Impairments drag Polarcus down

Image: Polarcus
Image: Polarcus

Polarcus, an offshore geophysical company, on Monday reported a net loss for the fourth quarter of 2015 due to impairment charges, as well as lower revenues driven by decrease in both contract and Multi-Client revenues.

Polarcus’ net loss, after impairments of $247.4 million, was $287.3 million in 4Q 2015 compared to a net loss, after impairments of $28.7 million, of $80 million in 4Q 2014.

As a result of the weak market fundamentals and falling day rates, an impairment charge totaling $242 million was recognized in 4Q 2015, of which $215.6 million was allocated to vessels and seismic equipment and $26.6 million to the streamer steering license acquired from WesternGeco in 2013. The carrying value of the streamer steering license is nil following the impairment.

Further, the seismic contractor on Monday posted revenues of $72.5 million, down 22% from 4Q 2014 revenues of $93.3 million due to a decrease in both contract and Multi-Client revenue.

According to the company, the decrease in revenues was mainly driven by one less vessel in operation, lower day rates and no Multi-Client late sales following the sale of the majority of the Multi-Client library in 2015.

Polarcus said it improved its financial position by completing a restructuring of its balance sheet after the end of the quarter. The restructuring will reduce the company’s debt level with renegotiated lease terms and the introduction of new call option prices for the bonds corresponding to a potential debt reduction of $280 million.

In addition, the company stated that debt service payments during the next two years would be reduced by approximately $140 million. The company will recognize significant accounting gains in 1Q 2016 as a result of the completion of the restructuring, Polarcus said.

The geophysical company considers that the market outlook remains uncertain due to continued low seismic spending by oil companies.

Offshore Energy Today Staff

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