CALGARY, ALBERTA--(Marketwired - May 10, 2013) - Pulse Seismic Inc. (TSX:PSD) (OTCQX:PLSDF) ("Pulse" or "the Company") reports its financial and operating results for the three months ended March 31, 2013. The unaudited condensed consolidated interim financial statements and MD&A will be filed on SEDAR ( www.sedar.com ) and will be available on Pulse's website ( www.pulseseismic.com ).
Pulse has declared a quarterly dividend of $0.02 per common share. This dividend will be paid on June 20, 2013 to shareholders of record at the close of business on June 6, 2013.
HIGHLIGHTS FOR THE PERIOD ENDED MARCH 31, 2013
- Pulse's key performance metrics which include cash EBITDA (a) , shareholder free cash flow (a) and net earnings all declined in the three month period ending March 31, 2013 compared to the prior year. The Company experienced lower data library sales for the quarter as the prior comparable period included Pulse's single-largest data sale of $27.8 million.
- Seismic data library sales were $13.9 million compared to $34.6 million.
- Total seismic revenue (including revenue from participation surveys) was $26.9 million compared to $36.4 million.
- Cash EBITDA was $11.3 million ($0.19 per share basic and diluted) compared to $32.0 million ($0.49 per share basic and diluted).
- Shareholder free cash flow was $10.4 million ($0.17 per share basic and diluted) compared to $31.4 million ($0.48 per share basic and diluted).
- Net earnings were $2.5 million ($0.04 per share basic and diluted) compared to $12.0 million ($0.19 per share basic and diluted).
- The 2012-13 winter 3D participation survey program has been completed on time and on budget. The three surveys totaled 1,182 square kilometres with total gross CAPEX amounting to $57.9 million. At the end of the quarter two of the surveys, totaling 642 square kilometres, were in the final data processing stage and had not yet been delivered to the client, therefore remain as work in progress at March 31, 2013.
- Pulse purchased and cancelled, through its normal course issuer bid, a total of 869,172 common shares at a total cost of approximately $2.5 million.
- On February 15, 2013 Pulse executed a new $50.0 million three-year extendible revolving syndicated credit facility. At March 31, 2013 $23.9 million was available for future draws.
SELECTED FINANCIAL AND OPERATING INFORMATION
(thousands of dollars except per share data and number of shares)
| 3 months ended | 3 months ended | ||||||
| March 31, | March 31, | Year ended | |||||
| 2013 | 2012 | December 31, | |||||
| (unaudited) | (unaudited) | 2012 | |||||
| Revenue: | |||||||
| Data library sales | $ | 13,864 | $ | 34,607 | $ | 64,040 | |
| Participation surveys | 13,068 | 1,793 | 22,313 | ||||
| Total revenue | $ | 26,932 | $ | 36,400 | $ | 86,353 | |
| Amortization of seismic data library | $ | 20,027 | $ | 17,000 | $ | 36,568 | |
| Net earnings | $ | 2,541 | $ | 11,985 | $ | 27,446 | |
| Net earnings per share: | |||||||
| Basic and diluted | $ | 0.04 | $ | 0.19 | $ | 0.44 | |
| Funds from operations (b) | $ | 20,317 | $ | 33,156 | $ | 71,585 | |
| Funds from operations per share (b) : | |||||||
| Basic and diluted | $ | 0.33 | $ | 0.51 | $ | 1.14 | |
| Cash EBITDA (a) | $ | 11,341 | $ | 32,001 | $ | 54,692 | |
| Cash EBITDA per share (a) : | |||||||
| Basic and diluted | $ | 0.19 | $ | 0.49 | $ | 0.87 | |
| Shareholder free cash flow (a) | $ | 10,371 | $ | 31,361 | $ | 50,046 | |
| Shareholder free cash flow per share (a) : | |||||||
| Basic and diluted | $ | 0.17 | $ | 0.48 | $ | 0.80 | |
| Capital expenditures: | |||||||
| Participation surveys | $ | 20,700 | $ | 3,703 | $ | 40,261 | |
| Seismic data purchases and related costs | 298 | - | 1,908 | ||||
| Property & equipment additions | 74 | 9 | 790 | ||||
| Total capital expenditures | $ | 21,072 | $ | 3,712 | $ | 42,959 | |
| Weighted average shares outstanding: | |||||||
| Basic | 60,958,068 | 64,691,878 | 62,526,761 | ||||
| Diluted | 60,998,114 | 64,691,878 | 62,526,761 | ||||
| Shares outstanding at period end | 60,927,170 | 63,877,071 | 61,140,442 | ||||
| Seismic library: | |||||||
| 2D net kilometres | 339,991 | 339,991 | 339,991 | ||||
| 3D net square kilometres | 27,642 | 27,089 | 27,089 | ||||
| Financial Position and Ratios | |||||||
| (thousands of dollars except ratio calculations) | |||||||
| March 31, | March 31, | December 31, | |||||
| 2013 | 2012 | 2012 | |||||
| Working capital | $ | 11,440 | $ | 25,708 | $ | (1,462 | ) |
| Working capital ratio | 1.85:1 | 1.99:1 | 0.96:1 | ||||
| Total assets | $ | 148,546 | $ | 155,726 | $ | 162,454 | |
| Long-term debt (c) | $ | 25,707 | $ | 43,351 | $ | 26,688 | |
| TTM cash EBITDA (d) | $ | 34,032 | $ | 50,542 | $ | 54,692 | |
| Shareholders' equity | $ | 97,318 | $ | 90,283 | $ | 96,550 | |
| Long-term debt to equity ratio | 0.26:1 | 0.48:1 | 0.28:1 | ||||
| Long-term debt to TTM cash EBITDA ratio | 0.76:1 | 0.86:1 | 0.49:1 | ||||
| (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) | Long-term debt is defined as total long-term debt, including current portion, net of deferred financing costs. |
| (d) | TTM cash EBITDA is defined as the sum of the trailing 12 month's cash EBITDA and is used to provide a comparable annualized measure. |
OUTLOOK
Pulse is pleased with the overall revenues and seismic data library sales in the first quarter of 2013, and remains optimistic about the year ahead. Pulse exceeded average seismic data library sales for the first quarter, except for the first quarter of 2012 which included a single record sale of $27.8 million.
Short-term visibility for industry activity and revenue remains poor, and Pulse is fully prepared for quarterly variations in activity and data library sales. Considerably higher natural gas prices from a year ago - $3.70 per thousand cubic feet (mcf) at AECO on May 8, 2013 versus only $2.12 per mcf a year earlier - as well as a reasonable price forecast for the year ahead are positive, but have not triggered an observed increase in natural gas-related activity in western Canada.
Other near-term risks discussed in the Outlook of Pulse's MD&A for the year ended December 31, 2012 all remain. These include volatile crude oil prices, high regional oil price differentials due to crude oil export transportation constraints, uncertainty over proposed oil export pipelines, geopolitical instability in certain international regions and capital constraints on oil and natural gas producers.
Signals for 2013 oil and natural gas field activity are flat to a slight improvement. The Petroleum Services Association of Canada's April update of its 2013 drilling forecast anticipates 12,000 oil and natural gas wells to be drilled across Canada in 2013, up 5% from the original November 2012 forecast of 11,400. Of the total, approximately 68 percent are forecast to be horizontal wells and 79 percent will target crude oil. According to the Canadian Association of Oilwell Drilling Contractors, well completions in January and February 2013 were down slightly from the same months in 2012 and 2011, while the number of active drilling rigs in January, February and March 2013 was lower than in the corresponding months one year earlier.
Pulse remains hopeful of additional transaction-based sales of seismic data generated by corporate-level activity such as mergers and acquisitions, joint ventures, asset sales and farm-ins/farm-outs (in which one or more parties to the transaction requires a licensed seismic data set) in areas where it holds data. The Company cannot predict these sales. There have been few reported corporate transactions to date in 2013.
Over the longer term, Pulse is optimistic that the development of large, long-term, capital-intensive plays such as the liquids-rich and oil-prone sections of the Montney Formation, as well as the Duvernay shale, will trigger substantial sustained industry activity, including seismic data sales and new 3D participation surveys. In addition, the continued progress of proposed liquefied natural gas terminals in British Columbia is conducive to a revival of natural gas drilling, including for "dry" natural gas targets, over the medium term.
Pulse is continuing with vigorous business development activity. Following the success of its record capital program of three large 3D participation surveys, the Company anticipates opportunities for additional participation surveys in the Duvernay and Montney plays, areas that remain highly active and also contain multiple other prospective zones, creating the sought-after prospect of future re-licensing sales. The Company's solid balance sheet, working capital and recently-closed credit facility provide a solid financial base from which to operate, with decision-making flexibility.
The Company's proven approach to capital allocation - investment in capital programs (participation surveys and dataset acquisitions that meet key criteria), purchase of Pulse shares, payment of a sustainable dividend, and prudent management of the revolving credit facility, will continue to guide Pulse's business throughout 2013. Pulse can generate solid shareholder free cash flow and continue to pay its dividend under moderately low year- over-year data sales.
With a large amount of recently shot 3D seismic data, the significant dataset acquisition in 2010, wide coverage over some of western Canada's most promising unconventional oil and liquids-rich gas plays, plus the financial strength to pursue a range of opportunities, Pulse is positioned to thrive in both the short and longer terms. As industry capital spending and field activities go up and down along with business conditions and opportunities, Pulse will continue to focus on generating as much data library sales, cash EBITDA and shareholder free cash flow per share as conditions allow, while seeking opportunities to grow.
Q1 2013 CONFERENCE CALL
Pulse will host a conference call on Monday, May 13, 2013 at 1:00 pm MT (3:00 pm ET) to discuss the Company's results for the first quarter. Neal Coleman, President & CEO will chair the call with Pamela Wicks, VP Finance & CFO taking part. A question-and-answer period will follow an update on the Company's strategies and outlook.
To participate please dial 416-340-8527 or 877-240-9772 approximately 10 minutes before the commencement of the call. To listen to the audio 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 May 21, 2013. To access the replay, please dial 905-694-9451 or 800-408-3053 and enter the pass code 7164722.
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 net square kilometres of 3D seismic and 340,000 net 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 remains optimistic about the year ahead;
- Pulse remains hopeful of additional transaction-based sales of seismic data;
- Pulse is optimistic that the development of large, long-term capital intensive plays will trigger substantial sustained industry activity, including seismic data sales and new 3D participation surveys;
- Pulse anticipates opportunities for additional participation surveys in the Duvernay and Montney plays;
- Pulse can generate solid shareholder free cash flow and continue to pay its dividend under moderately low year- over-year data sales;
- general economic and industry outlook;
- 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 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.
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:
- economic risks;
- 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;
- 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; 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.
