review strategic growth opportunities.
Financial results
All figures below relate to continuing operations unless otherwise stated. For
discontinued operations, see note 1.
The company reports a profit of USD 0.3 million for the second quarter 2012
(negative USD 19.7 million same period in 2011).
The loss for the first half of 2012 was USD 12.2 million, compared to a loss of
USD 42.2 million in 2011.
Revenues were USD 48.7 million in Q2 2012 (USD 22.2 million). The increased
revenues are mainly due to fleet composition, higher utilization of the vessels
in Q2 2012 compared to Q2 2011 and multi-client sales.
Revenues for the first half of 2012 were USD 83.0 million compared with USD
38.8 million for 2011.
Cost of sales was USD 27.6 million in Q2 2012 (USD 17.0 million). The change is
primarily due to fleet composition and higher vessel utilization.
For the first half of 2012, cost of sales was USD 54.9 million, up from USD
29.5 million in 2011.
EBITDA was USD 17.2 million in Q2 2012 (USD 0.2 million). EBITDA for the first
half of 2012 was USD 19.9 million compared with negative USD 1.3 million for
2011.
Depreciation and amortization were USD 9.5 million in Q2 2012 (USD 8.7 million).
The increase is principally due to higher multi-client sales amortization for
the period, partly offset by a reduction in depreciation resulting from the
impairment of vessels and equipment completed in 2011.
Depreciation and amortization increased from USD 17.1 million in the first half
of 2011 to USD 20.9 million in 2012.
SG&A were USD 4.0 million in Q2 2012, down from USD 5.1 million in Q2 2011. The
decrease is predominantly due to the organizational restructure and cost savings
initiative implemented during Q1 2012.
SG&A for the first half of 2012 were USD 8.9 million compared with USD 10.8
million for 2011.
Interest expense was USD 3.1 million in Q2 2012 (USD 6.0 million). The decrease
is a result of the financial restructuring completed in 2011.
For the first half of 2012, interest expense was USD 6.1 million, down from USD
9.7 million in 2011.
Other financial items, net expense, of USD 0.2 million in Q2 2012 (negative USD
4.7 million). The change is mainly due to the currency effect on the bond loans
and debt restructuring costs incurred in Q2 2011.
For the first half of 2012 other financial items, net expense, were negative USD
0.3 million compared with negative USD 10.7 million for 2011.
Income tax was USD 4.6 million in Q2 2012 (USD 0.4 million). The increase is
mainly due to increased corporate and withholding taxes directly related to the
tax jurisdictions the vessels operated within during Q2 2012. Furthermore,
during the period a review of a number of significant projects was completed
resulting in an additional USD 1.9 million tax liability being recognized during
Q2 2012.
For the first half of 2012, income tax was USD 4.8 million, up from USD 0.5
million in 2011.
Capital expenditures were USD 7.0 million in Q2 2012 (USD 5.9 million). Major
capital cost items for the quarter included the main class renewal and major
engine overhaul of Munin Explorer and Aquila Explorer. Furthermore, the Harrier
Explorer was equipped with a 12 km solid streamer.
Net profit from discontinued operations was USD 2.3 million for Q2 2012 (USD
3.1 million). Net profit from discontinued operations represents the remaining
contractual obligations of the Ocean Bottom Node (OBN) business which was
divested in Q4 2011.
For the first half of 2012, net profit from discontinued operations was USD 7.5
million, up from negative USD 7.5 million in 2011.
Liquidity and financing
Cash and cash equivalents at the end of the period were USD 6.7 million (USD
4.8 million), of which USD 1.7 million was restricted in connection with bid and
performance bonds. Net cash from operating activities was USD 3.8 million in Q2
2012 (USD 0.1 million).
Following the financial restructuring completed in December 2011, the company
has one bond loan, one convertible loan and the Hawk Explorer finance lease.
* The 6% secured bond loan has a face value of USD 89.9 million and is
recognized in the books at amortized cost of USD 76.6 million per Q2 2012.
The bond loan matures 19 December 2015 and has principal amortization due
in semi-annual increments of USD 2.0 million starting 19 December 2012.
* The 1% unsecured convertible loan with Perestroika has a face value of USD
14.9 million and is recognized in the books at amortized cost of USD 12.0
million per Q2 2012. The convertible loan matures 22 September 2014 and has
no principal amortization. Interest on the convertible loan may be paid in
kind.
* The lease of Hawk Explorer is recognized in the books as a finance lease at
USD 14.9 million per Q2 2012. Installments of USD 0.8 million against the
Hawk lease principal and USD 0.4 million against the interest portion were
paid during Q2 2012 (USD 0.8 million and USD 0.5 million in 2011,
respectively).
Net interest-bearing debt was USD 96.9 million at the end of Q2 2012 (USD 208.6
million).
Accrued interest for Q2 2012 was USD 0.1 million (USD 1.4 million).
The company was in compliance with all covenants as of 30 June 2012.
Important events in the first half of the year
The company made significant changes to key management and commenced a cost
reduction initiative during the first half of 2012.
During the first half of 2012, Seabird has developed a new technology based
around the use of a 20 km cable with continuous recording. Patent applications
for the technology have been made.
Due to an expected upswing in the source vessel market during the second half of
2012 we extended the bareboat charter on the Kondor Explorer with another two
years.
Responsibility statement
We confirm that, to the best of our knowledge, the condensed set of financial
statements for the first half year of 2012, 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 2012 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
16 August 2012
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegi