Offshore Hydrocarbon Mapping plc - Trading update
02 Mar 2010
Offshore Hydrocarbon Mapping plc (AIM: OHM), is pleased to provide the following trading update to coincide with the six months ended 28 February 2010.
The Group aims to reduce exploration and exploitation risk
through the careful
integration of seismic, CSEM and well log information. During the
first half to 28 February 2010, our wholly owned Rock Solid Images
subsidiary, specialising in seismic reservoir characterisation and
well log analysis, has continued to perform to plan. However, as
previously indicated in our announcements of 16 November and 24
December 2009, income from CSEM surveys in the first six months to
28 February 2010 has been disappointing largely as a result of
geopolitically induced delays to a number of programs which were in
train of award to OHM. Firm enquiries have continued to trend
upwards and CSEM survey backlog is beginning to build.
The Group's half year ended on 28 February 2010 and revenues for
each of its operating divisions are expected to be as
follows:
· As a result of the phasing
of awarded work, seismic reservoir characterisation revenues from
the Rock Solid Images division are expected to be £1.3
million (six months to 28 February 2009: £2.3 million) and
are in-line with our budget for the first six-months. Backlog
levels continue to be healthy and visibility of data arriving from
clients should drive strong revenues for the second
half;
· The WISE seismic/CSEM
integrated product line will achieve revenues of approximately
£0.4 million (six months to 28 February 2009: £0.1
million);
· As discussed above, CSEM
acquisition, data library and processing revenues were
disappointing and for the six months to 28 February 2010 amounted
to £1.5 million (six months to 28 February 2009: £3.9
million).
In aggregate, the Group's revenues are expected to be approximately £3.2 million for the six months to 28 February 2010 compared to £6.2 million for the six months to 28 February 2009. However, the Group is expected to have a much stronger second half than in the last financial year when total revenue fell back to £3.0 million in the six months to 31 August 2009.
Overheads for the Group before foreign currency differences have been reduced to an average of £410,000 per month for the six months to 28 February 2010 compared to GBP630,000 per month for the first half of 2009, following the cost reductions implemented this time last year.
Pre-tax loss for the six months to 28 February 2010 is expected to be in the £4.1 to £4.4 million range, (before impairment provisions and before accounting for the one-off charge arising from the removal of most of the Group's future financial commitments on two vessel charters last September), compared to a £5.6 million loss for the same period last year.
The EBITDA loss for the Group's six months to 28 February 2010 will be in the £2.8 to £3.1 million range compared to an EBITDA loss of £4.6 million for the six months to 28 February 2009.
The Group's cash balance at 28 February 2010 was £1.4 million, compared to £1.1 million at 31 August 2009.
The $2 million Credit Facility entered into with two of our main shareholders in December 2009 has been fully drawn.
The figures for the six months to 28 February 2010 are unaudited and have yet to be reviewed by the Group's Independent Auditors.
Current Trading and Prospects
Since 16
November 2009 when OHM reported its results for the 12 months ended
31 August 2009, it has continued to move forward in developing its
business.
The Company's wholly owned Rock Solid Images subsidiary's
reputation for delivering valuable reservoir insight continues to
grow, although delays in receiving data from clients on contracts
has temporarily held back revenues in the first half of the year.
The Group is processing several large seismic inversion projects
from the main players in West Africa and has recently been awarded
its second project from the conjugate margin area of Latin America,
considered to be an analogue for West Africa and hence potentially
highly
prospective.
The Group conducted its second full commercial reservoir appraisal survey using its WISE (Well Integration with Seismic and Electromagnetics) technology in December 2009 for a customer in West Africa. The survey was completed on time and data are currently being processed in the Group's Kuala Lumpur facility.
The level of bid activity for marine CSEM surveys is higher now than for the same period last year. This fact, coupled with the overall reduction in CSEM industry fleet size, is expected to lead to increased vessel utilisation for the Group over the coming months. CSEM order backlog is building and in addition the Group currently has marine CSEM survey opportunities developing in India, China, West Africa and the North Sea.
Funding
With a positive contribution from
Rock Solid Images and our continuing focus on restraining overhead,
the Group has reduced its dependence on CSEM income which
has allowed it to continue to trade through some very difficult
market conditions. As the market recovers, our focus will
inevitably change from cost cutting to planning and building for
future growth. Our growing order book and the pursuit of further
CSEM opportunities as outlined above will increase our working
capital requirements. With this in mind and the Group's ongoing
requirement for additional capital through to cash flow breakeven,
the Directors are examining options for attracting further funding
into the business.
Stated Richard Cooper, Group CEO: "The Group's
mission is to reduce our customers' risk in their search for
hydrocarbons. We achieve this via the careful integration of
surface geophysical data, primarily seismic, but also CSEM, using
available well-data as ground-truth. Although it is disappointing
that the CSEM part of business remains depressed, we are committed
to the long term development of this technology and are encouraged
with the progress we have made to date in developing the necessary
integration tools and workflows. Seismic and CSEM methods are
playing an increasingly important role in reservoir appraisal, in
addition to their traditional place as exploration tools. OHM
is
uniquely positioned to benefit from this trend as this market
matures over the coming years."
We anticipate announcing our final half year results on 22 April 2010.
Contact:
Offshore Hydrocarbon Mapping plc
www.ohmsurveys.com
Richard Cooper - Chief Executive Officer
0870 429
6581
Bob Auckland- Finance Director
0870 429
6581
KBC Peel Hunt (NOMAD and
Broker)
Julian Blunt/David
Anderson
020 7418
8900
Aquila Financial Ltd
(PR)
Peter
Reilly
07881
920542
