CALGARY, ALBERTA--(Marketwire - Aug. 8, 2011) - Douglas Cutts, President and Chief Executive Officer of Pulse Seismic Inc. (TSX:PSD) ("Pulse" or the "Company"), reports the financial and operating results of Pulse for the three and six months ended June 30, 2011 and announces the reinstatement of the quarterly dividend. The unaudited condensed consolidated interim financial statements, accompanying notes and MD&A are being filed on SEDAR. These documents will also be available on Pulse's website www.pulseseismic.com.
The board of directors has authorized reinstatement of a quarterly dividend of $0.0125 per common share. The upcoming quarterly dividend will be paid on September 21, 2011 to shareholders of record at the close of business on September 6, 2011. The Company's Dividend Reinvestment Plan and Optional Share Purchase Plan have not been reinstated at this time.
"Overall improvement in seismic data library sales and a strong financial position, including a current cash balance of approximately $17 million, has prompted the Company to take a number of measures" commented Douglas Cutts. "First, the Company has reinstated the quarterly dividend as a return of capital to our shareholders. Second, Pulse will continue its strategy of buying back its own shares on the open market through the Normal Course Issuer Bid. We have spent approximately $1.0 million to purchase 504,600 common shares since January 2011. Third, Pulse will be reducing its long-term debt with a penalty-free $2.0 million prepayment in the third quarter of 2011 which is expected to contribute to a more favorable interest rate at the next determination date. In addition, the Company will now have more flexibility in managing its cash and allocating capital as a result of the complete removal of the working capital covenant under the terms of the syndicated credit facility."
"Pulse continues to perform well with strong seismic data library sales and cash EBITDA both doubling in the first half of 2011 compared to 2010" stated Douglas Cutts. "Our business model continues to generate very high cash margins. In the first half of 2011 we generated cash EBITDA of $13.0 million, which represented 76% of seismic data library sales, despite the challenges of the ongoing slump in natural gas prices.
HIGHLIGHTS
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Seismic data library sales for the three months ended June 30, 2011 were $5.6 million compared to $3.4 million for the same period in 2010. For the six month period ended June 30, 2011 seismic data library sales were $17.0 million compared to $8.5 million for the period ended June 30, 2010.
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Total seismic revenue (including revenue from participation surveys) for the three months ended June 30, 2011 was $6.6 million compared to $3.4 million for the three months ended June 30, 2010. For the six month period ended June 30, 2011 total seismic revenue was $20.7 million compared to $8.5 million for the same period in 2010. There was no participation survey revenue in the first six months of 2010.
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Cash EBITDA(b) doubled for the three months ended June 30, 2011 to $3.8 million ($0.06 per share basic and diluted) from $1.7 million ($0.03 per share basic and diluted) for the same period in 2010. For the six months ended June 30, 2011 cash EBITDA more than doubled to $13.0 million ($0.19 per share basic and basic and diluted) from $5.2 million ($0.10 per share basic and diluted) for the same period in 2010.
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The net loss for the three months ended June 30, 2011 was $4.1 million ($0.06 per share basic and diluted) compared to $2.7 million ($0.05 per share basic and diluted) for the three months ended June 30, 2010. The net loss for the six months ended June 30, 2011 was $2.8 million ($0.04 per share basic and diluted) compared to a net loss of $4.2 million ($0.08 per share basic and diluted) for the same period in 2010.
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The primary reason for the significant variance between cash EBITDA and the net loss for both the three and six month periods ended June 30, 2011 is the large non-cash seismic data library amortization expense, which amounted to $9.1 million for the three months ended June 30, 2011 and $18.1 million for the six month period ended June 30, 2011.
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Pulse's working capital position at June 30, 2011 was $8.9 million (including cash of $18.5 million and current portion of long-term debt of $13.0 million) compared to $17.5 million (including cash of $21.8 million and current portion of long-term debt of $7.0 million) at June 30, 2010 and $7.9 million (including cash of $17.0 million and current portion of long-term debt of $13.0 million) at December 31, 2010.
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During the second quarter of 2011, Pulse completed and delivered one 3D participation survey consisting of 71 net square kilometres, located in the Farrell Creek area of northeast British Columbia.
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Pulse has initiated a 62 net square kilometre 3D participation survey located in the Edson area of northwest Alberta with field operations currently expected to commence in September. A second 3D participation survey, consisting of approximately 130 net square kilometres located in the Simon area of north central Alberta, is currently expected to commence in the fourth quarter of 2011 and to be completed in the first quarter of 2012.
| Selected Financial and Operating Information | |||||||||||||||||||||
| ($000s except per share data and number of shares) | |||||||||||||||||||||
| Three months ended June 30, |
Six months ended June 30, |
Year ended December 31, |
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| 2011 | 2010 | 2011 | 2010 | 2010 | |||||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||
| Data library sales | $ | 5,622 | $ | 3,358 | $ | 16,953 | $ | 8,474 | $ | 30,264 | |||||||||||
| Participation surveys | 957 | - | 3,708 | - | 2,770 | ||||||||||||||||
| Total revenue | $ | 6,579 | $ | 3,358 | $ | 20,661 | $ | 8,474 | $ | 33,034 | |||||||||||
| Amortization of seismic data library | $ | 9,103 | $ | 4,867 | $ | 18,108 | $ | 9,763 | $ | 22,771 | |||||||||||
| Net loss from continued operations (a): | $ | (4,072 | ) | $ | (2,717 | ) | $ | (2,763 | ) | $ | (4,282 | ) | $ | (745 | ) | ||||||
| Net loss from continued operations per share (a): | |||||||||||||||||||||
| Basic and diluted | $ | (0.06 | ) | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.01 | ) | ||||||
| Net loss (a) | $ | (4,072 | ) | $ | (2,671 | ) | $ | (2,763 | ) | $ | (4,167 | ) | $ | (1,251 | ) | ||||||
| Net loss per share (a): | |||||||||||||||||||||
| Basic and diluted | $ | (0.06 | ) | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.02 | ) | ||||||
| Funds from operations(a)(b) | $ | 3,853 | $ | 1,402 | $ | 14,805 | $ | 4,438 | $ | 22,670 | |||||||||||
| Funds from operations per share (a)(b): | |||||||||||||||||||||
| Basic and diluted | $ | 0.06 | $ | 0.03 | $ | 0.22 | $ | 0.08 | $ | 0.40 | |||||||||||
| Cash EBITDA (b) | $ | 3,836 | $ | 1,724 | $ | 12,957 | $ | 5,184 | $ | 21,687 | |||||||||||
| Cash EDITBA per share(b): | |||||||||||||||||||||
| Basic and diluted | $ | 0.06 | $ | 0.03 | $ | 0.19 | $ | 0.10 | $ | 0.38 | |||||||||||
| Capital expenditures | |||||||||||||||||||||
| Participation surveys (cost reduction) | $ | 4,069 | $ | - | $ | 7,767 | $ | (276 | ) | $ | 2,245 | ||||||||||
| Seismic data purchases | 35 | 108 | 635 | 108 | 75,575 | ||||||||||||||||
| Changes to work in progress | (2,919 | ) | - | (2,388 | ) | - | 2,400 | ||||||||||||||
| Property & equipment additions | 58 | 57 | 110 | 57 | 205 | ||||||||||||||||
| Total capital expenditures | $ | 1,243 | $ | 165 | $ | 6,124 | $ | (111 | ) | $ | 80,425 | ||||||||||
| Seismic library: | |||||||||||||||||||||
| 2D in net kilometres | 339,991 | 257,994 | 339,991 | 257,994 | 339,991 | ||||||||||||||||
| 3D in net square kilometres | 26,695 | 12,913 | 26,695 | 12,913 | 26,446 | ||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||
| Basic and diluted | 66,924,082 | 53,043,841 | 67,035,090 | 53,057,536 | 56,662,196 | ||||||||||||||||
| Shares outstanding at period end | 66,697,071 | 53,036,083 | 66,697,071 | 53,036,083 | 67,201,671 | ||||||||||||||||
| Financial Position and Ratios | |||||||||
| ($000s except ratios and percentage calculations) | |||||||||
| Working capital | $ | 8,855 | $ | 17,545 | $ | 7,878 | |||
| Working capital ratio | 1.56 | 2.87 | 1.38 | ||||||
| Total assets | $ | 138,303 | $ | 85,155 | $ | 154,438 | |||
| Long-term debt (c) | $ | 54,966 | $ | 21,257 | $ | 61,386 | |||
| TTM Cash EBITDA (d) | $ | 29,460 | $ | 14,156 | $ | 21,687 | |||
| Shareholders' equity | $ | 78,014 | $ | 59,165 | $ | 81,827 | |||
| Long-term debt to equity ratio | 0.70 | 0.36 | 0.75 | ||||||
| Long-term debt to TTM cash EBITDA ratio | 1.87 | 1.50 | 2.83 | ||||||
| (a) | 2010 figures adjusted to conform to the current year's financial statements presentation and to IFRS. | |
| (b) | The Company's continuous disclosure documents provide discussion and analysis of "cash EBITDA", "cash EBITDA per share", "funds from operations" and "funds from operations per share". These financial measures do not have standard definitions prescribed by IFRS (new Canadian GAAP) 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 continued operations before interest, taxes, depreciation and amortization less participation survey revenue, plus any non-cash and non-recurring SG&A 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. The Company's definition of funds from operations is cash provided by continued 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 debt finance cost. | |
| (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. |
CORPORATE
The Company announces the retirement of Mr. Arthur Dumont from the board of directors of Pulse. The resignation was effective August 4, 2011. First elected in 1999, Mr. Dumont had been the longest-serving independent director of Pulse. Pulse would like to thank Mr. Dumont for his years of service and commitment to the Company. A search committee of independent directors has been established and is in the process of recruiting an independent director to replace Mr. Dumont.
OUTLOOK
Pulse's results in the first two quarters of 2011 support the Company's cautiously optimistic outlook issued in its 2010 Annual Report, whereby it indicated reasons for optimism offset by weakness in natural gas prices as well as overall economic uncertainty. Results for the first and second quarters, and the first half overall, were strong given overall conditions. Growth of 67 percent in second-quarter seismic data library sales over the second quarter of 2010, following a record first quarter, led to a doubling of first-half seismic data library sales over the first half of 2010. With new participation surveys in progress and completed, total seismic revenue was approximately two-and-a-half times the level generated in the first half of 2010, and was also significantly higher than for the first half of 2009. These results reflect the enlarged seismic data library created by the significant seismic asset acquisition in September 2010 and the momentum experienced in the latter part of 2010.
The industry drivers that, entering 2011, suggested greater sales and revenue for Pulse have strengthened incrementally over the course of the year to date, generating growing confidence that Pulse's 2011 results should exceed those of 2010. The principal driver suggesting continued weakness, natural gas prices, also remains.
Pulse's first-half 2011 cash EBITDA of $13.0 million represents year-over-year growth of 150 percent, with the second quarter's cash EBITDA extending the strong performance begun in the first quarter. Pulse is optimistic about continued growth through the remainder of 2011 in its seismic data library sales, levered by the Company's much larger coverage over active play areas of northeast British Columbia resulting from the significant seismic asset acquisition in September 2010. The Company is also experiencing continued interest to initiate new participation surveys.
Through disciplined management, Pulse intends to maintain its strong record of successful cost control, which contributed to the Company's positive quarterly results. Pulse will also maintain its focus on sustaining its strong financial position, which includes ample cash and facilitates its ability to reinstate the quarterly dividend and to make substantial debt repayments and common share repurchases. Pulse's strong balance sheet contributes to its ability to maintain supportive credit facilities on good terms and manageable interest rates.
In addition, Pulse will remain vigilant for acquisition opportunities that meet the Company's three key criteria: seismic data that covers prospective areas with industry activity, 2D and 3D data that is high in quality, and data that has a favourable purchase valuation. The sustained weakness in natural gas prices provides reason for caution and continued conservative management of the Company's financial position. Continued growth in revenue and cash EBITDA remain Pulse's key objectives for 2011.
For further analysis and discussion on the business indicators affecting Pulse please refer to the Management and Discussion Analysis for the six months ended June 30, 2011 that is being posted on our website at www.pulsesseismic.com and filed on SEDAR (www.SEDAR.com).
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 26,700 net square kilometres of 3D seismic and approximately 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.
Please visit our website at www.pulseseismic.com.
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:
- general economic and industry outlook;
- Pulse's dividend policy;
- intended repurchases of shares under the normal course issuer bid;
- intended repayment of debt;
- growing confidence that Pulse's 2011 results should exceed those of 2010;
- optimism about continued growth through the remainder of 2011 in seismic data library sales;
- industry activity levels and capital spending;
- forecast commodity prices;
- estimated future demand for seismic data;
- estimated future seismic data sales;
- estimated future demand for participation surveys;
- expected commencement, completion and delivery dates 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 sources for forecasts and the material assumptions underlying this forward looking information are noted in the "Outlook" section of this news release.
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;
- the price and demand for oil and natural gas;
- the level of oil and natural gas exploration and development activities;
- the ability of the Company's customers to raise capital;
- 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 from other seismic data library companies;
- 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.
Contact Information:
Douglas Cutts
President and CEO
(403) 237-5559 or Toll-free: 1-877-460-5559
Pulse Seismic Inc.
Pamela Wicks
VP Finance and CFO
(403) 237-5559 or Toll-free: 1-877-460-5559
info@pulseseismic.com
www.pulseseismic.com