Published: 07:47 27.02.2007 GMT+1 /HUGIN /Source: SeaBird Exploration Ltd. /OSE: SBX /ISIN: VGG7944D1087
SeaBird Exploration Group - Preliminary Results 2006 and Fourth Quarter
- Consolidated revenues of USD 20.6 million, an increase of 165% compared to Q4 2005 and 104% compared to Q3 2006. Revenues for the full year of USD 46.3 million, up 111% from 2005.
- Q4 earnings hit by a total loss of USD 5 million related to Global Geo Services ("GGS").
- EBITDA of USD 5.3 million. Adjusted for the GGS loss of USD 5 million this was an increase of 213% compared to Q4 2005 and 265% compared to Q3 2006, mainly driven by the strengthening of the seismic markets, with substantially better rates. EBITDA for the full year of USD 14.6 million, up 139% from 2005 (adjusted for GGS loss).
- Hawk Explorer and Osprey Explorer started operations in Q4 2006, bringing the number of vessels in operation to five by the end of 2006.
- SeaBird continued the investments and has announced the addition of three more vessels to the fleet, bringing the total number of planned vessels in operation to ten by the end of 2007, compared to three by the end of Q3 2006.
- Main focus on planning for conversion of five remaining vessels for completion in 2007, with no indication of material overruns or delays so far.
- Substantial funding raised from the bond market and commercial debt through Q4 2006 and early 2007.
- We still see a very strong demand within all segments of the seismic industry, with a substantial part of the available capacity already contracted.
- We expect the supply within our segments to increase slightly. However, the demand side is expected to more than absorb the additional capacity.
- Aquila Explorer, Harrier Explorer and Munin Explorer projected to be ready for operation during Q2 2007, while Hugin Explorer and Raven Explorer are expected to be ready for operation in Q3 2007.
- 500 new deep water nodes expected to be operational on the Hugin Explorer by end Q3 2007/beginning of Q4 2007.
- On the basis of the substantial increase of the fleet and the strengthening of the market rates, we expect a significant growth in both revenues and earnings in 2007, and in particular we expect a very strong second half of the year. Revenues are expected to be in excess of USD 170 million for the full year, while EBITDA is expected to be in excess of USD 90 million.
- Total capital expenditures are expected to be in the range of USD 120 million for the full year.
Key Financial Performance Figures
The SeaBird Group reported consolidated revenues of USD 20.6 million in Q4 2006, an increase of 165% compared to Q4 2005 and 104% compared to Q3 2006. Revenues for the full year were USD 46.3 million, up 111% from 2005.
As previously disclosed, GGS presented substantial claims in arbitration proceedings against SeaBird. The main claim in the principal action was unlawful withdrawal of the lease of M/V Geo Mariner in 2005, amongst other things including (a) a claim for compensation in the amount of USD 4.3 million and (b) the right to a 50% ownership of the vessel and 50% of the future earnings of the vessel upon expiration of the charter agreement. Both these claims were upheld in SeaBird's favour.
The arbitration proceedings included a number of other claims and cross-claims, with various results. In total, SeaBird has charged a loss of around USD 5 million in Q4 2006 in the line other income, expenses (net), related to GGS (including the loss on investment in GGS shares (USD 1.1 million), write off of receivables refused in arbitration result and other GGS related items (USD 3.9 million). All substantial parts of this loss are non-cash.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were USD 5.3 million for the quarter, an increase of 213% compared to Q4 2005 and 265% compared to Q3 2006 (adjusted for the GGS loss of USD 5 million in Q4 2006) The improvements are mainly driven by the strengthening of the seismic markets, with substantially better rates together with bringing Hawk Explorer and Osprey Explorer into operations in Q4 2006. EBITDA for the full year was USD 14.6 million, up 139% from 2005 (adjusted for GGS loss).
Earnings before interest and taxes ("EBIT") increased to USD 3.6 million in Q4 2006 an increase of 208% compared to Q4 2005 (adjusted for the GGS loss). EBIT for the full year were USD 10.7 million, up 128% from 2005 (adjusted for GGS loss).
Net Profit for Q4 2006 increased 189% over the comparable quarter in 2005 (adjusted for the GGS loss), to USD 3.2 million. Net Profit for the full year was USD 11.0 million, up 146% from 2005 (adjusted for GGS loss).
Operational highlights Q4
M/V Geo Mariner completed a survey with Indago Petroleum in the beginning of the quarter, before it moved on to a survey in Pakistan for Oil & Gas Development Company Limited (OGDCL) which was completed in January 2007.
Northern Explorer completed a long term contract for TGS-Nopec in the beginning of the quarter and continued with surveys in Sicily and Kenya. Osprey Explorer commenced operations in October on a six month charter with Veritas DGC (now CGGVeritas) with two six months renewal options, while Kondor Explorer continued operations for Veritas DGC under a charter expiring in May 2007, but with a six months renewal option.
Hawk Explorer finally commenced full operations at the end of November 2006 after some technical challenges post completion of conversion. She is on a two year charter with a one year renewal option for Fugro.
The group has set up their branch in Houston (USA). The core activity of the branch will be to oversee operations in Americas and also explore further business opportunities in the Gulf of Mexico and South America. Furthermore, SeaBird continues to strengthen the management and operating capacity across the group in line with the requirements of the fleet expansion.
Subsequent to year-end, SeaBird has acquired GeoBird Management Middle East FZ LLC (GeoBird) for USD 2 million. GeoBird is a maritime management company that has been responsible for the maritime operations of the SeaBird fleet of vessels since 2003. GeoBird's business is mainly related to the SeaBird maritime operations, but GeoBird is also providing maritime management services for other leading seismic companies.
Seabird has decided to move the Harrier Explorer previously destined for SeaBed operations into the 2D/Source vessel market due to strong market demand. The vessel is expected to be ready for operations in April 2007 with a total cost of around USD 40 million. SeaBird has entered into a 4 year firm time-charter with a 2-year option with Petroleum Geo-Services ASA (PGS) as a source vessel. PGS has the option to use the vessel as a 2D vessel provided they cover the cost of additional seismic equipment and additional operating cost. The contract value for the firm period is approximately USD 58 million and is scheduled for commencement in May 2007.
M/V Aquila Explorer is under conversion to a source vessel at a Singapore yard. The vessel is expected to be ready for delivery in late March/early April 2007 with a total cost of around USD 35 million. The vessel is contracted to PGS for six months with two six month options.
Subsequent to year-end, SeaBird has entered into a 5 year firm bareboat charter with Økland Fiskebåtrederi AS (Økland) with 3 x 1 year options for the vessel Munin Explorer (ex. Newfoundland Otter) a 1990 built Norwegian trawler under conversion to a Seismic vessel. Økland will carry out the conversion to a Source/2D vessel at their cost with the exception of the cost of the Air Guns and the Streamer. Estimated capital expenditures for SeaBird are around USD 8 million. The contract value for the firm period is approximately USD 33 million and is scheduled for commencement in June 2007. SeaBird has an option to purchase the vessel during the firm 5 years period.
In October 2006 SeaBird Exploration agreed to acquire the M/V "Tasneem 2" from Syarikat Borcos Shipping Sdn Bhd for USD 13 million. The vessel is a new-built Anchor Handling Tug Supply (AHTS) vessel and will be converted into a shallow water 2D/3D vessel and re-named the "Raven Explorer". Total project cost including conversion and purchase price is estimated to approximately USD 36 mill. The vessel is expected to be operational in the third quarter of 2007.
In December 2006 SeaBird Exploration Limited and Siem Offshore Inc entered into a 5 year firm bareboat charter with 3 x 1 year options for the new-built vessel Siem Mariner, a DP2 platform supply vessel of MT 6000 mk II design. The contract value for the firm period is approximately USD 57 million and is scheduled for commencement in Q3 2007. SeaBird has an option to purchase the vessel at the expiry of the firm 5 years period. SeaBird will convert the vessel to a state of the art SeaBed seismic vessel. The vessel is expected to be operational in the third quarter of 2007. Furthermore, SeaBird is investing in 500 new deep water nodes for the SeaBed operations with projected delivery by the end of Q3 or beginning of Q4 2007. Total investments in SeaBed operations are estimated to be around USD 40 million in 2007.
Liquidity and Financing
At 31 December 2006, cash and cash equivalents amounted to USD 16.4 million, compared to USD 22.4 million at the end of the previous quarter. Net interest bearing debt was USD 68.2 million compared to USD 32.2 million at the end of the previous quarter.
In Q4 SeaBird exercised the drawdown of 2nd tranche of the bond loan at the Alternative Bond Market at the Oslo Stock Exchange ("Bond-loan"), equal to USD 7.7 mill (NOK 50 million) with an interest rate of NIBOR + 4.25%. Total Bond-loan at 31 December 2006 is around USD 32 million (NOK 200 million) with maturity in July 2009.
Furthermore, in Q4, SeaBird has completed the negotiations of part loan financing of the Osprey Explorer and the Aquila Explorer through a credit facility agreement with a commercial bank for a total amount of USD 30 million, to be repaid over five years. A total of USD 20 million was drawn under this facility as of 31 December 2006, while another USD 10 million will be drawn in the first half of 2007. This credit facility has an interest rate of LIBOR + 1.5%.
Subsequent to year-end, SeaBird decided to issue a new bond loan with a total borrowing limit of NOK 500 million. The new bond loan is listed on the Oslo Stock Exchange's Alternative Bond Market and has 5 years maturity, with floating interest (3 month NIBOR + 4.5%). The first tranche of NOK 400 million was closed 14 February 2007 and simultaneously SeaBird entered into a financial instrument which in effect converted the loan to a USD based loan with a principal repayment obligation of USD 65 million and a floating interest rate of LIBOR + 4.75%.
The Company views the new bond loan as a flexible financing for the substantial growth and investment program planned for the first half of 2007. SeaBird expects to incur significant capital expenditures for the previously discussed investments in 2007, where a substantial part is front-loaded to the first 6-8 months of the year. The net proceeds from the new bond loan will mainly be used to fund these investments. SeaBird expects some additional funding need in the peak investment period, and expects to be able to arrange this through additional commercial debt, financial lease arrangement or drawdown of the remaining part of the new Bond-loan.
The presentation and the full report with tables can be downloaded from the following links:
4th Quarter 2006 (PDF)
Q4 Investor presentation (PDF)