· The Ocean Bottom Node ("OBN") survey with Hugin Explorer and Munin Explorer was successfully completed on 16 August, followed by the pilot survey for ExxonMobil E&P Norway in the Norwegian North Sea. Upon completion, the vessels left the North Sea second week of September mobilising towards India for the ONGC contract awarded 23 August - approx. three to four months duration, at a value of USD 40 million.
· Bareboat charter, three years firm, of the 2D/3D shallow water 4-streamer vessel Voyager Explorer entered into in August 2011, replacing the Geo Mariner in the SBX fleet.
· Osprey Explorer Completed phase 1 of Perdido multiclient survey.
· Dialogue with Banks, Norsk Tillitsmann, key bondholders and other stakeholders, initiated to address the financial situation of SBX.
· Subsequent events - Contemplated sale of the OBN division to Fugro on 3 October 2011 and financial restructuring and industrial partnership on 18 November 2011.
· Consequent to (and dependent upon) closing, a financial restructuring of SeaBird will occur. This transaction has the approval of secured and unsecured creditors as is explained in more detail in the press release of 18 October.
COMPARISON OF Q3 2011 WITH Q3 2010
The vessel Voyager Explorer entered the SeaBird fleet and commenced operation in the middle of August 2011. The vessel replaced the Geo Mariner which was de-rigged and de-activated end of Q2 2011. Contracts previously allocated to Geo Mariner will be performed by Voyager Explorer. These changes affect the comparable figures to some extent.
SeaBird Group reports a loss of USD 75.1 million for the third quarter 2011 (USD 19.9 million same period in 2010).
Revenues were USD 35.2 million in Q3 2011 (USD 43.2 million). The decreased revenues are mainly due to lower revenues from the OBN operation and multiclient sales and more idle time for the vessels in Q3 2011 compared to Q3 2010.
Operating expenses were USD 38.4 million in Q3 2011 (USD 36.1 million). The change is mainly due to increased selling, general and administration expenses of USD 2.1 million.
EBITDA were negative at USD 3.0 million in Q3 2011 (positive USD 7.9 million).
Depreciation and amortisation were USD 12.2 million in Q3 2011 (USD 13.7 million). The decrease is mainly due to lower multiclient sales amortisation and impairment of vessels and equipment in Q4 2010 giving lower base for depreciation in 2011.
The vessel fleet has been impaired by USD 62.6 million and goodwill by USD 5.1 million in Q3 2011 to reflect the declined market situation.
Interest expense was USD 5.2 million in Q3 2011 (USD 2.9 million). The increase is mainly due to higher debt level (PGS convertible loan agreement) and increased interest margins on the loans.
Other financial items, net income, of USD 1.9 million in Q3 2011 (net expense of USD 8.0 million) refer mainly to unrealised currency exchange gain and fees to advisors related to restructuring of debt.
Capital expenditures were USD 5.3 million in Q3 2011 (USD 4.6 million). Major capital cost items refer to rigging of the Voyager, and intermediate classification costs of the Osprey.
A weakening of USD against NOK and EUR has in general a negative impact on the operating expenses, interest expenses and gross debt as SeaBird has significant costs in other currencies than USD and bond loans of a total of NOK 481.75 million.
The vessel utilisation for all vessels in operation for the full quarter was 76% in Q3 2011 (66%).
The OBN vessels had a utilisation of 98% (88%).
The 2D/3D fleet had a utilisation of 69% (62%), excluding Voyager Explorer, which was operational from mid-August (92% over 45 days).
Individual vessel details are given in the Q3-11 presentation document.
LIQUIDITY AND FINANCING
Cash and cash equivalents were USD 7.2 million, of which USD 3.3 million restricted in connection with bid/performance bonds, at 30 September 2011 (USD 26.3 million).
Following an application from SeaBird, bondholders approved in a meeting on 21 July 2011 to postpone the maturity of the NOK 81.75 million (net NOK 78.75 million) loan for two months to 14 September 2011, with a repayment price at 104% and increased margin from 4.25% to 9.25% from 14 July 2011 to maturity.
Net cash from operating activities was USD 18.6 million in Q3 2011 (negative USD 0.4 million), mainly due to postponing payments to vendors and salaries and other accruals in the ordinary course of business.
Instalments of USD 3.8 million were paid to banks and USD 0.5 million on the lease of Hawk Explorer during Q3 2011 (USD 1.25 million and USD 0.7 million). Net debt and borrowings were USD 196.8 million end of Q3 2011 (USD 159.8 million).
SeaBird did not meet covenants under the loan agreements with banks and the bond loans as of 30 September 2011. However in view of the restructuring plan accepted by secured and unsecured creditors, no events of default have been called.
Following the divestment of the OBN division, SeaBird will concentrate on the business activities of its 2D and 3D 4-6 streamer fleet.
Although still some idle time was experienced during Q3 and into Q4 2011, the general market is believed to be improving in 2012. SeaBird is well placed to be a front runner in this sector, having an excellent track record of performance, and prequalified with major oil companies for surveys in all areas. SeaBird does not rely on multiclient surveys to increase utilisation, but will contract on such basis if the economics are preferable to idle time. SeaBird will also look at an internal restructuring of personnel and offices following the OBN sale, and seek all methods of reducing costs whilst still maintaining safety and efficiency across the fleet.
With pre-acceptance from bondholders representing over 2/3 of both bond loans, the bondholder under the Perestroika convertible loan and the bondholder under the PGS convertible bond, SeaBird announced a restructuring plan comprising the following elements on 18 November 2011:
- Fugro acquiring 100% of the shares of SeaBird Technologies AS and Seabed Navigation Company Ltd which collectively hold all of SeaBird's rights and assets related to the OBN business.
- New Equity; pre-subscriptions for USD 6 million received.
- Use of proceeds; repay the secured creditors in full, repay overdue trade creditors to an acceptable level, retain a working capital and liquidity buffer for the SeaBird Group of USD 12.5 million, and partially redeem the unsecured creditors on a pro rata basis with all remaining proceeds, expected to give a partial redemption of around 32% of the principal amounts.
- The exchange bond; replacing the bond loans and the PGS convertible loan with a four year secured bond of approximately USD 92 million at 6% interest.
- The completion of the restructuring plan is conditional and subject to certain conditions precedent being satisfied within 31 December 2011.
We refer to the press release of 18 November 2011 for further information.
The Board of Directors and
Chief Executive Officer
SeaBird Exploration PLC
29 November 2011
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.