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SeaBird Exploration Plc: Fourth quarter report 2015

26 February 2016, Limassol, Cyprus


* Revenues for the quarter were $27.1 million, a decrease of 3% compared to
Q4 2014 and up 17% relative to Q3 2015.
* Contract revenues for the period were $26.6 million, up 13% from Q4 2014
and an increase of 15% from Q3 2015.
* Multi-client revenues were $0.5 million, down 90% from $4.6 million
reported in Q4 2014 and an increase of 424% from $0.1 million reported in
Q3 2015.
* Adjusted EBITDA of $8.3 million. EBITDA was $4.6 million compared to
negative $28.5 million for Q4 2014 and $4.6 million for Q3 2015.
* Adjusted EBIT of $3.3 million. EBIT for the quarter was negative $5.6
million compared to negative $68.6 million for Q4 2014 and $0.0 million for
Q3 2015.
* Total net non-recurring charges of $9.0 million. The multi-client portfolio
was impaired by $5.0 million while seismic equipment was impaired by $0.3
million. During the quarter the company made net a $2.7 million charge
related to changes in estimates of lay-up provisions for onerous long-term
lease contracts. Additionally, $1.0 million in bad debt costs and end of
service benefits were charged to SG&A in the period.
* Vessel utilization for the five vessels active in the period was 100%. All
five active vessels were in operation on the Mexico Gigante survey. Three
vessels remain stacked.
* 9% technical downtime in the quarter compared to 6% for Q4 2014.
* Contract surveys during the fourth quarter represented 100% of vessel
capacity compared to 86% during the third quarter 2015. None of the
company's vessels were utilized for multi-client surveys during the period,
similar to Q3 2015.
* Zero lost time injury frequency (LTIF) in the quarter.

Key highlights

Operational review

The fourth quarter was characterized by a continued weakness in oil prices and
challenging market conditions for oil exploration. Oil companies have
communicated significant reductions in their exploration and production
budgets for 2016 and seismic tender activity has remained low and marked by
substantial competition. The 2D/source market has continued to experience
significant competition from multi-streamer 3D vessels. However, the active
3D fleet is now being reduced as less competitive vessels are being retired
or stacked. The reduced 3D vessel capacity is expected to have a positive
impact on the 2D/source market dynamic. Nevertheless, the negative market
sentiment has exacerbated industry risk factors and increased the uncertainty
related to timing of a market recovery.

Vessel utilization was 100% during Q4 2015, up from 86% in the previous
quarter. Technical downtime for the fleet was 9% in Q4 2015, similar to Q3
2015. The current technical downtime is at an unsatisfactory level and the
management is actively implementing measures aimed at improving performance.
Contract surveys represented 100% of vessel capacity compared to 86% for the
third quarter of 2015.

Aquila Explorer commenced production on the Mexico project during the fourth
quarter. Harrier Explorer, Hawk Explorer, Northern Explorer and Osprey
Explorer were in production on the Mexico Gigante project the whole quarter.
Munin Explorer, Geo Pacific and Voyager Explorer remained stacked during the

Multi-client surveys represented 0% of vessel utilization in the quarter
compared to 5% in the same quarter previous year. Multi-client revenues were
$0.5 million in the period. The multi-client portfolio was impaired by $5.0
million. This includes an impairment of $2.6 million charged to the 3D
multi-client survey in West Africa resulting in zero book value at 31
December 2015. Further, increased market uncertainty and reduced revenue
forecasts from selected 2D multi-client surveys triggered an additional
impairment of $2.4 million during the quarter.

The company continued its cost reduction effort and standard vessel operating
expenses excluding fuel have been reduced by approximately 17% on a
comparable basis relative to fiscal 2014, in line with the previously
communicated cost savings target. Run-rate SG&A expenses have been reduced by
approximately 25% relative to fiscal 2014, ahead of the savings target.

Operating costs were also reduced due to the lay-up of two chartered 3D
vessels (Geo Pacific and Voyager Explorer) and one chartered 2D vessel (Munin
Explorer), reduced vessel charter rates and lower crew headcount. The company
will continue its review of additional savings initiatives. In addition to
cost reductions, the company is actively focusing on cost flexibility
measures as well as improving operational efficiency.

The company redelivered the Geo Pacific to its owners on 30 December 2015.
SeaBird has unsuccessfully tried to redeliver the Kondor Explorer to its
owners since the end of the bareboat charter in February 2014. Subsequent to
quarter closing, SeaBird's contractual obligations related to the Kondor
Explorer were terminated.

Net non-recurring cost of sales in the quarter amounted to $2.7 million, which
mainly relates to a $3.7 million charge for Munin Explorer onerous lease
contract partly offset by a $1.0 million cost reversal for the Kondor
Explorer. Furthermore, the company booked $1.0 million in non-recurring
charges related to doubtful debts and end of service benefits in the period
reported under selling, general and administrative expenses.

Capital expenditures were $0.5 million during the quarter, which is in line
with the lower spending estimates communicated earlier in the year.

Lost time injury frequency (LTIF) rate for the quarter was zero. The company
continued to focus on maintenance of its high standards in health, safety,
security, environment and quality (HSSEQ).

Regional review

North and South America (NSA) continued to be the most active region during
the fourth quarter. NSA revenues of $26.6 million represented 98% of total
revenues for the quarter. Sales in this region increased as Aquila Explorer
joined the rest of the active fleet on the Mexico Gigante survey.

Sales in Europe, Africa and the Middle East (EAME) was $0.02 million during
the quarter while sales in Asia Pacific (APAC) amounted to $0.5 million (2%
of total revenues for the quarter). No SeaBird vessels worked in either APAC
nor EAME during the quarter, and revenues recorded in these regions
represented multi-client sales.


Global seismic demand continued to be weak in the fourth quarter and there are
no signs of market improvement. Oil industry spending is anticipated to
remain depressed through 2016 and the seismic sector is expected to remain
under pressure as a result.

The Mexico Gigante project continues to represent the main part of the
company's current backlog. A significant portion of the company's fleet is
expected to be employed on the Mexico Gigante project into the second half of
2016 assuming the full project size of approximately 186,000 kilometers is to
be completed. The company has submitted proposals for source vessel and 2D
contracts for both oil companies and other seismic industry market players.
While there are a number of opportunities under review, contracting has
generally been delayed due to permitting, prefunding and/or budget concerns.
The current market uncertainty makes it difficult to predict the level of
contract coverage that is possible to obtain beyond the company's current
firm backlog.

Financial review

Financial comparison

All figures below relate to continuing operations unless otherwise stated.
For discontinued operations, see note 1. The company reports a net loss of
$6.5 million for Q4 2015 (net loss of $71.2 million in the same period in

Revenues were $27.1 million in Q4 2015 ($28.1 million).

Cost of sales was $18.2 million in Q4 2015 ($40.1 million). The decrease is
predominantly due to fewer vessels in operation and provisions taken in Q4
2014 for laid-up vessels.

SG&A was $4.5 million in Q4 2015, down from $15.6 million in Q4 2014. The
decrease is principally due to cost savings, significant bad debt and
restructuring charges taken in Q4 2014 as well as savings related to the
closing of the Dubai office and reduced onshore headcount.

Other income (expense) was $0.2 million in Q4 2015 (negative $1.0 million).

EBITDA was $4.6 million in Q4 2015 (negative $28.5 million).

Depreciation, amortization and impairment were $10.3 million in Q4 2015 ($40.1
million). This decrease is due to the significant vessel, multi-client and
goodwill impairments taken in Q4 2014 partially offset by multi-client
impairments charged in Q4 2015.

Financial expenses were $1.0 million in Q4 2015 (2.3 million). The decrease is
largely due to reduced debt levels.

Other financial items were positive $0.1 million in Q4 2015 (positive $0.2

Income tax expense was positive $0.01 million in Q4 2015 ($0.5 million).

Capital expenditures in Q4 2015 were $0.5 million ($0.1 million).

Multi-client investment was nil in Q4 2015 ($1.6 million).

Liquidity and financing

Cash and cash equivalents at the end of the period were $6.3 million ($7.0
million), of which $0.4 million was restricted in connection with deposits
and tax. Net cash from operating activities was $2.4 million in Q4 2015
(negative $2.1 million).

The company has one bond loan, one secured credit facility, one unsecured note
and the Hawk Explorer finance lease.

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 $26.1 million per Q4 2015 (nominal value of $29.3 million
plus accrued interest of $0.2 million less fair value adjustment of $3.4
million including amortized interest). 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 first interest instalment paid on 3 June 2015. The
bond matures on 3 March 2018, with principal amortizations due in quarterly
instalments of $2.0 million starting at 3 June 2017. The outstanding loan
balance will be paid at the maturity date. Interest paid during Q4 2015 was
$0.5 million. 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 $2.1
million (initial nominal value of $2.4 million less net amortized cost of
$0.3 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 m...

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