However, the Dubai-headquartered marine seismic company announced an encouraging half year net profit of $134.7m. This was due to an accounting gain of $177.8m on restructuring in the first quarter and a reduction in impairment charge in the same period.
Three new contracts worth $150m secured during the second quarter helped softened the blow of an $11.2m loss for Q2 as the company continues to chip away at a net interest bearing debt currently standing at $260.3m, down from $588.1m as of 31 December 2015.
In the second quarter the company reported revenues of $67.9m, up 7% from Q1.
“As expected, total cash dropped during the quarter as a result of a working capital build-up which should improve in the third quarter. The build-up is largely a result of extended payment terms negotiated earlier with one client, payment from whom was received in July,” Polarcus ceo Rod Starr said.
"Second-quarter revenue increased by 7% over the first quarter, driven by strong multi-client revenue from a converted contract project offshore Brazil. The project was carried out with high efficiency and strong cost control providing an extraordinary prefunding level in excess of 200%.
“At the same time, the contract business realised lower effective day rates which were impacted by certain turnkey projects.”
The three new contracts all represent new revenue sources. Two projects are located in countries previously uncharted by Polarcus while the third is to be acquired with its new XArray technology in Indonesia.
XArray is a new configuration that enables increased efficiency while providing enhanced data quality to clients, further improving Polarcus’ competitiveness.
“To navigate the challenging market we remain focused on delivering operational excellence and on maintaining our strong backlog. Our technical downtime remains below 2%.”
Polarcus’ H1 result follows an agreement reached in January with key shareholders, including the company’s banks, to restructure its balance sheet following a difficult 2015 when it recorded a $374.1m loss.
Renegotiated lease terms and the introduction of new call options prices for bonds are designed to reduce debt by a potential $280m. In addition, debt service payments over 24 months will be reduced by approximately $140m.
As part of the restructuring, charter rates for Polarcus Nadia and Polarcus Naila have been reduced by approximately 75% until January 2018 with an increase thereafter representing a reduction of 20% from current levels, subject to Polarcus being able to service its bank debt in full at the time.
“We continue to drive costs down to succeed in the current market, and as a result we realised a further drop in gross cost of sales by 4% from already low levels in the previous quarter,” Starr added.
An ultra-wide 3D marine seismic project offshore Myanmar early this year saw Polarcus set records. Polarcus Amani towed an in-sea configuration with a width of 1.8km across the front ends. With each of its 10 streamers separated by 200 m, the total area covered by the spread is 17.6 sq km – the largest in-sea configuration ever towed by a single seismic vessel as well as the largest man-made moving object on earth.
The acquisition plan in Myanmar was set to deliver up to 190 sq km per day, a production rate currently it claims is unrivalled in the seismic industry.
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