SeaBird Increases Investment in Multi-Client Surveys (Cyprus)

SeaBird Exploration PLC “SeaBird”, a global provider of marine 2D/3D/4D seismic data, and associated products and services to the oil and gas industry, has announced the second quarter 2013 financial results.

Revenues and earnings for the second quarter were down from the first quarter as the company actively increased investment in multi-client surveys, prepared the Geo Pacific for its first project and repositioned a number of vessels following the completion of existing contracts.

During the second quarter, SeaBird completed its three thousand kilometer multi-client project in the Caribbean and commenced two additional multi-client surveys, an expanded five thousand kilometer project in Namibia and a six thousand kilometer project in the Barents Sea. Multi-client activity during the period increased from 4% of vessel capacity in quarter one to 22% of vessel capacity in quarter two.

SeaBird will continue their multi-client focus and will generally partner with other industry participants. They anticipate attractive returns from multi-client investments. However, until the multi-client library reaches critical mass, revenues and EBITDA may be impacted.

The Geo Pacific commenced its first survey in mid-May. The delayed start date was primarily a result of extended sea trials. While the vessel operated successfully throughout the remainder of the quarter, the later than expected production start contributed negatively to EBITDA for the period. Additionally, a number of start-up issues resulted in above-average technical down-time. These issues are being addressed and going forward we expect to have the vessel perform in line with the rest of the fleet. Nevertheless, the increased technical down-time also impacted earnings.

However, the Geo Pacific completed its first survey on schedule and was immediately mobilized for its second project which is expected to keep the vessel occupied through the end of the third quarter.

Contract revenues for the second quarter were down compared to the prior period. Contract surveys during the second quarter represented 57% of vessel capacity compared to 84% during quarter one. The reduced contract survey utilization rate is in part a result of two vessels being dedicated to multi-client projects during the period. In addition, fleet repositioning accounted for 15% of vessel capacity for the second quarter. This includes the time allocated to mobilize the Geo Pacific for its first job as well as the repositioning of Voyager and Aquila following their Southern Asia Pacific campaigns. Harrier was also repositioned to Northern Europe and subsequently commenced work in the Barents Sea.

During the second quarter the Company had two yard stays, representing 6% of vessel capacity for the period.

Utilization for the second quarter was 79%, down from 88% in the first quarter.

Operational performance was solid during the period. Technical downtime for the fleet for the second quarter was 5% and the company’s lost time injury frequency (LTIF) rate for the quarter was zero.

The company has achieved early compliance with the new Maritime Labour Convention standards ratified in 2012. Moreover, during the quarter, Northern achieved seismic vessel notation as part of the Company’s ongoing program with DNV.

Health, safety, security, environment and quality (HSSEQ) successfully completed a number of client prequalification audits as well as follow-up audits for ISO 9001/14001 and OHSAS 18001. Several HSSEQ initiatives were commenced during the quarter as a part of the company’s continuous focus to improve internal processes.

Regional overview

In the second quarter, geographic revenues were strongest in North and South America (NSA) where SeaBird saw a significant increase in activity. Revenues in Asia Pacific (APAC) and Europe, Africa and Middle East (EAME) were down from the first quarter mainly due to vessel repositioning and increased multi-client focus.

NSA sales of $20.4 million represented 51% of total revenues. The significant increase in NSA revenues was in large part a result of Geo Pacific’s first survey in the Caribbean. In addition, SeaBird had two vessels active in the region throughout the quarter.

Sales in APAC of $13.2 million accounted for 33% of total revenues. Revenues in the region were down compared to the first quarter as Aquila completed its projects in Australia in May and mobilized for its new contract in South East Asia, commencing its new survey in early July. Additionally, Voyager completed its Australia and New Zealand campaign in April and transited to South East Asia for its next survey, commencing this project in June.

Sales in EAME of $6.6 million accounted for 16% of total revenues. Revenues were reduced compared to the first quarter as Northern completed its survey in Africa in late May and Osprey and Harrier operated in the region on multi-client projects.

Outlook

Global industry demand in the quarter continued to be strong albeit vessel repositioning in certain geographies caused time delays. Most significantly, SeaBird had two vessels in the Asia Pacific region during the second quarter which required more time than estimated to reengage following the completion of their surveys. However, both vessels are currently active and we are seeing solid demand in the APAC region.

In spite of continued robust seismic market demand in all SeaBird core regions, the Company expects that vessel repositioning from time to time will impact utilization. That being said, going into the third quarter, vessel utilization across the fleet was strong.

Day rates for both 2D and niche 3D seismic contract surveys remained solid in the second quarter. During the period SeaBird experienced stable to improving pricing trends in all geographies. SeaBird is not seeing any signs indicating a changing pricing environment and they expect day rates to remain firm for the foreseeable future.

The increased focus on multi-client investment is continuing and SeaBird will be developing attractive multi-client opportunities throughout their geographic focal areas.

Important events in the first half of the year

During the first half of 2013, the Geo Pacific was dry-docked and upgraded for increased power output and modified to reduce drag. The vessel performed successful sea trials and commenced its maiden survey in mid-May in the Caribbean.

The company issued 1,500,000 new shares at a subscription price of NOK 7.50 per share during the first half of 2013. Gross proceeds from this transaction were NOK 11.3 million ($2.0 million). The transaction closed in February 2013 and was targeted towards shareholders who did not have the opportunity to participate in the private placement of 2012.

[mappress]

August 16, 2013