Polarcus has reported a second quarter net loss of -$21 million on segment revenues of $23 million, compared with a net loss of -$0.6 million on revenues of $65 million in the second quarter of 2019.
Polarcus has reported a second quarter net loss of -$21 million on segment revenues of $23 million, compared with a net loss of -$0.6 million on revenues of $65 million in the second quarter of 2019. Vessel utilization of 50% has dropped from 72% in Q2 2019.
The company’s CEO, Duncan Eley, said: ‘The company’s Q2 2020 results were negatively impacted by low utilization as E&P companies reassessed their near-term exploration plans following the global economic slow-down which has also delayed tender processes.
The outlook for the second half of 2020 remains challenging, but the recent marine seismic industry restructuring alongside current oil price developments provide favourable foundations for activity levels to build during 2021, said the company’s results statement.
The revenue decline was driven largely by reduced utilization as a result of the cancelled and terminated contracts announced in Q1 2020 and lower effective day rates on contract.
Gross cost of sales in the quarter have dropped 60% to $23.5 million compared to $59.5 million in Q2 2019 and segment general and administrative costs dropped 29% to $2.7 million compared to $3.8 million in Q2 2019.
Cash flow from operating activities in the quarter improved to $12.7 million compared to $4.9 million in Q2 2019. Total cash at quarter-end was $44.8 million compared to $46.7 million at the end of Q1 2020.
Backlog at 30 June 2020 was estimated at $141 million compared to $200 million at the same time last year. The company’s fleet is 40% booked for the remainder of 2020. Tender activity significantly reduced during Q2 2020 with many tender processes and decisions deferred.
However, clients also indicate that 2021 activity is expected to rebuild with a number of projects and tenders rescheduled to next year, said Polarcus in its statement.
‘The reshaping of the seismic industry that has occurred, resulting in an increased number of multi-client companies without vessels, has led to an improved industry structure,’ said Polarcus. ‘However, continued supply-side discipline observed during Q2 2020 with three vessels removed from the global vessel count of 22 vessels is critical for the future market balance. Further reductions in active vessels are expected during H2 2020.’
