TSX Symbol - PSD
CALGARY, March 23 /CNW/ - Douglas Cutts, President and Chief Executive Officer of Pulse Data Inc. ("Pulse" or "the Company"), reports the financial and operating results of Pulse for the year ended December 31, 2008. The audited consolidated financial statements, accompanying notes and MD&A will be filed March 23, 2009 on SEDAR. These documents will also be available on Pulse's website www.pulsedatainc.com.
For Pulse, 2008 was a good year in what was a challenging time for the Canadian oil and natural gas industry. Significantly, the Company returned to being a pure play seismic data library company.
2008 HIGHLIGHTS - Returned $10.8 million in dividends to shareholders from cash EBITDA(b). - Increased the 3D seismic data library by 907 net square kilometres at a total cost of $21.0 million (at a net cost to Pulse of $13.6 million). - Reduced net long-term debt by $5.2 million. - Purchased and cancelled 2,186,900 common shares through the normal course issuer bid program for a total cost of $5.4 million. - Total seismic revenue was the highest in the Company's history, and 2008 data library sales and cash EBITDA were the second highest. - Total seismic revenue was $45.4 million, comprised of $36.9 million of data library sales and $8.5 million of participation survey revenue; compared to 2007 total seismic revenues of $44.2 million, comprised of $41.2 million of data library sales and $3.0 million of participation survey revenue. - Cash EBITDA for the year ended December 31, 2008 was $28.2 million, compared to $33.0 million in 2007. - Net earnings from continuing operations were $880,000 ($0.02 per share basic and diluted) in 2008 compared to $2.5 million ($0.05 per share basic and diluted) in 2007. - Net earnings were $586,000 ($0.01 per share basic and diluted) in 2008, compared to a loss of $5.0 million ($0.10 per share basic and diluted) in 2007.
TEMPORARY SUSPENSION OF DIVIDEND
As a result of a combination of sharply lower seismic data library sales in the first quarter of 2009, and the extreme uncertainty related to commodity prices and energy sector capital expenditures, Pulse announces that it is temporarily suspending the Company's quarterly dividend. Mr. Cutts indicated that the Board and management believe that it is in the shareholders' best interests to preserve cash at this time in order to maintain Pulse's financial position and to maintain financial flexibility to take advantage of attractive opportunities in the current downturn.
"Pulse is in an enviable financial position and we want to preserve that competitive advantage," said Mr. Cutts, noting Pulse's strong current working capital position of $11.5 million (including cash of $18.8 million) and total long-term debt of $32.3 million (including current portion of $6.8 million). At year-end 2008, Pulse had a total debt to equity ratio of 0.5 and cash EBITDA to total debt ratio of 0.85. On December 17, 2008 Pulse closed a $75.0 million syndicated revolving credit facility to provide additional financing should attractive growth opportunities arise, of which $42.7 million is currently undrawn. The current interest rate of this facility is 4.7 percent. The Company is currently in compliance with all financial covenants under this facility.
Seismic data library sales drive cash EBITDA - Pulse's key financial metric. Under normal economic conditions, Pulse's business model generates sufficient cash EBITDA to distribute dividends to shareholders. Pulse initiated its quarterly dividend program in 2003 and to date has made 22 consecutive payments totaling $32.9 million, equivalent to $0.6625 per share. The board of directors decided to temporarily suspend the dividend rather than reduce it, and is committed to reviewing and reinstating the payment of dividends when seismic data library sales recover.
The dividend suspension will result in cash savings on a quarterly basis of approximately $2.6 million. Pulse has also implemented additional cost saving measures including a reduction in directors' and senior management's compensation and reductions in other general and administrative costs. Pulse will continue to look for other cost saving measures if current economic conditions persist.
FINANCIAL HIGHLIGHTS
(000s of dollars except per share data)
3 months ended 12 months ended
December 31 December 31
----------- -----------
2008 2007 2008 2007
---- ---- ---- ----
(unaudited) (unaudited)
(restated)(c)
Revenue from
continuing
operations:
Data library sales $ 10,067 $ 10,995 $ 36,894 $ 41,215
Participation surveys 2,202 461 8,509 3,010
--------------------------------------------------
Total revenue
from continuing
operations $ 12,269 $ 11,456 $ 45,403 $ 44,225
Amortization
of seismic
data library $ 10,889 $ 8,478 $ 32,438 $ 28,345
Net earnings
(loss) from
continuing operations $ (1,640) $ 1,018 $ 880 $ 2,511
Net earnings (loss)
from continuing
operations per share:
Basic and diluted $ (0.03)(a) $ 0.02 $ 0.02 $ 0.05
Net earnings (loss) $ (1,640) $ (294) $ 586 $ (4,982)
Net earnings
(loss) per share:
Basic and diluted $ (0.03)(a) $ (0.01)(a) $ 0.01 $ (0.10)(a)
Funds from
continuing
operations(b) $ 9,238 $ 8,465 $ 35,188 $ 31,208
Funds from
continuing
operations
per share(b):
Basic $ 0.17 $ 0.15 $ 0.65 $ 0.61
Diluted $ 0.17 $ 0.15 $ 0.65 $ 0.60
Cash EBITDA(b) $ 7,351 $ 8,952 $ 28,196 $ 33,038
Working capital:
Cash $ 13,244 $ 6,602 $ 13,244 $ 6,602
Non-cash working
capital 7,918 13,661 7,918 13,661
Current portion
of long term debt (6,798) (8,004) (6,798) (8,004)
--------------------------------------------------
Total working capital $ 14,364 $ 12,259 $ 14,364 $ 12,259
Total assets $ 112,383 $ 124,473 $ 112,383 $ 124,473
Capital expenditures:
Seismic data
purchases $ 2,524 $ - $ 4,557 $ 11,738
Participation
surveys 11,358 4,700 16,433 6,979
Changes to work
in progress (6,580) (3,991) 1,681 -
Property &
equipment additions 12 475 556 422
--------------------------------------------------
Total capital
expenditures $ 7,314 $ 1,184 $ 23,227 $ 19,139
Total long-term debt
(net of current
maturities and debt
financing costs) $ 26,188 $ 23,543 $ 26,188 $ 23,543
Shareholders' equity $ 66,288 $ 79,174 $ 66,288 $ 79,174
Weighted average
shares outstanding:
Basic 53,736,580 54,637,247 53,985,299 50,828,071
Diluted 55,738,860 55,370,779 54,160,333 52,168,384
Shares outstanding
at period end 53,397,583 54,481,601 53,397,583 54,481,601
Seismic library:
2D in net kilometres 257,281 257,281
3D in net square kilometres 12,514 11,607
(a) Basic weighted average shares outstanding are used to calculate loss
per share.
(b) The Company's continuous disclosure documents provide discussion and
analysis of "cash EBITDA", "funds from operations" and "funds from
operations per share". These financial measures do not have standard
definitions prescribed by GAAP in Canada 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 before
interest, income taxes, depreciation and amortization less
participation survey revenue, plus non-cash and non-recurring G&A
expenses. The Company's definition of funds from operations is cash
flow from operations as prescribed by Canadian GAAP but excluding the
impact of changes in non-cash working capital. Funds from operations
per share is defined as funds from operations divided by the weighted
average number of shares outstanding for the period.
(c) On July 1, 2008 the Company changed its participation survey revenue
recognition policy from the completed contract method to the
percentage of completion method. Under the percentage of completion
method, participation survey revenue is recognized proportionately
with the degree of completion of the participation survey projects.
As a result, certain financial results for Q4 2007 were restated, but
there was no effect on the financial results for the year ended
December 31, 2007.
OPERATIONS UPDATE
During 2008, a total of 907 net square kilometres of 3D seismic data were added to the seismic data library by conducting participation surveys for new 3D data, and by acquiring existing 3D data sets. Pulse's business model is designed to generate cash EBITDA by repeatedly licensing data from its seismic data library to oil and natural gas companies. Pulse believes that this new seismic data will drive future annuity-like data library sales, of not only this new seismic data, but also of pre-existing seismic data that the Company owns in these prospective exploration areas.
During 2008, Pulse completed two 3D participation surveys in west-central Alberta consisting of 566 net square kilometres and initiated a third 3D participation survey program consisting of 291 net square kilometres. In September 2008, Pulse completed and delivered the first participation survey, consisting of 193 net square kilometres of 3D data. In November 2008, Pulse completed and delivered the second participation survey, consisting of 373 net square kilometres of 3D data. A third participation survey was started in the fourth quarter of 2008, with expected delivery at the end of the first quarter of 2009. The third participation survey was approximately 19 percent completed at December 31, 2008. The three participation surveys are all located in the Deep Basin area in west-central Alberta and the data sets generated are complementary to Pulse's current seismic data library.
In 2008 Pulse also purchased 341 net square kilometres of existing 3D seismic data, investing $4.6 million through four separate transactions. The largest consisted of a 169 net square kilometre data set located in the Deep Basin area in west-central Alberta. The second-largest is in southeast Saskatchewan and consists of 117 net square kilometres.
OUTLOOK
The weakening oil and natural gas industry conditions and financial market instability, outlined in Pulse's Third Quarterly Report, clearly worsened during the fourth quarter of 2008 and into the first quarter of 2009. Oil and natural gas companies have continued to defer previously planned capital expenditures, reduced 2009 budgets and continue to encounter poor capital market conditions. Those oil and gas companies that are not well-capitalized are having difficulty accessing further credit.
As previously stated, Pulse has experienced a sharply lower level of seismic data library sales to date in the first quarter of 2009. In addition, there is an unusual lack of clarity or "visibility" concerning the future levels of oil and natural gas industry field activity. Consequently, it is problematic for Pulse to attempt to forecast either when energy sector capital expenditures or seismic data library sales will recover. Pulse has adopted an extremely conservative stance for 2009 in order to maximize the length of time that the Company can endure adverse business conditions. Senior management has developed various planning scenarios that include a range of seismic data library sales from moderate, through weak to extremely low levels.
In the meantime, Pulse's seismic sales and marketing team is continuing to engage in active and innovative sales efforts to encourage spending on seismic data by oil and natural gas producers. Pulse has the second largest freely licensable seismic data library in Canada and the Company believes that this data will be attractive to oil and natural gas producers as their capital budgets are restored. In addition, Pulse is evaluating opportunities to acquire high-quality data sets at favourable valuations, as E&P companies shed non-core assets to gain cash. The Company is also continuing to negotiate with E&P companies on conducting further 3D participation surveys that meet targeted pre-funding levels from survey partners.
The Company is fortunate to have a flexible financial position, ample cash and working capital, a lean cost structure, very low capital commitments in 2009 and access to additional credit. The Company also benefits from completing its transition in the second quarter of 2008 to become a pure-play seismic data library company through the disposition of the Terrapoint business unit. Accordingly, Pulse could continue to operate throughout 2009 and 2010 with extremely low revenue if current difficult economic conditions persist.
CONFERENCE CALL FOR THE 2008 YEAR END RESULTS
A conference call and webcast to review the 2008 financial and operating results will take place Tuesday, March 24, 2009 at 1:00 p.m. EDT (11:00 a.m. MDT). Douglas Cutts, President and Chief Executive Officer will chair the call with Pamela Wicks, Vice-President Finance also taking part. A question-and-answer period will follow an update on the Company's strategies and outlook.
To participate please dial (416) 644-3416 (Toronto) or 1 800-732-9303, approximately 10 minutes before the commencement of the call in order to avoid delays. A live webcast of the conference call will be available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)2585440. An archival recording of the conference call will be available approximately one hour after the completion of the call until April 3, 2009. To access the replay, please dial 1-877-289-8525 or (416) 640-1917 (Toronto) and enter the pass code 21300941 followed by the pound (number) sign. In addition, a recording of the call will be available commencing April 3, 2009 in the Investor Relations section of Pulse's website at www.pulsedatainc.com.
CORPORATE PROFILE
Pulse is a market leader in the acquisition, marketing and licensing of 2D and 3D seismic data for the western Canadian energy sector. Pulse owns the second-largest licensable seismic data library in Canada, currently consisting of approximately 257,300 net kilometres of 2D seismic and 12,500 net square kilometres of 3D seismic. The library extensively covers the Western Canada Sedimentary Basin where most of Canada's oil and natural gas exploration and development occurs. The replacement value of Pulse's library is currently estimated at over $1 billion based on current field replacement costs.
Forward Looking Statements
This document 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:
- estimated future demand for seismic data; - estimated future seismic data sales; - estimated future demand for participation surveys; - estimated costs, funding, size, commencement dates and delivery dates of participation surveys; - planned future participation surveys; - planned growth of the seismic data library; - estimated future revenues, cash flow, cash EBITDA and earnings; - estimated future oil and gas drilling activities; - planned future dividend payments; - planned future normal course issuer bid purchases; - Pulse's business strategy; - other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results and performance.
Often, but not always, forward looking information uses words or phrases such as: "expects", "does not expect" or "is expected", "anticipates" or "does not anticipate", "plans" or "does not plan", "estimates" or "estimated", "projects" or "projected", "forecasts" or "forecasted", "believes" or "does not believe", "intends" or "does not intend", "likely" or "unlikely", "possible", "probable", "scheduled", "positioned", "goal", "objective", "hopes", "optimistic" or states that certain actions, events or results "should", "may", "could", "would", "might" or "will" be taken, occur or be achieved.
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 material risk factors include, but are not limited to:
- 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 gas exploration and development activities; - the ability of the Company's customers to raise capital; - environmental, 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.
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. The Company does not update forward looking information should circumstances change or management's assumptions, expectations, estimates or opinions change, except as required by securities laws.