Seitel Announces First Quarter 2012 Results

Cash Resales of $39.2 million

HOUSTON--()--Seitel, Inc., a leading provider of seismic data to the oil and gas industry, today reported results for the first quarter ended March 31, 2012.

First Quarter Highlights –

($ in millions)       First Quarter
2012     2011     % Increase
Cash Resales $ 39.2 $ 26.3 49 %
Total Revenue 72.5 59.5 22 %
Cash EBITDA 32.7 21.7 51 %

Cash resales for the first quarter of 2012 were $39.2 million compared to $26.3 million for the first quarter of last year, a 49% increase. Cash resales from 3D unconventional plays increased slightly from the first quarter of 2011 to the first quarter of 2012 to $20.5 million compared to $19.5 million last year. Cash resales related to conventional 3D, 2D and offshore data increased to $18.7 million in the first quarter of 2012 compared to $6.8 million in the same period last year. This increase was primarily attributable to an increase in activity in our U.S. 3D conventional data library.

Total revenue for the first quarter of 2012 was $72.5 million compared to $59.5 million during the first quarter of 2011. The 22% increase in revenue was primarily due to a 55% increase in acquisition revenue. Acquisition revenue was $36.6 million in the first quarter of 2012, reflecting continuing strong activity in unconventional plays. Total resale revenue was $34.7 million in both first quarters of 2012 and 2011. Solutions revenue was $1.3 million in this year’s first quarter compared to $1.1 million last year.

For the first quarter of 2012, net income was $14.7 million compared to last year’s net income of $0.5 million. The increase in revenue and lower interest expense were the primary drivers of the improved results.

Cash EBITDA, generally defined as cash resales and solutions revenue less cash operating expenses (excluding various non-recurring items), was $32.7 million for the first quarter of 2012 compared to $21.7 million in the same period of 2011. This increase was primarily due to a $13.0 million improvement in cash revenue partially offset by a $0.6 million increase in cash operating expenses.

We are pleased with the strong results we generated in the first quarter,” commented Rob Monson, president and chief executive officer. “The activity in cash resales this quarter demonstrates the optionality of our data library.

We are executing on our capital expenditure campaign for 2012, with the majority of our new data acquisition activity focused on the oil and liquids-rich areas in unconventional plays in the U.S. and Canada,” stated Monson.

Selling, general and administrative (“SG&A”) expenses were $8.1 million for the first quarter of 2012 compared to $7.6 million last year. Cash SG&A expenses were $7.9 million and $7.2 million, respectively, while non-cash SG&A expenses were $0.1 million and $0.3 million, respectively.

Our cash balances on March 31, 2012 were $63.4 million. Cash consumption during the first quarter was $11.5 million, as cash EBITDA of $32.7 million was offset by net cash capital expenditures for the quarter of $29.7 million, $13.5 million in interest payments and $1.5 million in current tax payments. Working capital generated $1.1 million during the quarter.

Gross capital expenditures for the first quarter of 2012 were $65.7 million, of which $64.2 million related to new data acquisition. Our underwriting revenue during the first quarter of 2012 was 57% of the gross investment. Our net cash capital expenditures totaled $29.7 million for the first quarter.

Our forecast of net cash capital expenditures for the remainder of 2012 is $53.3 million. Our current backlog of net cash capital expenditures related to acquisition programs is $51.6 million of which we expect approximately 78% to be incurred in 2012.

ABOUT SEITEL

Seitel is a leading provider of onshore seismic data to the oil and gas industry in North America with a leading position in many of the premier unconventional plays. Seitel's data products and services are critical for the exploration for, and development and management of, oil and gas reserves by oil and gas 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 oil and gas companies. Seitel believes that its library of onshore seismic data is the largest available for licensing in North America. Seitel's seismic data library includes both onshore and offshore 3D and 2D data. Seitel has ownership in over 46,000 square miles of 3D 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.

The press release contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” or “anticipates” or similar expressions that concern the strategy, plans or intentions of the Company. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, actual results may differ materially from management expectations reflected in our forward-looking statements. These risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, a copy of which may be obtained from the Company without charge. Management undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

The press release also includes certain non-GAAP financial measures as defined under the 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 income from operations; net cash capital expenditures, for which the most comparable GAAP measure is total capital expenditures; and cash operating expenses for which the most comparable GAAP measure is total operating expenses.

 

SEITEL, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In thousands, except share and per share amounts)

 

 

        (Unaudited)    
March 31, December 31,
2012 2011
ASSETS
 
Cash and cash equivalents $ 63,415 $ 74,894
Receivables, net 56,865 56,489
Net seismic data library 149,454 120,694
Net property and equipment 4,847 5,039
Investment in marketable securities 347 262
Prepaid expenses, deferred charges and other 10,284 10,244
Intangible assets, net 25,465 26,814
Goodwill 207,598 205,838
Deferred income taxes 56 56
 
TOTAL ASSETS $ 518,331 $ 500,330
 
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable and accrued liabilities $ 59,420 $ 60,550
Income taxes payable 2,401 1,464
Debt:
Senior Notes 275,000 275,000
Notes payable 79 95
Obligations under capital leases 3,176 3,161
Deferred revenue 48,575 48,845
Deferred income taxes 2,420 1,375
TOTAL LIABILITIES 391,071 390,490
 
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDER'S EQUITY
 
Common stock, par value $.001 per share; 100 shares authorized,
issued and outstanding at March 31, 2012 and December 31, 2011 - -
Additional paid-in capital 398,084 398,011
Retained deficit (294,479 ) (309,185 )
Accumulated other comprehensive income 23,655 21,014
TOTAL STOCKHOLDER'S EQUITY

127,260

109,840
 
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 518,331 $ 500,330
 
 

SEITEL, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

(In thousands)

 

 

        Three Months Ended
March 31,
2012       2011
 
REVENUE $ 72,547 $ 59,496
 
EXPENSES:
Depreciation and amortization 39,384 42,414
Cost of sales 97 16
Selling, general and administrative 8,092 7,565
47,573 49,995
 
INCOME FROM OPERATIONS 24,974 9,501
 
Interest expense, net (7,219 ) (10,159 )
Foreign currency exchange gains 411 232
Gain on sale of marketable securities - 1,487
Other income 81 49
 
Income before income taxes 18,247 1,110
Provision for income taxes 3,541 599
 
NET INCOME $ 14,706 $ 511
 

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 gauging new business activity. We expect cash resales to generally follow a consistent trend over several quarters, while considering our normal seasonality. Volatility in this trend over several consecutive quarters could indicate changing market conditions. 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
March 31,
2012       2011
 
Acquisition revenue:
Cash underwriting $ 35,304 $ 22,612
Underwriting from non- monetary exchanges 1,268 1,039
Total acquisition revenue 36,572 23,651

Resale licensing revenue:

Cash resales 39,169 26,265
Non-monetary exchanges 709 6,015
Revenue recognition adjustments (5,173 ) 2,438
Total resale licensing revenue 34,705 34,718
 
Total seismic revenue 71,277 58,369
 
Solutions and other 1,270 1,127
Total revenue $ 72,547 $ 59,496
 

The following table reconciles cash resales to revenue recognized for 3D data located in unconventional plays for the periods indicated (in thousands):

       
Quarter Ended March 31,
2012       2011
 
Unconventional 3D data cash resales $ 20,516 $ 19,497
Other revenue components:
Acquisition revenue 36,572 23,651
Non-monetary exchanges - 5,873
Revenue recognition adjustments (909 ) (36 )
Unconventional 3D data total revenue $ 56,179 $ 48,985
 

The following table reconciles cash resales to revenue recognized for conventional 3D, 2D and offshore data for the periods indicated (in thousands):

       
Quarter Ended March 31,
2012       2011
 
Conventional 3D, 2D and offshore data cash resales $ 18,653 $ 6,768
Other revenue components:
Non-monetary exchanges 709 142
Revenue recognition adjustments (4,264 ) 2,474
Conventional 3D, 2D and offshore data total revenue $ 15,098 $ 9,384
 

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, plus gains on sales of marketable securities obtained as part of licensing our seismic data, less cost of goods sold and cash selling, general and administrative expenses (excluding non-recurring corporate expenses such as severance costs). The following is a quantitative reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, operating income (in thousands):

             
Three Months Ended
March 31,
2012 2011
 
Cash EBITDA $ 32,673 $ 21,697
Add other revenue components
not included in cash EBITDA:
Acquisition revenue 36,572 23,651
Non-monetary exchanges 709 6,015
Revenue recognition adjustments (5,173 ) 2,438
Solutions non-cash revenue 20 -
Less:
Gain on sale of marketable securities - (1,487 )
Depreciation and amortization (39,384 ) (42,414 )
Non-recurring corporate expenses (298 ) (62 )
Non-cash operating expenses (145 ) (337 )
Operating income $ 24,974 $ 9,501
 

The following table summarizes the cash and non-cash components of our total operating expenses (cost of sales and selling, general and administrative (“SG&A”) expenses) for the three months ended March 31, 2012 and 2011 (in thousands):

             
Three Months Ended
March 31,
2012 2011
 
Cost of Sales $ 97 $ 16
Cash SG&A expenses 7,947 7,228
Cash operating expenses 8,044 7,244
Non-cash equity compensation expense 73 264
Non-cash rent expense 72 73
Total $ 8,189 $ 7,581
 

The following table summarizes our actual capital expenditures for the three months ended March 31, 2012 and our estimate for the year ending December 31, 2012 (in thousands):

                   
Three Months
Ended Estimate for Total
March 31, Remainder Estimate
2012 of 2012 for 2012
 
New data acquisition $ 64,186 $ 139,814 $ 204,000
Cash purchases and data processing 573 2,427 3,000
Non-monetary exchanges 709 5,291 6,000
Property and equipment and other 250 1,750 2,000
Total capital expenditures 65,718 149,282 215,000
Less:
Non-monetary exchanges (709 ) (5,291 ) (6,000 )
Cash underwriting (35,304 ) (90,696 ) (126,000 )
Net cash capital expenditures $ 29,705 $ 53,295 $ 83,000
 

Contacts

Seitel, Inc.
Marcia Kendrick, 713-881-8900

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Contacts

Seitel, Inc.
Marcia Kendrick, 713-881-8900