SeaBird Back to Black
SeaBird Exploration, a provider of marine seismic data to the oil and gas industry, returned to profit in the second quarter of 2016 despite weak seismic market while its revenues increased by 14 pct due to higher vessel utilization.
The company on Friday reported a net income of $0.1 million for 2Q 2016, compared to a net loss of $16.8 million in the same period in 2015.
Revenues were $22.2 million in 2Q 2016, an increase of 14% compared to 2Q 2015 and revenues of $19.6 million. The increased revenues are primarily due to higher fleet utilization.
The cost of sales was $12.9 million in Q2 2016, compared to $20 million in the prior-year quarter. The decrease is predominantly due to fewer vessels in operation, lower operating expenses and non-recurring restructuring charges for onerous long-term lease contracts taken in 2Q 2015.
The company stated that the second quarter of 2016 was challenging with weak seismic market demand and that the timing of a sustained market recovery is still highly uncertain.
Vessel utilization for the second quarter of 2016 was 82%, with the fleet employed on the TGS Gigante survey in Mexico and two projects in North West Europe, down from 90.3% in the first quarter. Utilization is expected to be reduced in the second half of the year as several vessels are completing their contracts with no immediate new employment secured.
The company had two vessels stacked during the quarter, the Munin Explorer and Voyager Explorer. During the quarter, SeaBird made the decision to redeliver the Voyager Explorer to its owners following the completion of its bareboat charter in August 2016.
Exploration spending to ‘remain depressed’
SeaBird noted that, during the quarter, global seismic demand continued to be weak. Providing an outlook for the upcoming period, the company said that the oil industry exploration spending is anticipated to remain depressed for the foreseeable future and this is likely to continue to negatively impact seismic activity.
The current market uncertainty makes it difficult to predict the level of contract coverage that is possible to obtain beyond the company’s firm backlog. Consequently, the company said it is reviewing its fleet capacity and other measures to further reduce its operating cost level. SeaBird said that this may include stacking of additional vessels and further fleet reduction.
