SeaBird Exploration Plc: Second quarter report 2016

(Thomson Reuters ONE) -


19 August 2016, Limassol, Cyprus

2016 SUMMARY OBSERVATIONS FOR THE SECOND QUARTER

* Revenues for the quarter were $22.2 million, an increase of 14% compared to
Q2 2015 and down 14% relative to Q1 2016.
* Contract revenues for the period were $21.4 million, up 14% from Q2 2015 and
a decrease of 17% from Q1 2016.
* Multi-client revenues were $0.8 million, up from $0.7 million reported in Q2
2015 and nil reported in Q1 2016.
* EBITDA was $6.3 million compared to negative $6.5 million for Q2 2015 and
$7.4 million for Q1 2016.
* EBIT for the quarter was $1.9 million compared to negative $15.7 million for
Q2 2015 and positive $3.6 million for Q1 2016.
* Vessel utilization for the period was 82.0%. Contract surveys during the
second quarter represented 74.9% of vessel capacity compared to 68.1% during
the second quarter 2015. Multi-client surveys accounted for 7.0% of vessel
capacity compared to 0% in the prior period.
* 5.8% technical downtime in the quarter compared to 1.9% for Q2 2015 and
6.8% previous quarter.
* Zero lost time injury frequency (LTIF) in the quarter.



Key highlights

Operational review

The second quarter of 2016 was challenging with weak seismic market demand.
Timing of a sustained market recovery is still highly uncertain.

Vessel utilization for the second quarter of 2016 was 82.0%, down from 90.3% in
the first quarter. Contract surveys represented 74.9% of vessel capacity
compared to 90.3% for the first quarter of 2016. Technical downtime for the
fleet was 5.8% in Q2 2016, down from 6.8% in Q1.

Hawk Explorer, Harrier Explorer, Northern Explorer and Aquila Explorer were in
production on the Mexico Gigante project during the quarter. Osprey Explorer
left the Gigante project at the start of the quarter, completed its scheduled

dry dock in Denmark and mobilized for a source contract in the North Sea.
Harrier Explorer worked on the Mexico Gigante project until May, then transited
to North West Europe to complete a multi-client survey. The vessel subsequently
mobilized for a 2D survey in North West Europe which commenced in quarter three.

Osprey Explorer completed its scheduled maintenance in Denmark in June. Yard
stay represented 9.9% of vessel capacity during the quarter.

Munin Explorer and Voyager Explorer remained stacked during the period. During
the quarter the company made the decision to redeliver the Voyager Explorer to
its owners following the completion of its bareboat charter in August 2016.

Multi-client surveys represented 7.0% of vessel utilization in the quarter,
compared to 0% in the previous quarter and 0% the same quarter last year. Multi-
client revenues were $0.8 million in the period, compared to nil in the previous
quarter.

The company signed two new contracts during the quarter; one for source work in
the North Sea and one 2D survey in the North West Europe region, representing
approximately four vessel months in total.

Operational expenses were reduced during the second quarter relative to previous
quarters as a result of ongoing cost cutting initiatives.

Capital expenditures were $1.5 million during the quarter.

Lost time injury frequency (LTIF) rate for the quarter was zero.



Regional review

North and South America (NSA) continued to be the most active region during the
quarter. NSA revenues of $21.3 million represented 96% of total revenues for the
quarter.

Europe, Africa and the Middle East (EAME) revenues of $0.9 million represented
4% of total Q2 revenues. Harrier Explorer completed a significantly prefunded
multi-client project and Osprey Explorer commenced a source project in the
region during the quarter.

No SeaBird vessels worked in Asia Pacific (APAC) during the quarter and revenues
were nil in the region.



Outlook

Global seismic demand continued to be weak in the second quarter. Oil industry
exploration spending is anticipated to remain depressed for the foreseeable
future and this is likely to continue to negatively impact seismic activity.

The Mexico Gigante project is expected to be completed during the third quarter
of 2016, with three vessels employed on the project in that reporting period.
The remaining active fleet is currently employed in the North West Europe
region. The company is reviewing a number of survey opportunities for quarter
four of 2016 as well as fiscal 2017. However, the current market uncertainty
makes it difficult to predict the level of contract coverage that is possible to
obtain beyond the company's firm backlog. Consequently, the company is reviewing
its fleet capacity and other measures to further reduce its operating cost
level. This may include stacking of additional vessels and further fleet
reduction.



Financial review

Financial comparison

All figures below relate to continuing operations unless otherwise stated. For
discontinued operations, see note 1. The company reports net income of $0.1
million for Q2 2016 (net loss of $16.8 million in the same period in 2015).

Revenues were $22.2 million in Q2 2016 ($19.6 million). The increased revenues
are primarily due to higher fleet utilization.

Revenues for first half of 2016 were $48.2 million ($43.8 million).

Cost of sales was $12.9 million in Q2 2016 ($20.0 million). The decrease is
predominantly due to fewer vessels in operation, lower operating expenses and
non-recurring restructuring charges for onerous long-term lease contracts taken
in Q2 2015.

For the first half of 2016, cost of sales amounted to $27.9 million, down from
$37.0 million for same period during 2015.

SG&A was $3.2 million in Q2 2016, down from $6.1 million in Q2 2015. The
decrease is principally due to one-off bad debt expenses on long-dated
receivables incurred in Q2 2015 and reduced onshore headcount.

SG&A for the first half of 2016 was $7.1 million ($9.9 million).

Other income (expense) was $0.2 million in Q2 2016 (nil).

Other income (expense) for the first half was $0.5 million ($0.1 million).

EBITDA was $6.3 million in Q2 2016 (negative $6.5 million).

EBITDA for first half of 2016 was $13.7 million ($1.7 million).

Depreciation, amortization and impairment were $4.3 million in Q2 2016 ($9.2
million). This decrease is largely due to an impairment on the multi-client
library taken in Q2 2015.

For the first half of 2016, depreciation amortization and impairment were $8.2
million ($13.7 million).

Finance expense was $1.5 million in Q2 2016 ($1.3 million).

For the first half of 2016 finance expense was $2.9 million ($2.3 million).

Other financial items were negative $0.1 million in Q2 2016 (positive $0.1
million).

For the first half of 2016, other financial items were negative $0.2 million
(negative $0.1 million).

Income tax expense was $0.3 million in Q2 2016 ($0.3 million).

For the first half of 2016 income tax expense was $0.5 million ($0.8 million).

Capital expenditures in the quarter were $1.5 million ($3.1 million).

Multi-client investment was $0.7 million in Q2 2016 ($0.2 million).



Liquidity and financing

Cash and cash equivalents at the end of the period were $8.1 million ($7.4
million in Q2 2015), of which $0.4 million was restricted in connection with
deposits and tax. Net cash from operating activities was $1.5 million in Q2
2016 (negative $4.1 million in Q2 2015).
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 $26.8 million per Q2 2016 (nominal value of $29.3 million plus
accrued interest of $0.2 million plus amortized interest of $1.8 million 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 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 Q2 2016 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 $2.3 million plus accrued interest of $0.02
million plus amortized interest of $0.2 million less fair value adjustments of
$0.4 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. Principal
repayments during Q2 2016 amounted to $0.7 million and additional amounts drawn
on the credit facility during the period was $0.5 million. Interest paid during
Q2 2016 was $0.03 million.
The three-year unsecured loan is recognized at amortized cost of $1.4 million
(initial nominal value of $2.1 million plus amortized interest $0.2 million less
fair value adjustment and accrued interest of $0.2 million less principal
repayments of $0.7 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
quarterly instalments of $0.2 million commencing on 1 January 2016. Interest
paid during Q2 2016 was $0.02 million and principal repayments during Q2 2016
was $0.2 million.
The lease of Hawk Explorer is recognized in the books as a finance lease at $2.8
million per Q2 2016. Instalments and interest amounting to $0.6 million were
paid during Q2 2016 ($0.6 million in Q2 2015).
Net interest bearing debt was $25.0 million as at the end of Q2 2016 ($26.4
million in Q2 2015).
Accrued interest on the bond loan, credit facility and the unsecured note for Q2
2016 was $0.2 million ($0.2 million).
The company was in compliance with all covenants as of 30 June 2016.
The total outstanding amount of common shares in the company 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 very
challenging market conditions and the company's limited working capital creates
a material risk to this assumption. In the event that new backlog cannot be
secured on satisfactory rates or at all, project performance is significantly
worse than expected or contracts and other arrangements in respect of the
employment of SeaBird's vessels are cancelled, or significantly delayed, 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.

Important events in the first half of the year

In January 2016, the company announced that Mr. Christophe Debouvry was
appointed as new CEO.
The company signed four new contracts during the first half of the year; two
source work awards, one 2D survey and one 2D multi-client survey, all in the
North West Europe region.
On 10 May 2016, the annual general meeting of the company was held. At this
meeting, board members Annette Malm Justad (Chairman), Kitty Hall (Director),
Olav Haugland (Director) and Hans Petter Klohs (Director) were re-elected for a
new term.


Responsibility statement

We confirm that, to the best of our knowledge, the condensed set of financial
statements for the first half year of 2016, 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 2016 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
18 August 2016


The second quarter 2016 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.

Q2-16 Report:
http://hugin.info/136336/R/2036052/758417.pdf

Q2-16 Presentation:
http://hugin.info/136336/R/2036052/758418.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#2036052]

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