Polarcus has weaker fourth quarter but strengthens backlogCompany News // February 21, 2017
Marine seismic company Polarcus says it had a weaker fourth quarter compared to earlier quarters in 2016, but has secured numerous contract awards.
Rod Starr, CEO at Polarcus, said the contracts give the company "good visibility and significantly strengthen our backlog." He said that the contracts, in addition to the company's recent private placement and associated debt service amendments, improved the company's cashflow profile for the next two years. "We continue to have the lowest cost base and fleet technical downtime, while maintaining high utilization and the highest levels of ESHQ performance," said Mr Starr.
The fourth quarter financial results reflect a challenging seismic market resulting in fleet utilization significantly weaker than the utilization reported by the company in recent quarters. Total utilization was 72 per cent, down from 90 per cent in the third quarter of 2016.
Revenues in the quarter were US$47.2 million, down US$17.4 million (27 per cent) compared to the third quarter 2016, driven by a US$18.1 million (33 per cent) decrease in contract revenue to US$36.0 million.
The quarter saw increased standby time following delays in clients obtaining permits on certain projects and vessel repositioning after strong utilization in the third quarter.
The prolonged weak market led the company to recognize a US$24.8 million non-cash impairment charge on the carrying values of its vessels and seismic equipment, as well as a non-cash onerous contract provision of US$26.4 million in the quarter. A total of US$9.5 million of the impairment charge relates to equipment owned by Polarcus Nadia and US$22.4 million of the onerous contract provision relates to the operating lease for the same vessel.