Polarcus Achieves High Utilization at Low Costs
Polarcus Limited announced release of its third quarter 2016 financial statements.
HEADLINES Q3 2016:
* Revenues of USD 64.6 million, down 5% from Q2 2016
* Contract revenues of USD 54.1 million, up 31% from Q2 2016
* Multi-Client revenues of USD 10.5 million, prefunding level of 122%
* Vessel utilization 90% for the quarter, 87% YTD
* Gross cost of sales of USD 56.5 million, up 2% from Q2 2016
* EBITDA of USD 12.3 million, 19% margin
* Cash from operations of USD 25.3 million, up 126% from Q2 2016
* Total cash of USD 38.0 million in addition to USD 25 million undrawn working capital facility
* Three contract awards since end of last quarter, resulting in backlog of USD 105 million
The third quarter financial results reflect a continued competitive market in which Polarcus was successful in maintaining high fleet utilization. Revenues of USD 64.6 million were recorded, down USD 3.3 million (5%) compared to the second quarter 2016. Contract revenues increased by USD 12.7 million (31%) to USD 54.1 million, driven by a shift of vessel capacity to contract from Multi-Client as well as higher achieved contract day rates. As a result of the lower fleet allocation to Multi-Client, related revenues fell by USD 16.0 million (60%) to USD 10.5 million compared to the second quarter 2016. Of the Multi-Client revenue, late sales were USD 1.1 million and prefunding revenue was USD 9.4 million. The prefunding level for the quarter was 122%.
The Company secured three new contract awards since the end of the last quarter. Of the recent contract awards, one is in a country in which Polarcus has not previously operated, and one project will be acquired with the Company's new XArray technology, which gives increased efficiency while providing improved data quality. The Company's expansion into new regions continues to be a key goal and the result of the new sales strategy implemented over the past year.
Post quarter end the Company entered into a memorandum of understanding to collaborate with TGS to jointly develop Multi-Client projects. The collaboration will support a more focused Multi-Client strategy and is expected to drive vessel utilization as well as allow Polarcus to expand its Multi-Client business with limited investments. As part of the collaboration agreement, TGS will agree to extend its vessel agreement with Polarcus entered in June 2015 for the charter of 3D vessel capacity. The extension will be valid through the end of 2017 for up to 10,000 km².
Gross cost of sales was USD 56.5 million, an increase of USD 1.3 million (2%) compared to the second quarter 2016. The increase was driven by project specific costs. The global cost base continues to be the lowest in the industry and is a result of the Company's strong focus on cost management.
The net cash movement during the quarter was positive as expected, with a net cash increase of USD 10.6 million, mainly driven by the release of working capital build-up as reported in the second quarter 2016. As a result, the total cash at the quarter end amounted to USD 38.0 million, comprising USD 37.2 million unrestricted cash and USD 0.8 million restricted cash. The net interest bearing debt amounted to USD 247.9 million, down from USD 260.3 million in the second quarter 2016.
"While third quarter results were reasonably strong, the seismic market continues to look challenging in the near-term with the expectation of reduced tendering and pre-funding activity during the coming northern hemisphere winter season stated Rod Starr, Chief Executive Officer. "The Company will continue to focus on areas within its direct control."
