SeaBird Announces Positive Revenue Results (Cyprus)

SeaBird, a global provider of marine 2D/3D/4D seismic data, and associated products and services to the oil and gas industry, announces 3rd quarter 2012 Revenue Results. Revenues for the quarter were $45.5 million, Contract revenues for the period were $38.4 million and Multi-client revenues were $7.1 million. Vessel utilization for the period was 93%. During Q3 2012, the company participated in three new multi-client surveys.

During the quarter SeaBird continued to see a high level of activity in the global seismic markets. In addition to solid demand in the 2D sector, they also experienced strong demand for shallow-water as well as niche-market 3D surveys. The upswing in demand from oil and gas companies which started earlier this year has continued. Multi-client contract activity was also strong during the quarter and going forward they anticipate a number of large area surveys to come for tender.

Multi-client sales during the quarter were robust. The majority of multi-client revenues were related to the sale of SeaBird’s interest in one of their multi-client surveys. In addition to this, they had two license sales as well as pre-funding revenues related to new surveys. During the period, the company participated in three new multi-client surveys. SeaBird continues to evaluate multi-client opportunities and expect to increase their investment in this area.

The increasing requirement for source vessels for 4D surveys as well as wide azimuth and undershoot operations continued during the period. To date, this market has primarily been targeting shorter-term contracts. However, the growing demand in this sector is expected to result in an increase in longer-term agreements.

Industry pricing has continued to improve both in the 2D and their segment of the 3D markets. In light of the steady tender activity in both sectors, SeaBird anticipates that this trend will be maintained for the rest of the year. Moreover, given the current robustness in the market and the increase in longer-term contracts, available industry capacity is likely to be further reduced going forward.

The company’s backlog remains firm and in line with last quarter. A number of vessels are maintained under short-term agreements and will thus not have a material impact on the backlog. This mix between short and long-term agreements allows the flexibility to capitalize on more profitable opportunities. However, it does increase the potential impact of sudden changes in the industry as well as costs associated with any potential repositioning of vessels.

Third quarter vessel utilization was 93%. The high utilization reflects the strong market environment. However, during the third quarter SeaBird repositioned three vessels which resulted in a significant increase in steaming time. While mobilization fees generally covered the vessel repositioning, these charges were not commensurate with forgone production revenues. As a result, contract revenues for the quarter are below what they would have been had the fleet utilization reflected production time alone. In addition, utilization numbers are excluding Kondor Explorer which has yet to be equipped for production.

Operations delivered another solid quarter and reported a low technical down time of 4%. The active focus on training, trouble shooting and incident review is continuing to pay off. SeaBird improved flexibility on the vessels by increasing cross-department training between maritime and seismic crew. With the launch of “Idea Explorer”, they have received approximately 100 suggestions from employees around the world on how to improve efficiency and strive for operational excellence. Management is continuously reviewing these suggestions and is evaluating how to implement proposed operational improvements.

SeaBird’s solid health, safety, security, environment and quality (HSSEQ) record is a result of continuous system review and process improvement. The company’s total recordable incident rate (TRIR) year-to-date is currently at 2.7, well below expected industry norms. During the year, a campaign of HSSEQ system training was implemented to reduce recordable incidents and further strengthen the HSSEQ culture. Improved training around hazard and risk awareness and a focus on ensuring a strong HSSEQ appreciation especially for new employees and temporary crew has had a meaningful impact on performance. In addition to injury prevention, HSSEQ is also actively being used to flag deviations and ensure that SeaBird maintains best-in-class performance.

Within finance, they are continuing cost improvement efforts. The focus is now on cost of sales and potential alternatives to reduce the cost structure. While evaluating cost reduction possibilities they are also reviewing ways to enhance cost elasticity. Moreover, this quarter SeaBird commenced a review of legal and tax structures to assess ways to improve efficiency. The enterprise resource planning (ERP) system is in the early stages of being implemented.

With the exception of the return of GGS Atlantic and the sale of long-time stacked Geo Mariner, there is no change to the fleet composition during the quarter.

[mappress]
Press Release, November 01, 2012