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Highlights First quarter 2007
  • Consolidated revenues of USD 23.2 million, an increase of 216% compared to Q1 2006 and 13% compared to Q4 2006
  • EBITDA of USD 9.4 million, an increase of 213% compared to Q1 2006 and 76% compared to Q4 2006.
  • Contracting the Munin Explorer on a five year bareboat charter with delivery expected in July.
  • SeaBird continued the focus on the conversion of five vessels, bringing the total number of planned vessels in operation to ten by the end of 2007, compared to five in the beginning of the year. Progress of conversion projects is in line with previous guidance.
  • USD 65 million raised from the bond market in February, and commitments in place securing the remainder of the projected funding need.
  • In February, SeaBird won the principal action in the arbitration with Global Geo Services ASA ("GGS").
  • Senior management strengthened by new CFO, Head of Operations Dubai office and Head of SeaBed Geophysical.
Key financial performance figures
The SeaBird Group reported consolidated revenues of USD 23.2 million in Q1 2007, an increase of 216% compared to Q4 2005 and 13% compared to Q4 2006.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were USD 9.4 million for the quarter, an increase of 213% compared to Q1 2006 and 76% compared to Q4 2006. The improvements from Q1 2006 are mainly due to the strengthening of the seismic markets, with substantially better rates  combined with  the fact that Hawk Explorer and Osprey Explorer  commenced operations in Q4 2006.  The main reason for the improvement from Q4 2006 was the GGS loss of around USD 5 million recognized in Q4 2006, compared to a further impairment of the GGS shares of USD 0.5 million in Q1 2007.
Earnings before interest and taxes ("EBIT") increased to USD 6.1 million in Q1 2007 an increase of 149% compared to Q1 2006 and 68% compared to Q4 2006. Depreciations increased to USD 3.2 million, compared to USD 0.5 million for Q1 2006 and USD 1.7 million for Q4 2006. This increase is partly caused by a full quarter of depreciations for Hawk Explorer and Osprey Explorer, in addition to the effect of the revaluation of Geo Mariner and Northern Explorer as of 31 December 2006.
Net Income for Q1 2007 increased 117% over the comparable quarter in 2006, to USD 5.0 million.
Operational highlights Q1
Geo Mariner completed a survey with Pakistan for Oil & Gas Development Company Limited (OGDCL) in January 2007. She continued on a survey in Kenya in February. Due to an acquisition postponement with a client, Geo Mariner performed SeaBird's first ever multi-client survey on the Seychelles in March, continuing to mid-April. Even though we are very optimistic about the prospectivity of the area and we have secured a small equity interest, this does not constitute a change in SeaBird's strategy. However we may be involved in similar projects in the future. Total investments capitalized in Q1 is around USD 0.9 million for this survey.  Geo Mariner has now relocated to the Mediterranean for a series of shorter surveys.
Northern Explorer completed two surveys in East Africa in the beginning of the quarter before she went to dry-dock in South Africa in the middle of March. She returned from dry-dock in the end of April and is currently doing a survey for Norsk Hydro in Mozambique.
Osprey Explorer and Kondor Explorer continued operations for CGGVeritas on a wide-azimuth survey in the Gulf of Mexico.
Hawk Explorer is on a 2-year charter ending in December 2008, with a one-year renewal option, for Fugro.
SeaBird continues to strengthen the management and operating capacity across the group in line with the requirements of the fleet expansion.  For Q1 2007, this has contributed to a substantial increase in selling, general and administrative expenses to USD 3.9 million, from USD 2.3 million in the comparable quarter in 2006 and USD 1.7 million in the previous quarter.  Approximately USD 0.4 million of the cost for Q1 2007 is non-cash cost related to the employee stock option incentive plan.
In January, SeaBird acquired GeoBird Management Middle East FZ LLC (GeoBird) for USD 2 million. GeoBird is a maritime management company that has been responsible for the maritime operations of the SeaBird fleet of vessels since 2003.  GeoBird's business is mainly related to the SeaBird maritime operations, but GeoBird is also providing maritime management services for other leading seismic companies.
Conversion projects
As previously announced, asbestos  was found on board the Harrier Explorer in March, despite the fact that she has an "asbestos free certificate" from an independent consultant. Even though all asbestos has now been removed and the project is back on track, this is  the main reason  that the delivery of the vessel is delayed until the end of July 2007. The removal of the asbestos and the extended yard-stay has increased the projected total cost from around USD 40 million to around USD 44 million. SeaBird has entered into a 4year firm time-charter with a 2-year option with Petroleum Geo-Services ASA (PGS) as a source vessel. PGS has the option to use the vessel as a 2D vessel provided they cover the cost of additional seismic equipment and additional operating cost.  The contract value for the firm period is approximately USD 58 million and is scheduled for commencement in August 2007.
Aquila Explorer is under conversion to a source vessel at a Singapore yard. The vessel is expected to be ready for delivery in a couple of weeks with a total cost of around USD 35 million. The vessel is contracted to PGS for six months with two six month options.
In January 2007, SeaBird entered into a 5year firm bareboat charter with Økland Fiskebåtrederi AS ("Økland") with 3 x 1 year options for the vessel Munin Explorer. Økland will carry out the conversion to a Source/2D vessel at their cost with the exception of the cost of certain seismic equipment. Estimated capital expenditures for SeaBird are around USD 8 million. The contract value for the firm period is approximately USD 33 million and is scheduled for commencement in July 2007.  SeaBird has an option to purchase the vessel during the firm 5year period. 
In October 2006 SeaBird Exploration acquired the Raven Explorer for USD 13 million. The vessel is a new-built Anchor Handling Tug Supply vessel and will be converted into a shallow water 2D/3D vessel. Total project cost including conversion and purchase price is estimated to in the range of USD 50 million, depending on final specifications. The vessel is expected to be operational in the fourth quarter of 2007.
In December 2006 SeaBird Exploration Limited and Siem Offshore Inc entered into a 5 year firm bareboat charter with 3 x 1 year options for the new-built vessel Siem Mariner, a DP2 vessel.  The contract value for the firm period is around USD 57 million.  SeaBird has an option to purchase the vessel at the expiry of the firm 5 years period. SeaBird will convert the vessel to a state of the art SeaBed seismic vessel. The vessel is expected to be operational in the fourth quarter of 2007.  Furthermore, SeaBird is investing in 500 new deep water nodes for the SeaBed operations with projected delivery by the end of Q3 or beginning of Q4 2007.  Total investments in SeaBed operations are estimated to be around USD 50 million.
Liquidity and Financing
At 31 March 2007, cash and cash equivalents amounted to USD 69.7 million, compared to USD 16.4 million at the end of the previous quarter.  Net interest bearing debt was USD 79.7 million compared to USD 68.2 million at the end of the previous quarter.
In February 2007 SeaBird decided to issue a new bond loan   in the Alternative Bond Market at the Oslo Stock Exchange ("Bond-loan") with a total borrowing limit of NOK 500 million.  The first tranche of NOK 400 million was closed 14 February 2007 and has 5 years maturity, with floating interest (3 month NIBOR + 4.5%).   Simultaneously SeaBird entered into a financial instrument which in effect converted the loan to a USD based loan with a principal repayment obligation of USD 65 million and a floating interest rate of LIBOR + 4.75%. 
Furthermore, in Q1, SeaBird has drawn USD 2 million at a credit facility agreement related to the Aquila Explorer and Osprey Explorer.   A total of USD 22 million was drawn under this facility as of 31 March 2007, while another USD 8 million will be drawn in June/July 2007.  This credit facility has an interest rate of LIBOR + 1.5% and will be repaid over five years.
The Company views the new Bond-loan as a flexible financing for the substantial growth and investment program planned for the first half of 2007.  SeaBird expects to incur significant capital expenditures for the previously discussed investments in 2007, where a substantial part is front-loaded to the first 9 months of the year. The net proceeds from the new bond loan will mainly be used to fund these investments. SeaBird expects some additional funding need in the peak investment period and has secured satisfactory commitments from banks for the remaining projected funding needs.
Outlook 2007
We still see a very strong demand within all segments of the seismic industry, with a substantial part of the available capacity already contracted. We expect the supply within our segments to increase slightly. However, the demand side is expected to more than absorb the additional capacity.
Aquila Explorer is in the completion phase and is expected to be ready for operation in a couple of weeks.  Harrier Explorer and Munin Explorer are projected to be ready for operation during July 2007, while Hugin Explorer and Raven Explorer are expected to be ready for operation in Q4 2007. 500 new deep-water nodes are expected to be operational on the Hugin Explorer as soon as the vessel is ready for operation. 
On the basis of the substantial increase of the fleet and the strengthening of the market rates, we expect a significant growth in both revenues and earnings in 2007, and in particular we expect a very strong second half of the year.  Revenues are expected to be in the range of USD 150 million for the full year, while EBITDA is expected to be in the range of USD 80 million. Total capital expenditure is expected to be in the range of USD 130-140 million for the full year.
The presentation and the full report with tables can be downloaded from the following links: