Seabird Exploration Group Second Quarter 2009
(Thomson Reuters ONE) - HIGHLIGHTS SECOND QUARTER 2009 * Refinancing and partly redemption of the NOK 200 million bond loan was resolved in March with a USD 6.2 million profit recognised in April 2009, when the bondholders exercised their put option. * Agreed on 17 June 2009 with a bank consortium, fronted by BNbank, to reduce instalments for 2nd half of 2009 by USD 14.1 million to be applied as a balloon together with last instalments in November 2011 - September 2012. * A full scale test of our deep water Sea Bottom Node seismic was completed mid July by retrieving 42 Nodes on a location at 1700 - 2200 m water depth close to the Atlantis field, where the node seismic is now ready to commence for BP. * The Osprey Explorer in long term lay-up from 15 June.KEY FINANCIAL PERFORMANCE FIGURESFor comparisons of income and expenses between Q2 2009 and Q2 2008,it must be noted that the financing and level of operating activityfor the SeaBird Group has changed considerably. The Sea Bottom Nodeseismic with the Hugin Explorer commenced in the second half of 2008,and the revenue day rates on the 2D seismic and source vessels havebeen reduced significantly since 2008. In addition, there is moreidle time for the vessels in between contracts this year.Consolidated revenues for the SeaBird Group "SeaBird" are on the samelevel in Q2 2009, at USD 45.1 million, as in Q1 2009, despite animproved utilization from 62% in Q1 2009 to 80% in Q2 2009. The mainreason is that the Hugin Explorer has been under demobilisation andmobilisation during most of Q2 2009 (utilization 86%) with less thanhalf revenue per day compared to operating day rates under the Totalcontract during Q1 (utilization 38%). Earnings before interest,taxes, depreciation and amortization ("EBITDA") were USD 8.9 millionin Q2 2009 compared to USD 4.3 million in Q1 2009, due to reducedoperating expenses from USD 35.2 million in Q1 2009 to USD 29.2million in Q2 2009.Operating expenses reduced by USD 6 million this quarter compared toprevious quarter is partly due to reduced manning cost, maintenanceand fuel consumption for vessels in standby/idle. Further, about USD2 million related to 2008 operations was recognised in Q1 2009.Selling, general and administrative ("SG&A") expenses were USD 7.1million in Q2 2009, at same level as in Q1 2009. However, write offof bad debt was 0.7 million in Q1 2009 compared to USD 1.5 million inQ2 2009.Depreciation is up by USD 2 million to USD 12.1 million in Q2 2009compared to Q1 2009, mainly due to write-off of seismic equipmentsold in Q2.Impairment tests based on value in use calculations (discountedfuture cash-flows) indicate no need for further write-down of vesselsand seismic equipment in Q2. The impairment tests have considered areduction of expected revenue rates for 2D vessels over the next 2-3years and lay-up of part of the 2D fleet through 2010.Interest expense is reduced from USD 4.1 million in Q1 to USD 3.7million in Q2 due to the restructuring of the NOK 200 million bondloan which was reduced by NOK 117 million (USD 17.6 million) partlyfinanced by a new USD 5 million bank loan, effectively reducing debtby USD 12.6 million.Other financial items for the quarter were USD 4.2 million due to aprofit of USD 6.2 million for the partly redemption of the NOK 200million bond loan, unrealized exchange loss of USD 1.3 million andrealized exchange loss of USD 0.7 million. The income tax of USD 2.2million in Q2 2009, as in Q1 2009, refers mainly to withholding taxin various jurisdictions around the world where the SeaBird vesselshave been operating.Loss for Q2 2009 was USD 4.9 million compared to a loss for Q1 2009of USD 15.3 million and a profit in Q2 2008 of USD 11.4 million.Revenue was USD 91.6 million and the EBITDA USD 13.1 million for thesix months ended 30 June 2009. Comparable figures for 2008 were USD98.4 million in revenue and USD 36.2 million in EBITDA, main changesexplained above. Loss as of 30 June 2009 is USD 20.2 million comparedwith a profit of USD 3.4 million as of 30 June 2008.Capital Expenditures (CAPEX) for Q2 2009 was USD 2.3 million whileUSD 13.3 million was capitalized in Q1 2009, of which USD 1.7 millionrefers to investments in Node modifications and node handlingequipment onboard Hugin Explorer.The relatively strong USD has in general a positive impact on ouroperating expenses, interest expenses and gross debt as we havesignificant costs in other currencies and bond loans of a total ofNOK 478 million.OPERATIONAL HIGHLIGHTS Q2 2009The vessel utilization for the 9 seismic vessels operated by SeaBirdfor Q2 2009 is 80%, up from 62% in Q1 2009.Geo Mariner had utilization of 50% after mobilizing mid March,completing a short contract offshore Mozambique end of May andthereafter lying idle in East Africa during June.Hawk Explorer and Harrier Explorer have continued on their long termtime charters to Fugro Geoteam (to end November 2009) and PGS (toOctober 2011) and had utilization of 95% and 100% respectively.Osprey Explorer and Northern Explorer continued to acquire data atthe East Coast of India during the quarter with exceptionalacquisition results. Both vessels completed 100% of the contractual82,000 line kilometers earlier than expected in early June. Bothvessels demobilized to Singapore with utilization for the quarter of81% and 80% respectively. Northern Explorer is currently kept activewhereas Osprey Explorer underwent preparations for layup,subsequently being cold stacked in early July.Aquila Explorer continued her surveys for Santos and subsequently TGSNopec throughout the quarter, with utilization of 95%.Munin Explorer completed her survey offshore Mozambique andsubsequently mobilized to East Coast India on a survey for Fugro,with utilization of 89%.The Hugin Explorer completed her first full scale OBN survey forTotal's Dalia field in Angola in April. The vessel immediatelymobilized to GoM for the Green Canyon Field survey for BP E&P Inc.scheduled to commence end July, with utilization of 86%.Kondor Explorer had utilization of 33% due to continuing to be idlein April and May, prior to entering the mobilization phase in Juneand being rigged for the engagement as source/support vessel for theOBN contract for Hugin Explorer with BP E&P Inc in GoM.With regard to the reduction in SeaBird fleet from 9 vessels to 8following the decision to cold stack the Osprey Explorer, furtherreduction in operating costs will be seen across Q3 and Q4 2009. Inaddition, overall work force will be reduced by some 18%. Spares andequipment from the Osprey Explorer have been removed and areavailable as inventory to the remaining fleet vessels. In view of thevery volatile 2D market at present, further decisions regarding layupof vessels may be taken after evaluation of geographical positioningand opportunities with short notice.Liquidity and FinancingAt 30 June 2009, cash and cash equivalents amounted to USD 10.6million, compared to USD 8.9 million at the end of Q2 2008 and USD17.6 million at the end of Q1 2009. Net cash flow from operatingactivities for Q2 2009 was USD 8.3 million, compared to USD 22.6million for Q2 2008, while Q1 2009 was USD 6.8 million. For the firstsix months of 2009, net cash flow from operating activities was USD15.1 million compared to USD 38.1 million for the same period in2008.Net down payment of debt was USD 15 million for the quarter, mainlycaused by the NOK 200 million bond restructuring and someinstalments. Net interest-bearing debt was USD 169 million at 30 June2009 compared to USD 210 million at the end of Q2 2008 and USD 172.7million at the end of 2008.SeaBird has during 2006-2008 invested approximately USD 350 millionin a significant expansion of the fleet. In Q2 2009, capitalexpenditure was reduced to USD 2.3 million. There are no furthersignificant committed investments for the rest of 2009, except normalmaintenance type expenditures, certain equipment upgrades andmanufacturing of 250 new Nodes for the Hugin Explorer operation.The NOK 200 million bond loan with maturity on 14 July 2009 wasrestructured during March and April this year through a PrivatePlacement raising a total of NOK 61.8 million and USD 5 million innew bank debt for the purpose to partly finance the bondrestructuring. A bondholders' meeting in March 2009 accepted toeither:(i) put its bonds to SeaBird for cash consideration for the bonds of55%(ii) continue as a bondholder, where 25% redemption at 100% of parand that the terms for the Bond Loan were amended to extend maturitywith two years and removal of the negative.46% of the bondholders exercised the put option on 27 April 2009.This refinancing transaction generated a USD 6.1 million profit in Q22009. The remaining balance of the NOK 200 million loan is NOK 78.7million (net of NOK 4 million of own bonds held by SeaBird) now due14 July 2011.The banks agreed in June 2009 to defer instalments of a total USD14.1 million due in second half of 2009 to be added as a balloon tothe last instalment in 2011-2012.Based on the current business plan and the projected cash flow fromoperations, SeaBird expects to be able to comply with its financialcommitments through 2009. However, our financial situation leaveslimited room for deviations from the business plan and under thepresent market environment a successful operation of the Sea BottomNode seismic with the Hugin Explorer is of the outmost importance tothe SeaBird Group.With the current uncertainties in the market the total debt level ison the high side. We continue to evaluate various alternatives toimprove liquidity and reduce the debt.OutlookThe market situation continues to be a concern as we have seen volumeof business and revenue rates both decreasing in first half 2009. Wehave identified and prequalified for a considerable number of tendersand bids due out in Q3 and Q4.In the 2D sector of the seismic industry, a significant number ofvessels are now scheduled as going to layup, or sold out of themarket completely. Revenue rates on SBX latest fixtures are in linewith 2007 levels and this level is acceptable to maintain theoperation of vessels. SeaBird is aggressively pursuing the tendersand other business opportunities coming into the market.Our shallow water 2D/3D operation with the Geo Mariner has beenaffected both from a lack of survey requirements and from the monsoonseason leading into Q3.In our ocean bottom node operation, we have in July successfullycompleted our node test phase for BP in the Gulf of Mexico, deployingand recovering 42 nodes and downloading the data onboard. SBX is theowner of this data and has already sold MC licenses to 2 other majorinternational oil companies with whom we are discussing futuresurveys for 2010 and onwards. This confirms the interest from the oilcompanies for the development of nodes surveys on producing fieldsaround the world.SeaBird along with other seismic operators will experience a reducedseismic activity level over the coming months. Consequently we havereduced operating costs in Q2, we have cold stacked one vessel, wehave reduced our workforce going forward by some 18%, and we arecontinuing to monitor the situation closely and may further decreaseour 2D operating fleet number should the market situation requiresuch action.RESPONSIBILITY STATEMENTWe confirm that, to the best of our knowledge, the condensed set offinancial statements for the first half year of 2009, which have beenprepared 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 alsoconfirm that, to the best of our knowledge, the first half 2009report includes a fair review of important events that have occurredduring the first six months of the financial year and their impact onthe condensed financial statements, a description of the principalrisks and uncertainties for the remaining six months of the financialyear, and major related parties transactions. The Board of Directors and Chief Executive Officer SeaBird Exploration Ltd22 July 2009The presentation and the full report with tables can be downloadedfrom the following links:http://hugin.info/136336/R/1330428/314479.pdfhttp://hugin.info/136336/R/1330428/314480.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 23.07.2009 - 07:31 Uhr
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