Vis børsmeldingen
Polarcus CEO, Duncan Eley, commented:
"Polarcus delivered a solid increase in earnings for Q1 2020 with EBITDA more
than doubling year-on-year driven by increased margins from improved pricing and
continued operational excellence of our core fleet.
"Market conditions deteriorated in March 2020 with the sharp decline in oil
price, exacerbated by the global response to the COVID-19 pandemic. Polarcus
rapidly implemented enhanced business continuity initiatives for our onshore and
offshore operations to navigate the COVID-19 related restrictions, prioritizing
the health and safety of all personnel and maintaining our highly efficient
operational performance. In addition, a substantial cost reduction plan was
implemented during the quarter that will strengthen the financial resilience of
the Company through 2020.
"The ability of our sales organization to secure two new project awards since
quarter end demonstrates that industry activity continues, and E&P companies are
placing trust in Polarcus to execute their seismic acquisition plans.
“Whilst 2020 will be a challenging year for the industry, I am confident that
the decisive action taken will provide an effective foundation for Polarcus to
manage the current market uncertainty and to position the Company to capture an
increased level of activity anticipated through 2021-22.”
Q1 2020 HEADLINES
- Segment revenues of USD 66.3 million, compared to USD 67.1 million in Q1
2019
- Segment EBITDA of USD 22.2 million, up from USD 10.2 million in Q1 2019
- Segment EBIT of USD 8.5 million, up from USD 2.8 million in Q1 2019
- Total cash balance of USD 46.7 million
- Strong operational performance with low technical downtime
- Vessel utilization of 89%, compared to 92% in Q1 2019
- Implementation of 2020 cost reduction plan and enhanced business continuity
initiatives in relation to COVID-19 restrictions
- Backlog of approximately USD 157 million, compared to USD 170 million at the
same time last year
Segment revenues of USD 66.3 million in Q1 2020 were essentially flat relative
to the same period last year. The Polarcus core fleet generated revenues during
Q1 2020 that were 26% higher compared to Q1 2019 driven by improved pricing. In
Q1 2019, additional revenue was generated related to a hybrid streamer-node
project acquired by Polarcus using third party vessels. Bareboat revenue was
flat year on year.
Improved day rates, combined with meticulous attention to cost control and more
cost capitalized to multi-client, led to a solid improvement in profitability
with segment EBITDA more than doubling to USD 22.2 million in the quarter
compared to Q1 2019. Operational metrics were excellent during the quarter with
industry-leading technical performance combined with high utilization and
productivity.
Gross cost of sales of USD 45.2 million in the quarter decreased by 18% compared
to USD 55.0 million in Q1 2019. The reduction was due to the elevated costs
related to the hybrid project in Q1 2019. General and administrative costs
during the quarter were held at USD 2.8 million, at similar levels to Q1 2019.
The cash flow during the quarter was impacted by a negative segment working
capital movement of USD 18.1 million. Total cash at quarter end was USD 46.7
million including USD 25 million drawn from the USD 40 million working capital
facility in March 2020. The cash balance at the end of the previous quarter was
USD 36.5 million.
The sharp decline in oil price and the global response to the COVID-19 pandemic
during March 2020 impacted the short-term activity outlook of the Company. An
ongoing seismic acquisition project offshore West Africa was terminated prior to
its scheduled completion date resulting in 6% standby time in the quarter. In
addition, the Company’s backlog was impacted by the cancellation of a seismic
acquisition project due to commence in Asia Pacific in Q2 2020, partly offset by
two new projects announced since quarter end in North West Europe and Asia
Pacific.
On 31 March 2020, the Company released details of enhanced business continuity
initiatives to ensure continued efficient operations in light of the global
COVID-19 pandemic response and also announced a substantial cost reduction plan
to strengthen the financial resilience of the Company through 2020. The plan is
expected to deliver cash cost savings in the order of USD 15 million during
2020 across capital expenditures, operating expenses and general and
administrative costs which will help mitigate the financial impact of lower
fleet utilization anticipated in the near term.
Backlog at 31 March 2020 together with the value of awards announced after the
quarter end is estimated at USD 157 million compared to USD 170 million at the
same time last year. The Company’s fleet is 50% booked for the remainder of
2020.
OUTLOOK
Tender activity continued to be strong during Q1 2020. However, the combined
effects of the sharp decline in oil price in March 2020 and the global slow-down
resulting from the COVID-19 pandemic have introduced uncertainty around E&P
companies’ spending outlook over the short to medium term.
Whilst many clients remain focused on their seismic acquisition plans, the
industry may encounter project deferrals, operational disruptions, and
reductions in the size of awarded surveys as a consequence of the low oil price
and the COVID-19 pandemic.
The Company continues to focus on managing its cost base appropriately with cash
preservation being a key priority. Implementation of business continuity
initiatives and cost reduction measures will help the Company navigate the
current market uncertainty.
The reshaping of the seismic industry that has occurred, resulting in an
increased number of multi-client companies without vessels, has led to a stable
industry structure, provided that supply-side discipline continues to respond
appropriately to demand levels.
Industry-wide focus on the environment continues to sharpen and Polarcus is
receiving growing recognition for its Explore Green™ capabilities, a cornerstone
of the Company since inception. Following a successful launch in 2019, Polarcus
Cirrus™ is expected to gain further momentum as more E&P clients realize the
opportunity of accelerated decision-making to compress the timeline for
hydrocarbon production. With a young, highly efficient and uniform fleet,
combined with demonstrated operational excellence, Polarcus is well-positioned
to continue securing and delivering premium projects around the globe.
Note: All references above to “segment” results have been adjusted for IFRS 15
effects. Refer to Note 3 in the accompanying interim financial statements.
Contacts
Duncan Eley, CEO
+971 4 43 60 915
duncan.eley@polarcus.com (mailto:duncan.eley@polarcus.com)
Hans-Peter Burlid, CFO
+971 50 559 8175
hp.burlid@polarcus.com (mailto:hp.burlid@polarcus.com)
About Polarcus
Polarcus (OSE: PLCS) is a focused geophysical service provider of safe and
environmentally responsible marine acquisition services globally. Our
geophysical offering is driven by innovation and collaboration to provide
clients with better seismic data faster. Polarcus operates a fleet of high
performance seismic vessels with 3D and 4D imaging capabilities, which
incorporate leading-edge technologies for improved environmental performance and
operational efficiency. Polarcus offers contract seismic surveys and multi-
client projects with advanced priority processing solutions including Cirrus, a
suite of cloud-based applications and services designed to bring clients closer
to acquired seismic data, enabling faster and better informed exploration
decisions. The Company services its clients globally from its head office in
Dubai and regional offices located in Houston, London, Singapore and delivers
Group asset management services from Oslo. For more information, visit
www.polarcus.com
Disclaimer
The information included herein may contain forward-looking statements. Forward-
looking statements include all statements that are not historical facts,
including but not limited to statements expressing or implying the Company’s
intent, belief or current expectations with respect to, among other things,
forecasts, estimates, and predictions. Such forward-looking statements
necessarily involve risks and uncertainties and are dependent on assumptions,
information, data or methods that may be incorrect or imprecise. Actual results
could differ materially from expectations expressed in the forward-looking
statements if one or more of the underlying assumptions or expectations proves
to be inaccurate or is unrealized. Some factors that could cause actual results
to differ materially from those in the forward-looking statements include, but
are not limited to, developments in the oil and gas industry, the demand for
seismic services, the demand for data from the Company’s multi-client library,
currency risks, political risks, regulatory risks, and unexpected operational
setbacks. For a further description of other relevant risk factors we refer to
our 2019 Annual Report. The reservation is also made that inaccuracies or
mistakes may occur in the information given above concerning the current status
of the Company or its business. Any reliance on the information given above is
at the risk of the reader, and Polarcus disclaims any and all liability in this
respect.
This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act
Kilde
