Pulse Seismic Inc. Reports Q2 2014 Results and Declares Quarterly Dividend
CALGARY, Aug. 1, 2014 /CNW/ - Pulse Seismic Inc. ("Pulse" or "the Company") reports its financial and operating results for the three and six months ended June 30, 2014. The unaudited condensed consolidated interim financial statements and MD&A will be filed on SEDAR (www.sedar.com) and will be available on Pulse's website (www.pulseseismic.com).
Pulse has declared a quarterly dividend of $0.02 per common share. This dividend will be paid on September 19, 2014 to shareholders of record at the close of business on September 5, 2014. Dividends are designated as an eligible dividend for Canadian income tax purposes. For non-resident shareholders, Pulse's dividends are subject to Canadian withholding tax.
HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014
Pulse's key performance metrics, which include cash EBITDA(a), shareholder free cash flow(a), funds from operations(b) and net earnings or loss, all improved in the three-month period ending June 30, 2014 over the prior year's period. The improvement resulted from the period-over-period increase in data library sales.
For the six months ended June 30, 2014, the period-over-period reduction in data library sales and participation survey revenue reduced Pulse's key performance metrics, with the exception of net loss.
The net loss in both prior-year periods was increased by the record seismic amortization expense recorded upon completion of the 2012-2013 winter seismic surveys.
Seismic data library sales for the second quarter of 2014 increased to
$7.3 million from $4.5 million for the comparable period in 2013.
Seismic data library sales for the six months ended June 30, 2014 were
$12.8 million compared to $18.4 million for the first half of 2013.
Total seismic revenue (including revenue from participation surveys) was
$7.3 million for the three months ended June 30, 2014 and $12.8 million
for the six months ended June 30, 2014, compared to $4.8 million and
$31.8 million for the respective periods in 2013. There were no
participation surveys in progress during the first two quarters of
2014. The Company recognized $13.4 million of participation survey
revenue for the 2012-2013 winter seismic surveys in the first half of
Cash EBITDA was $5.5 million ($0.09 per share basic and diluted) for the
second quarter of 2014 compared to $2.3 million ($0.04 per share basic
and diluted) for the comparable period in 2013. Cash EBITDA was $9.2
million ($0.16 per share basic and diluted) for the six months ended
June 30, 2014 compared to $13.6 million ($0.22 per share basic and
diluted) for the six months ended June 30, 2013.
Shareholder free cash flow was $5.2 million ($0.09 per share basic and
diluted) for the second quarter of 2014 compared to $2.8 million ($0.05
per share basic and diluted) for the comparable period in 2013.
Shareholder free cash flow was $8.8 million ($0.15 per share basic and
diluted) for the six months ended June 30, 2014 compared to $13.2
million ($0.22 per share basic and diluted) for the first half of 2013.
A net loss of $612,000 (including non-cash amortization expense of $5.8
million) was incurred in the second quarter of 2014, bringing the net
loss for the six months ended June 30, 2014 to $2.4 million (including
non-cash amortization expense of $11.7 million). The net loss for the
second quarter of 2013 was $15.1 million (including non-cash
amortization expense of $22.3 million) and for the six months ended
June 30, 2013 was $12.5 million (including non-cash amortization
expense of $42.3 million).
During the second quarter of 2014, Pulse reduced its total debt(c) by $2.5 million. At June 30, 2014 total debt was $16.0 million. On July
31, 2014 Pulse made an additional $4.5 million repayment. Subsequent to
the repayment, Pulse's total debt was $11.5 million, with $38.5 million
available for future draws.
- Pulse paid two dividends of $0.02 per share each, in the second quarter, totalling $2.4 million. The first, paid in April, had been declared in the first quarter and the second dividend, paid in June, was declared in the second quarter of 2014.
|Selected Financial and Operating Information|
|(thousands of dollars except per share data and number of shares)|
|Three months ended||Six months ended|
|June 30||June 30||Year ended|
|Data library sales||$||7,321||$||4,486||$||12,827||$||18,350||$||27,079|
|Amortization of seismic data library||$||5,842||$||22,287||$||11,674||$||42,314||$||55,619|
|Per share basic and diluted||$||(0.01)||$||(0.25)||$||(0.04)||$||(0.21)||$||(0.31)|
|Cash EBITDA (a)||$||5,467||$||2,298||$||9,230||$||13,639||$||19,145|
|Per share basic and diluted (a)||$||0.09||$||0.04||$||0.16||$||0.22||$||0.32|
|Shareholder free cash flow (a)||$||5,246||$||2,849||$||8,796||$||13,220||$||20,682|
|Per share basic and diluted (a)||$||0.09||$||0.05||$||0.15||$||0.22||$||0.34|
|Funds from operations (b)||$||8,796||$||1,982||$||12,407||$||22,689||$||27,751|
|Per share basic and diluted (b)||$||0.15||$||0.03||$||0.21||$||0.37||$||0.46|
|Seismic data purchases and related costs||184||290||367||588||961|
|Property and equipment additions||7||75||21||149||127|
|Total capital expenditures||$||191||$||880||$||388||$||21,952||$||22,353|
|Weighted average shares outstanding|
|Basic and diluted||59,314,120||60,664,740||59,330,197||60,810,594||60,280,876|
|Shares outstanding at period end||59,314,120||60,377,670||59,349,120|
|2D in kilometres||339,991||339,991||339,991|
|3D in square kilometres||28,284||28,284||28,284|
|Financial Position and Ratios|
|(thousands of dollars except ratio calculations)|
|June 30,||June 30,||December 31,|
|Working capital ratio||3.06:1||2.16:1||3.71:1|
|Total debt (c)||$||16,000||$||21,100||$||22,100|
|TTM cash EBITDA (d)||$||14,736||$||25,405||$||19,145|
|Total debt to equity ratio||0.26:1||0.27:1||0.34:1|
|Total debt to TTM cash EBITDA ratio||1.09:1||0.83:1||1.15:1|
(a) The Company's continuous disclosure documents provide discussion and analysis of "cash EBITDA", "cash EBITDA per share", "shareholder free cash flow" and "shareholder free cash flow per share". These financial measures do not have standard definitions prescribed by IFRS and, therefore, may not be comparable to similar measures disclosed by other companies. The Company has included these non-GAAP financial measures because management, investors, analysts and others use them as measures of the Company's financial performance. The Company's definition of cash EBITDA is cash available for interest payments, cash taxes if applicable, debt servicing, discretionary capital expenditures and the payment of dividends, and is calculated as earnings (loss) from operations before interest, taxes, depreciation and amortization less participation survey revenue, plus any non-cash and non-recurring expenses. Cash EBITDA excludes participation survey revenue as these funds are directly used to fund specific participation surveys and this revenue is not available for discretionary capital expenditures. The Company believes cash EBITDA assists investors in comparing Pulse's results on a consistent basis without regard to participation survey revenue and non-cash items, such as depreciation and amortization, which can vary significantly depending on accounting methods or non-operating factors such as historical cost. Cash EBITDA per share is defined as cash EBITDA divided by the weighted average number of shares outstanding for the period. Shareholder free cash flow further refines the calculation of capital available to invest in growing the Company's 3D and 2D seismic data library, to repay debt, to purchase its common shares and to pay dividends by deducting non-discretionary expenditures from cash EBITDA. Non-discretionary expenditures are defined as debt financing costs (net of deferred financing expenses amortized in the current period) and current tax provisions. Shareholder free cash flow per share is defined as shareholder free cash flow divided by the weighted average number of shares outstanding for the period.
(b) Funds from operations is an additional GAAP measure. Funds from operations is defined as cash provided by operations as prescribed by IFRS, excluding the impact of changes in non-cash working capital. Funds from operations represents the cash that was generated during the period, regardless of the timing of collection of receivables and payment of payables. Funds from operations per share is defined as funds from operations divided by the weighted average number of shares outstanding for the period. Funds from operations for the comparative three and six months ended June 30, 2013 reflect a reclassification to conform to the current year's financial statement presentation.
(c) Total debt is defined as long-term debt, including current portion, excluding deferred financing costs.
(d) TTM cash EBITDA is defined as the sum of the trailing 12 month's cash EBITDA and is used to provide a comparable annualized measure.
Pulse's low cost structure and strong balance sheet enable the Company to continue operating under low revenue levels and still provide returns to shareholders. The moderate quarter-over-quarter improvement in data library sales generated significantly higher cash EBITDA and shareholder free cash flow.
Pulse maintains its cautious outlook for the remainder of 2014. The current environment continues to be depressed, while conversely there are also signs of improvement. There has been developing momentum in publicly announced asset transactions as well as mergers and acquisitions in 2014. Natural gas prices have eased somewhat since the first quarter, but the AECO spot price remained in the $4-per-gigajoule range throughout July. Hydraulic fracturing providers are known to be busy, suggesting a reasonable pace of capital spending by oil and natural gas producers. There is some uncertainty whether these activities will translate into more active data library sales.
In June, the Canadian Association of Oilwell Drilling Contractors issued a slight upward revision to its 2014 drilling forecast, noting higher-than-forecast fleet utilization and a larger number of total drilling days in the second quarter. In the latest forecast, 11,494 wells are forecast to be completed in 2014, up from 11,102 in 2013.
Pulse will continue to practise prudent cost and capital management and remain focused on generating returns for shareholders.
The Company's next conference call will be held after the release of its year-end 2014 results. Investors or analysts should feel free to contact Neal Coleman or Pamela Wicks at the telephone numbers or e-mail address provided below.
Pulse is a market leader in the acquisition, marketing and licensing of 2D and 3D seismic data to the western Canadian energy sector. Pulse owns the second-largest licensable seismic data library in Canada, currently consisting of approximately 28,300 square kilometres of 3D seismic and 340,000 kilometres of 2D seismic. The library extensively covers the Western Canada Sedimentary Basin where most of Canada's oil and natural gas exploration and development occur.
This news release contains information that constitutes "forward looking information" or "forward looking statements" (collectively, "forward looking information") within the meaning of applicable securities legislation. This forward looking information includes, among other things, statements regarding:
- The Company can continue to operate under low revenue levels and still provide returns to shareholders;
- The current environment continues to be depressed, while conversely there are also signs of improvement;
- There has been developing momentum in publicly announced asset transactions as well as mergers and acquisitions in 2014;
- General economic and industry outlook;
- Industry activity levels and capital spending;
- Forecast commodity prices;
- Oil and natural gas producer's forecast capital budgets and cash flows;
- Estimated future demand for seismic data;
- Estimated future seismic data sales;
- Estimated future demand for participation surveys;
- Management's expectations on the sufficiency of Pulse's capital resources;
- Pulse's business and growth strategy; and
- Other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results and performance.
Often, but not always, forward looking information uses words or phrases such as: "expects", "does not expect" or "is expected", "anticipates" or "does not anticipate", "plans" or "does not plan", "estimates" or "estimated", "projects" or "projected", "forecasts" or "forecast", "believes" or "does not believe", "intends" or "does not intend", "likely" or "unlikely", "possible", "probable", "scheduled", "positioned", "goal", "objective", "hopes", "optimistic" or states that certain actions, events or results "should", "may", "could", "would", "might" or "will" be taken, occur or be achieved.
Undue reliance should not be placed on forward-looking information. Forward looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to vary and in some instances to differ materially from those anticipated in the forward looking information. Pulse does not publish specific financial goals or otherwise provide guidance, due to the inherently unclear visibility of seismic revenue.
The material risk factors that could cause actual results to differ materially from the forward-looking information include, but are not limited to:
- Oil and natural gas prices;
- Seismic industry cycles and seasonality;
- The demand for seismic data and participation surveys;
- The pricing of data library license sales;
- Relicensing (change of control) fees and partner copy sales;
- The level of pre-funding of participation surveys, and the ability of the Company to make subsequent data library sales from such participation surveys;
- The Company's ability to complete participation surveys on time and within budget;
- Environmental, health and safety risks;
- The effect of seasonality and weather conditions on participation surveys;
- Federal and provincial government laws and regulations, including those regarding taxation, royalty rates, environmental protection and safety;
- Dependence on qualified seismic field contractors;
- Dependence on key management, operations and marketing personnel;
- Loss of seismic data;
- Protection of intellectual property; and
- The introduction of new products.
The foregoing list of risks is not exhaustive. Additional information on these risks and other factors which could affect the Company's operations or financial results are included in the Risk Factors section of the Company's MD&A for the most recent calendar year and interim periods. Forward looking information is based upon the assumptions, expectations, estimates and opinions of the Company's management at the time the information is presented.
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