SEABIRD EXPLORATION PLC 
By Revenues for the quarter were $51.9 million, an increase of 14% compared to the comparable period in 2012 and up 29% relative to Q2 2013.
Contract revenues for the period were $50.1 million, up 30% from Q3 2012 and up 38% from Q2 2013.
Multi-client revenues were $1.8 million, a decrease of 75% from $7.1 million reported in Q3 2012 and down 55% from $4.0 million reported in Q2 2013.
Contract surveys during the third quarter represented 82% of vessel capacity compared to 57% during the second quarter; the increase is mainly due to a reduction in multi-client investment and vessel repositioning relative to the prior period.
EBITDA was $13.2 million compared to $11.7 million for Q3 2012 and $3.7 million for Q2 2013.
EBIT for the quarter was $6.7 million compared to $4.2 million for Q3 2012 and negative $2.4 million for Q2 2013.
Vessel utilization for the period was 86%.
Operational review
Third quarter revenues and earnings were up from the previous quarter driven by improved utilization. Multi-client investment was reduced during the period and contract utilization increased. Fleet repositioning was moderate.
Multi-client sales and investment were down for the quarter. Multi-client utilization was 4% for the period compared to 22% in the second quarter.
The five thousand kilometer multi-client survey in Namibia and the six thousand kilometer survey in the Barents Sea that commenced in the second quarter were completed. In light of the recent Wisting Central hydrocarbon discovery we anticipate increased interest in the Barents Sea survey. Towards the end of the period, Harrier Explorer commenced a one thousand five hundred kilometer multi-client survey in the North Sea in partnership with GeoPartners Ltd.
Contract revenues for the third quarter were up compared to the prior period. Contract surveys during the third quarter represented 82% of vessel capacity compared to 57% for quarter two.
The Geo Pacific continued production throughout the third quarter. Significant improvement in maritime and source performance has been achieved. However, challenging operating conditions as well as technical difficulties related to its acquisition systems reduced the vessel's production results. The combined effect of these issues resulted in lower than anticipated earnings for the period.
During the third quarter, we completed a series of shorter-term contracts. Standby in between contracts created revenue gaps which negatively impacted earnings.
The Northern Explorer completed its scheduled maintenance docking in July. There were no other dockings during the quarter. Yard stays represented 1% of vessel capacity for the period.
Vessel utilization for the third quarter was 86%, up from 79% in the second quarter.
Operational performance for the quarter was strong. However, our multi-streamer fleet had above-average technical down time. Technical downtime for the fleet was 5%. During the period, the Osprey Explorer was equipped with a new streamer which was installed as the vessel commenced its campaign in South America.
The company delivered another quarter of solid health, safety, security, environment and quality (HSSEQ) results. The lost time injury frequency (LTIF) rate for the period was zero. During the quarter, the company commenced the implementation of a new Institution of Occupational Safety and Health (IOSH) competency training program, targeting both offshore and onshore staff. The internationally recognized safety training qualification provides company staff with the tools to better understand and identify hazards and risks in the workplace. It also provides a framework to increase safety performance.
Regional overview
In the third quarter, geographic revenues strengthened in North and South America (NSA) where the company experienced a significant increase in activity. Revenues in Asia Pacific (APAC) and Europe, Africa and Middle East (EAME) were both up from the second quarter mainly due to reduced vessel repositioning and a decrease in multi-client activity during the period.
NSA sales of $23.7 million represented 46% of total revenues. The increase in NSA revenues was in large part a result of the completion Geo Pacific's first survey in the Caribbean and the immediate commencement of its second survey in the region. In addition, Hawk Explorer and Osprey Explorer were both active in the region throughout the quarter.
Sales in APAC of $19.8 million accounted for 38% of total revenues. APAC revenues were up compared to the second quarter as Voyager Explorer was fully utilized in the region completing both a 3D survey and two source contracts during the quarter. Aquila Explorer also completed a 2D survey for an oil company in the region and towards the end of the quarter commenced a source contract which will keep the vessel active into the fourth quarter.
Sales in EAME of $8.4 million accounted for 16% of total revenues. Revenues increased compared to the second quarter as Harrier Explorer and Northern Explorer both commenced contract work in this region.
Outlook
Global tender activity in the 2D and the niche 3D markets continued to be healthy during the third quarter. Pricing has remained firm in all regions and we would largely expect this trend to remain through the fourth quarter. We are continuing to see strong demand in our APAC region but demand in select parts of the NSA and EAME regions are showing typical signs of seasonal weakness.
Multi-client demand in the 2D sector is remaining robust. However, late sales are at times taking longer to conclude and prefunding is proving more challenging to secure. Multi-client activity remains a core part of our strategy and we will continue to make select investments in this segment. Higher proprietary contract volume from oil companies compensates for somewhat lower multi-client activity.
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 profit of $4.0 million for Q3 2013 (net loss $0.6 million in the same period in 2012).
Revenues were $51.9 million in Q3 2013 ($45.5 million). The increased revenues are primarily due to fleet composition, offset by a reduction in multi-client late sales and a decrease in vessel repositioning during the quarter.
Cost of sales was $34.5 million in Q3 2013 ($29.6 million). The increase is mainly due to the chartering of the Geo Pacific, fleet composition and operating in higher cost geographical regions relative to the same period in 2012. The cost increase was offset by a reduction in cost of multi-client sales recognized in Q3 2012 as part of the sale of one of our multi-client libraries.
SG&A was $4.7 million in Q3 2013, up from $3.9 million in Q3 2012. The increase is principally due to an increase in employee numbers in line with an increased fleet size and higher consultancy costs.
EBITDA was $13.2 million in Q3 2013 ($11.7 million).
Depreciation and amortization was $6.5 million in Q3 2013 ($7.5 million). The decrease is predominantly due to lower multi-client sales amortization for the period.
Interest expense was $2.9 million in Q3 2013 ($3.1 million).
Other financial items, net expense, of negative $0.5 million in Q3 2013 (negative $0.4 million). The change is mainly due to currency fluctuations.
Income tax benefit was $0.6 million in Q3 2013 (expense of $1.4 million). The decrease in tax cost is primarily due to the reassessment of selected historical tax provisions, along with a reduction in corporate and withholding taxes directly related to the tax jurisdiction the vessels operated within during Q3 2013.
Capital expenditures were $5.0 million in Q3 2013 ($2.5 million). The majority of the capital cost incurred during the quarter related to the Osprey Explorer being equipped with a new streamer. The remaining portion related to the purchase of routine seismic and other equipment across the fleet.
Multi-client investment was $1.3 million in Q3 2013 ($2.8 million), which related to a new survey that commenced in the North Sea along with the finalization of the Barents Sea and Namibia multi-client surveys which begun during the second quarter.
Net loss from discontinued operations was nil for Q3 2013 (loss of $0.2 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 $14.0 million ($11.9 million), of which $3.0 million was restricted in connection with bank guarantees, deposits and the bond service account. Net cash from operating activities was positive $7.4 million in Q3 2013 (positive $11.0 million).
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 $85.9 million and is recognized in the books at amortized cost of $77.1 million per Q3 2013. The bond loan matures 19 December 2015 and has principal amortization due in semi-annual increments of $2.0 million that started 19 December 2012. No interest was paid during Q3 2013 in relation to the bond loan.
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 $13.6 million per Q3 2013. The convertible loan matures 30 September 2014 and has no principal amortization. Interest on the convertible loan is paid annually. Interest of $0.1 million was paid during Q3 2013 in relation to the convertible loan.
The lease of Hawk Explorer is recognized in the books as a finance lease at $10.3 million per Q3 2013. Installments of $1.0 million against the Hawk lease principal and $0.3 million against the interest portion were paid during Q3 2013 ($0.9 million and $0.4 million in 2012, respectively). During the quarter the company announced it will exercise its option under the current charter agreement to purchase the vessel and related equipment for $6.5 million. The vessel and equipment will be delivered at the end of the lease term 31 August 2014 against settlement of the purchase price.
Net interest-bearing debt was $87.0 million at the end of Q3 2013 ($92.0 million).
Accrued interest for Q3 2013 was $1.2 million ($1.4 million).
The company was in compliance with all covenants as of 30 September 2013.
The Board of Directors and
Chief Executive Officer
SeaBird Exploration Plc
30 October 2013
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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