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Dolphin: Possible Dividend after Q3 Report

Maritime Activity Reports, Inc.

August 20, 2014

Q2 disappointed due to weak late sales; Expects higher revenues and earning in q3. Expects no growth in market's overall capacity; seismic market under pressure, sees some positive signs.

OSLO, Aug 20 (Reuters) - Seismic surveyor Dolphin expects earnings to improve in the third quarter thanks to deliveries of two new vessels, and may soon start paying dividends even though the market is under pressure from widespread oil industry cost cuts.

A high level of contract coverage has secured most of the revenues for second half of the year, the company said on Wednesday.

"We maintain our $400 million revenue target for 2014. Third quarter will be a new record quarter. Polar Marquis will be in operation the whole quarter and we expect significantly higher margins," Chief Executive Officer Atle Jacobsen told an investor presentation.

Third quarter revenues rose to $101 million from $68 million in same quarter last year and earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $30 million from $23 million last year.

But so-called late-sales from its library of multi-client data was a big disappointment, contributing to a 6.5 percent drop in the company's shares by 1030 GMT.

"We had indications of a good late sale but then customers came back and told us projects were delayed due to budget cuts," Jacobsen said.

Because of weak prefunding from oil companies, Dolphin cut its 2014 multi-client investment forecast to $50 million from $60-$80 million previously.

The biggest share of Dolphin's revenues comes from contract work, which is paid for a the time of collection, rather than the multi-client surveys where oil companies can buy data if and when they need them.

The book value of the firm's multi-client library now stands at $108 million.

Dolphin meanwhile has a contract backlog of $300 million and is fully booked for the third quarter, while 75 percent of the fleet of seven vessels has secured work for the fourth quarter.

The intention is to start paying a dividend as soon as possible, the company said.

"It's possible we will announce a dividend policy after the third quarter," Chief Financial Officer Erik Hokholt said.

Meanwhile, competition remains largely unchanged.

"We expect zero growth in the (global) fleet in 2015. Decommissioning of older vessels is accelerating. There have been no new orders of seismic vessels in the last six months. We expect flat to negative supply growth. This is clearly good for the industry," Jacobsen said.

He added that he saw several good signs in the market and that activity may increase from the first half of 2015.

"If that happens it'll be six months earlier than we previously expected," Jacobsen said.

Dolphin share were down 6.5 percent at 5 Norwegian crowns at 1030 GMT, compared to a rise of 0.3 percent in the Oslo Bourse benchmark index.


Reporting by Ole Petter Skonnord

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