Polarcus "adapting to a challenging market"Company News // November 14, 2014
Polarcus Limited has unveiled its third quarter 2014 financial statements.
Highlights in the third quarter 2014 included higher cash generation despite a reduction in revenues quarter-on-quarter; improvement in the debt maturity profile and a reduction in the company's effective interest rate; a cost reduction programme initiated in the quarter with expected annual savings of US$35 million; an order backlog of US$325 million
The company said the quarter was marked by a significant weakening of the seismic market, which has created uncertainty and negative market sentiment with pressure on utilization and pricing. Despite the tough competition, the company has secured high backlog, giving good visibility well into 2015.
The challenging market resulted in lower utilization, which caused a fall in contract revenue in the third quarter of 2014 compared to the same quarter the previous year. Despite this, the company continued to record strong cash generation, recording higher cash from operations compared to the same quarter last year.
The company significantly increased its revenue from multi-client sales compared to the same quarter the previous year.
"There is uncertainty going forward regarding the extent to which the macroeconomic environment will impact oil and gas companies' attitude towards spending on seismic," said Polarcus.
The UK 28th licensing round announced on 06 November 2014 is expected to drive strong late sales on the company's multi-client data once the awards are finalized over the next two quarters.
Post-quarter end the company secured a fully subscribed equity issue raising a total of US$35 million through a private placement. The net proceeds from the equity issue, in addition to the NKr 350 million bond issued and US$20 million amendment to the Polarcus Naila sale and lease back in the quarter, strengthen the company's financial position in preparation for a challenging winter season.
Commenting on the results, Rolf Rønningen, CEO Polarcus, said: "The lower oil price and consequent reduced exploration spend by our clients is resulting in a highly competitive market landscape.
"Our determined focus on securing contracts has seen our backlog grow to record levels whilst our pre-emptive cost reduction programme initiated in the quarter will improve margins going forward and help buttress the company against the prevailing market headwinds."