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  • Revenues for the quarter were $45.5 million, an increase of 146% compared to the comparable period in 2011 and down 7% relative to Q2 2012. 

  • Contract revenues for the period were $38.4 million, up 117% from Q3 2011 and down 12% from Q2 2012. 

  • Multi-client revenues were $7.1 million, an increase of 788% from $0.8 million reported in Q3 2011 and an increase of 39% from $5.1 million reported in Q2 2012. 

  • EBITDA was $16.8 million compared to negative $0.8 million for Q3 2011 and $17.2 million for Q2 2012. 

  • EBIT for the quarter was $4.2 million compared to negative $63.5 million for Q3 2011 and $7.7 million for Q2 2012. 

  • Vessel utilization for the period was 93%. 

  • During Q3 2012, the company participated in three new multi-client surveys. 

Operational review

During the quarter we continued to see a high level of activity in the global seismic markets.  In addition to solid demand in the 2D sector, we also experienced strong demand for shallow-water as well as niche-market 3D surveys. The upswing in demand from oil and gas companies which started earlier this year has continued and we see this trend remaining. Multi-client contract activity was also strong during the quarter and going forward we anticipate a number of large area surveys to come for tender.

Multi-client sales during the quarter were robust.  The majority of multi-client revenues were related to the sale of our interest in one of our multi-client surveys. In addition to this, we had two license sales as well as pre-funding revenues related to new surveys. During the period, the company participated in three new multi-client surveys.  We continue to evaluate multi-client opportunities and expect to increase our investment in this area.

The increasing requirement for source vessels for 4D surveys as well as wide azimuth and undershoot operations continued during the period.  To date, this market has primarily been targeting shorter-term contracts.  However, the growing demand in this sector is expected to result in an increase in longer-term agreements.

Industry pricing has continued to improve both in the 2D and our segment of the 3D markets.  In light of the steady tender activity in both sectors, we anticipate that this trend will be maintained for the rest of the year. Moreover, given the current robustness in the market and the increase in longer-term contracts, available industry capacity is likely to be further reduced going forward.

The company's backlog remains firm and in line with last quarter.  While we look to operate a substantial portion of the fleet under long-term contracts, a number of vessels are maintained under short-term agreements and will thus not have a material impact on the backlog.  This mix between short and long-term agreements allows us flexibility to capitalize on more profitable opportunities. However, it does increase the potential impact of sudden changes in the industry as well as costs associated with any potential repositioning of vessels.

Third quarter vessel utilization was 93%.  The high utilization reflects the strong market environment.  However, during the third quarter we repositioned three vessels which resulted in a significant increase in steaming time. While mobilization fees generally covered the vessel repositioning, these charges were not commensurate with forgone production revenues.  As a result, contract revenues for the quarter are below what they would have been had the fleet utilization reflected production time alone.  In addition, utilization numbers are excluding Kondor Explorer which has yet to be equipped for production.

Operations delivered another solid quarter and reported a low technical down time of 4%.  The active focus on training, trouble shooting and incident review is continuing to pay off.  We improved flexibility on the vessels by increasing cross-department training between maritime and seismic crew.  With the launch of "Idea Explorer", we have received approximately 100 suggestions from employees around the world on how to improve our efficiency and strive for operational excellence.  Management is continuously reviewing these suggestions and is evaluating how to implement proposed operational improvements.

SeaBird's solid health, safety, security, environment and quality (HSSEQ) record is a result of continuous system review and process improvement.  The company's total recordable incident rate (TRIR) year-to-date is currently at 2.7, well below expected industry norms.  During the year, a campaign of HSSEQ system training was implemented to reduce recordable incidents and further strengthen our HSSEQ culture.  Improved training around hazard and risk awareness and a focus on ensuring a strong HSSEQ appreciation especially for new employees and temporary crew has had a meaningful impact on performance.  In addition to injury prevention, HSSEQ is also actively being used to flag deviations and ensure that we maintain our best-in-class performance.

Within finance, we are continuing our cost improvement efforts.  The focus is now on cost of sales and potential alternatives to reduce our cost structure. While evaluating cost reduction possibilities we are also reviewing ways to enhance cost elasticity. Moreover, this quarter we commenced a review of our legal and tax structures to assess ways to improve our efficiency. The enterprise resource planning (ERP) system is in the early stages of being implemented.

With the exception of the return of GGS Atlantic and the sale of long-time stacked Geo Mariner, there is no change to the fleet composition during the quarter.

Regional overview

Geographic revenues were strong across all our operating regions - Europe, Africa and Middle East (EAME), North and South America (NSA) and Asia Pacific (APAC).  Demand growth has primarily been driven by solid interest in frontier areas and we anticipate that this trend will continue.

Sales in EAME of $20.3 million accounted for 45% of total revenues.  During the quarter we successfully completed a complex shallow-water 3D seismic survey in Mozambique.  We concluded a seasonal 2D project in the Barents Sea. Additionally, we finished a 2D survey off the East Coast of Africa.  Two multi-client surveys were also concluded in Africa during the quarter.  We continue to see Africa as well as the North Sea as core growth areas.

NSA sales of $16.1 million represented 35% of total revenues.  A significant portion of revenues earned in this region were derived from multi-client late sales. Remaining revenues were primarily derived from long-term 2D contracts in South America. We anticipate that strong demand in South America will continue. Furthermore, new potential areas in North America may result in significant new survey opportunities for the region.

Sales in APAC of $9.1 million accounted for 20% of total revenues.  The majority of the revenues are attributable to two contracts commenced in South East Asia towards the end of the quarter.  The contracts, one in the 2D space and one in the 3D space, will continue into early fourth quarter.  We are reviewing a number of opportunities in the 2D and 3D sectors and expect the APAC region to increase in relative contribution.  During the quarter, we completed one multi-client survey in the APAC market.


The robust demand we started seeing at the beginning of the year has continued through the third quarter.  We anticipate that the market will remain strong for the remainder of the year and also well into 2013.  Day-rates have continued to improve and we believe this trend will remain in light of reduced vessel availability.  A number of large 2D surveys are expected to come up for tender over the coming year.  These surveys are generally targeting all of our operating regions and we anticipate that they will consume much of the industry's 2D capacity.

Demand for source vessel capacity is expected to increase.  Also, demand in a number of frontier markets is likely to result in a growing requirement for ice class capacity.

While we continue to focus on investments into the multi-client market, late sales from our multi-client library are anticipated to moderate as we build the portfolio and develop our strategy in the sector.


Financial comparison

All figures below relate to continuing operations unless otherwise stated.  For discontinued operations, see note 1.

The company reports a loss of $0.6 million for the third quarter 2012 (loss of $63.4 million same period in 2011).  

Revenues were $45.5 million in Q3 2012 ($18.5 million).  The increased revenues are mainly due to fleet composition, higher utilization of the vessels in Q3 2012 compared to Q3 2011 and multi-client sales.  

Cost of sales was $24.6 million in Q3 2012 ($14.2 million).  The change is primarily due to fleet composition and higher vessel utilization.  

SG&A were $3.9 million in Q3 2012, down from $5.3 million in Q3 2011.  The decrease is predominantly due to the organizational restructure and cost savings initiative implemented during 2012.

EBITDA was $16.8 million in Q3 2012 (negative $0.8 million).  

Depreciation and amortization were $12.5 million in Q3 2012 ($8.4 million).  The increase is principally due to higher multi-client sales amortization for the period, partly offset by a reduction in depreciation resulting from the impairment of vessels and equipment completed in 2011.  The resulting impairment charge of this exercise was $54.3 million recognized in Q3 2011.

Interest expense was $3.1 million in Q3 2012 ($4.1 million).  The decrease is a result of the financial restructuring completed in 2011.

Other financial items, net expense, of negative $0.4 million in Q3 2012 (gain of $4.8 million).  The change is mainly due to the currency effect on the bond loans.  

Income tax expense was $1.4 million in Q3 2012 (expense of $0.6 million).  The increase is mainly due to increased corporate and withholding taxes directly related to the tax jurisdictions the vessels operated within during Q3 2012.  

Capital expenditures were $2.5 million in Q3 2012 ($2.0 million).  The majority of the capital cost incurred during Q3 2012 related to Aquila Explorer being re-equipped with a 10km solid streamer, increasing the marketability of the vessel.

Net loss from discontinued operations was $0.2 million for Q3 2012 (loss of $11.7 million). Discontinued operations represent the remaining contractual obligations of the Ocean Bottom Node (OBN) business which was divested in Q4 2011.

Liquidity and financing

Cash and cash equivalents at the end of the period were $11.9 million ($7.2 million), of which $3.5 million was restricted in connection with bank guarantees and the bond service account. Net cash from operating activities was $8.3 million in Q3 2012 ($14.5 million).

Following the financial restructuring completed in December 2011, the company has one bond loan, one convertible loan and the Hawk Explorer finance lease.  

  • The 6% secured bond loan has a face value of $89.9 million and is recognized in the books at amortized cost of $77.5 million per Q3 2012.  The bond loan matures 19 December 2015 and has principal amortization due in semi-annual increments of $2.0 million starting 19 December 2012. 

  • The 1% unsecured convertible loan with Perestroika has a face value of $14.9 million and is recognized in the books at amortized cost of $12.3 million per Q3 2012.  The convertible loan matures 30 September 2014 and has no principal amortization.  Interest on the convertible loan of $0.1 million was paid during Q3 2012. 

  • The lease of Hawk Explorer is recognized in the books as a finance lease at $14.1 million per Q3 2012.  Installments of $0.9 million against the Hawk lease principal and $0.4 million against the interest portion were paid during Q3 2012 ($0.5 million and $0.3 million in 2011, respectively).  

Net interest-bearing debt was $92.0 million at the end of Q3 2012 ($196.8 million).  

Accrued interest for Q3 2012 was $1.4 million ($3.0 million).

The company was in compliance with all covenants as of 30 September 2012.  

The Board of Directors and
Chief Executive Officer

SeaBird Exploration Plc
31 October 2012


This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.