SeaBird Exploration Plc: First quarter report 2015
(Thomson Reuters ONE) -
6 May 2015, Limassol, Cyprus
2015 SUMMARY OBSERVATIONS FOR THE FIRST QUARTER
* Revenues for the quarter were $24.2 million, a decrease of 28% compared to
Q1 2014 and down 14% relative to Q4 2014.
* Contract revenues for the period were $23.0 million, down 25% from Q1 2014
and a decrease of 2% from Q4 2014.
* Multi-client revenues were $1.2 million, down 62% from $3.2 million reported
in Q1 2014 and a decrease of 74% from $4.6 million reported in Q4 2014.
* EBITDA was $8.2 million compared to $10.2 million for Q1 2014 and negative
$28.5 million for Q4 2014.
* EBIT for the quarter was $3.7 million compared to $2.4 million for Q1 2014
and negative $68.6 million for Q4 2014.
* Vessel utilization for the period was 58%. Contract surveys during the first
quarter represented 58% of vessel capacity compared to 52% during the fourth
quarter 2014. None of the company's vessels were utilized for multi-client
surveys during the period, compared to 5% of vessel capacity in Q4 2014.
* The company completed its financial restructuring in the quarter. A non-
recurring financial restructuring gain net of advisory fees of $61.3 million
was reported, resulting from creditor debt forgiveness and partial
conversion of debt to equity. Additionally, a non-recurring restructuring
gain on leases of $4.7 million was reported as a result of debt forgiveness
of outstanding operational lease payables.
* Issued a 3-year secured bond in two tranches ("SBX04") raising gross
proceeds of $5 million in tranche A and $24.3 million in tranche B
originating from a debt conversion of existing outstanding debt and
payables.
* Completed private placement of 1.8 million preference shares and warrants,
generating gross proceeds of NOK 88.5 million ($11.6 million).
Key highlights
Operational review
First quarter revenues decreased from the prior period due to continued softness
in seismic market demand.
Vessel utilization was 58% during Q1 2015, up from 57% in the previous quarter.
Technical downtime for the fleet was 5%, down from 6% for Q4 2014. Yard stay
represented 2% of vessel capacity.
Contract surveys represented 58% of vessel capacity compared to 52% for the
fourth quarter of 2014. Aquila Explorer was employed on its 2D survey in
Australasia, while Osprey Explorer continued working on several 2D surveys in
the Gulf of Mexico throughout the quarter. Northern Explorer performed a 2D
contract survey in West Africa and was in transit to Las Palmas for planned
maintenance and class certification towards the end of the quarter. Munin
Explorer continued its long-term source contract. The vessel was in South
America throughout the period. Harrier Explorer was off hire early in the
quarter and finished the quarter in scheduled maintenance in Dubai, en route to
a source contract in South East Asia. Hawk Explorer remained off hire during the
quarter. Geo Pacific finished its 3D survey in West Africa and then transited to
Norway for cold stacking.
During the quarter the company implemented measures to reduce costs. The lay-up
of Geo Pacific, lower project activity, reduced vessel charter rates and lower
crew headcount contributed to bring down costs of goods sold relative to 2014.
The company also benefited from reduced bunker fuel prices and favorable
exchange rates. Administrative costs were reduced as a result of the
implementation of the closing of the Dubai office and reduced onshore headcount.
Multi-client surveys represented 0% of vessel utilization. Multi-client revenues
were $1.2 million during the quarter.
Lost Time Injury Frequency (LTIF) rate for the quarter was zero. Industry-
leading HSSEQ processes continue to ensure that the company provides a safe and
healthy work environment both offshore and onshore while continuously improving
operational performance and quality.
Regional overview
Revenues in the first quarter represented a geographical shift from Europe,
Africa and the Middle East (EAME) towards Asia Pacific (APAC) and North and
South America (NSA).
Sales in APAC of $10.6 million, an increase of 89% from the previous period,
accounted for 44% of total revenues for the quarter. APAC revenues increased
mainly due to Aquila being employed on a contract survey in Australasia during
the quarter.
NSA revenues of $9.0 million represented 37% of total revenues for the quarter.
Sales in this region increased by 79% compared to previous quarter due to higher
contract utilization. Munin Explorer worked in the region under its long-term
charter agreement and Osprey Explorer continued working on several contract
surveys in the Gulf of Mexico.
Sales in EAME of $4.6 million accounted for 19% of total revenues. EAME revenues
were down compared to Q4 2014 due to the decline in seismic demand. Northern
Explorer completed a contract survey in West Africa and Geo Pacific finished its
3D contract survey in the region during the quarter.
Outlook
Global seismic market demand continued to show weakness in the first quarter.
Reduced oil prices and increased market uncertainty impacted capital spending in
the sector and selectively delayed or postponed contract start-ups.
In light of the challenging market conditions, we continue to evaluate and
execute savings initiatives to reduce the company's overall cost level. We
expect the current market softness to continue to negatively impact the seismic
sector throughout 2015.
Multi-client demand was soft in the first quarter and available prefunding for
new projects was limited. We anticipate that this weakness will persist over the
foreseeable future and will impact multi-client sales.
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 profit of $63.3
million for Q1 2015 (net loss of $0.6 million in the same period in 2014).
Revenues were $24.2 million in Q1 2015 ($33.7 million). The decreased revenues
are primarily due to reduced number of vessels in operation and lower multi-
client activity during the period.
Cost of sales was $17.0 million in Q1 2015 ($19.7 million). The decrease is
predominantly due to fewer vessels in operation as the Geo Pacific and Voyager
Explorer are laid up, reduced charter hire and lower fuel cost.
SG&A was $3.8 million in Q1 2015, down from $4.9 million in Q1 2014. This is
principally due savings related to the closing of the Dubai office and reduced
onshore headcount.
Other income (expense) was positive $0.1 million in Q1 2015 (positive $1.1
million).
Restructuring gain on leases of positive $4.7 million in Q1 2015 (nil) as a
result of negotiated debt forgiveness as a part of the company's financial
restructuring that was completed during the quarter.
EBITDA was $8.2 million in Q1 2015 ($10.2 million).
Depreciation, amortization and impairment were $4.5 million in Q1 2015 ($7.8
million). This decrease is largely due to lower vessel book values and lower
multi-client sales amortization.
Finance expense was $1.0 million in Q1 2015 ($3.0 million).
Other financial items, net expense, of negative $0.2 million in Q1 2015
(positive $0.2 million).
Restructuring gain of positive $61.3 million in Q1 2015 (nil) as a result of the
completion of the company's financial restructuring during the quarter.
Income tax expense was $0.5 million in Q1 2015 ($0.3 million in Q1 2014).
Capital expenditures in the quarter were $0.2 million ($2.4 million).
Multi-client investment was nil in Q1 2015 ($7.8 million).
Financial restructuring
During the quarter the company announced and reached agreement on a financial
restructuring to reduce indebtedness 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.
* Issue of a 3-year secured credit line facility of $2.4 million and a $2.1
million unsecured loan.
* Approximately $16.2 million of the outstanding amount under the SeaBird
Exploration Plc Senior Secured Callable Bond Issue 2011/2015 ("SBX03") was
converted into SBX04 and the remaining approximately $64.7 million of SBX03
was converted into equity at NOK 0.30 per ordinary share.
* Approximately $3.0 million of the company's convertible loan with
Perestroika AS was converted into SBX04 and the remaining approximately
$11.9 million of the Perestroika Loan was converted into equity at NOK 0.30
per ordinary share.
* The outstanding charter hire for the Munin Explorer, Geo Pacific, Hawk
Explorer and Voyager Explorer (the "Charterers") was partially converted
into SBX04, a loan, partially converted into equity and partially written
down. The ongoing charter obligations were amended 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. Fuel vendors' outstanding balances of
$3.4 million were converted into SBX04 Tranche B and $2.4 million was
converted to the secured credit facility described above.
* $0.7 million of restructuring advisory fees were converted into SBX04 and
$2.8 million of restructuring advisory fees were converted into equity at
NOK 0.30 per share.
The issue of new equity and warrants was booked directly to equity $10.9 million
net of transaction cost, of which $8.2 million of the overall amount was
accounted for in paid in capital (the preference shares issued) and $2.7 million
was booked in equity component of warrants listed under the equity section in
the balance sheet (warrants issued). The company has obtained external advice to
correctly account for the fair value of preference shares and warrants, new debt
instruments issued to investors and creditors at the 2 March 2015 transaction
date. The fair value of preference shares issued have been set at NOK 38.2 per
preference share (NOK 0.076 per ordinary share after the conversion) while the
fair value of issued warrants have been set at NOK 11.8 (NOK 0.024 per warrant
to acquire one ordinary share after the conversion). In total, the company has
issued approximately 4.2 million preference shares (convertible to 2,123.2
million ordinary shares) to creditors, which have been valued at $21.4 million.
In addition, the company issued SBX04 bond, the secured credit facility and the
unsecured loan to creditors. The par value of the outstanding debt and
liabilities from creditors of approximately $116.3 million (prior to creditor
debt forgiveness and conversion) were converted to the preference shares and
debt instruments listed above.
At 31 March, SBX04 bond, the 3-year secured credit line facility and loan have
been valued at nominal value less amortized cost using an effective interest
rate of 14%. The amortized cost positive fair value adjustment for the debt
facilities has been recognized as a restructuring gain, of which $1.4 million
has been allocated to restructuring gain on leases and $3.7 million has been
booked to the restructuring gain account under the finance cost section.
The issue of preference shares to individual creditors, partial debt forgiveness
of outstanding principal, issue of the new bond SBX04 and converting outstanding
payables to loans/credit facility was accounted for through the restructuring
gain account in the other finance income section of the profit and loss
statement. Outstanding debt and payables at the transaction date have been
derecognized while the issued equity and debt instruments have been booked as
described above net of advisory fees. The total gain resulting from the
financial restructuring was $66.0 million, of which $4.7 million was reported
under restructuring gain on leases and $61.3 million was reported as
restructuring gain under the financing section.
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.
Additionally, on 11 February 2015, the company called for a second extraordinary
general meeting ("EGM2") that was 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. In the general meetings all
proposals on the agenda were adopted with requisite majority.
On 3 March 2015, the company announced that the conditions for the restructuring
were fulfilled. Further, preferred shares were issued to certain creditors and
the restructuring as set out in the preceding paragraphs was implemented. As a
part of the transaction, the company issued 6,015,693 preference shares each
with a par value US$0.1. Each preference share carries 500 times the rights of
the common shares. The preference shares are to be converted into common shares
following the approved reduction of the company's authorized and issued share
capital, through the reduction of the nominal value of its shares from US$0.1 to
US$0.0001 (the "reduction"). The conversion of the shares is estimated to occur
during Q2 2015. After confirmation of the reduction, the preference shares will
be converted at an exchange rate of 500:1 common shares per preference share,
hence a total of 3,007,846,500 shares will be issued to preferred shareholders
following the reduction. Post conversion of the preference shares, the total
outstanding amount of common shares in the company will be 3,065,427,746. The
company has also issued 1,769,375 warrants, convertible into 884,687,500
ordinary shares after the reduction.
Liquidity and financing
Cash and cash equivalents at the end of the period were $15.9 million ($16.0
million), of which $0.2 million was restricted in connection with deposits and
tax. Net cash from operating activities was negative $6.2 million in Q1 2015
($14.9 million).
The company has one bond loan, one secured credit facility, one unsecured loan
and the Hawk Explorer finance lease.
* The SBX04 secured bond loan is recognized in the books at amortized cost of
$25.1 million per Q1 2015 (nominal value of $29.3 plus accrued interest less
fair value adjustment of $4.4 million). 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 will be
paid quarterly, commencing 3 June 2015. The bond's stated maturity is 3
March 2018 and has principal amortization due in quarterly instalments of
$2.0 million starting at 3 June 2017 with a balloon repayment to be made at
maturity.
* The three year secured credit facility is recognized at amortized cost of
$1.9 million (nominal value of $2.4 million). Coupon interest rate is 6%
whereas effective interest is 14%. Interest will be paid quarterly,
commencing 3 June 2015. The facility's stated maturity date is 3 March 2018
and has principal amortization due in quarterly instalments of $0.2 million
starting on 3 June 2017 with a balloon repayment to be made at maturity.
Effective interest booked for Q1 2015 was $0.02 million.
* The three year unsecured loan is recognized at amortized cost of $1.9
million (nominal value of $2.1 million). Coupon interest rate is 6% whereas
effective interest is 14%. Stated maturity date is on 1 January 2018.
Interest is paid quarterly in arrears with the first payment date falling
due on 1 April 2015. The principal will be repayable in nine equal
instalments of $0.2 million commencing on 1 January 2016. Effective interest
booked for Q1 2015 was $0.06 million.
* The lease of Hawk Explorer is recognized in the books as a finance lease at
$4.7 million per Q1 2015. Instalments and interest amounting to $0.6 million
were paid during Q1 2015 ($1.0 million in Q1 2014).
Net interest bearing debt was $17.5 million as at the end of Q1 2015 ($83.5
million in Q1 2014).
Accrued interest for Q1 2015 was $1.2 million ($1.4 million).
The company was in compliance with all covenants as of 31 March 2015.
The company's accounts have been prepared on the basis of a going concern
assumption. In the view of the board of directors, the company does not have
sufficient working capital for its current requirements, being understood as the
requirements for a minimum of 12 months. In making such statement, the board of
directors has taken into consideration working capital requirements in various
scenarios, and in particular, in the event that contracts and other arrangements
in respect of the employment of SeaBird's vessels are cancelled or significantly
delayed and alternative employment cannot be secured at satisfactory rates.
Should these contracts and other arrangements be commenced and completed in
accordance with the plans entered into between SeaBird and the respective
counterparties, SeaBird does not expect a working capital shortfall. However, in
the event of such contracts being delayed, cancelled or not materializing,
SeaBird could have a working capital shortfall which could result in the need
for significant amounts of additional financing, which may not be available at
that time. The timing of a potential shortfall would depend on the overall
employment of SeaBird's vessels, but in the event of all contracts being
delayed, could occur during the summer of 2015. The amount of such shortfall
would also depend on the overall and alternative employment of SeaBird's
vessels, but in a worst case scenario, could amount to approximately $50 million
for a 12 month period. Reference is made to the Going Concern section in
selected notes and disclosures and the recently issued prospectus for further
details on the current financial position of the company.
The Board of Directors and
Chief Executive Officer
SeaBird Exploration Plc
6 May 2015
The first 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.
Q1-15 Report:
http://hugin.info/136336/R/1919042/686984.pdf
Q1-15 Presentation:
http://hugin.info/136336/R/1919042/686985.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#1919042]
Unternehmensinformation / Kurzprofil:
Datum: 06.05.2015 - 07:02 Uhr
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