- Revenues for the full year of USD 95.8 million, an increase of 107% from 2006, while EBITDA is up 60% to USD 23.3 million.
- Substantial increase of revenues from previous quarters to USD 35.0 million, an increase of 70 % compared to Q4 2006.
- EBITDA of USD 9.1 million, an increase of 71 % compared to Q4 2006.
- Eight vessels in operation for the full quarter, with an average vessel utilization of around 82%.
- Performance for the quarter negatively affected by vessel utilization below target and high operating cost.
- SeaBird is well positioned to take full benefit of the strong market in 2008 with eight vessels operational for the full year and limited exposure to uncertainty related to conversions and vessel delivery.
- SeaBed on target to commence operations with Hugin Explorer and new nodes in Q2 2008
KEY FINANCIAL PERFORMANCE FIGURES
The SeaBird Group reported consolidated revenues of USD 35.0 million in Q4 2007, an increase of 70 % compared to Q4 2006. All eight vessels were in operation for the full quarter with an average vessel utilization of around 82%. Vessel utilization was negatively affected by idle time for the Geo Mariner, low utilization of the Osprey Explorer and having Kondor Explorer in dry-dock for part of the quarter. However, even though utilization was not optimal, revenues for the quarter were at an all-time high.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were USD 9.1 million for the quarter, compared to USD 5.3 million for Q4 2006. EBITDA were negatively affected both by the low vessel utilization described above and high cost for the quarter.
Earnings before interest and taxes ("EBIT") were USD 2.0 million in Q4 2007 compared to USD 3.6 million for Q4 2006. Depreciation increased to USD 7.0 million, up from USD 1.7 million for Q4 2006, as five vessels were added in the period while Geo Mariner and Northern Explorer were revalued 31 December 2006 which also contributed to higher depreciation. Furthermore, a year-end review of allocation to component classes and depreciation periods gave an increase of depreciation compared to previous quarters.
Interest expenses increased from zero in Q4 2006 to USD 4.6 million, in line with the increase of net interest bearing debt from USD 68.2 million by the end of Q4 2006 to USD 213 million by the end of Q4 2007. Other financial expenses, net, for the quarter were USD 0.8 million compared to USD 0.7 million for Q4 2006. Net loss for Q4 2007 was USD 3.0 million, compared to a net profit of USD 3.2 million for Q4 2006.
OPERATIONAL HIGHLIGHTS Q4 2007
Geo Mariner did a short survey in the Arabian Gulf in October. Subsequent to that she mobilized to East Africa where she has acquired a series of short contracts which will be finalized at the beginning of March. Subsequently, she will mobilize to the recently announced contract for Cairn Energy India on the East-Coast of India. She has some follow up work contracted, giving a firm back-log until the end of Q2 2008.
Northern Explorer was fully employed throughout the quarter, continuing the contract with GX Technologies ("GXT"). This contract is expected to be completed by the end of February 2008, when she will mobilize for the recently announced 2D survey for Oil and Natural Gas Corporation Limited of India ("ONGC") on the East-Coast of India.
Osprey Explorer completed the 2D upgrade mid-October and then mobilized to Bangladesh for a short survey. Part of the transit was unpaid and consequently she ended up with a vessel utilization of only 56% for the quarter. She is currently completing a short survey in the Far East before she will mobilize for the recently announced 2D survey for ONGC on the East-Coast of India.
Kondor Explorer was in dry-dock and had a vessel utilization of 78% for the quarter. Kondor continued operations for CGGVeritas on a wide-azimuth survey in the Gulf of Mexico. This contract is now extended to November 2008. The negative EBITDA effect caused by the dry-docking was around USD 1.5 million from reduced revenues under the off-hire period and maintenance cost recognized.
Hawk Explorer is on a two-year charter for Fugro ending in December 2008, with a one-year renewal option. Vessel utilization was somewhat below 90% for the vessel in the quarter caused by technical downtime on seismic equipment. There will be some improvements to the seismic equipment carried out at the end of Q1 or beginning of Q2 2008, and the vessel is expected be out of production for approximately one week.
Aquila Explorer is currently on a time charter with Petroleum Geo-Services ASA ("PGS") ending in February 2009. Vessel utilization for the quarter was close to 100%.
Munin Explorer completed a 2D survey in the North Sea at the end of October. She then mobilized to India for the previously announced ONGC contract on the West-Coast of India and commenced operations in the beginning of December. The first part of the survey has been challenging in a congested area with significant fishery, hence acquisition rate has been below target for the initial phase of the survey. She is now approaching completion of this sector and will move to deeper waters where acquisition rate is expected to improve substantially.
The Harrier Explorer was delivered 10 September 2007. She had some start-up related downtime in her first month of operations and had 9 days in production until 13 October. Subsequently, she has had close to zero technical downtime. The vessel is committed on to a four-year firm time-charter with a two-year option to PGS as a source vessel.
SeaBird has delivered 5 converted seismic vessels in 12 months. With the delivery of the Hugin Explorer in Q2 2008 we will have completed the aggressive vessel conversion program and all focus will be on operations of existing vessels. SeaBird took delivery of the Hugin Explorer in January 2008 and the vessel is now in the middle of rigging to a state of the art node vessel for the SeaBed operations. The vessel is expected to be operational in May 2008 with 500 new deep-water nodes. Total expected investment in nodes and vessel conversion and equipment is estimated to be in the range of USD 60-62 million.
SeaBird has during 2007 strengthened the management and operating capacity across the group in line with the requirements of the fleet expansion. In the fourth quarter, SeaBird has also established a representative office in Singapore to establish a strong market presence in the Eastern Hemisphere. For Q4 2007 SeaBird had selling, general and administrative expenses of USD 6.8 million, compared to USD 1.7 million in the comparable quarter in 2006. Approximately USD 0.4 million of the cost for Q4 2007 is non-cash cost related to the employee stock option incentive plan. The weakening USD has a negative impact on both operating expenses and capital expenditures.
At 31 December 2007, cash and cash equivalents amounted to USD 11.6 million, compared to USD 23.4 million at the end of the previous quarter. Net interest bearing debt was USD 213.0 million compared to USD 174.5 million at the end of the previous quarter and USD 68.2 million at the end of 2006. This increase is mainly caused by capital expenditures for the year of USD 129.8 million, mainly related to our conversion program.
As previously announced, the Company has entered into a five-year secured term bank loan with a borrowing limit of USD 25 million with interest rate of LIBOR + 1.25% and an additional unsecured revolving bank credit facility of USD 25 million with interest rate of LIBOR + 1.75%. The Company had drawn the full amount under these facilities as of 31 December 2007. Further unsecured credit facilities of USD 20 million have been secured in the fourth quarter with interest rate of LIBOR + 1.50%. USD 10 million of these facilities had been drawn as of 31 December 2007.
SeaBird issued a bond loan of NOK 400 million in February 2007 with a 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%. In the fourth quarter, as a consequence of the inherent value of the financial instrument and the long maturity, the Company has realized the value of the swap of the principal repayment generating a cash contribution of USD 4.8 million in Q4 2007. The principal will be hedged against USD again if and when the USD strengthens. As a consequence of this transaction the USD 4.8 million was recognized as a realized gain in Q4 2007, while the loan in NOK and the remaining interest swap was recognized to fair value at 31 December 2007, making a net unrealized loss of around USD 5.0 million. In Q1 2008, the interest rate swap was realized and generated a cash contribution of USD 4.2 million.
The peak liquidity need is projected to be in the second quarter of 2008 when we will be completing the Hugin Explorer and simultaneously building up working capital needs, both related to projected contracts on the SeaBed operations and the huge contracts for ONGC in India. SeaBird is currently working with various alternatives for further funding.
SeaBird expects the 2008 market to be stronger than in 2007 in all seismic segments. We expect the supply within our segments to increase slightly. However, the demand side is expected to more than absorb the additional capacity. SeaBird was not in a position to take full benefit of the strong market in 2007, but is now well placed to take advantage of the continuing strong market in 2008 with 8 vessels in operation for the full year and SeaBed commencing operation with Hugin Explorer in Q2 2008.
We expect significant growth in revenues and earnings for 2008. Q1 2008 will be negatively affected by low acquisition rate on the Munin Explorer in India in the beginning of the quarter and mobilization for the ONGC contracts for Osprey Explorer and Northern Explorer. The main uncertainty for the year is related to revenues and profitability for the Hugin Explorer, and effective production and utilization of the vessels on contract in India. Planned capital expenditures for the year are mainly related to the completion of the Hugin Explorer conversion, the new nodes, maintenance type investments on the existing fleet and some commitments for equipment purchases to cancelled projects. This equipment has been put on the resale market if they could not be utilised in fleet inventory.
The presentation and the full report with tables can be downloaded from the following links: