CALGARY, Alberta, July 26, 2017 (GLOBE NEWSWIRE) — Pulse Seismic Inc. (TSX:PSD) (OTCQX:PLSDF) (“Pulse” or “the Company”) is pleased to report its financial and operating results for the three and six months ended June 30, 2017. The unaudited condensed consolidated interim financial statements, accompanying notes and MD&A are being filed on SEDAR (www.sedar.com) and will be available on Pulse’s website at www.pulseseismic.com.
HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017
- Total revenue, comprised exclusively of data library sales, for the three months ended June 30, 2017 was $2.9 million compared to $2.8 million for the three months ended June 30, 2016. Total revenue for the first six months of 2017, also comprised exclusively of data library sales, increased by 24 percent to $5.6 million from $4.6 million for the six months ended June 30, 2016;
- The net loss was $2.4 million ($0.04 loss per share basic and diluted) for the second quarter of 2017 and 2016. The net loss for the six months ended June 30, 2017 was $4.9 million ($0.09 loss per share basic and diluted), a $1.0 million improvement compared to a net loss of $5.9 million ($0.11 loss per share basic and diluted) for the first six months of 2016;
- Cash EBITDA(a) was $1.5 million ($0.03 per share basic and diluted) for the second quarter of 2017 and 2016. Cash EBITDA was $2.9 million ($0.05 per share basic and diluted) for the six months ended June 30, 2017 compared to $1.8 million ($0.03 per share basic and diluted) for the six months ended June 30, 2016;
- Shareholder free cash flow(a) was $1.6 million ($0.03 per share basic and diluted) for the second quarter of 2017 compared to $1.5 million ($0.03 per share basic and diluted) for the comparable period in 2016. Shareholder free cash flow was $2.9 million ($0.05 per share basic and diluted) for the six months ended June 30, 2017 compared to $1.7 million ($0.03 per share basic and diluted) for the six months ended June 30, 2016;
- In the three-month period ended June 30, 2017 Pulse didn’t purchase any shares through its normal course issuer bid. In the six-month period ended June 30, 2017 Pulse purchased and cancelled a total of 583,500 common shares at a total cost of approximately $1.4 million (average cost of $2.41 per common share including commissions); and
- At June 30, 2017 Pulse was debt-free and had cash of $8.3 million. The $30.0 million revolving credit facility is undrawn and fully available to the Company.
| SELECTED FINANCIAL AND OPERATING INFORMATION |
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| Three months ended June 30, | Six months ended June 30, | Year ended | ||||||||||||
| (thousands of dollars except per share data, | 2017 | 2016 | 2017 | 2016 | December 31, | |||||||||
| numbers of shares and kilometres of seismic data) | (unaudited) | (unaudited) | 2016 | |||||||||||
| Revenue | ||||||||||||||
| Data library sales | 2,929 | 2,779 | 5,648 | 4,550 | 14,339 | |||||||||
| Amortization of seismic data library | 4,638 | 4,706 | 9,273 | 9,615 | 18,973 | |||||||||
| Net loss | (2,426 | ) | (2,441 | ) | (4,928 | ) | (5,935 | ) | (7,490 | ) | ||||
| Per share basic and diluted | (0.04 | ) | (0.04 | ) | (0.09 | ) | (0.11 | ) | (0.13 | ) | ||||
| Cash provided by operating activities | 833 | 1,183 | 4,131 | 4,689 | 9,471 | |||||||||
| Per share basic and diluted | 0.02 | 0.02 | 0.07 | 0.08 | 0.17 | |||||||||
| Cash EBITDA (a) | 1,542 | 1,504 | 2,872 | 1,770 | 9,119 | |||||||||
| Per share basic and diluted (a) | 0.03 | 0.03 | 0.05 | 0.03 | 0.16 | |||||||||
| Shareholder free cash flow (a) | 1,605 | 1,465 | 2,859 | 1,690 | 9,029 | |||||||||
| Per share basic and diluted (a) | 0.03 | 0.03 | 0.05 | 0.03 | 0.16 | |||||||||
| Capital expenditures | ||||||||||||||
| Seismic data purchases, digitization and related costs | 60 | 65 | 125 | 2,215 | 2,444 | |||||||||
| Property and equipment | 10 | – | 37 | 6 | 6 | |||||||||
| Total capital expenditures | 70 | 65 | 162 | 2,221 | 2,450 | |||||||||
| Weighted average shares outstanding | ||||||||||||||
| Basic and diluted | 55,337,560 | 56,175,306 | 55,539,541 | 56,109,173 | 56,105,593 | |||||||||
| Shares outstanding at period-end | 55,337,560 | 56,161,432 | 55,921,060 | |||||||||||
| Seismic library | ||||||||||||||
| 2D in kilometres | 447,000 | 447,000 | 447,000 | |||||||||||
| 3D in square kilometres | 28,647 | 28,613 | 28,647 | |||||||||||
| FINANCIAL POSITION AND RATIO | ||||||||||||||
| June 30, | June 30, | December 31, | ||||||||||||
| (thousands of dollars except ratio) | 2017 | 2016 | 2016 | |||||||||||
| Working capital | 11,811 | 4,085 | 10,674 | |||||||||||
| Working capital ratio | 11.2:1 |
5.0:1 | 8.9:1 | |||||||||||
| Cash and cash equivalents | 8,263 | 1,849 | 5,847 | |||||||||||
| Total assets | 36,632 | 47,256 | 44,957 | |||||||||||
| Long-term debt | – | – | – | |||||||||||
| Trailing twelve-month (TTM) cash EBITDA(b) | 10,221 | 12,145 | 9,119 | |||||||||||
| Shareholders’ equity | 32,338 | 40,667 | 38,646 | |||||||||||
(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, repayment of debt, purchase of its shares, discretionary capital expenditures and the payment of dividends (if applicable), 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 (if applicable) 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) TTM cash EBITDA is defined as the sum of the trailing 12 months’ cash EBITDA and is used to provide a comparable annualized measure.
OUTLOOK
Following its two quarters of modestly improved data library sales over the comparable periods of last year, and with industry indicators continuing to fluctuate within indecisive bands – neither especially strong nor particularly weak – Pulse maintains its cautiously optimistic outlook for continued modest improvement in its traditional sales business through the remainder of 2017. The Company does not believe that a stronger rebound in its traditional sales business is imminent.
The slide in the crude oil price since the end of the first quarter, to US$47.77 per bbl WTI on July 25, and the continued weakness in the Canadian gas price, standing at only $1.74 per mcf for AECO spot on July 25, raise concerns that commodity pricing may no longer be sufficient to sustain the recent increases in Canadian industry capital spending, land sales and drilling rates.
Earlier in the year, positive indicators had included the April revision by the Petroleum Services Association of Canada to its 2017 Canadian drilling forecast to 6,680 wells, an increase of over 60 percent from 2016 and of 28 percent since the organization’s previous 2017 forecast. Also, industry spending on mineral rights increased over 2016. Land sales in Alberta and B.C. in the first half of 2017 totalled $250.2 million compared to only $68 million in the first half of 2016, an increase of 268 percent. Historically, commodity prices, land sales and drilling rates, while not directly correlated to Pulse’s data library sales were in fact key indicators of activity levels. The Company believes that a recovery in its traditional data library sales depends on materially increased capital investment and higher field activity by the oil and gas industry on a sustained basis.
In the United States, natural gas storage is down from year-ago levels and only modestly exceeds the five-year weekly average. Weekly net injections are down year-over-year, and U.S. LNG exports are often exceeding 2 bcf per day. This is positive for natural gas prices. On the other hand, the active U.S. drilling rig fleet has soared over the past year and in mid-July exceeded 950 rigs, suggesting that U.S. oil and gas production will remain robust, dampening expectations for crude oil and natural gas prices.
Given this basket of ambivalent and in some cases contradictory signals, Pulse’s optimism is tempered by the possibility of continued weakness in traditional sales for the short term. Transaction-based sales of any size could occur at any time.
With zero long-term debt, cash reserves of $8.3 million at June 30, 2017, unutilized credit facilities, an experienced management team and Board of Directors, annual cash costs below $6.0 million, and a valuable, competitive and technically high-quality asset – its seismic data library – Pulse remains positioned to grow. The Company continues to be a pure-play seismic data provider with the goal of becoming the largest licensable seismic dataset in Western Canada.
CONFERENCE CALL
The Company’s next conference call will be held after the release of its year-end 2017 results, in March 2018. Should investors or analysts wish to contact the Company, please feel free to contact Neal Coleman or Pamela Wicks at the e-mail address or telephone number provided below.
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 28,600 square kilometres of 3D seismic and 447,000 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.
This document contains information that constitutes “forward-looking information” or “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities legislation.
The Outlook section contains forward-looking information which includes, among other things, statements regarding:
- Pulse maintains its cautiously optimistic outlook for continued modest improvement in its traditional sales business through the remainder of 2017;
- The Company does not believe that a stronger rebound in its traditional sales business is imminent;
- Oil and natural gas prices;
- Oil and natural gas drilling activity and land sales activity;
- Oil and natural gas company capital budgets;
- Future demand for seismic data;
- Future seismic data sales;
- 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 on 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. Pulse does not publish specific financial goals or otherwise provide guidance, due to the inherently poor visibility of seismic revenue.
The material risk factors include, without limitation:
- Oil and natural gas prices;
- The demand for seismic data and participation surveys;
- The pricing of data library license sales;
- Relicensing (change-of-control) fees and partner copy sales;
- Cybersecurity;
- The level of pre-funding of participation surveys, and the Company’s ability to make subsequent data library sales from such participation surveys;
- The Company’s ability to complete participation surveys on time and within budget;
- Environmental, health and safety risks;
- Federal and provincial government laws and regulations, including those pertaining to taxation, royalty rates, environmental protection and safety;
- Competition;
- Dependence on qualified seismic field contractors;
- Dependence on key management, operations and marketing personnel;
- The loss of seismic data;
- Protection of intellectual property rights; and
- The introduction of new products.
The foregoing list is not exhaustive. Additional information on these risks and other factors which could affect the Company’s operations and financial results is included under “Risk Factors” of the Company’s MD&A for the most recently completed financial year and interim periods. Forward-looking information is based on the assumptions, expectations, estimates and opinions of the Company’s management at the time the information is presented.
Neal Coleman, President and CEO
Or
Pamela Wicks, VP Finance and CFO
Tel.: 403-237-5559
Toll-free: 1-877-460-5559
E-mail: info@pulseseismic.com.
Please visit our website at www.pulseseismic.com.