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18 August 2017, Limassol, Cyprus

Statement

SeaBird recorded a 18.4% active vessel utilization during the second quarter of 2017 compared to 36.4% in Q1. Seismic tender activity has picked up in 2017 relative to 2016, but contracting lead-time remains long with substantial competition and high market uncertainty. During quarter two, the company implemented a further reduction in onshore headcount and a complete conversion of all offshore crew contracts to flexible voyage contracts. The company continues its cost management program and is reviewing alternatives to further reduce expenses.

On 1 August, the company announced that all consents to the company's proposed restructuring had been received. The restructuring reduces debt and lease obligations by approximately $37.5 million and the remaining financial debt will be $5.7 million with no significant debt principal repayments until 2020 and interest and charter hire with a payment in kind option.

As previously announced to the market, the company is in urgent need of equity financing in order to enable the company to continue trading as a going concern and avoid initiating voluntary liquidation procedures in Cyprus. The company is in active dialogue with potential capital sources. Any issuance of further equity capital is likely to result in substantial dilution to existing shareholders. There can be no guarantee that sufficient additional financing is available in a timely manner.

2017 Summary observations for the second quarter

  • Revenues for the quarter were $2.6 million, a decrease of 88% compared to Q2 2016 and down 69% relative to Q1 2017.
  • Contract revenues for the period were $2.4 million, down 89% from Q2 2016 and a decrease of 70% from Q1 2017.
  • Multi-client revenues were $0.3 million, down from $0.8 million reported in Q2 2016 and a decrease from $0.4 million reported in Q1 2017.
  • Adjusted EBITDA of negative $6.1 million. Reported EBITDA was negative $6.3 million compared to positive $6.3 million for Q2 2016 and negative $2.8 million for Q1 2017.
  • Adjusted EBIT of negative $9.5 million. Reported EBIT for the quarter was negative $9.7 million compared to positive $1.9 million for Q2 2016 and negative $6.3 million for Q1 2017.
  • Active vessel utilization for the period was 18.4%. Contract surveys during the second quarter represented 18.4% of vessel capacity compared to 68.1% during the second quarter 2016. Multi-client surveys accounted for 0% of vessel capacity compared to 7% in the second quarter 2016.
  • Announced new contract awards and letters of intents amounting to thirteen vessel months; entered into option agreement with TGS Nopec to provide up to 600 vessel days of seismic services.
  • Two vessels to commence operations in third quarter and expect these to remain active through 2017.
  • Completed financial restructuring subsequent to quarter end; reducing debt and lease obligations by approximately $37.5 million, extending principal amount of remaining $5.7 million debt maturities until June 2020 and introducing payment-in-kind option.

Key Highlights

Operational review

The second quarter of 2017 was challenging with continued weak seismic market demand. Total vessel utilization for the quarter was low as discussions were delayed on a number of surveys under review. In the beginning of the third quarter, the Voyager was chartered to qualify for local flag requirements in Asia and the vessel commenced a campaign which we expect to continue for the remainder of the year. We also expect the Osprey to commence operations in South America in the third quarter and to remain active in the area for the remainder of 2017.

Active vessel utilization for the second quarter of 2017 was 18.4%, down from 36.4% in the first quarter. Contract surveys represented 18.4% of vessel capacity compared to 36.4% for the first quarter of 2017. Technical downtime for the fleet was 1.6% in Q2 2017, up from 0.8% in Q1.

Harrier Explorer completed its 2D contract survey in the Caribbean early in the quarter. Osprey Explorer completed a 2D project in West Africa and commenced on a second 2D project in same region in the period. The Voyager Explorer was chartered for a source project in the Asia Pacific Region.

Northern Explorer and Aquila Explorer were not active on projects in the quarter while the Munin Explorer remained stacked.

Yard stay represented 0% of active vessel capacity during the quarter.

Multi-client surveys represented 0% of vessel utilization in the quarter, compared to 0% in the previous quarter and 7% in the same quarter last year. Multi-client revenues were $0.3 million in the period, compared to $0.4 million in the previous quarter. During the quarter, the company signed a contract to provide a seismic source vessel for a survey in the Asia Pacific region starting in quarter three with an expected duration of five to six months. The company also signed a new 2D contract in West Africa starting in quarter two with a duration of approximately one month and a 2D survey letter of award for an additional two weeks in West Africa commencing in quarter two. Moreover, the company announced a new letter of intent for an upcoming 2D seismic survey in South America. The project will have a duration of approximately two and a half months. Additionally, the company has signed an agreement to provide a source vessel for an upcoming survey in South America with a duration of approximately two months.

Subsequent to quarter closing, the company announced a letter of intent to conduct a shallow water 3D seismic survey in the West Africa region with a duration of approximately two months. The project is anticipated to commence during the first half of 2018. The company also announced that it entered into an option agreement with TGS Nopec to provide up to 600 vessel days of seismic services. The agreement offers TGS access to one or more SeaBird vessels to perform seismic services on a global basis. Call-off under this option agreement may be made by TGS at its option throughout 2017 and the agreement will be extended through 2018 under certain conditions.

The company had non-recurring costs of $0.3 million during the quarter relating to legal fees for the ongoing financial restructuring. Additionally, the company booked a $0.1 million non-recurring gain in relation to the 2016 redelivery of Voyager Explorer.

Capital expenditures were $0.5 million during the quarter compared to $1.5 million in Q2 2016.

Lost time injury frequency (LTIF) rate for the quarter was 0.0.

Regional review

Europe, Africa and the Middle East (EAME) was the most active region during the quarter. EAME revenues of $2.2 million represented 85% of total Q2 revenues. Osprey Explorer completed a 2D project and started on a second 2D contract in the region towards the end of the quarter. The company also recognized $0.3 million in multi-client revenues from the region.

North and South America (NSA) revenues of $0.4 million represented 15% of total Q2 revenues. Harrier Explorer completed the remaining part of its 2D contract survey in the Caribbean early in the quarter.

Asia Pacific (APAC) revenues during the quarter were nil. The Voyager Explorer was chartered for an upcoming source contract in the region, but no revenues were recognized.

Outlook

Global seismic demand continued to be weak in the second quarter. SeaBird continues to evaluate and execute savings initiatives to reduce the company's overall cost level and this may include temporary stacking of additional vessels.

We observed a significant pick-up in requests for quotes in the beginning of the year. Still, the third and fourth quarter 2017 revenues are expected to be negatively impacted by slow contract award lead times resulting in idle periods as well as the potential repositioning of vessels before start-up of new projects.

The company is reviewing a number of survey opportunities. However, the current market uncertainty makes it difficult to predict the level of contract coverage that is possible to obtain.

Financial review

Financial comparison

All figures below relate to continuing operations unless otherwise stated. For discontinued operations, see note1.

The company reports net loss of $11.2 million for Q2 2017 (net profit of $0.1 million in the same period in 2016).

Revenues were $2.6 million in Q2 2017 ($22.2 million). The decreased revenues are primarily due to lower utilization.

Revenues for first half of 2017 were $11.1 million ($48.2 million). Cost of sales was $5.6 million in Q2 2017 ($12.9 million). The decrease is predominantly due to relatively low project activity and implemented cost cutting efforts partially offset by an additional $1.2 million in Voyager Explorer rigging costs.

For the first half of 2017, cost of sales amounted to $13.9 million, down from $27.9 million for same period during 2016.

SG&A was $3.4 million in Q2 2017, up from $3.2 million in Q2 2016. The increase is principally due to advisory costs in relation to the restructuring of the company partially offset by reduced headcount.

SG&A for the first half of 2017 was $6.5 million ($7.1 million).

Reversal of bad debt charges was $0.1 million in Q2 2017.

Reversal of bad debt charges for the first half was $0.2 million.

Other income (expense) was $0.0 million in Q2 2017 ($0.2 million).

Other income (expense) for the first half was $0.0 million ($0.5 million).

EBITDA was negative $6.3 million in Q2 2017 (positive $6.3 million).

EBITDA for first half of 2017 was negative $9.1 million (positive $13.7 million).

Depreciation, amortization and impairment were $3.5 million in Q2 2017 ($4.3 million).

For the first half of 2017, depreciation amortization and impairment were $6.9 million ($8.2 million).

Finance expense was $1.3 million in Q2 2017 ($1.5 million).

For the first half of 2017 finance expense was $2.5 million ($2.9 million).

Other financial items were negative $0.1 million in Q2 2017 (negative $0.1 million).

For the first half of 2017, other financial items were negative $0.1 million (negative $0.2 million).

Income tax expense was $0.0 million in Q2 2017 ($0.3 million).

For the first half of 2017 income tax expense was $0.4 million ($0.5 million).

Capital expenditures in the quarter were $0.5 million ($1.5 million).

Multi-client investment was nil in Q2 2017 ($0.7 million).

Liquidity and financing

Cash and cash equivalents at the end of the period were $3.3 million ($8.1 million in Q2 2016), of which $0.3 million was restricted in connection with deposits and taxes. Net cash from operating activities was negative $4.7 million in Q2 2017 (positive $1.5 million in Q2 2016).

The company has one bond loan, one secured credit facility and one unsecured note.

The SBX04 secured bond loan (issued as "SeaBird Exploration Finance Limited First Lien Callable Bond Issue 2015/2018") is recognized in the books at amortized cost of $28.9 million per Q2 2017 (nominal value of $29.3 million plus accrued interest of $0.7 million plus amortized interest of $3.3 million less  air value adjustment of $4.4 million). This bond has been issued in two tranches; tranche A amounting to $5.0 million and tranche B amounting to $24.3 million. The SBX04 bond tranche A is carrying an interest rate of 12.0% and Tranche B is carrying an interest rate of 6.0%. Interest is paid quarterly in arrears with the first interest instalment being paid on 3 June 2015. The bond matures on 3 March 2018, with scheduled principal amortizations due in quarterly instalments of $2.0 million starting at 3 June 2017. The outstanding loan balance is scheduled to be paid at the maturity date. Interest paid during Q2 2017 was nil. The bond is listed on Nordic ABM, and it is traded with ticker SBEF01 PRO and SBEF02 PRO for the respective two bond tranches.

The three-year secured credit facility is recognized at amortized cost of $2.3 million (nominal value of $2.4 million plus accrued interest of $0.04 million plus amortized interest $0.3 million less fair value adjustment of $0.4 million). Coupon interest rate is 6.0%. Interest is to be paid quarterly in arrears and the first interest amount was paid on 3 June 2015. The facility's final maturity is 3 March 2018 and quarterly instalments of $0.2 million are scheduled to start on 3 June 2017. Principal repayments during Q2 2017 amounted to $0.4 million and additional amounts drawn on the credit facility during the period was $0.4 million. Interest paid during Q2 2017 was nil.

The three year unsecured loan is recognized at amortized cost of $0.7 million (initial nominal value of $2.1 million plus amortized interest $0.2 million less fair value adjustment of $0.3 million less principal repayments of $1.4 million). Coupon interest rate is 6.0%. Stated maturity is 1 January 2018. Interest is paid quarterly in arrears and the first payment was due on 1 April 2015. The principal is repayable in nine equal instalments of $0.2 million, commencing 1 January 2016. Interest paid during Q2 2017 was $0.01 million and principal repayments during Q2 2017 was $0.2 million.

Net interest bearing debt was $28.5 million as at the end of Q2 2017 ($25 million in Q2 2016).

Accrued interest on the bond loan, credit facility and the unsecured note for Q2 2017 was $0.7 million ($0.2 million).

The company announced a debt restructuring proposal on 26 May 2017. On 6 June, the SBX04 bondholders approved a suspension of all financial covenants until 15 August 2017 and a standstill for the repayment of a principal amount of $2.0 million due 3 June 2017 and a standstill for the interest payment due 3 June 2017. Please see restructuring and subsequent events section below for further details.

The total outstanding amount of common shares in the company is 3,065,434. The company has also issued 884,686 warrants, convertible into 884,686 ordinary shares. The warrants are listed on the Oslo Stock Exchange with ticker SBX J.

The company's accounts have been prepared on the basis of a going concern assumption. In the view of the board of directors, the continued very challenging market conditions, low cash balance, limited working capital, low level of firm contract backlog and negative cash flow development for the second half of the year, creates a material risk to this assumption. The company is in urgent need of equity financing in order to enable the company to continue trading as a going concern and avoid initiating voluntary liquidation procedures in Cyprus. In the event that new financing cannot be raised, new backlog cannot be secured on satisfactory rates or at all, project performance is significantly worse than expected or contracts and other arrangements in respect of the employment of SeaBird's vessels are cancelled, or significantly delayed, the company would need to sell assets or raise additional financing, which may not be available at that time. SeaBird is working closely with its financial advisors to raise additional capital. Still, no firm commitments are currently in place. Alternatives may exist to sell or otherwise monetize certain assets, but the ability to sell or otherwise monetize assets, being primarily made up of owned vessels, would require consent from lenders as all such assets are held as security for loan arrangements, and may therefore not be available within a short time frame or at all. Should none of these financing arrangements be available at that time, such circumstance would have a significant negative effect on SeaBird's financing situation and its ability to continue operations. In such a scenario, the company would be unable to meet its liabilities as they fall due and to continue as a going concern. In such event, SeaBird would be unable to realize the carrying value of its property, plant and equipment, whose values on a forced sale basis would be significantly lower than their carrying values. Furthermore, goodwill and intangibles would be written off as their carrying values largely represent their values in use.

The company is working closely with its financial advisors to evaluate financial alternatives and raise additional capital. The restructuring of the company's debt and lease obligations has been completed subsequent to quarter end. Any issue of further equity capital is likely to result in substantial dilution to existing shareholders. There can be no guarantee that sufficient additional financing is available in a timely manner, and the absence of additional financing would have the effect that the company will be unable to continue operations.

Important events in the first half of the year

The company signed six new contracts during the first half of the year; two source work awards and four 2D surveys.

On 10 May 2017, the annual general meeting of the company was held. At this meeting, board members Annette Malm Justad (Chairman), Kitty Hall (Director), Olav Haugland (Director) and Hans Petter Klohs (Director) were re-elected for a new term.

During the first half of the year, the company together with its financial advisors continued to evaluate financial alternatives in close dialogue with its bondholders, other key creditors and main shareholders. On 26 May, the company announced a debt restructuring proposal, which following an approval from all parties would reduce debt and lease obligations in the company by approximately $37.5. On 6 June 2017 and 13 June, the bondholders of SBX04 and the company's shareholders, respectively, approved the restructuring proposal with the requisite majority. Please see restructuring section below for additional details on the restructuring proposal.

Restructuring and subsequent events

On 26 May 2017, the company announced a financial restructuring proposal to reduce indebtedness and extension of debt maturities to 30 June 2020. Moreover, all required consents for the restructuring had been obtained as of 1 August 2017:

· The company signed an agreement with Glander whereupon $1,911,896 of the principal amount and all accrued interest as of 3 June 2017 owed to Glander under the Glander Credit Facility shall be irrevocably repaid and discharged upon the issuance of SeaBird shares to Glander at NOK 5.00 per share and that the remaining claim of Glander under the Glander Credit Facility shall be irrevocably repaid and discharged upon the issuance of SeaBird shares to Glander at NOK 5.00 per share and that the remaining claim of Glander under the Glander Credit Facility of $440,591 will beamended with the maturity date being extended until 30 June 2020, no principal payments until 30 June 2020 and the introduction of payment-in-kind interest for all interest payments to be made under the Glander Credit Facility.

· The company entered into an Exchange Agreement and a confirmation with TGS that all SBX04 Bonds outstanding under Tranche A shall be transferred to the company and that any interest on such SBX04 Bonds shall be irrevocably discharged in exchange for the transfer of title to the majority of the company's multi-client library assets to TGS, and confirmation that the Company has cancelled all SBX04 Bonds under Tranche A. As part of the agreement there will be a 60 days post-closing due diligence period where TGS will have the opportunity to return to SeaBird certain parts of the multi-client libraries that they may elect not to take ownership of. In relation to this agreement between the company and TGS there has also been established an Income Distribution Agreement between TGS and the Bond Trustee that will secure the Tranche B bondholders and Glander 25% of the income from any utilization, sale or other disposal of the multi-client libraries by TGS, less costs (defined as 10% of sales).

· The company entered into an agreement with the SBX04 bondholders to convert ~81.5% of tranche B of the SBX04 bond loan including accrued interest, as of 3 June 2017, in an aggregate amount of approximately $20.15 million into equity at an offer price reflecting a subscription price of equity at NOK 5.00 per share and that the remaining claim of SBX04, tranche B be of $4,559,409 will be amended with the maturity date being extended until 30 June 2020, no principal payments until 30 June 2020 and the introduction of payment-in-kind interest for all interest payments to be made under the SBX04 bond loan.

· The company also entered into an addendum to the Munin Charter Contract pursuant to which the charter period for the Munin Charter Contract will be extended to 30 June 2020, the charter hire will be reduced to $2,088 per day for the period from 3 June 2017 until 30 June 2020 and where the new charter hire can, at the company's discretion, be accumulated and not paid in cash before 30 June 2020. In accordance with this addendum, the difference between the new charter hire of $2,088 per day and the remaining and unpaid previous charter hire shall be converted into shares at NOK 5.00 per share in accordance with the terms of the restructuring.

The financial restructuring will affect multiple reporting lines in the company's balance sheet and profit and loss statement. The converted portion of the debt exchanged for equity will lead to a reduction in debt and increase in equity.

The SBX04 Tranche A bond loan will be exchanged for the multi-client library as a part of the agreement with TGS Nopec. The effect of this transaction is that SBX04 Tranche A and the multi-client library will be derecognized while the company will book a restructuring gain and an increase in retained earnings.

The main accounting effect of the revised Munin charter agreement is that related trade payables and the future charter hire will be substantially reduced in exchange for the issuance of new shares to Ordinat Shipping. The issuance of the new shares will increase the company's share capital.

On 6 June 2017, the bondholders of SBX04 approved the restructuring proposal with the requisite majority in a bondholder meeting. Furthermore, on 13 June 2017, the company held an extraordinary general meeting to approve the conversion of debt into equity and to approve the restructuring. All proposals on the agenda were adopted with requisite majority.

On 1 August 2017, the company announced that all consents required for the restructuring had been obtained. The company effectuated the closing of the restructuring on 7 August, including the issuance of 54,389,711 new shares. The total number of shares in the company after issuance of the new shares will be 57,455,145. The Company will as a consequence of the restructuring reduce its debt and lease burden by approximately $37.5 million, have $5.7 million in outstanding financial debt and have no significant debt maturities until 30 June 2020. Additionally, all financial covenants throughout the term of the SBX04 bond agreement have been suspended.

As stated in the liquidity and financing section, the company requires additional funding for working capital purposes. The company continues its efforts to raise additional capital and is in active dialogue with potential capital sources in such respect. Any equity transaction will require the increase of authorized share capital. On 17 August, the company heldan extraordinary general meeting and obtained shareholders' approval for such an equity issue. Any issue of further equity capital is likely to result in substantial dilution to existing shareholders.

Responsibility statement

We confirm that, to the best of our knowledge, the condensed set of financial statements for the first half year of 2017, which have been prepared in accordance with IAS 34 "Interim Financial Reporting", gives a true and fair view of the company's consolidated assets, liabilities, financial position and results of operations. We also confirm that, to the best of our knowledge, the first half 2017 report includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the condensed financial statements, a description of the principal risks and uncertainties for the remaining six months of the financial year and major related parties' transactions.

The Board of Directors and Chief Executive Officer

SeaBird Exploration Plc
17 August 2017

The second quarter 2017 presentation will be transmitted live at

http://www.sbexp.com/investor-relations.aspx.

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