Pulse Seismic Inc. reports Q1 2010 results

TSX Symbol - PSD

CALGARY, May 5 /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 three months ended March 31, 2010. The unaudited interim consolidated financial statements, accompanying notes and MD&A are being filed on SEDAR. These documents will also be available on Pulse's website www.pulseseismic.com.

HIGHLIGHTS

    
    -   Seismic data library sales increased to $5.1 million for the three
        months ended March 31, 2010 from $2.2 million for the same period in
        2009.

    -   Cash EBITDA(a) for the three months ended March 31, 2010 was
        $3.5 million ($0.07 per share basic and diluted) compared to
        $0.7 million ($0.01 per share basic and diluted) for the same period
        in 2009.

    -   The net loss for the three months ended March 31, 2010 was
        $1.5 million ($0.03 per share basic and diluted) compared to the net
        loss of $2.9 million ($0.05 per share basic and diluted) for the
        three months ended March 31, 2009.

    -   Pulse's working capital position at March 31, 2010 was $18.1 million
        (including cash of $19.9 million and current portion of long term
        debt of $7.0 million) compared to $11.0 million (including cash of
        $17.0 million and current portion of long term debt of $7.0 million)
        at March 31, 2009.

    -   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 31, 2010 was $3.0 million.


    SELECT FINANCIAL AND OPERATING INFORMATION

    ('000's except per share data and number of shares)

                                   3 months ended              Year ended
                                      March 31,               December 31,
                                  ----------------          ----------------
                                  2010        2009                2009
                                  ----        ----                ----
                              (unaudited) (unaudited)


    Revenue:
      Data library sales      $    5,116  $    2,152              $   23,444
      Participation surveys            -       4,872                   7,302
                              -----------------------------------------------
    Total revenue             $    5,116  $    7,024              $   30,746

    Amortization of seismic
     data library             $    4,896  $    8,856              $   24,569

    Net loss                  $   (1,533) $   (2,925)             $   (2,755)
    Loss per share:
      Basic and diluted       $    (0.03) $    (0.05)             $    (0.05)

    Funds from operations(a)  $    3,072  $    5,176              $   22,084
    Funds from operations
     per share(a):
      Basic and diluted       $     0.06  $     0.10              $     0.41

    Cash EBITDA(a)            $    3,460  $      656              $   16,359
    Cash EBITDA(a) per share  $     0.07  $     0.01              $     0.31

    Capital expenditures:
      Seismic data purchases  $        -  $        -              $      315
      Participation surveys
       (cost recoveries)            (276)      8,900                  12,083
      Changes to work in
       progress                        -      (1,641)                 (1,681)
      Property & equipment
       additions                       -          22                      29
                              -----------------------------------------------
    Total capital
     expenditures             $     (276) $    7,281              $   10,746

    Seismic library:
      2D in net kilometres       257,994     257,281                 257,994
      3D in net square
       kilometres                 12,913      12,805                  12,913

    Weighted average shares
     outstanding:
      Basic                   53,071,383  53,263,616              53,318,318
      Diluted                 53,071,383  53,263,616              53,318,318
    Shares outstanding at
     period end               53,071,383  53,160,483              53,071,383


    Financial Position and
     Ratios
    ($000s except per ratio and
     percentage calculations)

    Working capital           $   18,091  $   10,988              $   19,296
    Working capital ratio            2.8         2.0                     2.8
    Total assets              $   90,865  $  102,654              $   98,219
    Long-term debt(b)         $   22,932  $   32,384              $   27,407
    TTM cash EBITDA(c)        $   19,163  $   22,959              $   16,359
    Shareholders' equity      $   61,883  $   63,067              $   63,345
    Long-term debt to equity
     ratio                          0.37        0.51                    0.43
    Long-term debt to
     TTM cash EBITDA ratio          1.20        1.41                    1.68

    (a) The Company's continuous disclosure documents provide discussion and
        analysis of "Cash EBITDA", "funds from operations" and "funds
        from 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 operations is cash flow from operations as prescribed by
        Canadian GAAP but excluding the impact of changes in non-cash working
        capital. Funds from operations represent 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.

    (b) Long-term debt is defined as total long-term debt, including current
        portion, net of debt financing cost.

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

OUTLOOK

Pulse is cautiously optimistic about energy industry activity levels and capital spending over the remainder of 2010 and, hence, about the Company's data library sales. The main drivers of Pulse's business remain the same as those discussed in the Outlook section of the MD&A for the year ended December 31, 2009, and the reader is referred to that document for background information germane to Pulse's current quarterly outlook.

The Company's cautious optimism is based on a number of positive economic and industry signals. These include:

    
    -   Regular expressions of interest from existing and potential customers
        in licensing seismic data from Pulse, following first-quarter data
        library sales that were up considerably over the first quarter of
        2009, although the anticipated timing of future sales remains
        uncertain;
    -   Strong sales of mineral leases at successive auctions in late 2009
        and early 2010 in Alberta, B.C. and Saskatchewan;
    -   Relatively favourable outlooks for oil and natural gas industry
        activities issued by financial analysts at energy-focused investment
        banks;
    -   The Government of Alberta's announcement that its recent
        Competitiveness Review of the energy sector points to the need for a
        more supportive energy fiscal regime, including lower royalties than
        under its current Royalty Framework; and
    -   The continued successful evolution of several unconventional crude
        oil and natural gas plays, along with signs of further emerging
        plays, which are attracting capital investment at current commodity
        prices.
    

The positive signals are offset to a large degree by the continued weakness in natural gas prices - coupled with poor visibility on natural gas pricing trends - and the generally weak ability of natural gas-focused producers to access substantial new capital for exploration spending. The AECO 'C' spot natural gas price was well below $4 per mcf at the end of April. The lack of pricing visibility is shared by commodity experts and forecasting agencies, which are also generally cautious in their short-term scenarios. The number of natural gas-focused drilling rigs in the United States continued to increase in April, and natural gas storage has shifted back to net weekly injection, with United States storage volumes reaching all-time records for the time of year at the end of April. All of this is bearish for short-term natural gas prices. The United States Department of Energy's Energy Information Administration recently forecast high rates of natural gas storage injection during 2010 and reduced its short-term natural gas price forecast.

In summary, although there are more positive economic and industry factors currently evident compared to a year ago, Pulse expects 2010 to unfold as a slow recovery period.

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;
    -   industry activity levels and capital spending;
    -   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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