Polarcus Limited, a UAE-based owner of seismic survey vessels announced a drop in revenue for the first quarter 2014.
The company said that the effects of the challenging market conditions at the end of 2013 spilled over into the start of 2014, as the Company recorded lower revenues during the quarter compared to the same quarter the previous year.
Polarcus recorded revenues of USD 121.4 million, EBITDA of USD 39.6 million and EBIT of USD 16.9 million. Net cash flow from operations was USD 55.9 million, while cost of sales and finance costs compared to same quarter last year have been reduced. Overall Q1 backlog, at the end of April was at USD 250 million.
The first quarter also marks the completion of the propulsion upgrade and increase from 10 to 12 streamers on Polarcus Naila, which can also be contributed to lower utilization.
Multi-client revenue during the quarter was lower than expected as oil companies have maintained a cautious approach following the opening of the UK 28th licensing round in January. Some of the anticipated multi-client sales following the second tranche of the UK 27th licensing round announced at the end of last year have also been delayed.
Despite the fall in revenue the Company has continued to deliver excellent operational performance, with very low technical downtime and a reduction in operating costs compared to Q1 2013. The decrease in net profit was significantly less than the decrease in revenue as a result of the Company’s reduced cost due to reductions in both operating and financing costs compared to the same quarter last year.
During the quarter the Company started a yard stay to upgrade the propulsion system on Polarcus Naila. The vessel was also upgraded from 10 to 12 streamers and a mandatory classification was carried out during the yard stay. The upgrades have significantly improved the revenue generating potential as well as increasing the value of the vessel. The vessel left the yard early May 2014 and transited straight to the North Sea for commencement on an industry supported multi-client project.
Commenting on the results, Rolf Rønningen, CEO Polarcus, said: “The weak market reported in the fourth quarter continued well into the first, resulting in lower revenues across both Contract and Multi-Client business lines. We took advantage of this period to upgrade Polarcus Naila, bringing her into line with our high-performing A-Class fleet and thereby significantly increasing her earnings potential going forward. We also maintained our focused investment into our highly-regarded UK multi-client library and secured industry prefunding for two exciting projects to commence next quarter, including a major new program offshore Ireland. Throughout this period the continued strong performance of our marine operations has provided a rock solid foundation for our business whilst our broadband offering, RightBand(TM), has gained good traction with clients, promising to present new opportunities to grow our backlog.”