Seitel Announces Third Quarter 2015 Results
Seitel, Inc., a leading provider of seismic data to the oil and gas
industry, today reported results for the third quarter ended
September 30, 2015.
Third Quarter Highlights -
-
Total revenue totaled $31.2 million compared to $41.3 million in Q3
2014.
-
Cash resales totaled $4.0 million compared to $29.4 million in Q3 2014.
-
Cash EBITDA was ($0.6) million compared to $23.3 million in Q3 2014.
-
Net loss was $4.1 million compared to net income of $4.5 million in Q3
2014.
First Nine Months Highlights -
-
Total revenue totaled $86.3 million compared to $145.7 million in 2014.
-
Cash resales totaled $31.4 million compared to $87.8 million in 2014.
-
Cash EBITDA was $16.1 million compared to $69.6 million in 2014.
-
Net loss was $14.0 million compared to net income of $9.0 million in
2014.
Total revenue for the third quarter of 2015 was $31.2 million compared
to $41.3 million in the third quarter of 2014. Total revenue is
primarily comprised of underwriting revenue related to new data
acquisition and resale licensing revenue. Acquisition underwriting
revenue totaled $16.5 million in the third quarter of 2015 compared to
$11.2 million in the third quarter of 2014, and resale licensing revenue
totaled $14.2 million in the third quarter of 2015 compared to $29.2
million in the third quarter of last year. The majority of our new data
acquisition activity in the third quarter of 2015 occurred in the U.S.
with a focus in the Eagle Ford/Woodbine and Permian areas. Increased
acquisition underwriting revenue during the third quarter of 2015 was
primarily due to the progress and timing of phases of work performed on
ongoing surveys, including improved progress on certain of our new data
acquisition projects located in the Eagle Ford/Woodbine area that
experienced weather delays earlier in the year. Cash resales, a
component of resale licensing revenue, were $4.0 million in the third
quarter of 2015 compared to cash resales of $29.4 million in the third
quarter of 2014. Cash resales in the third quarter of 2015 were
significantly impacted by the reductions in customer spending resulting
from the ongoing low crude oil price environment. Solutions and other
revenue was $0.6 million in the third quarter of 2015 compared to $1.0
million in the third quarter of 2014.
Total revenue for the nine months ended September 30, 2015 was $86.3
million compared to $145.7 million for the same period last year.
Acquisition underwriting revenue was $38.7 million for the first nine
months of 2015 compared to $42.5 million in the first nine months of
2014. This decrease was primarily attributable to weather delays on
certain of our U.S. surveys caused by heavy rainfall in the first half
of 2015. Weather conditions improved in the third quarter of 2015, which
allowed significant progress on the affected surveys. Total resale
licensing revenue was $45.9 million in the first nine months of 2015
compared to $100.0 million in the first nine months of 2014. For the
first nine months of 2015, cash resales were $31.4 million compared to
$87.8 million in the first nine months of 2014 reflecting lower activity
levels by our clients as a result of less drilling and reduced capital
expenditures stemming from the drop in crude oil prices beginning in
late 2014 and continuing throughout 2015. Solutions and other revenue
was $1.7 million in the first nine months of 2015 compared to $3.1
million in the first nine months of 2014.
“The third quarter was exceptionally challenging for both Seitel and the
broader oil services industry. The reduction in capital spending by our
clients led to a sharp decline in our cash resales for the quarter,”
commented Rob Monson, chief executive officer and president. “Even
though we are seeing U.S. crude oil production levels begin to decline,
volatility in crude oil prices is expected to continue as uncertainty
remains on both the supply and demand sides of the market. As a result,
we expect the level of our cash resales will continue to be impacted in
the coming quarters.
“As a result of our reduced activity levels, we reduced our headcount in
October. This reduction, in addition to attrition during the year, has
resulted in a 20% reduction in our workforce this year. We have reduced
overhead expenses in other areas as well,” stated Monson. “On the capex
side, our 2015 net cash capital expenditures are expected to be about
$30 million, the majority of which relates to projects committed to
prior to 2015. We expect 2016 net cash capital expenditures to be
significantly lower than our levels this year. We remain confident that
we will weather this cycle as we will continue to tightly control our
operating costs and capital expenditures for the remainder of 2015 and
well into 2016,” continued Monson.
For the third quarter of 2015, our net loss was $4.1 million compared to
net income of $4.5 million for the third quarter of 2014. The decrease
between quarters was primarily due to a reduction in revenues and an
increase in amortization expense associated with our data library,
partially offset by a decrease in selling, general and administrative
("SG&A") expenses and lower income tax expense. For the first nine
months of 2015, our net loss was $14.0 million compared to net income of
$9.0 million in the first nine months of 2014. The decrease between the
nine month periods was primarily due to a reduction in revenues
partially offset by lower amortization of seismic data, a decrease in
SG&A expenses and lower income tax expense.
Cash EBITDA, generally defined as cash resales and solutions revenue
less cash operating expenses (excluding various non-routine items), was
($0.6) million in the third quarter of 2015 compared to $23.3 million in
the same period last year. Cash EBITDA was $16.1 million in the first
nine months of 2015 compared to $69.6 million in the first nine months
of last year. The decrease from 2014 to 2015 in both periods was
primarily due to the reduced level of cash resales.
SG&A expenses were $5.3 million in the third quarter of 2015 compared to
$7.2 million in the third quarter of last year. SG&A expenses were $17.2
million in the first nine months of 2015 compared to $21.5 million in
the same period last year. The decreases between periods were mainly due
to a reduction in variable expenses, consisting of commissions and
annual incentive compensation, resulting from the decrease in revenue
and Cash EBITDA. In addition, non-variable expenses were lower due to a
targeted reduction in overall expenses in response to our lower level of
revenue in 2015.
In the first nine months of 2015, our net cash capital expenditures
totaled $23.3 million. Gross capital expenditures were $69.7 million, of
which $58.0 million related to new data acquisition. Estimated net cash
capital expenditures for the remainder of 2015 is $6.2 million, bringing
our total estimated net cash capital expenditures for the year to $29.5
million. Our current backlog of net cash capital expenditures related to
acquisition programs is $6.5 million, of which we expect approximately
$5.5 million to be incurred in the fourth quarter.
CONFERENCE CALL
Seitel will hold its quarterly conference call to discuss third quarter
results for 2015 on Thursday, November 12, 2015 at 9:00 a.m. Central
Time (10:00 a.m. Eastern Time). The dial-in number for the call is
800-374-2540, Conference ID 52191994. A replay of the call will be
available until November 19, 2015 by dialing 800-585-8367, Conference ID
52191994 and will be available following the conference call at the
Investor Relations section of the company's website at http://www.seitel.com.
ABOUT SEITEL
Seitel is a leading provider of onshore seismic data to the oil and gas
industry in North America. Seitel's data products and services are
critical in the exploration for and development of oil and gas reserves
by exploration and production companies. Seitel has ownership in an
extensive library of proprietary onshore and offshore seismic data that
it has accumulated since 1982 and that it licenses to a wide range of
exploration and production companies. Seitel believes that its library
of 3D onshore seismic data is the largest available for licensing in
North America and includes leading positions in oil, liquids-rich and
natural gas unconventional plays. Seitel has ownership in over 42,500
square miles of 3D onshore data, over 10,000 square miles of 3D offshore
data and approximately 1.1 million linear miles of 2D seismic data
concentrated in the major active North American oil and gas producing
regions. Seitel serves a market which includes over 1,600 companies in
the oil and gas industry.
This press release contains “forward-looking statements” within the
meaning of the federal securities laws, which involve risks and
uncertainties. Statements contained in this press release about our
future outlook, prospects, strategies and plans, and about industry
conditions, demand for seismic services and the future economic life of
our seismic data are forward-looking, among others. All
statements that express belief, expectation, estimates or intentions, as
well as those that are not statements of historical fact, are
forward-looking. The words “believe,” “expect,” “anticipate,”
“estimate,” “project,” “propose,” “plan,” “target,” “foresee,” “should,”
“intend,” “may,” “will,” “would,” “could,” “potential” and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements represent our present belief and are based on
our current expectations and assumptions with respect to future events
and their potential effect on us. While we believe our expectations and
assumptions are reasonable, they involve risks and uncertainties beyond
our control that could cause the actual results or outcome to differ
materially from the expected results or outcome reflected in our
forward-looking statements. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this press release
may not occur. Such risks and uncertainties include, without limitation,
actual customer demand for our seismic data and related services, the
timing and extent of changes in commodity prices for natural gas, crude
oil and condensate and natural gas liquids, conditions in the capital
markets during the periods covered by the forward-looking statements,
the effect of economic conditions, our ability to obtain financing on
satisfactory terms if internally generated cash flows and available
borrowings under our revolving credit facility are insufficient to fund
our capital needs, the impact on our financial condition as a result of
our debt and our debt service, our ability to obtain and maintain normal
terms with our vendors and service providers, our ability to maintain
contracts that are critical to our operations, changes in the oil and
gas industry or the economy generally and changes in the capital
expenditure budgets of our customers. For additional information
regarding known material factors that could cause our actual results to
differ, please see our filings with the Securities and Exchange
Commission (“SEC”), including our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K.
The forward-looking statements contained in this press release speak
only as of the date hereof and readers are cautioned not to place undue
reliance on such forward-looking statements. Except as required by
federal and state securities laws, we undertake no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or any other reason. All
forward-looking statements attributable to Seitel, Inc. or any person
acting on its behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to herein, in our Annual
Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current
Reports on Form 8-K and future reports filed with the SEC.
This press release also includes certain non-GAAP financial measures
as defined under SEC rules. Non-GAAP financial measures include cash
resales, for which the most comparable GAAP measure is total revenue;
cash EBITDA, for which the most comparable GAAP measure is net income
(loss); and net cash capital expenditures, for which the most comparable
GAAP measure is total capital expenditures. Reconciliations of each
non-GAAP financial measure to its most comparable GAAP measure are
included at the end of this press release.
(Tables to follow)
|
SEITEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
September 30, 2015
|
|
December 31, 2014
|
ASSETS
|
|
|
|
|
Cash and cash equivalents
|
$
|
63,974
|
|
|
$
|
59,175
|
|
|
Receivables, net
|
20,959
|
|
|
56,091
|
|
|
Net seismic data library
|
163,161
|
|
|
165,079
|
|
|
Net property and equipment
|
2,948
|
|
|
3,857
|
|
|
Prepaid expenses, deferred charges and other
|
7,925
|
|
|
10,075
|
|
|
Intangible assets, net
|
6,598
|
|
|
10,013
|
|
|
Goodwill
|
182,196
|
|
|
193,722
|
|
|
Deferred income taxes
|
86,607
|
|
|
81,744
|
|
TOTAL ASSETS
|
$
|
534,368
|
|
|
$
|
579,756
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDER'S EQUITY
|
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
35,897
|
|
|
$
|
34,400
|
|
|
Income taxes payable
|
125
|
|
|
197
|
|
|
Senior Notes
|
250,000
|
|
|
250,000
|
|
|
Obligations under capital leases
|
1,765
|
|
|
2,219
|
|
|
Deferred revenue
|
21,250
|
|
|
34,517
|
|
|
Deferred income taxes
|
3,672
|
|
|
5,334
|
|
TOTAL LIABILITIES
|
312,709
|
|
|
326,667
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
STOCKHOLDER'S EQUITY
|
|
|
|
|
Common stock, par value $.001 per share; 100 shares authorized,
|
|
|
|
|
|
issued and outstanding
|
-
|
|
|
-
|
|
|
Additional paid-in capital
|
400,441
|
|
|
400,177
|
|
|
Retained deficit
|
(162,753
|
)
|
|
(148,776
|
)
|
|
Accumulated other comprehensive income (loss)
|
(16,029
|
)
|
|
1,688
|
|
|
TOTAL STOCKHOLDER'S EQUITY
|
221,659
|
|
|
253,089
|
|
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
|
$
|
534,368
|
|
|
$
|
579,756
|
|
|
SEITEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
|
$
|
31,242
|
|
|
$
|
41,299
|
|
|
$
|
86,290
|
|
|
$
|
145,686
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
24,627
|
|
|
18,309
|
|
|
68,114
|
|
|
85,938
|
|
|
Cost of sales
|
|
|
37
|
|
|
29
|
|
|
164
|
|
|
282
|
|
|
Selling, general and administrative
|
|
|
5,293
|
|
|
7,181
|
|
|
17,150
|
|
|
21,499
|
|
|
|
|
|
29,957
|
|
|
25,519
|
|
|
85,428
|
|
|
107,719
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
|
1,285
|
|
|
15,780
|
|
|
862
|
|
|
37,967
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(6,381
|
)
|
|
(6,306
|
)
|
|
(19,020
|
)
|
|
(18,724
|
)
|
Foreign currency exchange losses
|
|
|
(138
|
)
|
|
(901
|
)
|
|
(1,559
|
)
|
|
(1,344
|
)
|
Other income
|
|
|
-
|
|
|
5
|
|
|
5
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(5,234
|
)
|
|
8,578
|
|
|
(19,712
|
)
|
|
17,963
|
|
Provision (benefit) for income taxes
|
|
|
(1,179
|
)
|
|
4,092
|
|
|
(5,735
|
)
|
|
9,010
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
$
|
(4,055
|
)
|
|
$
|
4,486
|
|
|
$
|
(13,977
|
)
|
|
$
|
8,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash resales represent new contracts for data licenses from our library,
including data currently in progress, payable in cash. We believe this
measure is important in assessing overall industry and client activity.
Cash resales are likely to fluctuate quarter to quarter as they do not
require the longer planning and lead times necessary for new data
creation. The following table summarizes the components of Seitel's
revenue and shows how cash resales (a non-GAAP financial measure) are a
component of total revenue, the most directly comparable GAAP financial
measure (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Total acquisition underwriting revenue
|
|
|
$
|
16,498
|
|
|
$
|
11,175
|
|
|
$
|
38,683
|
|
|
$
|
42,512
|
|
|
|
|
|
|
|
|
|
|
|
Resale licensing revenue:
|
|
|
|
|
|
|
|
|
|
|
Cash resales
|
|
|
4,045
|
|
|
29,405
|
|
|
31,352
|
|
|
87,771
|
|
Non-monetary exchanges
|
|
|
24
|
|
|
-
|
|
|
7,948
|
|
|
177
|
|
Revenue recognition adjustments
|
|
|
10,096
|
|
|
(248
|
)
|
|
6,613
|
|
|
12,086
|
|
Total resale licensing revenue
|
|
|
14,165
|
|
|
29,157
|
|
|
45,913
|
|
|
100,034
|
|
|
|
|
|
|
|
|
|
|
|
Total seismic revenue
|
|
|
30,663
|
|
|
40,332
|
|
|
84,596
|
|
|
142,546
|
|
|
|
|
|
|
|
|
|
|
|
Solutions and other
|
|
|
579
|
|
|
967
|
|
|
1,694
|
|
|
3,140
|
Total revenue
|
|
|
$
|
31,242
|
|
|
$
|
41,299
|
|
|
$
|
86,290
|
|
|
$
|
145,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash EBITDA represents cash generated from licensing data from our
seismic library net of recurring cash operating expenses. We believe
this measure is helpful in determining the level of cash from operations
we have available for debt service and funding of capital expenditures
(net of the portion funded or underwritten by our customers). Cash
EBITDA includes cash resales plus all other cash revenues other than
from data acquisitions, less cost of goods sold and cash selling,
general and administrative expenses (excluding non-routine and other
corporate expenses). The following is a quantitative reconciliation of
this non-GAAP financial measure to the most directly comparable GAAP
financial measure, net income (loss) (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Cash EBITDA
|
|
|
$
|
(602
|
)
|
|
$
|
23,279
|
|
|
$
|
16,120
|
|
|
$
|
69,597
|
|
Add (subtract) other revenue components not included in cash EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Acquisition underwriting revenue
|
|
|
16,498
|
|
|
11,175
|
|
|
38,683
|
|
|
42,512
|
|
|
Non-monetary exchanges
|
|
|
24
|
|
|
-
|
|
|
7,948
|
|
|
177
|
|
|
Revenue recognition adjustments
|
|
|
10,096
|
|
|
(248
|
)
|
|
6,613
|
|
|
12,086
|
|
|
Solutions non-cash revenue
|
|
|
13
|
|
|
-
|
|
|
13
|
|
|
-
|
|
Add (subtract) other items included in net income (loss):
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
(24,627
|
)
|
|
(18,309
|
)
|
|
(68,114
|
)
|
|
(85,938
|
)
|
|
Non-cash operating expenses
|
|
|
(67
|
)
|
|
(113
|
)
|
|
(264
|
)
|
|
(417
|
)
|
|
Non-routine and other corporate expenses
|
|
|
(50
|
)
|
|
(4
|
)
|
|
(137
|
)
|
|
(50
|
)
|
|
Interest expense, net
|
|
|
(6,381
|
)
|
|
(6,306
|
)
|
|
(19,020
|
)
|
|
(18,724
|
)
|
|
Foreign currency losses
|
|
|
(138
|
)
|
|
(901
|
)
|
|
(1,559
|
)
|
|
(1,344
|
)
|
|
Other income
|
|
|
-
|
|
|
5
|
|
|
5
|
|
|
64
|
|
|
Benefit (provision) for income taxes
|
|
|
1,179
|
|
|
(4,092
|
)
|
|
5,735
|
|
|
(9,010
|
)
|
Net income (loss)
|
|
|
$
|
(4,055
|
)
|
|
$
|
4,486
|
|
|
$
|
(13,977
|
)
|
|
$
|
8,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash capital expenditures represent total capital expenditures less
cash underwriting revenue from our clients and non-cash additions to the
seismic data library. We believe this measure is important as it
reflects the amount of capital expenditures funded from our operating
cash flow. The following table summarizes our actual capital
expenditures for the nine months ended September 30, 2015 and our
estimate for the year ending December 31, 2015 and shows how net cash
capital expenditures (a non-GAAP financial measure) are derived from
total capital expenditures, the most directly comparable GAAP financial
measure (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2015
|
|
Estimate for Remainder of 2015
|
|
Total Estimate for 2015
|
New data acquisition
|
|
|
$
|
58,038
|
|
|
$
|
13,700
|
|
|
$
|
71,738
|
|
Cash purchases and data processing
|
|
|
3,323
|
|
|
500
|
|
|
3,823
|
|
Non-monetary exchanges
|
|
|
7,959
|
|
|
1,500
|
|
|
9,459
|
|
Property and equipment and other
|
|
|
406
|
|
|
100
|
|
|
506
|
|
Total capital expenditures
|
|
|
69,726
|
|
|
15,800
|
|
|
85,526
|
|
Less:
|
|
|
|
|
|
|
|
|
Non-monetary exchanges
|
|
|
(7,959
|
)
|
|
(1,500
|
)
|
|
(9,459
|
)
|
|
Cash underwriting
|
|
|
(38,517
|
)
|
|
(8,100
|
)
|
|
(46,617
|
)
|
Net cash capital expenditures
|
|
|
$
|
23,250
|
|
|
$
|
6,200
|
|
|
$
|
29,450
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151111006221/en/ Copyright Business Wire 2015
Source: Business Wire
(November 11, 2015 - 4:01 PM EST)
News by QuoteMedia
www.quotemedia.com
|