Fourth quarter and preliminary full year 2014 report – Difficult market environment marked by a rapid decline in oil prices
10 Feb 2015
Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) announces the release of its fourth quarter and preliminary full year 2014 financial statements.
Highlights in the fourth quarter 2014:
- Revenue of USD 93.3 million, down 24% from the same quarter the previous year
- Multi-client sales of USD 21.1 million, up 100% from the same quarter the previous year
- Utilization of 70% negatively impacted by 10% standby time
- EBIT of USD -18.8 million before and USD -47.7 million after non-recurring charges
- Backlog of USD 280 million providing good visibility for 2015
The fourth quarter was marked by a rapid decline in oil prices and cautious spending by oil companies. The challenging market environment and capacity reallocation from multi-client to contract led to increased competition for contract work, resulting in both a lower unit price and increased standby time for the fleet.
The UK 28th licensing round announced on 6 November 2014 helped the Company increase its revenue from multi-client sales. However, in addition to time amortization of USD 2.0 million to reflect the current market environment, the Company has taken a disciplined approach to amortization of multi-client revenue and total amortization was therefore 102%.
Earnings were negatively affected by a USD 28.8 million impairment charge, of which USD 22.6 million results from a detailed evaluation of the sales outlook for the Company’s multi-client library and USD 6.2 million relates to old thrusters held as spares. Financial costs were negatively affected by the depreciation of the Russian Ruble and the Norwegian Krone, resulting in higher than expected foreign exchange losses.
The recent downturn in the seismic market has negatively impacted the Company, leading to a more uncertain outlook. As a result, the Company is not currently providing guiding for 2015.
Commenting on the results, Rod Starr, CEO Polarcus, said: “The last quarter has seen our clients exercise extreme caution on exploration spend as the oil price declined at its fastest rate since the 2008 cycle. This in turn led to increased competition for contract work as clients delayed project decisions, resulting in idle time and extended transits as we repositioned the fleet to markets where activity was being sustained. Recognizing the importance of a robust multi-client projects pipeline, we have strengthened our multi-client team, taken impairments on two legacy projects in our existing library, and raised the prefunding hurdle rate to ensure that only the highest funded projects make the grade. Against this challenging market backdrop we are accelerating the previously announced initiatives to regionalize sales resources and implement a rigorous cost management program with a clear focus on capital discipline. We are adapting quickly to this new landscape and working to position ourselves for the next phase of growth.”
Rod Starr, CEO Polarcus
+971 4 436 0800
Tom Henrik Sundby, CFO Polarcus
+971 50 708 6480
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 over 600 professionals worldwide. The Company’s principal office is in Dubai, United Arab Emirates. For more information, visit www.polarcus.com
The information included herein may contain forward-looking statements. Forward-looking statements include all statements that are not historical facts, including but not limited to statements expressing or implying the Company’s intent, belief or current expectations with respect to, among other things, forecasts, estimates, and predictions. Such forward-looking statements necessarily involve risks and uncertainties and are dependent on assumptions, information, data or methods that may be incorrect or imprecise. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations proves to be inaccurate or is unrealized. Some factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, developments in the oil and gas industry, the demand for seismic services, the demand for data from the Company’s multi-client library, currency risks, political risks, regulatory risks, and unexpected operational setbacks. For a further description of other relevant risk factors we refer to our 2013 Annual Report. The reservation is also made that inaccuracies or mistakes may occur in the information given above concerning the current status of the Company or its business. Any reliance on the information given above is at the risk of the reader, and Polarcus disclaims any and all liability in this respect.
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