Revenues for SAExploration decreased 32.3 per cent to US$99.7mn from US$147.2mn in the first half of 2016
Revenues in H1 2017 decreased significantly in North and South America due to a decrease in active projects in these regions compared to the prior period. The overall revenue decrease in 1H 2017 was partially offset by a large increase in activity in West Africa from a large ocean-bottom marine project that was completed during Q1 2017.
Gross profit decreased 43.6 per cent to US$24.1mn, or 24.2 per cent of revenues, from US$42.8mn, or 29.1 per cent of revenues, in H1 2016. Gross profit for H1 2017 and H1 2016 included depreciation expense of US$6.2mn and US$8.4mn, respectively. Excluding depreciation expense, adjusted gross profit for H1 2017 was US$30.3mn, or 30.4 per cent of revenues, compared to US$51.2mn, or 34.8 per cent of revenues, in the first half of 2016. The decrease in gross profit was primarily related to the decrease in revenue from a reduction in the number of active projects in H1 2017 compared to H1 2016. This was partially offset by a decrease in depreciation expense resulting from the sale of some ocean-bottom nodal recording equipment in the fourth quarter of 2016 and an increase in revenue from West Africa.
On June 30 2017, cash, cash equivalents and restricted cash totaled US$25.4mn, which included US$5.1mn of restricted cash that was primarily related to exchange control regulations in a West African country where SAE completed a deep-water ocean-bottom marine project during Q1 2017. Also on June 30, 2017, working capital was US$26.7mn, total debt at face value, excluding net unamortised premiums or discounts, was US$119.7mn, and total stockholders' equity was US$30.0mn.
Jeff Hastings, Chairman and CEO of SAE, commented, "The second quarter was a very difficult period for SAE. We maintained our superior level of execution on the projects we performed, but continue to be hampered by sparse activity, limited visibility and tighter pricing. Despite seeing the dip in activity beginning in the fourth quarter of last year, and despite benefiting from a dependable winter market in Alaska and a large ocean-bottom marine project in West Africa during the first quarter of this year, replacing our backlog at a more consistent rate has proven to be an arduous task in this market environment. Furthermore, the lack of activity in our international markets has been exacerbated by heightened competitive pressure leading to less favorable pricing on the new projects we secure. Although it now appears that 2017 will prove to be our most challenging year yet, we are encouraged by the level of dialogue and interest surrounding opportunities in 2018 and beyond. This optimism is supported by our ability to recently add projects in Alaska and Colombia to our backlog for 2018. One constant that cannot be inherently changed is the perpetual need to find new sources of hydrocarbons to replace existing production and consumption. Only producing from existing reservoirs without replacing the depleting assets is not a sustainable long-term strategy."
