Third quarter 2016 report – Achieving high utilization at low costs
27 Oct 2016
Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) announces the release of its third quarter 2016 financial statements.
HEADLINES Q3 2016:
Revenues of USD 64.6 million, down 5% from Q2 2016
Contract revenues of USD 54.1 million, up 31% from Q2 2016
Multi-Client revenues of USD 10.5 million, prefunding level of 122%
Vessel utilization 90% for the quarter, 87% YTD
Gross cost of sales of USD 56.5 million, up 2% from Q2 2016
EBITDA of USD 12.3 million, 19% margin
Cash from operations of USD 25.3 million, up 126% from Q2 2016
Total cash of USD 38.0 million in addition to USD 25 million undrawn working capital facility
Three contract awards since end of last quarter, resulting in backlog of USD 105 million
The third quarter financial results reflect a continued competitive market in which Polarcus was successful in maintaining high fleet utilization. Revenues of USD 64.6 million were recorded, down USD 3.3 million (5%) compared to the second quarter 2016. Contract revenues increased by USD 12.7 million (31%) to USD 54.1 million, driven by a shift of vessel capacity to contract from Multi-Client as well as higher achieved contract day rates. As a result of the lower fleet allocation to Multi-Client, related revenues fell by USD 16.0 million (60%) to USD 10.5 million compared to the second quarter 2016. Of the Multi-Client revenue, late sales were USD 1.1 million and prefunding revenue was USD 9.4 million. The prefunding level for the quarter was 122%.
The Company secured three new contract awards since the end of the last quarter. Of the recent contract awards, one is in a country in which Polarcus has not previously operated, and one project will be acquired with the Company’s new XArray technology, which gives increased efficiency while providing improved data quality. The Company’s expansion into new regions continues to be a key goal and the result of the new sales strategy implemented over the past year.
Post quarter end the Company entered into a memorandum of understanding to collaborate with TGS to jointly develop Multi-Client projects. The collaboration will support a more focused Multi-Client strategy and is expected to drive vessel utilization as well as allow Polarcus to expand its Multi-Client business with limited investments. As part of the collaboration agreement, TGS will agree to extend its vessel agreement with Polarcus entered in June 2015 for the charter of 3D vessel capacity. The extension will be valid through the end of 2017 for up to 10,000 km².
Gross cost of sales was USD 56.5 million, an increase of USD 1.3 million (2%) compared to the second quarter 2016. The increase was driven by project specific costs. The global cost base continues to be the lowest in the industry and is a result of the Company’s strong focus on cost management.
The net cash movement during the quarter was positive as expected, with a net cash increase of USD 10.6 million, mainly driven by the release of working capital build-up as reported in the second quarter 2016. As a result, the total cash at the quarter end amounted to USD 38.0 million, comprising USD 37.2 million unrestricted cash and USD 0.8 million restricted cash. The net interest bearing debt amounted to USD 247.9 million, down from USD 260.3 million in the second quarter 2016.
“While third quarter results were reasonably strong, the seismic market continues to look challenging in the near-term with the expectation of reduced tendering and pre-funding activity during the coming northern hemisphere winter season. The Company will continue to focus on areas within its direct control.”
Chief Executive Officer
|Quarter ended||Nine months ended||Year ended|
|(In millions of USD)||30-Sep-16||30-Jun-16||30-Sep-15||30-Sep-16||30-Sep-15||31-Dec-15|
|EBITDA (before non-recurring items)||12.9||23.0||69.9||54.0||148.7||157.0|
|EBIT (before non-recurring items)||(11.4)||(4.6)||36.7||(18.1)||36.6||15.4|
|Net profit / (loss) for the period||(17.4)||(11.2)||19.8||117.3||(84.9)||(374.1)|
|Basic earnings/(loss) per share (USD)||(0.033)||(0.02)||0.030||0.282||(0.127)||(5.6)|
|Net cash flows from operating activities||25.3||11.2||55.5||50.7||138.9||167.5|
|PP&E cash investment||2.1||2.6||1.0||15.4||14.1||15.1|
|Multi-client projects cash investment||7.7||12.9||21.3||32.1||85.4||97.0|
|Net interest bearing debt||247.9||260.3||593.2||247.9||593.2||588.1|
Non-recurring items include impairments, the cost of onerous contract provisions and restructuring costs.
Rod Starr, CEO
+971 4 436 0800
Hans-Peter Burlid, CFO
+971 50 559 8175
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 nearly 500 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 2015 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).