07:43:18 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Pulse Seismic Inc
Symbol PSD
Shares Issued 56,223,232
Close 2016-04-28 C$ 2.20
Market Cap C$ 123,691,110
Recent Sedar Documents

Pulse Seismic loses $3.49-million in Q1

2016-04-28 21:09 ET - News Release

Mr. Neal Coleman reports

PULSE SEISMIC INC. REPORTS Q1 2016 RESULTS

Pulse Seismic Inc. is releasing its financial and operating results for the three months ended March 31, 2016. The unaudited condensed consolidated interim financial statements, and management's discussion and analysis, will be filed on SEDAR and will be available on Pulse's website.

"The increase in quarterly seismic data library sales over the first quarter of 2015 is positive and it is encouraging that 100 per cent of first quarter sales were classified as traditional sales, despite low commodity prices and field activity," stated Neal Coleman, Pulse's president and chief executive officer. "Our outlook for 2016 remains cautious, and we will remain conservative in our cost control and spending. Following on our successful addition to the data library in January, we continue to seek further opportunities for countercyclical acquisitions."

Highlights for the three months ended March 31, 2016

Financial highlights for the three-month period are:

  • Seismic data library sales for the first quarter of 2016 increased to $1.8-million, from $1.3-million for the comparable period in 2015.
  • Total seismic revenue was $1.8-million, compared with $4.5-million for the three months ended March 31, 2015. There was one participation survey completed during the first quarter of 2015, which generated $3.2-million of participation survey revenue.
  • The net loss was $3.5-million (six cents per share basic and diluted), compared with a net loss of $3.3-million (six cents per share basic and diluted) for the same period in 2015.
  • Cash provided by operating activities was $3.5-million (six cents per share basic and diluted), versus $5.9-million (10 cents per share basic and diluted) for the comparable period of 2015.
  • Cash EBITDA (earnings before interest, taxes, depreciation and amortization) was $266,000 (nile per share basic and diluted), compared with negative $240,000 (nil per share basic and diluted) for the comparable period of 2015.
  • Shareholder free cash flow was $225,000 (nil per share basic and diluted), compared with negative $347,000 (negative one cent per share basic and diluted) for the comparable period in 2015.
  • In the three-month period ended March 31, 2016, Pulse purchased and cancelled, through its normal course issuer bid, a total of 54,000 common shares at a total cost of approximately $123,000 (at an average cost of $2.27 per common share, including commissions).
  • At March 31, 2016, Pulse was debt free and had cash of $1.0-million. The $30.0-million revolving credit facility is undrawn and fully available to the company.

Operational and corporate update

On Jan. 26, 2016, the company added approximately 107,000 net kilometres of 2-D seismic data and 58 net square kilometres of 3-D seismic data, increasing Pulse's 2-D seismic data library by 31.5 per cent from approximately 340,000 net kilometres to approximately 447,000 net kilometres.

Brent Gale, a director of the company, will be retiring from the Pulse board of directors as of the annual general meeting (AGM) on May 18, 2016. Mr. Gale was a co-founder of Pulse in 1983. He retired from the position of senior vice-president and chief operating officer in 2013, and was elected to the board at the May, 2013, AGM. The company wishes to thank Mr. Gale for his dedication and many contributions to the company, and wishes him well in the future.

                  SELECTED FINANCIAL AND OPERATING INFORMATION
     (in thousands of dollars, except per-share data and kilometres of seismic data)

                                                       Three months ended March 31, Year ended
                                                                2016          2015     Dec. 31,
Revenue                                                                                       
Data library sales                                         $   1,771     $   1,316   $  21,214
Participation surveys                                              -         3,220       3,220
Total revenue                                                  1,771         4,536      24,434
Amortization of seismic data library                           4,909         7,292      22,836
Impairment loss                                                    -             -         937
Net earnings (loss)                                           (3,494)       (3,347)     (5,308)
Per share basic and diluted                                $   (0.06)    $   (0.06)  $   (0.09)
Cash provided by operating activities                          3,506         5,925      17,094
Per share basic and diluted                                $    0.06     $    0.10   $    0.30
Cash EBITDA                                                      266          (240)     15,121
Per share basic and diluted                                $    0.00     $    0.00   $    0.27
Shareholder free cash flow                                       225          (347)     14,745
Per share basic and diluted                                $    0.00     $   (0.01)  $    0.26
Capital expenditures                                                                    
Participation surveys                                              -         3,968       3,959
Seismic data purchases, digitization and related costs         2,150           183         933
Property and equipment additions                                   6             6          14
Total capital expenditures                                     2,156         4,157       4,906
Seismic library                                                                               
2-D in kilometres                                            447,000       339,991     339,991
3-D in square kilometres                                      28,613        28,409      28,555

                           FINANCIAL POSITION AND RATIOS                                                                 
                     (in thousands of dollars, except ratios)
                                                               As at         As at       As at
                                                            March 31,     March 31,    Dec. 31,
                                                                2016          2015        2015

Working capital                                             $  2,944      $  1,862    $  4,996
Working capital ratio                                         3.62:1        1.38:1    $ 4.44:1
Total assets                                                $ 50,945      $ 70,786    $ 54,618
Long-term debt                                                     -      $  5,397           -
TTM cash EBITDA                                             $ 15,627      $ 24,612    $ 15,121
Shareholders' equity                                        $ 43,341      $ 52,796    $ 45,389
Ratio of long-term debt to TTM cash EBITDA                    0.00:1        0.22:1      0.00:1
Ratio of long-term debt to equity                             0.00:1        0.10:1      0.00:1

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

Outlook

Pulse's short-term outlook remains more cautious than one year ago. Although the company's first quarter 2016 seismic data library sales were higher than in the first quarter of 2015, consisting 100 per cent of traditional sales, it is still possible that traditional sales for the year will be lower than in 2015.

So far in 2016, oil and natural gas prices remain considerably weaker than one year ago, and mineral lease auctions or land sales in Alberta and British Columbia are extremely low. According to the Canadian Association of Oilwell Drilling Contractors (CAODC), the number of active oil and gas drilling rigs in Western Canada in the first three months of 2016 averaged approximately half the level of the same period in 2015, while utilization rates in the first half of April were under 10 per cent of the total rig fleet. The CAODC is forecasting that 4,728 wells will be drilled in Western Canada in 2016, compared with 5,394 wells in 2015. The Petroleum Services Association of Canada's updated 2016 drilling forecast is for 4,900 wells in 2016, compared with 5,300 wells in 2015, and 11,500 wells in 2014. All of this is suggestive of low traditional seismic data sales.

Pulse continues, however, to see improved prospects for merger and acquisition activity in 2016. With commodity prices remaining low, and first quarter and second quarter cash flows among E&P (exploration and production) companies widely expected to decline or even become negative, causing debt ratios to increase sharply, banks are expected to strongly encourage their borrowers to narrow bid-ask spreads and close transactions.

Following a year of surprisingly low M&A (mergers and acquisitions) spending and weak deal-flow, dozens of asset packages representing millions of acres of mineral rights and hundreds of thousands of barrels of production are being marketed in 2016, and a number of deals were announced in the first three months of the year. Greater M&A activity would create favourable conditions for additional transaction-based seismic data sales.

The unpredictability of transaction-based sales, however, means that Pulse will continue to lack visibility as to its 2016 revenues. Corporate transactions are a necessary but not sufficient condition to generate seismic data relicensing fees; generating transaction-based sales depends on the nature of the underlying corporate transaction and on the purchaser's plans for the assets in question.

Pulse's critical strengths continue to be its very low costs and strong balance sheet, including zero long-term debt and zero current short-term borrowing. The company's ability to generate cash EBITDA and shareholder free cash flow in the first quarter, with sales of only $1.8-million, demonstrates how low the company's costs have become.

With its annual cash costs having been reduced to approximately $6.0-million, immaterial financing costs and no dividend, Pulse can continue to generate cash EBITDA and shareholder free cash flow at low revenue while buying back additional shares and maintaining the financial flexibility to grow its seismic data library. Pulse's revised $30.0-million credit facility is undrawn as of this date and includes an accordion feature for expansion to $70.0-million.

Pulse's long-term goal continues to be growing into Western Canada's largest licensable data library. The company's history demonstrates that its revenues could accelerate at any time and could increase significantly with virtually no increase in operating costs, making Pulse a high-margin business under even modestly positive industry conditions.

Conference call

The company's next conference call will be held after the release of its year-end 2016 results, in March, 2017. Should investors or analysts wish to contact the company, please feel free to contact Mr. Coleman or Pamela Wicks.

We seek Safe Harbor.

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