SeaBird expects delays of over two months for two seismic surveys
Seismic services player SeaBird Exploration has estimated that its ongoing seismic surveys in West Africa and Americas will both be completed about two months later than originally planned, resulting in increased operating expenses.
SeaBird said in late July that the completion of a niche 3D survey in West Africa – utilizing the Nordic Explorer – was delayed from early 3Q to the latter part of 3Q 2019.
Furthermore, the completion of a 2D survey in the Americas – utilizing the Harrier Explorer – was pushed from the first half of 3Q 2019 to the second half of the same quarter.
In an update on Tuesday, August 6 SeaBird said that, based on the current estimates for survey completion, the company expects to report an EBITDA for the second quarter of 2019 of negative $1.7 million.
This includes a loss provision for 3Q 2019 of $1.3 million relating to the West Africa 3D survey due to the contract being treated as an onerous contract according to IAS 37. The provision is based on an estimated survey completion by mid-September 2019.
Both the Harrier Explorer and the Nordic Explorer are rigged with the “Digistreamer” technology and both surveys are affected by difficulties with availability and lead-time of select seismic streamer equipment parts relating to this technology.
This includes a significant increase in the repair period for streamer sections compared to historic experience caused by the service offering, repair facilities and inventory level for certain technology components included in the “Digistreamer” all being significantly downscaled post the 2014 downturn.
The company placed orders for repair of streamer and for new streamer related equipment shortly after the contract awards. However, the combined effect of worse than expected condition of the Nordic Explorer streamer pool equipment (included in the charter-in agreement for the vessel), increased repair period and logistical lead times exceeded the equipment related contingency included in the project plans for the 2D and 3D surveys.
SeaBird will after completion of the projects have a significant pool of repaired and tested “Digistreamer” ready for use. In addition comes a larger pool of Sercel Sentinel streamer. The current “Digistreamer” related problems are therefore not expected to have any effects on future 2D and niche 3D projects.
The ongoing 3D survey in West Africa is estimated to be completed by mid-September 2019, more than two months later than the original survey plan, predominantly due to the survey being acquired with two streamers versus four streamers as originally planned. The extended survey duration will result in increased operating expenses and generate an estimated project margin of negative $1.4 million.
The ongoing 2D survey in the Americas is estimated to be completed ultimo September 2019 which is about two months later than the original plan. The extended survey duration will result in increased operating expenses and generate an estimated project margin of close to zero.
The Osprey Explorer is currently transiting to the NCS for a two-month source project with estimated completion late September/early October. This represents a new contract award and is also the first contract with the relevant OBN contractor.
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