Polarcus Limited has announced the release of its fourth quarter and preliminary full year 2014 financial statements.
Highlights in the fourth quarter 2014:
- Revenue of US$93.3 million, down 24% from the same quarter the previous year
- Multi-client sales of US$21.1 million, up 100% from the same quarter the previous year
- Utilisation of 70% negatively impacted by 10% standby time
- EBIT of US$ -18.8 million before and US$ -47.7 million after non-recurring charges
- Backlog of US$280 million providing good visibility for 2015
The fourth quarter was marked by a rapid decline in oil prices and cautious spending by oil companies. The challenging market environment and capacity reallocation from multi-client to contract led to increased competition for contract work, resulting in both a lower unit price and increased standby time for the fleet.
The UK 28th licensing round announced on 6 November 2014 helped the Company increase its revenue from multi-client sales. However, in addition to time amortisation of US$2.0 million to reflect the current market environment, the Company has taken a disciplined approach to amortisation of multi-client revenue and total amortisation was therefore 102%.
Earnings were negatively affected by a US$28.8 million impairment charge, of which US$22.6 million results from a detailed evaluation of the sales outlook for the Company's multi-client library and US$6.2 million relates to old thrusters held as spares. Financial costs were negatively affected by the depreciation of the Russian Ruble and the Norwegian Krone, resulting in higher than expected foreign exchange losses.
The recent downturn in the seismic market has negatively impacted the Company, leading to a more uncertain outlook. As a result, the Company is not currently providing guiding for 2015.
Commenting on the results, Rod Starr, CEO Polarcus, said: "The last quarter has seen our clients exercise extreme caution on exploration spend as the oil price declined at its fastest rate since the 2008 cycle. This in turn led to increased competition for contract work as clients delayed project decisions, resulting in idle time and extended transits as we repositioned the fleet to markets where activity was being sustained. Recognising the importance of a robust multi-client projects pipeline, we have strengthened our multi-client team, taken impairments on two legacy projects in our existing library, and raised the prefunding hurdle rate to ensure that only the highest funded projects make the grade. Against this challenging market backdrop we are accelerating the previously announced initiatives to regionalise sales resources and implement a rigorous cost management program with a clear focus on capital discipline. We are adapting quickly to this new landscape and working to position ourselves for the next phase of growth."