Polarcus Activity in Northwest Europe Lower than Expected, CEO Says

Polarcus Limited announces the release of its second quarter 2013 financial statements.

The Company reported the following Highlights in the second quarter 2013:

– Revenues of USD 130.5 million, up 14% from Q2 2012

– EBITDA of USD 51.1 million, up 19% from Q2 2012

– EBIT of USD 26.7 million, up 22% from Q2 2012

– Net Cash Flow from operating activities of USD 90.1 million

– Q2 2013 vessel utilization at 85%, comprising Contract 72% and Multi-Client 13%

– Backlog end June of USD 260 million

– Reduced average nominal interest rate to 7.1% through refinancing

– Shares included in the OBX index as one of top 25 most liquid shares on OSE

The quarter saw increased competition for contract work in an uneven market which resulted in several lengthy unpaid transits. More weather standby on certain projects also impacted negatively on revenues. The increased competition in the multi-client business and a delay in block awards from the 2nd tranche announcement of the UK 27th licensing round has led to lower multi-client revenues than expected. However, for H1 2013, total revenues were still 28% higher than for H1 2012 due to a combination of higher day rates and more vessels in operation.

From a position of financial strength, Polarcus continued to reduce its interest cost as it refinanced two existing bonds by issuing a new unsecured bond of USD 95 million with a reduced interest rate of 8%. Furthermore, the sale- and- lease back financing of Polarcus Nadia and Polarcus Naila was renegotiated at improved terms. This in combination with the sale of Polarcus Samur in February 2013 and the consequent repayment of USD 65 million in debt has led to a more robust balance sheet for the Company.

Commenting on the results, Rolf Rønningen, CEO Polarcus, said: “Despite indications that demand globally continues to grow, the market in the last quarter can be best described as uneven. Activity in northwest Europe has not met our expectations and further, it was necessary to reposition certain vessels globally in order to remain competitive, resulting in lower than expected Contract revenues. Prefunding revenues from multi-client were also lower than anticipated on account of continuing delays with the remaining block awards from the UK 27th Round. That said, the underlying market fundamentals appear robust with double digit growth expected in E&P spending. We see expansion in several frontier regions including the Russian arctic, Myanmar, and East Africa supporting a continued improvement of the seismic market into 2014.”