Fourth Quarter 2017 – Earnings impacted by low utilization; significant backlog improvement

Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) announces the release of its fourth quarter and preliminary full year 2017 financial statements.


  • Revenues of USD 37.2 million, down 36% from Q3 2017
  • Gross cost of sales of USD 37.0 million, down 8% from Q3 2017
  • EBITDA before non-recurring cost of USD 2.2 million, down from USD 14.5 million in Q3 2017
  • Cash from operations of USD 18.5 million, up from USD 2.6 million in Q3 2017
  • Non-cash charges of net USD 62.8 million related to impairments and movement of onerous contract provisions
  • Total cash balance of USD 33.7 million (excluding WCF of USD 25 million), up from USD 31.6 million at end Q3 2017
  • Backlog increased to USD 164 million with twelve contract awards since end of Q3 2017
  • Post-quarter end, completion of NOK 300 million private placement and financial restructuring providing debt service runway to 2022

The Company’s revenue decreased 36% to USD 37.2 million sequentially (Q3 2017 – USD 58.5 million). The decline in revenue was driven by lower utilization, mainly due to Polarcus Asima being idle for most of the quarter. The achieved day rate was flat compared to Q3 2017. Long-term bareboat charter and management fee revenue remained stable at USD 10.5 million (Q3 2017 – USD 10.5 million), providing an important, stable revenue stream for the Company. Multi-client revenue increased 24% to USD 6.0 million (Q3 2017 – USD 4.8 million), mainly driven by an increase in prefunding revenue following commencement of two multi-client projects during December 2017. Polarcus recorded late sales of USD 2.5 million in the quarter (Q3 2017 – USD 2.8 million).

Gross cost of sales dropped 8% to USD 37.0 million (Q3 2017 – USD 40.3 million), partly driven by lower utilization. The Company’s cost base continues to be highly competitive in the industry as a result of a strong focus on cost and efficiency.

Total cash at quarter end amounted to USD 33.7 million (Q3 2017 – USD 31.6 million). The working capital facility of USD 25 million remained undrawn at the end of Q4 2017.

As a result of the prolonged challenging market conditions, non-cash impairments of USD 89.8 million were recorded in Q4 2017 related to the carrying value of the Company’s seismic vessels and equipment as well as of the multi-client library. A net gain of USD 27.0 million was recognized to estimates for onerous contract provisions, mainly related to an operating lease contract provision for Polarcus Nadia, a lease which was extinguished in Q1 2018 when Polarcus completed the purchase of Polarcus Nadia and Polarcus Naila as part of the Company’s financial restructuring.

Post-quarter end, Polarcus completed the pre-conditions for a financial restructuring of its debt, allowing the Company to raise NOK 300 million (approximately USD 38 million) in new equity through a private placement.  The financial restructuring will be completed in Q1 2018 and will significantly improve the Company’s financial situation and provide a debt service runway to 2022. The Company’s debt service over the next four years will be reduced by up to USD 166 million. Outstanding unsecured bonds with nominal value of approximately USD 170 million will be partly converted to equity reducing the remaining nominal value of the unsecured bonds to approximately USD 20 million. In addition, the Company’s working capital facility was increased by USD 15 million to USD 40 million and its maturity extended by three years to 30 June 2022.  On 26 February 2018, Polarcus purchased Polarcus Nadia and Polarcus Naila for an aggregate consideration of USD 75 million (fully financed by debt) and 12,846,144 warrants with a strike price of NOK 3.90 representing 2.5% of the Company’s issued share capital. The prior operating leases for these vessels, with a commitment of approximately USD 90 million, were terminated.

Polarcus continued to take market share and improve its backlog, securing twelve contract awards since the end of Q3 2017, including a one-year extension of a seismic management contract with a national oil company. XArray(TM), the Company’s unique, innovative acquisition technology developed in-house, continues to be recognized for its efficiency and high quality by more and more oil companies. The Company’s secured backlog has increased to USD 164 million from USD 125 million at the end of Q3 2017.  

Commenting on the Q4 2017 performance, CEO Duncan Eley stated: “Utilization of the 25-vessel global industry fleet was estimated at approximately 50% during Q4 2017, with Polarcus’ fleet utilization and quarterly revenue negatively impacted by this supply and demand imbalance at the back end of 2017. On a more positive note, we maintained tight control of our cost base, continuing to reduce our gross cost of sales to the lowest levels we have delivered since the fleet was launched”.

 “The financial restructuring is a very important milestone for Polarcus. The robustness of this financial foundation that we have put in place for the Company is underscored by the fact that our existing long term bareboat charters and management contract provide a fixed annual EBITDA contribution in excess of the Company’s reduced annual debt service obligations. The debt service runway in combination with a significant increase in available liquidity through the equity injection and increased working capital facility provide us with important flexibility in an industry which we expect to remain highly competitive during 2018”. 

 “As a result of the fantastic performance by our sales organization in securing a significant increase in backlog since the end of Q3 2017 we have greatly increased our visibility into 2018 with more than 90% of the six Polarcus active vessels booked for the first half of 2018. We still see cautious spending on seismic exploration by our clients, but tender activity is up year-on-year with some positive momentum going into 2018 and we expect to see the seasonal tightening of the market during Q2 and Q3 this year. We remain positive on the fundamentals driving an improving market in the medium to long term, though there remains current uncertainty in the supply-demand balance in the present market. Tender activity going into Q2 2018 will be an important indicator of the market development for the second half of 2018”.

Duncan Eley
Chief Executive Officer


  Quarter ended   Year ended
(In millions of USD) 31-Dec-17 30-Sep-17 31-Dec-16   31-Dec-17 31-Dec-16
Revenues 37.2 58.5 47.2   179.0 243.4
EBITDA (before non-recurring items) 2.2 14.5 (2.6)   18.2 51.4
EBITDA 26.7 14.5 (29.0)   41.3 0.9
EBIT (before non-recurring items) (19.3) (3.6) (36.0)   (68.9) (54.1)
EBIT (84.5) (3.6) (86.0)   (137.0) (131.3)
Net profit / (loss) for the period (91.7) (9.1) (97.0)   (172.5) 20.3
Basic earnings/(loss) per share (USD) (0.60) (0.06) (1.83)   (1.41) 0.46
Net cash flows from operating activities 18.5 2.6 (2.6)   34.1 48.1
Total assets (period end) 402.9 523.8 571.9   402.9 571.9
Total liabilities (period end) 358.2 387.5 393.1   358.2 393.1
Total Equity (period end) 44.7 136.3 178.8   44.7 178.8
Equity Ratio 11% 26% 31%   11% 31%
PP&E cash investment 1.7 1.7 1.0   7.3 16.4
Multi-client projects cash investment 6.9 1.2 12.6   20.6 44.6
Total cash (period end) 33.7 31.6 14.5   33.7 14.5
Net interest bearing debt (period end) 260.7 263.5 270.7   260.7 270.7

 Non-recurring items include impairments, the cost of onerous contract provisions and restructuring costs.


Duncan Eley, CEO
+971 50 553 2198

Hans-Peter Burlid, CFO
+971 50 559 8175


About Polarcus

Polarcus (OSE: PLCS) is an innovative marine geophysical company with a pioneering environmental agenda, delivering high-end towed streamer data acquisition and imaging services from Pole to Pole. Polarcus operates a fleet of high performance 3D seismic vessels incorporating leading-edge maritime technologies for improved safety and efficiency. Polarcus offers contract seismic surveys and multi-client projects with advanced onboard processing solutions and employs approximately 350 professionals worldwide. The Company’s principal office is in Dubai, United Arab Emirates. For more information, visit


This information is subject to the disclosure requirements pursuant to section 5 -12 of the Norwegian Securities Trading Act.