Third quarter 2014 report – Adapting to a challenging market environment
13 Nov 2014
Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) announces the release of its third quarter 2014 financial statements.
Highlights in the third quarter 2014:
- Higher cash generation despite a reduction in revenues quarter-on-quarter
- Improvement in the debt maturity profile and a reduction in the Company’s effective interest rate
- Cost reduction program initiated in the quarter with expected annual savings of USD 35 million
- Backlog USD 325 million
The quarter was marked by a significant weakening of the seismic market, which has created uncertainty and negative market sentiment with pressure on utilization and pricing. Despite the tough competition, the Company has secured high backlog, giving good visibility well into 2015.
The challenging market resulted in lower utilization, which caused a fall in contract revenue in Q3 2014 compared to the same quarter the previous year. Despite this, the Company continued to record strong cash generation, recording higher cash from operations compared to the same quarter last year.
The Company significantly increased its revenue from multi-client sales compared to the same quarter the previous year. There is uncertainty going forward regarding the extent to which the macroeconomic environment will impact oil and gas companies’ attitude towards spending on seismic. The UK 28th licensing round announced on 06 November 2014 is expected to drive strong late sales on the Company’s multi-client data once the awards are finalized over the next two quarters.
Post-quarter end the Company secured a fully subscribed equity issue raising a total of USD 35 million through a private placement. The net proceeds from the equity issue, in addition to the NOK 350 million bond issued and USD 20 million amendment to the Polarcus Naila sale and lease back in the quarter, strengthen the Company’s financial position in preparation for a challenging winter season.
Commenting on the results, Rolf Rønningen, CEO Polarcus, said: “The lower oil price and consequent reduced exploration spend by our clients is resulting in a highly competitive market landscape. Our determined focus on securing contracts has seen our backlog grow to record levels whilst our pre-emptive cost reduction program initiated in the quarter will improve margins going forward and help buttress the Company against the prevailing market headwinds.”
Rolf Rønningen, CEO Polarcus, +971 4 436 0800 / +971 50 459 6982
Tom Henrik Sundby, CFO Polarcus, +971 4 436 0800 / +971 50 708 6480
Polarcus (OSE: PLCS) is a pure play marine geophysical company with a pioneering environmental agenda, specializing in high-end towed streamer data acquisition from Pole to Pole. Polarcus operates a fleet of high performance 3D seismic vessels incorporating an innovative design and advanced maritime technologies for improved safety and efficiency. Polarcus offers contract seismic surveys and multi-client projects worldwide and employs over 500 professionals. 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.
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)