SeaBird Exploration Plc: Fourth quarter report 2014
(Thomson Reuters ONE) -
2014 SUMMARY OBSERVATIONS FOR THE FOURTH QUARTER
* Revenues for the quarter were $28.1 million, a decrease of 27% compared to
Q4 2013 and up 24% relative to Q3 2014.
* Contract revenues for the period were $23.5 million, down 30% from Q4 2013
and an increase of 44% from Q3 2014.
* Multi-client revenues were $4.6 million, down 11% from $5.1 million reported
in Q4 2013 and a decrease of 28% from $6.3 million reported in Q3 2014.
* EBITDA was negative $28.5 million compared to positive $3.9 million for Q4
2013 and negative $2.1 million for Q3 2014.
* EBIT for the quarter was negative $68.6 million compared to negative $4.6
million for Q4 2013 and negative $11.1 million for Q3 2014.
* Vessel utilization for the period was 57%. Contract surveys during the
fourth quarter represented 52% of vessel capacity compared to 35% during the
third quarter 2014. Multi-client surveys accounted for 5% of vessel capacity
compared to 30% in the prior period.
* Non-recurring costs in the period of $21.0 million relating to lay-up of 3D
vessels, bad debt provisions, loss on insurance settlements, financial
restructuring and office relocation costs.
* Impairments were $31.5 million during the quarter.
Operational review
Fourth quarter revenues increased from the prior period due to higher contract
utilization. However, the overall seismic market continued to be negatively
impacted by the weakness in oil prices. Although all operating sectors were
affected by the softness in the oil services markets, the 2D and source segments
have been less impacted than the niche 3D market.
Vessel utilization was 57%, down from 65% in the third quarter. Technical
downtime for the fleet was 6%, up from 3% for Q3. The Geo Pacific experienced
significant technical challenges on its 3D survey in West Africa and this had a
substantial impact on overall downtime for the period.
Contract surveys represented 52% of vessel capacity compared to 35% for the
third quarter of 2014. Aquila Explorer completed one 2D multi-client survey in
the Philippines and thereafter mobilized for a new 2D contract survey in
Australasia. Osprey Explorer continued working on the 2D survey in the Gulf of
Mexico throughout the quarter. Harrier Explorer completed a 2D multi-client
survey off-shore Ireland and performed a contract survey in Africa. Munin
Explorer continued its long-term source contract and was mobilized to South
America towards the end of the quarter. Hawk Explorer and Northern Explorer
remained off hire awaiting start-up of new 2D contracts. Geo Pacific was
employed on its 3D survey in West Africa during the quarter.
In light of the weakness experienced in 3D market demand, the company decided to
lay up the Voyager Explorer in November. Furthermore, the company has opted to
lay up the Geo Pacific after its Africa survey, which was completed in the early
part of Q1 2015. Non-recurring cost of sales resulting from the implementation
of the lay-up of Geo Pacific and Voyager Explorer amounted to $9.0 million
during the quarter. The cost provision covers estimated net losses until
redelivery of Geo Pacific in 2015 and Voyager Explorer in 2016.
Multi-client surveys represented 5% of vessel utilization for Q4 compared to
30% for Q3. Multi-client revenues were $4.6 million during the quarter.
No additional yard stays were performed during the quarter.
The company's health, safety, security, environment and quality (HSSEQ) controls
continued to prove effective and resulted in a Lost Time Injury Frequency (LTIF)
rate of zero for the quarter.
As a part of the restructuring and refinancing effort, the company incurred $1.7
million in non-recurring advisory costs for the period and $1.1 million in
relation to the closure of the Dubai office. In addition, the company made a
provision of $8.1 million for bad debt related to certain long-dated
receivables. These charges were all reported under selling, general and
administrative expenses. Further, the company had a loss on insurance
settlements of $1.0 million, which was booked under other income and expenses.
Property, plant and equipment impairments amounted to $24.8 million during the
quarter. The impairments relate to vessels and equipment and were triggered by
the current market weakness. The recent reduction in oil prices is also expected
to delay and reduce revenues from selected multi-client surveys, and triggered
an impairment of $5.5 million during the quarter. The company also performed its
annual review of goodwill and decided to make a goodwill impairment of $1.3
million.
Regional overview
Europe, Africa and the Middle East (EAME) represented the largest portion of
revenues during the quarter.
Sales in EAME of $17.4 million accounted for 62% of total revenues. The increase
in EAME revenues compared to the prior period was mainly due to higher contract
utilization. Munin Explorer worked in the region under its long-term charter
agreement. Harrier Explorer completed a multi-client project off the coast of
Ireland and also completed a 2D contract survey in the region. Geo Pacific
continued to work on its 3D contract in Africa during the quarter.
Asia Pacific (APAC) sales of $5.6 million accounted for 20% of total revenues.
APAC revenues were down compared to the third quarter of 2014 due to the decline
in seismic demand. Aquila Explorer completed a multi-client survey in South East
Asia by mid-October and subsequently mobilized for a contract survey in
Australasia.
Sales in North and South America (NSA) of $5.0 million, an increase of 124% from
Q3, represented 18% of total revenues for Q4. NSA revenues increased from the
previous period as a result of Osprey Explorer being employed on a contract
survey in the Gulf of Mexico. The vessel is expected to remain in the region for
the foreseeable future.
Outlook
Global seismic market demand continued to be soft through the fourth quarter.
The decline in oil prices and the cautious spending approach from oil companies
delayed contract start-ups and had a negative impact on seismic demand.
Nevertheless, the company continued to secure additional 2D contracts during the
quarter and significantly strengthened the backlog for 2015.
In light of the challenging market, the company decided to lay up two 3D
vessels, which will reduce costs and improve vessel utilization. The company
continues to evaluate and execute savings initiatives to reduce the company's
overall cost level.
We expect the current seismic market softness to continue to impact the seismic
sector in 2015. Longer term, we expect that continued interest in frontier
exploration and the scheduled exit of a number of 3D vessels currently operating
in our markets will benefit the company. We also believe the company's financial
restructuring effort has had a negative impact on contract awards and expect
this to improve with the completion of the refinancing. Multi-client activity
was robust in the fourth quarter with completion of two projects and solid sales
from recently completed projects in Asia and Europe. The company views multi-
client investment as a core part of its operation and will capitalize on multi-
client investment opportunities with attractive risk reward characteristics.
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 $71.2 million for Q4 2014 (net loss of $8.7
million in the same period in 2013).
Revenues were $28.1 million in Q4 2014 ($38.7 million). The decreased revenues
are primarily due to reduced contract rates during the period.
Cost of sales was $40.1 million in Q4 2014 ($30.0 million). The increase is
predominantly due to non-recurring provisions related to the decision to lay up
the Geo Pacific and Voyager Explorer.
SG&A was $15.6 million in Q4 2014, up from $5.2 million in Q4 2013. This is
principally due to an increase in non-recurring bad debt charges against certain
long-dated receivables, restructuring advisory costs and expenses associated
with the office relocation from Dubai to Limassol and Oslo.
Other income (expense) was negative $1.0 million in Q4 2014 (positive $0.4
million); resulting from a net loss on insurance claims of $1.0 million for the
Osprey streamer incident booked during the quarter.
EBITDA was negative $28.5 million in Q4 2014 (positive $3.9 million).
Depreciation, amortization and impairment were $40.1 million in Q4 2014 ($8.5
million). The impairments are related to vessels ($24.8 million), multi-client
library ($5.5 million) and goodwill ($1.3 million).
Finance expense was $2.3 million in Q4 2014 ($3.1 million). The decrease is
primarily due to a reduction in amortized interest.
Other financial items, net expense, of positive $0.2 million in Q4 2014
(negative $0.7 million).
Income tax expense was $0.5 million in Q4 2014 ($0.2 million in Q4 2013).
Capital expenditures in the quarter were $0.1 million.
Multi-client investment was $1.6 million in Q4 2014 ($1.4 million), which
related to completion of two 2D multi-client projects.
Liquidity and financing
Cash and cash equivalents at the end of the period were $7.0 million ($12.2
million), of which $1.0 million was restricted in connection with deposits and
tax. Net cash from operating activities was negative $2.1 million in Q4 2014
(negative $0.29 million).
The company has one bond loan, one convertible loan and the Hawk Explorer
finance lease.
* The 6% secured bond is recognized in the books at $80.9 million per Q4 2014
(face value of $81.9 million less principal amounts in the bond service
account of $1.0 million). The bond loan's stated maturity is 19 December
2015 and has principal amortization due in semi-annual increments of $2.0
million that started 19 December 2012.
* The 1% unsecured convertible loan with Perestroika AS is recognized in the
books at face value of $14.9 million. The company was unable to repay the
convertible loan at maturity of 30 September 2014 and no interest on the
convertible loan was paid during Q4 2014.
* The lease of Hawk Explorer is recognized in the books as a finance lease at
$5.1 million per Q4 2014. No installments and interest were paid during Q4
2014 ($1.0 million and $0.3 million in Q4 2013, respectively).
Net interest-bearing debt was $95.2 million at the end of Q4 2014 ($87.1
million).
Accrued interest for Q4 2014 was $2.7 million ($0.1 million).
The company was in breach of covenants of the convertible loan from Perestroika
as of 30 September as a result of the inability to repay the $14.9 million face
value at maturity. Moreover, the company was in breach of balance sheet ratio
covenants and cross-default provisions in SBX03 bond agreement. The company has
negative equity as of Q4 2014 and requires new sources of funds to sustain its
operations.
The company continued its financial restructuring dialogue with stakeholders
during the quarter and reached agreement on terms subsequent to quarter closing.
The company's accounts have as a result been prepared on the basis of a going
concern assumption. Reference is made to the Financial Restructuring below and
the Going Concern section in selected notes and disclosures for further details
on the current financial position of the company.
Financial restructuring
Subsequent to quarter closing, the company announced an agreed restructuring
proposal to reduce indebtness and provide additional funding.
* Issue of new equity for a total of approximately $11.6 million or
884,687,500 new shares and 884,687,500 new warrants to acquire one share per
warrant at an exercise price of NOK 0.10 per share.
* Issue of a new 3-year secured bond in two tranches ("SBX04") subscribed by
TGS-NOPEC Geophysical company ASA for $5 million in tranche A and $24.3
million in tranche B originating from a debt conversion of the existing
SBX03 bond, Perestroika convertible bond, charter hire and financial
advisory payables.
* The SBX04 bond will be a secured bond issued in two tranches, one Tranche A
carrying a 12% interest per annum and one Tranche B carrying an interest of
6% per annum, to be secured against certain assets of the SeaBird group.
Interest will be paid quarterly commencing in August 2015. The first
principal payment date will occur two years after the date of settlement of
the SBX04, which is expected in Q1 2015, at which time $2.0 million shall be
payable on that interest payment date and quarterly on each following
interest payment date with a bullet payment to be made on maturity.
* Issue of a 3-year secured credit line facility of $2.4 million. The facility
will carry an interest of 6% per annum, will be secured against certain
assets of the SeaBird group and credit line amount will be reducing from
April 2017 and each interest repayment date at the same proportion as the
installment amounts under SBX04. Interest will be payable quarterly in
arrears with first interest date falling three months after settlement date.
* Issue of a $2.1 million loan. The loan will be unsecured, will carry
interest of 6% per annum and its maturity date will be 1 January 2018. The
principal will be repayable in nine equal installments commencing 1 January
2016. Accrued interest will be paid quarterly in arrears with first interest
payment in April 2015.
Approximately $16.2 million of the outstanding amount under the SeaBird
Exploration Plc Senior Secured Callable Bond Issue 2011/2015 ("SBX03") is to be
converted into SBX04 and the remaining approximately $64.7 million of SBX03 is
to be converted into equity at NOK 0.30 per share. Further, approximately $3.0
million of the company's convertible loan with Perestroika AS to be rolled into
SBX04 and the remaining approximately $11.9 million of the Perestroika Loan to
be converted into equity at NOK 0.30 per share. Additionally, the outstanding
charter hire for the Munin Explorer, Geo Pacific, Hawk Explorer and Voyager
Explorer (the "Charterers") to be partially converted into SBX04 or a loan,
partially converted into equity and/or partially written down and the ongoing
charter obligations to undergo certain amendments including a reduction in total
charter hire of above $25,000 per day, yielding an annual pre-tax cash flow
improvement of above $9 million. Moreover, $0.7 million of restructuring
advisory fees to be converted into SBX04 and $2.8 million of restructuring
advisory fees to be converted into equity at NOK 0.30 per share. In addition,
$11.6 million of equity is to be raised from certain investors, at NOK 0.10 per
share, (which includes a subscription by SBX03 holders of all monies standing to
the credit of a bond service account pledged in favor of SBX03), and where each
new share thus subscribed will entitle the subscriber to a three-year warrant to
subscribe for another share at a subscription price of NOK 0.10 per share. Fuel
vendors' outstanding balances of $3.4 million are to be converted into SBX04
Tranche B and $2.4 million to be converted to the secured credit facility.
On 18 February 2015, the bondholders of SBX03 approved the restructuring
proposal with the requisite majority in a bondholder meeting. Furthermore, on 3
February 2015, the company called for an extraordinary general meeting ("EGM1")
on 19 February 2015, for the creation of a new Class A of shares, conversion of
debt into equity and exclusion of preemption rights in relation to new shares,
all in order to carry out the restructuring as proposed. In the general meeting,
all proposals on the agenda were adopted with requisite majority. Additionally,
the company has called for a second extraordinary general meeting ("EGM2")to be
held on 5 March 2015 to approve conversion of Class A shares into ordinary
shares and reduction in capital with simultaneous increase of authorized capital
to its former amount. Implementation of the restructuring remains subject to
final documentation and customary closing conditions. We refer to press releases
issued by the company to provide further details on the announced restructuring.
The Board of Directors and
Chief Executive Officer
SeaBird Exploration Plc
26 February 2015
The third quarter 2014 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.
Q4-14 Presentation:
http://hugin.info/136336/R/1897876/673752.pdf
Q4-14 Report:
http://hugin.info/136336/R/1897876/673751.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: SeaBird Exploration Plc via GlobeNewswire
[HUG#1897876]
Unternehmensinformation / Kurzprofil:
Datum: 27.02.2015 - 07:30 Uhr
Sprache: Deutsch
News-ID 374772
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contact information:
Town:
Oslo
Kategorie:
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