Polarcus cuts losses despite lower revenues

Oslo-listed marine seismic player Polarcus tightened its quarterly net loss despite lower revenues and impairment charges. 

According to its financial report published on Tuesday, Polarcus managed to cut its net loss for the fourth quarter of 2017 to $91.7 million from $97 million in the same period of 2016.

As a result of the prolonged challenging market conditions, non-cash impairments of $89.8 million were recorded in 4Q 2017 related to the carrying value of the company’s seismic vessels and equipment as well as of the multi-client library.

A net gain of $27 million was recognized to estimates for onerous contract provisions, mainly related to an operating lease contract provision for Polarcus Nadia, a lease which was extinguished in 1Q 2018 when Polarcus completed the purchase of Polarcus Nadia and Polarcus Naila as part of the company’s financial restructuring.

The company’s revenues in 4Q 2017 decreased 36% to $37.2 million from $58.5 million in 3Q 2017. Polarcus’ revenues also dropped when compared to the fourth quarter of 2016 and revenues of $47.2 million.

The decline in revenue was driven by lower utilization, mainly due to Polarcus Asima vessel being idle for most of the quarter. The achieved day rate was flat compared to 3Q 2017.

Polarcus’ vessel utilization decreased to 68% in 4Q 2017 from 72% in 4Q 2016.

The company’s secured backlog has increased to $164 million from $125 million at the end of 3Q 2017.

Commenting on the 4Q 2017 performance, Polarcus CEO Duncan Eley stated: “Utilization of the 25-vessel global industry fleet was estimated at approximately 50% during 4Q 2017, with Polarcus’ fleet utilization and quarterly revenue negatively impacted by this supply and demand imbalance at the back end of 2017.”

Tender activity up

Commenting on the market situation, Eley said: “We still see cautious spending on seismic exploration by our clients, but tender activity is up year-on-year with some positive momentum going into 2018 and we expect to see the seasonal tightening of the market during 2Q and 3Q this year. We remain positive on the fundamentals driving an improving market in the medium to long term, though there remains current uncertainty in the supply-demand balance in the present market. Tender activity going into 2Q 2018 will be an important indicator of the market development for the second half of 2018.”

At the start of 2018, there are some indications of a stabilization in the market, though it is too early to conclude that the market is in recovery, Polarcus noted.

The company also added that tender activity increased 35% in 2017 compared to 2016, while the number of global seismic vessels in operation is down 10% over the same period.

The year-to-date oil price at the start of 2018 is approximately $67 per barrel, up from the price of around $55 per barrel a year ago, and further up from a price of less than $30 per barrel at the start of 2016. Polarcus has 90% of its available vessel capacity booked for the first half of 2018.

More work ahead 

Also on Tuesday, Polarcus revealed it has received a Letter of Intent from an undisclosed client for a broadband 3D marine seismic acquisition project in Central America.

The project is due to start in the second quarter of 2018 and will run for approximately two months. The company has not revealed any other details about the project in Central America.

Offshore Energy Today Staff