Pulse Seismic Inc. Reports 2014 Results and Declares Quarterly Dividend

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OTCQX: PLSDF

CALGARY, March 5, 2015 /CNW/ - Pulse Seismic Inc. ("Pulse" or "the Company") is pleased to report its financial and operating results for the year ended December 31, 2014. The audited financial results were in line with the preliminary unaudited financial results announced in the Company's news release on January 19, 2015. The audited consolidated financial statements, accompanying notes and MD&A are being filed on SEDAR (www.sedar.com) and will be available on Pulse's website at www.pulseseismic.com.

Pulse has declared a quarterly dividend of $0.02 per common share to be paid on April 10, 2015 to shareholders of record at the close of business on March 27, 2015. 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 TWELVE MONTHS ENDED DECEMBER 31, 2014

  • Seismic data library sales increased by 32 percent year-over-year to $35.7 million in 2014 from $27.1 million in 2013;

 

  • Total seismic revenue was also $35.7 million in 2014, with zero participation revenue, compared to $40.5 million of which $13.4 million was participation survey revenue in 2013;

 

  • Cash EBITDA(a) of $28.6 million, a 49 percent increase from $19.1 million in 2013, and a 53 percent increase on a per-share basis to $0.49 per share basic and diluted from $0.32 in 2013;

 

  • Shareholder free cash flow(a) of $27.9 million, a 35 percent increase from $20.7 million in 2013, and a 38 percent increase on a per-share basis to $0.47 per share basic and diluted from $0.34 in 2013;

 

  • Funds from operations(b) of $31.6 million ($0.54 per share basic and diluted) compared to $27.8 million ($0.46 per share basic and diluted) for 2013;

 

  • Pulse purchased and cancelled, through its normal course issuer bid, a total of 2,101,277 common shares (3.5 percent of the total outstanding at December 31, 2013) at a total cost of approximately $6.3 million (average cost of $3.01 per common share including commissions);

 

  • Pulse paid four quarterly dividends of $0.02 per common share at a total cost of $4.7 million;

 

  • At December 31, 2014 Pulse's cash balance was $900,000 and total debt(c) was $5.5 million, resulting in net debt of $4.6 million; and

 

  • The Company signed a participation survey agreement in the fourth quarter for a 137 km2 3D participation survey to be conducted near Edson in the Company's West Central Alberta core area in the first quarter of 2015. The survey is currently nearing completion.

HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2014

 

  • Seismic data library sales of $8.4 million, up by 84 percent from $4.6 million in the same period of 2013;

 

  • Cash EBITDA of $6.7 million or $0.12 per share basic and diluted compared to $3.0 million or $0.05 per share basic and diluted in the fourth quarter of 2013;

 

  • Shareholder free cash flow of $6.5 million or $0.11 per share basic and diluted compared to $3.7 million or $0.06 per share basic and diluted in the fourth quarter of 2013; and

 

  • Funds from operations of $6.6 million ($0.11 per share basic and diluted) compared to $2.7 million ($0.05 per share basic and diluted) for the three months ended December 31, 2013.

"The 32 percent increase in annual data library sales over 2013 was due to a higher level of transaction based sales, and I'm very pleased that 78 percent of our $35.7 million in sales was converted to shareholder free cash flow," stated Neal Coleman, Pulse's President and CEO. "Transaction-based sales have become a significant part of our annual revenues, as traditional data sales are hampered by low commodity prices and over-supplies of crude oil and natural gas."

In addition, Coleman said, "Our financial position continues to improve. Shareholders benefited directly from our shareholder free cash flow through a return of $11.0 million of capital, consisting of $4.7 million in dividends and $6.3 million in share buybacks. Additionally, we repaid $16.6 million of debt, reducing our net debt at year-end to only $4.6 million. This further strengthens Pulse during a period of industry uncertainty."

Selected Financial and Operating Information









(thousands of dollars except per share data, number of shares and kilometres of seismic data)













Three months ended December 31


Year ended December 31



2014


2013



2014


2013









Revenue











Data library sales

$

8,385

$

4,565


$

35,743

$

27,079


Participation surveys


-


-



-


13,429

Total revenue

$

8,385

$

4,565


$

35,743

$

40,508











Amortization of seismic data library

$

5,279

$

6,215


$

22,507

$

55,619











Net earnings (loss)

$

824

$

(2,572)


$

3,478

$

(18,834)


Per share basic and diluted

$

0.01

$

(0.04)


$

0.06

$

(0.31)












Cash EBITDA (a)

$

6,661

$

2,962


$

28,615

$

19,145


Per share basic and diluted(a)

$

0.12

$

0.05


$

0.49

$

0.32












Shareholder free cash flow (a)

$

6,515

$

3,655


$

27,858

$

20,682


Per share basic and diluted(a)

$

0.11

$

0.06


$

0.47

$

0.34












Funds from operations (b)

$

6,583

$

2,736


$

31,580

$

27,751


Per share basic and diluted(b)

$

0.11

$

0.05


$

0.54

$

0.46












Capital expenditures











Participation surveys (cost reduction)

$

36

$

(67)


$

36

$

21,265


Seismic data digitization and related costs


183


183



733


961


Property and equipment additions (cost reduction


43


(41)



64


127

Total capital expenditures

$

262

$

75


$

833

$

22,353











Weighted average shares outstanding











Basic and diluted


57,865,941


59,434,027



58,957,072


60,280,876

Shares outstanding at period end







57,247,843


59,349,120

Seismic library:










2D in net kilometres







339,991


339,991

3D in net square kilometres







28,284


28,284









































Financial Position and Ratios










(thousands of dollars except ratio calculations)
















As at December 31,








2014


2013

Working capital






$

5,296

$

6,476

Working capital ratio







2.79:1


3.71:1

Total assets






$

75,482

$

98,017

Total debt (c)






$

5,500

$

22,100

TTM cash EBITDA (d)






$

28,615

$

19,145

Shareholders' equity






$

58,401

$

65,962

Total debt to equity ratio







0.09:1


0.34:1

Total debt to TTM cash EBITDA ratio







0.19:1


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 2D and 3D 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.

(c) Total debt is defined as long-term debt, excluding deferred financing costs.

(d) TTM cash EBITDA is defined as the sum of the trailing 12 months' cash EBITDA and is used to provide a comparable annualized measure.

OUTLOOK

Pulse's outlook for 2015 is cautious. Energy producers have reduced capital spending, trimmed staffing and, in some cases, deferred the completion of recently drilled wells. The most recent industry forecast, issued in January by the Canadian Association of Petroleum Producers, is for non-oil sands capital investment to decline by 40 percent year-over-year and for 7,350 wells to be drilled in Western Canada this year, down from 10,500 in 2014. Natural gas in Alberta was priced below $3 per thousand cubic feet throughout February. In addition, Pulse believes that uncertainty has increased surrounding development of liquefied natural gas (LNG) export facilities on Canada's West Coast.

The Company's view is that US$50-per-barrel WTI oil is not sustainable. There has been significant response in the exploration and production sectors in Canada and the United States, with the aforementioned capital spending reductions in Canada and a dramatic recorded reduction in the U.S. active drilling rig count over successive weeks. This is conducive to a reduction in production and, in turn, a supply-demand rebalancing. Pulse considers it noteworthy that the overall decline in world crude oil prices was due to temporary over-supply rather than global recession accompanied by falling oil demand. Low commodity prices amid general economic growth are conducive to rising oil demand and a recovery in the oil price, the timing of which is unknown, as is the effect on upstream activity in Western Canada and on Pulse's business.

Times of capital scarcity, declining cash flows and increasing corporate debt serviceability problems encourage asset sales, bringing in of partners and corporate mergers and acquisition. The Company also foresees a significant role for private companies, funded by private equity, in purchasing and redeveloping assets, creating further opportunities for transaction-based sales. (For further information on transaction-based sales, please see the Company's MD&A for the year ended December 31, 2014, which is being filed on SEDAR at www.sedar.com and on the Company's website at www.pulseseismic.com.)

Throughout periods of weaker sales, the Company will rely on its advantages of low costs, lack of capital spending commitments and low debt. Pulse will also remain open to acquiring seismic datasets that meet its criteria for geographical and geological coverage, technical quality, regional industry activity and valuation. Pulse will require approximately $13 million in data library sales revenue to cover its cash costs, pay interest on its debt and pay its dividend to shareholders, making the Company capable of generating shareholder free cash flow even in a weak revenue year. So far this year, the Company has experienced a record low level of data library sales.

2014 CONFERENCE CALL

Pulse will hold a conference call and live audio webcast on Friday, March 6, 2015 at 11:00 a.m. MST (1:00 p.m. EST) where Neal Coleman, President & CEO and Pamela Wicks, VP Finance & CFO will discuss the Company's 2014 results. A question-and-answer period will follow an update on the Company's strategies and outlook.

To participate please dial 587-880-2171 (local – Calgary) or 1-888-390-0546 (toll free – North America) approximately 10 minutes before the commencement of the call. To listen to the webcast of the conference call please visit the Company's website at www.pulseseismic.com.

An archival recording of the conference call will be available approximately one hour after the completion of the call until March 13, 2015. To access the replay, please dial 1-888-390-0541 or 416-764-8677 and enter the playback pass code 997259#.

CORPORATE PROFILE

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.

Forward Looking Information

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:

  • Pulse's outlook for 2015 is cautious;
  • The Company's view is that US $50 per barrel oil is not sustainable;  
  • The Company also foresees a significant role for private companies, funded by private equity, in purchasing and redeveloping assets, creating further opportunities for transaction based sales;
  • The Company is capable of generating shareholder free cash flow even in a weak revenue year;
  • General economic and industry outlook;
  • Pulse's capital allocation strategy;
  • Pulse's dividend policy;
  • Industry activity levels and capital spending;
  • Forecast commodity prices;
  • Forecast oil and natural gas drilling activity;
  • Forecast oil and natural gas company capital budgets;
  • Forecast horizontal drilling activity in unconventional oil and natural gas plays;
  • Estimated future demand for seismic data;
  • Estimated future seismic data sales;
  • Estimated future demand for participation surveys;
  • 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: "foresees", "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 "forecasted", "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 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 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 ability of the Company to complete participation surveys on time and within budget;
  • 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;
  • dependence upon qualified seismic field contractors;
  • dependence upon 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.

SOURCE Pulse Seismic Inc.

For further information: Neal Coleman, President and CEO Or Pamela Wicks, VP Finance and CFO Tel.: (403) 237-5559, Toll-free: 1-877-460-5559, E-mail: info@pulseseismic.com., Please visit our website at www.pulseseismic.com.

RELATED LINKS
http://www.pulsedatainc.com

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