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  • All time high quarterly revenues of USD 37.7 million, an increase of 63 % compared to Q1 2007.

  • All time high EBITDA of USD 9.7 million, an increase of 3 % compared to Q1 2007.

  • Eight vessels in operation for the full quarter, with an average vessel utilization of around 92%.

  • Performance for the quarter negatively affected by production below target for Munin Explorer in India and mobilization of three other vessels to India in the second half of the quarter.

  • Production above target from commencement of operations for the three vessels starting operations in India in late March to-date.
     
  • SeaBird is well positioned to take full benefit of the continued strong market with eight vessels operational for the full year and limited exposure to uncertainty related to conversions and vessel delivery.

  • Letter of award received from Total E&P Angola in April 2008 leading to first contract for SeaBed operations

  • Contracts with a total value of USD 170 million announced first four months of 2008
 
KEY FINANCIAL PERFORMANCE FIGURES
 
The SeaBird Group reported consolidated revenues of USD 37.7 million in Q1 2008, an increase of 63 % compared to Q1 2007. All eight vessels were in operation for the full quarter with an average vessel utilization of around 92%. Vessel utilization and revenues were negatively affected by down-time and low acquisition rates for the Munin Explorer in India. Furthermore, revenues were also negatively affected by mobilisation of three vessels to India in the second half of the quarter. However, despite these negative factors, revenues for the quarter were at an all-time high.
 
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were also at an all-time high with USD 9.7 million for the quarter, compared to USD 9.3 million for Q1 2007. In addition to the negative impacts on revenues from vessels operating in India described above, EBITDA were negatively affected by high costs of operations for Munin Explorer for the whole quarter and high mobilization cost for the other vessels going to India.
 
Earnings before interest and taxes ("EBIT") were USD 2.6 million in Q1 2008 compared to USD 6.1 million for Q1 2007. Depreciation increased to USD 7.1 million, up from USD 3.2 million for Q1 2007, as three vessels were added in the period.
 
Interest expenses increased from USD 1.1 million in Q1 2007 to USD 4.5 million, in line with the increase of net interest bearing debt from USD 79.7 million by the end of Q1 2007 to USD 207 million by the end of Q1 2008. Other financial expenses, net, for the quarter were USD 6.6 million compared to USD 0.1 million for Q1 2007. Unrealized foreign exchange losses on bond loans in Norwegian kroner of NOK 600 million constituted USD 7.3 million of the total amount. Net loss for Q1 2008 was USD 8.1 million, compared to a net profit of USD 5.0 million for Q1 2007.
 
OPERATIONAL HIGHLIGHTS Q1 2008
 
Geo Mariner completed a series of short contracts in East Africa in February and then mobilized to the east coast of India for a contract for Cairn Energy India. This survey was completed ahead of schedule in the end of April and the vessel is now back in production in East-Africa.
 
Northern Explorer completed the contract with GX Technologies (GXT) in February, while the Osprey Explorer completed a short survey for TGS-Nopec in the Far East in February. Both vessels mobilized to India and commenced operations on two large 2D surveys off the east coast of India for Oil and Natural Gas Corporation Limited of India (ONGC) towards the end of March.  Revenues for these two vessels and the Geo Mariner for the first quarter were negatively affected by the long mobilization period, including the process to get all necessary clearances in India. However, from commencement of operation, production rates have exceeded our targets for both vessels.
 
Munin Explorer had a vessel utilization of around 69%.  The Munin Explorer has been working for ONGC on the west-coast of India the whole quarter.  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.  Furthermore, as a consequence of extraordinary damages to and losses of seismic equipment from fishing gear, the vessel was out of production for around 21 days in Q1 waiting for replacement and repair of damaged equipment.  Munin Explorer is now operating in deeper water, where acquisition rates are better. However, the survey will not be completed prior to the monsoon period in India and it is agreed with ONGC that the vessel will be brought back after the monsoon to complete the survey within 31 March 2009.  
 
Kondor Explorer continued operations for CGGVeritas on a wide-azimuth survey in the Gulf of Mexico. The contract with CGGVeritas expires in November 2008. Hawk Explorer continued operations for Fugro on the time charter contract ending in November 2008, with a one-year renewal option. Aquila Explorer continued the time-charter with Petroleum Geo-Services ASA (PGS) ending in February 2009. The Harrier Explorer continued on a four-year firm time-charter with a two-year option to PGS.
 
Kondor, Hawk and Aquila will all undergo maintenance/upgrade work in the second quarter which is expected to give around 30-40 vessel-days off-hire in total for these three vessels. PGS has exercised their option to use the Aquila as a 2D vessel, consequently day-rates will be increased by approximately 10 %.
 
SeaBird took delivery of the Hugin Explorer in January 2008 and the vessel is now in the final phases of rigging and testing to a state of the art node vessel for our seabed operations with 500 new deep-water nodes on board. Total expected investment in nodes and vessel conversion and equipment is estimated to be in the range of USD 65 million.
 
In April, we received a letter of award from Total E&P Angola ("Total") for an ocean bottom nodes seismic acquisition survey in Angola.  Including mobilization and demobilization the survey is expected to take around 4 months, and the total contract value for the survey will be in the region of USD 25 million. The survey will be done at around 1,300 meters water depth. Currently, we expect to commence operations after mobilization to Angola in early Q3. This letter of award represents a first major recognition from oil companies for our seabed operations and provides our first contract in the high end of the seismic industry where we see great potential for the future in reservoir imaging and 4C / 4D applications.  SeaBird is very pleased to have reached this milestone and to have Total as the contractual partner in the first survey using Hugin Explorer and her autonomous node acquisition system in deepwater and congested areas.
 
With the completion of Hugin Explorer, SeaBird has delivered 6 converted seismic vessels in 18 months.  This completes the aggressive vessel conversion program and focus will be on streamlining operations of the fleet.
 
For Q1 2008 SeaBird had selling, general and administrative expenses of USD 5.1 million, compared to USD 3.9 million in the comparable quarter in 2007. 
 
The weakening USD has a negative impact on both operating expenses and on the capital expenditures related to the investments in the Hugin Explorer, nodes and related equipment.
 
LIQUIDITY AND FINANCING
 
At 31 March 2008, cash and cash equivalents amounted to USD 28.2 million, compared to USD 11.6 million at the end of 2007.  Net cash flow from operating activities was USD 15.4 million while capital expenditures for the quarter were USD 25.9 million for the quarter.  These investments were financed with raising around USD 22.4 million of new equity in the quarter (see further details below) and increase of borrowings of around USD 4.6 million.  Net interest bearing debt was USD 207 million compared to USD 213 million at the end of 2007. 
 
Based on the current business plan, the peak liquidity need is projected to be towards the end of the second quarter and beginning of the third quarter of 2008. At this time SeaBird will complete the conversion of the Hugin Explorer, complete the manufacture of the SeaBed nodes, some other capital expenditures and, simultaneously, build up of our working capital needs - both for projected contracts on the SeaBed operations and for the major contracts for ONGC in India. In order to meet this requirement, in February 2008 we entered into a placement of 8,100,000 new shares at a price of NOK 15.00 per share. The share issue represented approximately 10 per cent of the shares outstanding prior to the placement and total gross proceeds from the share issue were NOK 121,500,000.
 
As described above, at 31 March 2008, SeaBird had a cash balance of USD 28.2 million.  SeaBird is in the process of amending the instalment plans for loans with scheduled repayments in 2008 to better align it with our forecasted cash flow. SeaBird currently has USD 40 million of unsecured revolving/renewable credit facilities where it is a dialogue with the banks for renewal.  SeaBird is dependent on renewing part or all of these credit facilities or finding other alternative sources of financing to replace them to secure a satisfactory liquidity for 2008.  Assuming a successful conclusion with our banks, we believe that we have adequate liquidity to support our operations and the investment programme. 
 
OUTLOOK
 
SeaBird believes that there is a positive outlook for all segments of the seismic offshore market and we expect that 2008 and beyond will be healthier than 2007. In response to a strengthening market there will be a number of additional vessels coming on-line in 2008, but with demand so strong we believe the additional capacity will be comfortably absorbed.
 
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.
 
With eight vessels in the fleet at the beginning of 2008 - along with delivery of the Hugin Explorer in the second quarter of 2008- we strongly believe we now have both the resources and skills to significantly develop our revenues and profitability through 2008 and forward.
 
Despite our optimism, there is still some uncertainty for the year in relation to the revenues and profitability for the Hugin Explorer, and effective production and utilisation of the vessels on contract in India.
 
 
The presentation and the full report with tables can be downloaded from the following links: