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Seabird Exploration : SeaBird - Report 4th quarter 2011

02/29/2012 | 02:24am US/Eastern

Highlights

·       A Letter of Intent entered into between SeaBird and Fugro Norway on 3 October 2011 for the sale of the OBN business, completed on 8 December 2011. The transaction also includes two SeaBird vessels on time charter to Fugro; one for 3 years firm (Munin Explorer - source) and one for 1 year firm with 1 plus 1 year optional (Harrier Explorer - 2D), an OBN transition service agreement for a period of 6 months with an option for another 6 months, and a maritime management agreement for 2 years with a 2 year automatic extension for the Hugin Explorer.

·      Financial restructuring of SeaBird, approved by secured and unsecured creditors, consisting in a full repayment to secured creditors (Standard Chartered Bank and Sparebanken 1 SMN/Glitnir) and a partial redemption to unsecured creditors (SBX01, SBX02, PGS and Perestroika), followed by a consolidation of the remaining bond holdings in SBX01, SBX02 and PGS CLA into a new bond (SBX03).

·       The PGS co-operation agreement for deep water node seismic was brought to an end upon completion of the restructuring and closing of the Fugro transaction.

·       An Extraordinary General Meeting was held on 9 December 2011 whereby five Directors were honourably discharged and three new Directors were appointed. The Board now consists of five members. The EGM additionally resolved to authorise increase of the share capital up to USD 5 million representing 500,000,000 shares.

·       Also on 9 December 2011 the Board of SeaBird announced that it had resolved to issue 139,363,892 new shares through a private placement. The new shares were subscribed for at a price of NOK 0.25 per share. Total gross proceeds from the Private Placement amounted to NOK 34.8 million (approximately USD 6 million). Following the registration of the new shares, the Company has 314,259,723 shares outstanding.

·       Hugin Explorer and Munin Explorer commenced acquisition on the ONGC contract on 24 October 2011. The acquisition part was completed and the vessels demobilised 10 February 2012. The data processing and interpretation part of the project will be finalised over the next 12 months.

·       Harrier Explorer was in dry-dock for class renewal during Q4 2011 and subsequently commenced a source contract in the North Sea in January 2012.

·        Voyager Explorer was fully rigged up to four-streamer operation and commenced a 2D/3D (combination) contract beginning of November 2011 with expected completion in March 2012. Further backlog until end of June 2012 is secured.

COMPARISON OF Q4 2011 WITH Q4 2010

Voyager Explorer replaced Geo Mariner in Q3 2011, which affect the comparable figures to some extent. Furthermore, the Ocean Bottom Node (''OBN'') business has been divested and represents the discontinued operations which will affect the comparable figures.

RESULTS

All figures below relate to continuing operations unless otherwise stated. SeaBird Group reports a loss of USD 13.7 million for the fourth quarter 2011 (negative USD 34.4 million same period in 2010). Revenues were USD 24.4 million in Q4 2011 (USD 20.5 million). The increased revenues are mainly due to higher multiclient sales and higher utilisation for the vessels in Q4 2011 compared to Q4 2010. Operating expenses were USD 31.3 million in Q4 2011 (USD 25.4 million). The change is mainly due to higher vessel utilisation and a USD 4.0 million write-off for bad debts. EBITDA were negative at USD 6.2 million in Q4 2011 (USD 4.9 million). Depreciation and amortisation were USD 7.4 million in Q4 2011 (USD 12.0 million). The decrease is mainly due to lower multiclient sales amortisation and impairment of vessels and equipment in Q3 2011 giving lower base for depreciation in Q4 2011. Interest expense was USD 4.7 million in Q4 2011 (USD 2.3 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 6.2 million in Q4 2011 (net expense of USD 1.4 million) refer mainly to gain on extinguishment of debt related to restructuring of the debt. Capital expenditures were USD 3.4 million in Q4 2011 (USD 1.8 million). Major capital cost items refer to rigging of the Voyager Explorer to a full four-streamer vessel, and classification costs for the Harrier Explorer. A weakening of USD against NOK and EUR has in general a negative impact on the operating expenses.  Interest expenses and gross debt are from 19 December 2011 only in USD, hence going forward not impacted by currency fluctuations.

OPERATIONAL PERFORMANCE

The vessel utilisation for 2D/3D vessels in operation for the full quarter was 60% in Q4 2011. The OBN vessels had an utilisation of 93%. Individual vessel details are given in the Q4-11 presentation document.

LIQUIDITY AND FINANCING

Cash and cash equivalents were USD 13.3 million, of which USD 3.3 million restricted in connection with bid/performance bonds, at 31 December 2011 (USD 1.1 million). Net cash from operating activities was negative USD 47.3 million in Q4 2011 (negative USD 38.4 million), mainly due to payment of trade payables.

In connection with the debt restructuring taking place in Q4 2011, the secured creditors, Standard Chartered Bank and Sparebanken 1 SMN/Glitnir, have been repaid in full. The bond SBX01, bond SBX02, PGS convertible loan and Perestroika convertible loan were repaid with approximately 31.4% for each of the mentioned facilities. The remaining balance of the bonds SBX01, SBX02 and PGS convertible loan were merged into a new senior secured bond loan (with inter alia 1st priority pledge in the vessels Northern Explorer, Osprey Explorer, Harrier Explorer and Aquila Explorer), SBX03, at an interest rate of 6% p.a. and maturity in December 2015. After the partial redemption, the Perestroika convertible loan continues under the same terms as before the debt restructuring. Furthermore, a credit facility from Fugro was provided to cover working capital needed for the ONGC contract.

As of 31 December 2011 the draw down was USD 18 million. Instalments of USD 1.1 million were paid on the lease of the Hawk Explorer during Q4 2011 (USD 3.6 million and USD 0.7 million). Net debt and borrowings were USD 107.7 million end of Q4 2011 (USD 172.1 million). SeaBird met all covenants under the bond loan SBX03 as of 31 December 2011.   

OUTLOOK  

Following the divestment of the OBN business, SeaBird will concentrate on the business activities of its 2D and 3D four-streamer fleet.  Idle time was experienced during Q4 2011, but improving towards end of Q1 2012. Further, we experience that the general market is improving in 2012.

SeaBird does not rely on multiclient surveys to increase utilisation, but will contract on such basis if the economics are preferable to idle time. 

A restructuring program has started which will reduce SG&A and increase efficiency significantly whilst still maintaining safety across the fleet.

SUBSEQUENT EVENTS

On 6February 2012 a change was announced whereby Mr. Tim Isden was replaced as CEO by Mr. Dag Reynolds, who is expected to assume the position by latest 1May 2012. As an interim measure, Mr. Jan Eivind Fondal has taken the position of CEO until Mr. Reynolds takes over his duties. Mr. Reynolds combines an extensive track record in the industry with in-depth knowledge of the Company. This is a set of competencies that will be highly valuable in the Company's continued efforts to reposition itself as a high end operator in the seismic market.  

On 11 February 2012 the ONGC contract was successfully completed and the handover of the OBN business to Fugro took place. SeaBird will continue to assist Fugro under a service agreement until Q2 2012, and the previously announced time charter agreements and management agreement are in full force and effect.

A number of contracts were announced February 2012 under the 2011 Frame Agreement with Spectrum ASA and other clients, improving backlog for the SeaBird fleet significantly in 2012. Further, on 13 February 2012 multiclient sales of USD 6.3 million were announced, partly from late sales and partly from the financial realisation of non-core assets. 

The Board of Directors and

Chief Executive Officer

SeaBird Exploration PLC

28 February 2012

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



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