Marine geophysical player Polarcus nearly halved its net loss during the third quarter of the year despite lower revenues.
Namely, Polarcus reduced its net loss during the third quarter 2017 to $9.1 million compared to $17.4 million loss in 3Q 2016, the company reported on Friday.
The company recorded revenues of $58.5 million in the third quarter 2017, up 62% from $36.1 million in 2Q 2017, and down from $64.6 million in 3Q 2016. The sequential increase in revenues was mainly driven by increased utilization and achieved dayrates. Vessel utilization increased to 92%, up from 75% in 2Q 2017.
Bareboat charter revenue was $6.8 million, up 8% from the previous quarter due to an increase in the number of days spent on bareboat charter following the start of Polarcus Amani (renamed Ivan Gubkin) on a 5½ year bareboat contract with Sovcomflot during April 2017.
Polarcus recorded multi-client revenue of $4.8 million, an increase of 146% from $2 million in 2Q 2017, mainly driven by an increase in late sales. There was no vessel allocation to multi-client in the quarter.
The company continued to record lower operating costs in the quarter, achieving a 3% reduction in gross cost of sales to $40.3 million, this in combination with an increase of 36% in the number of days the vessels were operating on contracts compared to 2Q 2017.
Polarcus said on Friday that the marine seismic market continues to be challenging and uncertain in the short term. With continued limited exploration spending by oil companies, the lower demand combined with excess vessel capacity in the market drives high competition for seismic contracts.
Polarcus expects the current challenging market conditions to continue into 2018 and has, after the quarter-end, undertaken to further streamline and re-shape the organization to deliver improved flexibility and optimized productivity. This strategic re-shape of the organization enables Polarcus to more effectively reduce costs when global fleet activity is decreased.
The immediate effects include an estimated $8 million annual cost savings, and the ability to take advantage of mid-year seismic exploration cycles when global demand is typically higher. The one-off extra costs associated with the streamlining are expected to be $2 million and will impact the company’s 4Q 2017 financial results.
The company expects its total capex investments for the full year 2017 to be $8 million, down from $10 million. Expected multi-client investments remain unchanged at $20 million for the full year 2017. The multi-client pre-funding level target also remains unchanged at above 110%.
The company’s backlog as at September 30, 2017, including the two bareboat charters, is estimated to be $125 million.
Offshore Energy Today Staff