Pulse Seismic Inc. reports 2009 results

TSX Symbol - PSD

CALGARY, March 15 /CNW/ - Douglas Cutts, President and Chief Executive Officer of Pulse Seismic Inc. ("Pulse" or "the Company"), reports the financial and operating results of Pulse for the year ended December 31, 2009. The audited consolidated financial statements, accompanying notes and MD&A will be filed March 15, 2010 on SEDAR. These documents will also be available on Pulse's website www.pulseseismic.com.

Thanks to very good levels of seismic library sales and cash EBITDA(a) in the fourth quarter of 2009, a strong balance sheet, a lean cost structure and dedicated employees, Pulse came through 2009 financially intact and operationally strong. The Company also reduced its long-term debt by $6 million, added seismic data to the library and increased year-end working capital and cash balances.

The year end audited financial results were in line with the preliminary unaudited financial results announced in the Company's news release on January 25, 2010.

    
    HIGHLIGHTS

    -   Seismic data library sales for the three months ended December 31,
        2009 were $10.2 million, compared to $10.1 million for the same
        period in 2008. Seismic data library sales for the year ended
        December 31, 2009 were $23.4 million compared to $36.9 million for
        the year ended December 31, 2008.

    -   Total seismic revenue (including revenue from participation surveys)
        for the year ended December 31, 2009 was $30.7 million compared to
        $45.4 million for the year ended December 31, 2008.

    -   Cash EBITDA for the year ended December 31, 2009 was $16.4 million
        ($0.31 per share basic and diluted) compared to $28.2 million ($0.52
        per share basic and diluted) for the year ended December 31, 2008.

    -   Net loss for the year ended December 31, 2009 was $2.8 million ($0.05
        per common share basic and diluted) compared to net earnings of
        $586,000 ($0.01 per share basic and diluted) for the year ended
        December 31, 2008.

    -   Pulse's working capital position grew to $19.3 million (including
        cash of $15.0 million and current portion of long term debt of
        $7.0 million) at December 31, 2009 from $14.4 million (including cash
        of $13.2 million and current portion of long term debt of
        $6.8 million) at December 31, 2008.

    -   Pulse completed two 3D participation surveys in 2009 in its core
        area, the Edson-Grande Prairie multizone corridor, adding
        approximately 400 net square kilometres of new 3D seismic data to its
        seismic data library.

    -   On February 3, 2010 Pulse prepaid $2.8 million of its long-term debt,
        without penalty, in order to reduce interest charges. This prepayment
        represented 10 percent of the revolving term bank loan balance as at
        January 1, 2010. The Company's total long-term debt less cash balance
        as at March 15, 2010 is $3.5 million.

    -   Key debt ratios at year-end included total debt to annual cash EBITDA
        of 1.68:1 and total debt to equity of 0.43:1.



    FINANCIAL HIGHLIGHTS


    ('000's except per share
     data and number of shares)
                                  3 months ended          12 months ended
                                    December 31,             December 31,
                                    ------------             ------------
                                  2009        2008        2009        2008
                                  ----        ----        ----        ----
    Revenue from continuing
     operations:
      Data library sales      $   10,235  $   10,067  $   23,444  $   36,894
      Participation surveys           48       2,202       7,302       8,509
                              -----------------------------------------------
    Total revenue from
     continuing operations    $   10,283  $   12,269  $   30,746  $   45,403
      Amortization of seismic
       data library           $    5,989  $   10,889  $   24,569  $   32,438
    Net earnings (loss) from
     continuing ops           $      434  $   (1,640) $   (2,924) $      880
    Net earnings (loss) from
     continuing ops per share:
      Basic and diluted       $     0.01  $    (0.03) $    (0.05) $     0.02
    Net earnings (loss)       $      503  $   (1,640) $   (2,755) $      586
    Net earnings (loss) per
     share:
      Basic and diluted       $     0.01  $    (0.03) $    (0.05) $     0.01
    Funds from continuing
     operations(a)            $    7,270  $    9,238  $   22,084  $   35,188
    Funds from continuing
     operations per share(a):
      Basic and diluted       $     0.14  $     0.17  $     0.41  $     0.65
    Cash EBITDA(a)            $    7,612  $    7,352  $   16,359  $   28,196
    Working capital:
      Cash                    $   14,975  $   13,244  $   14,975  $   13,244
      Non-cash working capital    11,319       7,918      11,319       7,918
      Current portion of long
       term debt                  (6,998)     (6,798)     (6,998)     (6,798)
                              -----------------------------------------------
    Total working capital     $   19,296  $   14,364  $   19,296  $   14,364
    Total assets              $   98,219  $  112,383  $   98,219  $  112,383
    Capital expenditures:
      Seismic data purchases  $        6  $    2,524  $      315  $    4,557
      Participation surveys        3,173      11,358      12,083      16,433
      Changes to work in
       progress                   (3,110)     (6,580)     (1,681)      1,681
      Property & equipment
       additions                       4          12          29         556
                              -----------------------------------------------
    Total capital
     expenditures             $       73  $    7,314  $   10,746  $   23,227

    Total long-term debt (net
     of current maturities and
     debt financing costs)    $   20,409  $   26,188  $   20,409  $   26,188
    Shareholders' equity      $   63,345  $   66,288  $   63,345  $   66,288
    Weighted average shares
     outstanding:
      Basic                   53,089,908  53,736,580  53,318,318  53,985,299
      Diluted                 53,089,908  55,738,860  53,318,318  54,160,333
    Shares outstanding at
     year end                 53,071,383  53,397,583  53,071,383  53,397,583
    Seismic library:
      2D in net kilometres       257,994     257,281     257,994     257,281
      3D in net square
       kilometres                 12,913      12,514      12,913      12,514

    (a) The Company's continuous disclosure documents provide discussion and
    analysis of "cash EBITDA", "funds from continuing operations" and "funds
    from continuing operations per share". These financial measures do not
    have standard definitions prescribed by GAAP in Canada 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 before interest, taxes,
    depreciation and amortization less participation survey revenue, plus
    non-cash and non-recurring G&A 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.
    The Company's definition of funds from continuing operations is cash flow
    from continuing operations as prescribed by Canadian GAAP but excluding
    the impact of changes in non-cash working capital. Funds from continuing
    operations represent the cash that was generated during the period,
    regardless of the timing of collection of receivables and payment of
    payables. Funds from continuing operations per share is defined as funds
    from continuing operations divided by the weighted average number of
    shares outstanding for the period.

    CORPORATE UPDATE

    The Board of Directors is pleased to announce the appointment of Ms.
Pamela Wicks as VP Finance & CFO of the Company effective March 10, 2010. Ms.
Wicks has been employed with the Company, and its predecessors, since 1998 and
has held the positions of Controller and most recently VP Finance.

    OUTLOOK

    Pulse's general economic and industry outlook encompasses two main groups
of factors: industry activities, capital spending, drilling rates and
forecasts, and commodity pricing in western Canada; and overall natural gas
supply and demand fundamentals, including storage volume and drilling
activity, in the United States. The first group of factors directly shapes the
industry environment driving Pulse's seismic data library sales and customer
demand for participation surveys, while the second group has a general
influence over the first.
    Western Canada - Conditions appeared to be improving throughout the first
two months of 2010. Commodity prices for oil and natural gas have been
stronger than one year earlier. After bottoming at $1.96 per mcf (thousand
cubic feet) at AECO (Alberta Energy Co. gas trading price) on September 4,
2009, the key domestic natural gas benchmark strengthened towards year-end and
in 2010 has averaged approximately $5.65 per mcf into February, before
trending lower again in early March ($4.36 per mcf on March 8, 2010).
    Forecasts for oil and natural gas drilling have strengthened, albeit from
very low levels. The number of active drilling rigs in western Canada in
mid-February was up by more than 170 from the year-earlier level, making the
highest rig-count since the first quarter of 2008. The Petroleum Services
Association of Canada (PSAC), noting that fourth-quarter 2009 drilling
activity was substantially higher than its original forecast, in late January
issued a revised 2010 drilling forecast of 9,000 wells, an increase of 12
percent from its initial 2010 forecast issued in November. The Canadian
Association of Oilwell Drilling Contractors (CAODC) previously predicted 8,523
wells for 2010. A number of investment banks have issued forecasts in the
range of 11,000 wells or even higher. While moving in the right direction,
these forecast numbers are well below the more than 16,300 wells drilled in
2008. Also positive was that Alberta's February and March auctions of oil and
natural gas mineral leases raised $273.0 million and reportedly included lands
focusing on the Cardium and Montney plays of which Pulse's data library covers
various portions. Land sales are considered a leading indicator of oil and
natural gas exploration and development activity.
    Some investment banks are reporting higher 2010 capital budgets among some
of their oil and natural gas clients and, accordingly, have modestly increased
their forecasts for aggregate industry capital spending. To date there have
been some press-released announcements of higher capital budgets and greater
amounts of drilling, including by operators active in Pulse's core area, the
Edson-Grande Prairie multizone corridor. Materially lower field service costs
and Alberta's current drilling and royalty incentives, which can reduce the
net costs of drilling and completing a deep horizontal well by several million
dollars, are improving drilling economics. Some producers have stated these
incentives, along with the recently announced Government of Alberta's
"Competitiveness Review" of the energy sector's fiscal regime, will contribute
to increased capital spending in 2010.
    Western Canada's oil and natural gas industry is continuing to focus on a
number of unconventional "tight" oil and natural gas plays. These are
typically developed using horizontal wells completed with multiple hydraulic
fractures. Such wells require high-quality 3D seismic and are forecast,
according to Peters & Co.'s North American Energy Overview (Winter 2010) to
increase from 7 percent to 16 percent of all wells drilled in western Canada
in 2010. The overall trend is evidenced by the gradual increase in average
drilling depth and average number of drilling days per well drilled in western
Canada. The Pulse 3D data library contains high-quality 3D data required for
unconventional drilling.
    United States - There are numerous "moving parts" determining natural gas
prices in the United States, demanding caution in any forecast. On the
positive side, overall natural gas storage volume fell back into the five-year
average weekly band in late 2009 and steady to record weekly withdrawals have
kept storage within this five-year range to date in 2010. As of early February
the key Henry Hub natural gas spot price was higher than year-earlier levels.
The Department of Energy's Energy Information Administration (EIA) reported in
early February that it "expects this year's annual average natural gas Henry
Hub spot price to be $5.37 per million Btu (MMBtu), a $1.42-per-MMBtu increase
over the 2009 average of $3.95." This forecast was based on a slight
year-over-year increase in overall natural gas consumption and a slight
decline in natural gas production in the United States.
    It is possible that natural gas production in the United States could hold
steady or even increase, which would be bearish for prices. The current
positive price signals could cause drilling rates to increase, increasing new
well tie-ins and eventually offsetting price gains. In addition, it remains
unclear whether the large unconventional shale gas plays that have yielded a
succession of extremely productive horizontal wells will maintain or even
increase production rates, or whether steep production decline rates will set
in as some believe. The EIA also reported that the number of rigs drilling for
natural gas increased during January by approximately 100 to a total of 861 at
month-end. By mid-February, this figure had increased further to 891 natural
gas rigs, according to Baker Hughes.
    Pulse entered 2010 in a solid financial position with ample working
capital, moderate long-term debt and a low cost structure. Approaching the end
of the first quarter Pulse continues to experience poor visibility for its
seismic data library sales and cash EBITDA for the second quarter and 2010 as
a whole.
    Accordingly, the Company is maintaining a cautious outlook for the year.
Pulse will continue to focus its business development efforts, including
participation survey marketing, in its core area, the Edson-Grande Prairie
multi-zone corridor. The Company will also continue to seek opportunities to
acquire attractively priced and high-quality existing 2D or 3D datasets. Pulse
can draw on substantial unutilized borrowing capacity if required. With its
extensive 2D and 3D seismic coverage, low data library maintenance costs and
high-quality team of sales and technical personnel, Pulse is well-positioned
to serve and benefit from any increase in customer demand through the
remainder of 2010.

    CONFERENCE CALL FOR THE 2009 YEAR END RESULTS

    A conference call and webcast to review the 2009 financial and operating
results will take place Tuesday, March 16, 2010 at 12:00 noon EST (10:00 a.m.
MST). Douglas Cutts, President and CEO will chair the call with Pamela Wicks,
Vice-President Finance and CFO also taking part. A question-and-answer period
will follow an update on the Company's strategies and outlook.
    To participate please dial (647) 427-7450 (Toronto) or 1 888 231-8191
approximately 10 minutes before the commencement of the call. A live webcast
of the conference call will be available at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2984740. An archival
recording of the conference call will be available approximately two hours
after the completion of the call until April 25, 2010. To access the replay,
please dial 1-800-642-1687 or (416) 849-0833 (Toronto) and enter the pass code
59888558 followed by the pound (No.) sign. In addition, a recording of the
call will be available commencing April 9, 2010 in the Investor Relations
section of Pulse's website at www.pulseseismic.com.

    CORPORATE PROFILE

    Pulse is a market leader in the acquisition, marketing and licensing of 2D
and 3D seismic data for the western Canadian energy sector. Pulse owns the
second-largest licensable seismic data library in Canada, currently consisting
of approximately 258,000 net kilometres of 2D seismic and 12,900 net square
kilometres of 3D seismic. The library extensively covers the Western Canada
Sedimentary Basin where most of Canada's oil and natural gas exploration and
development occurs.
    

Forward Looking Information

The "Outlook" section of 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:

    
    -   general economic and industry outlook;
    -   forecast commodity prices;
    -   forecast oil and gas drilling activity;
    -   forecast oil and gas company capital budgets;
    -   forecast horizontal drilling activity in unconventional oil and gas
        plays;
    -   estimated future demand for seismic data;
    -   estimated future seismic data sales;
    -   estimated future demand for participation surveys;
    -   Pulse's business strategy; and
    -   Other expectations, beliefs, plans, goals, objectives, assumptions,
        information and statements about possible future events, conditions,
        results and performance.
    

Undue reliance should not be placed on forward-looking information. Forward looking information is based upon 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.

The sources for forecasts and the material assumptions underlying this forward looking information are noted in the "Outlook" section of this news release.

The material risk factors that could cause actual results to differ materially from the forward-looking information include, but are not limited to:

    
    -   general economic and industry conditions;
    -   the demand for seismic data and participation surveys;
    -   the pricing of data library license 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 ability of the Company to complete participation surveys on time
        and within budget;
    -   the price and demand for oil and natural gas;
    -   the level of oil and natural gas exploration and development
        activities;
    -   the ability of the Company's customers to raise capital;
    -   environment, health and safety risks;
    -   the effect of seasonality and weather conditions on participation
        surveys;
    -   federal and provincial government laws and regulation, including
        taxation, royalty rates, environment and safety;
    -   competition from other seismic data library companies;
    -   dependence upon qualified seismic field contractors;
    -   dependence upon key management, operations and marketing personnel;
    -   loss of seismic data; and
    -   protection of Intellectual Property.
    

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.

SOURCE Pulse Seismic Inc.

For further information: For further information: Douglas Cutts, President and C.E.O., Tel.: (403) 237-5559, Toll-free: 1-877-460-5559, E-mail: info@pulseseismic.com; Please visit our website at www.pulseseismic.com

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Pulse Seismic Inc.

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