The third quarter financial results reflect a continued competitive market in which Polarcus was successful in maintaining high fleet utilisation.
Revenues of US$64.6 million were recorded, down US$3.3 million (5%) compared to the second quarter 2016. Contract revenues increased by US$12.7 million (31%) to US$54.1 million, driven by a shift of vessel capacity to contract from Multi-Client as well as higher achieved contract day rates. As a result of the lower fleet allocation to Multi-Client, related revenues fell by US$16.0 million (60%) to US$10.5 million compared to the second quarter 2016. Of the Multi-Client revenue, late sales were US$1.1 million and prefunding revenue was US$9.4 million. The prefunding level for the quarter was 122%.
The Company secured three new contract awards since the end of the last quarter. Of the recent contract awards, one is in a country in which Polarcus has not previously operated, and one project will be acquired with the Company's new XArray technology, which gives increased efficiency while providing improved data quality. The Company's expansion into new regions continues to be a key goal and the result of the new sales strategy implemented over the past year.
Post quarter end the Company entered into a memorandum of understanding to collaborate with TGS to jointly develop Multi-Client projects. The collaboration will support a more focused Multi-Client strategy and is expected to drive vessel utilisation as well as allow Polarcus to expand its Multi-Client business with limited investments. As part of the collaboration agreement, TGS will agree to extend its vessel agreement with Polarcus entered in June 2015 for the charter of 3D vessel capacity. The extension will be valid through the end of 2017 for up to 10 000 km².
Gross cost of sales was US$56.5 million, an increase of US$1.3 million (2%) compared to the second quarter 2016. The increase was driven by project specific costs. The global cost base continues to be the lowest in the industry and is a result of the Company's strong focus on cost management.
The net cash movement during the quarter was positive as expected, with a net cash increase of US$10.6 million, mainly driven by the release of working capital build-up as reported in the second quarter 2016. As a result, the total cash at the quarter end amounted to US$38.0 million, comprising US$37.2 million unrestricted cash and US$0.8 million restricted cash. The net interest bearing debt amounted to US$247.9 million, down from US$260.3 million in the second quarter 2016.
"While third quarter results were reasonably strong, the seismic market continues to look challenging in the near-term with the expectation of reduced tendering and pre-funding activity during the coming northern hemisphere winter season. The Company will continue to focus on areas within its direct control."
Rod Starr, Chief Executive Officer
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