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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Vgs Seismic Canada Com Npv | TSXV:VGS | TSX Venture | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0 | - |
Hot Features
Premium
VGS Seismic Canada Inc. ("VGS" or "the Company") (TSX VENTURE:VGS) is pleased to
announce that in its first full year of operation as a public company it has
generated $8.1 million ($0.26 per share) in Cash EBITDA, compared to $548,443
($0.02 per share fully diluted) for the six months ended December 31, 2006.
VGS had net income of $548,766 ($0.02 per share basic and fully diluted) from
gross revenues of $19.4 million, compared to the six months ended December 31,
2006 where VGS generated net income of $7.5 million ($0.40 per share basic and
$0.24 per share fully diluted) from gross revenues of $23.9 million. The reason
for the comparatively lower revenue and net earnings in 2007 is that, in the
fourth quarter of 2006, the Company recognized $20.8 million in data acquisition
revenue as a result of two large surveys being released from their proprietary
usage period.
License sales were $12.3 million in cash for 2007, compared to $2.85 million for
the six months ended December 31, 2006. The growth in sales is due to the
increase in data VGS has available for sale in 2007, and the fact that the data
is located in areas where demand was strong.
Data acquisition revenue earned in 2007 was $6.8 million compared to $20.8
million in 2006. This reduction was due to fewer attractive large scale data
creation opportunities, which in management's consideration, may have been a
result of lower natural gas prices. Acquisition revenue was generated through
the completion of four 3-D surveys and one survey that was in progress at 2007
year-end. New 3-D data was added to the library in Northeast British Columbia,
the Peace River Arch, Southeast Alberta and Saskatchewan. The total cost of new
data created for the year was $10.4 million, of which $6.8 million, or 66%, was
paid for by oil and gas company clients.
Selected Financial Information
Year ended Six months ended
December 31, 2007 December 31, 2006
$ $
Data acquisition revenue 6,831,652 20,835,183
License sales revenue 12,306,806 2,852,778
Brokerage and other revenue 252,062 189,583
--------------------------------------
19,390,520 23,877,544
--------------------------------------
Non-recurring reverse takeover costs - 833,927
Other operating expenses 4,482,983 1,659,991
--------------------------------------
4,482,983 2,493,918
--------------------------------------
EBITDA (Non-GAAP measure) 14,907,537 21,383,626
--------------------------------------
Interest 1,683,065 527,946
Accretion 1,690,811 667,123
Amortization 10,724,249 12,682,880
--------------------------------------
14,098,125 13,877,949
--------------------------------------
Earnings before income taxes 809,412 7,505,677
Current income tax expense 260,646 53,681
--------------------------------------
Net Income 548,766 7,451,996
--------------------------------------
Earnings per share
Basic $0.02 $0.40
Diluted $0.02 $0.24
Cash EBITDA (Non-GAAP measure) 8,075,885 548,443
--------------------------------------
Cash EBITDA per share
Basic $0.26 $0.03
Diluted $0.26 $0.02
For the year ended December 31, 2007, the Company changed its policy with
respect to recognition of seismic data acquisition revenue by adopting the
percentage of completion method. Previously, revenue from the creation of new
seismic data was deferred when the payments were received from the client
partner and then recognized as revenue when the proprietary period expired. New
data is amortized at a rate of 35% of the total survey cost when a completed
dataset is returned from the data processor, while the remaining amount is
amortized on a straight-line basis over five years.
Corporate Review
Founded in 2005, and becoming publicly traded in December 2006, VGS is in the
business of creating and growing a seismic data library, and licensing that data
to oil and natural gas companies for cash. The Company grows its library by
creating new seismic data or purchasing existing data which it then actively
markets to oil and gas exploration companies. With its head office based in
Calgary, Alberta, VGS owns a significant and growing portfolio of seismic data
concentrated in British Columbia, Southern Alberta and Eastern Saskatchewan. As
of April 9, 2008, VGS owned 5,016 square kilometres of recent vintage or newly
created 3-D seismic data, and 5,013 linear kilometres of 2-D seismic data. The
Company focuses solely on building and marketing its seismic data library
through data creation, data purchase and data trade. VGS owns 100 per cent of
the 3-D data it has created. As part of its purchase and trade contracts, VGS
focuses on limiting revenue share obligations, and in all instances has a goal
of owning pure title to data with zero revenue share obligations.
While VGS is pleased with the growth of its seismic data library to date, when
measured in kilometres, VGS is still one of the smaller data library companies
in the Western Canadian Sedimentary Basin. It is management's opinion that both
the quality of the data in terms of the area it covers and the vintage are as
important as the volume of data in the library. The Company has a management
team with a successful track record of identifying and executing opportunities
to partner with exploration companies to create new 3-D seismic data. VGS
expects new surveys will generate more licensing revenue than surveys that have
previously been on the market. While VGS will purchase pre-existing datasets if
management assesses they possess good value, the Company's focus is to seek out
and attempt to capitalize on new data creation opportunities, keeping the
library newer and more attractive to its customers.
Non-GAAP Measures
The terms working capital, EBITDA, and Cash EBITDA are not measures that have
any standardized meaning prescribed by Canadian GAAP and are considered non-GAAP
measures. Therefore, these measures may not be comparable to similar measures
presented by other issuers. Accordingly, these measures have been described and
presented in this press release to provide readers with additional information
regarding the Company's financial position, results, liquidity, and its ability
to generate future cash flows.
These non-GAAP measures are calculated as follows:
- Working capital is defined as current assets less current liabilities;
- EBITDA is defined as earnings before any deduction for net interest,
taxes, depreciation and amortization; and
- Cash EBITDA is defined as EBITDA less data acquisition revenue and
non-monetary exchange revenue.
Balance Sheets
As at December 31, 2007 2006
$ $
Assets
Current assets
Cash and cash equivalents 8,946 540,834
Accounts receivable 6,568,093 3,276,128
Due from related party - 40,000
GST receivable - 369,663
Prepaid expenses and deposits 64,094 39,115
--------------------------------------
6,641,133 4,265,740
Seismic data libraries 39,145,800 34,258,181
Property and equipment 1,927,507 2,023,088
--------------------------------------
47,714,440 40,547,009
--------------------------------------
--------------------------------------
Liabilities
Current liabilities
Bank indebtedness 1,024,218 -
Accounts payable and accrued liabilities 5,249,524 2,554,615
GST payable 367,006 -
Deferred revenue 2,230,303 1,159,592
Current portion of mortgage payable - 7,788
Income taxes payable 62,250 53,681
--------------------------------------
8,933,301 3,775,676
Convertible debentures 7,560,266 5,869,455
Mortgage payable - 292,441
--------------------------------------
16,493,567 9,937,572
--------------------------------------
Shareholders' Equity
Share capital 20,276,468 20,276,468
Contributed surplus 330,035 19,806
Warrants 692,088 939,647
Equity portion of convertible debentures 3,618,203 3,618,203
Retained earnings 6,304,079 5,755,313
--------------------------------------
31,220,873 30,609,437
--------------------------------------
47,714,440 40,547,009
--------------------------------------
--------------------------------------
Statements of Operations, Income and Retained Earnings
Six Months
Year ended ended December
December 31, 2007 31, 2006
$ $
Revenue 19,390,520 23,877,544
--------------------------------------
Operating expenses
Sales commissions 813,462 537,790
Consulting and professional fees 794,497 394,810
General and administrative 2,812,354 697,188
Stock-based compensation 62,670 30,203
Reverse take-over costs - 833,927
--------------------------------------
4,482,983 2,493,918
--------------------------------------
14,907,537 21,383,626
Amortization 10,724,249 12,682,880
--------------------------------------
4,183,288 8,700,746
Interest
Long-term debt 1,492,562 527,946
Accretion of convertible debentures 1,290,532 594,680
Accretion of deferred financing costs 400,279 72,443
Other 190,503 -
--------------------------------------
3,378,876 1,195,069
--------------------------------------
Income before income taxes 809,412 7,505,677
Income taxes 260,646 53,681
--------------------------------------
Net income and comprehensive income
for the period 548,766 7,451,996
Retained earnings (deficit),
beginning of period 5,755,313 (1,696,683)
--------------------------------------
Retained earnings, end of period 6,304,079 5,755,313
--------------------------------------
--------------------------------------
Earnings per share
Basic 0.02 0.40
Diluted 0.02 0.24
Statements of Cash Flows
Six months
Year ended ended December
December 31, 2007 31, 2006
$ $
Cash provided by (used in)
Operating activities
Net income for the period 548,766 7,451,996
Items not affecting cash
Amortization of seismic database
libraries 10,591,089 12,636,313
Amortization of property and equipment 133,160 46,567
Accretion of deferred financing costs 400,279 72,443
Stock-based compensation 62,670 30,203
Accretion of convertible debentures 1,290,532 594,680
Common shares issued for services - 76,960
--------------------------------------
13,026,496 20,909,162
Net change in non-cash working capital
items
Accounts receivable (3,291,965) 1,881,690
GST recoverable and payable 736,669 988,410
Prepaid expenses and deposits (24,979) 51,195
Accounts payable and accrued
liabilities 1,671,387 (12,923,656)
Deferred revenue 1,070,711 (20,690,193)
Income taxes payable 8,569 53,681
--------------------------------------
13,196,888 (9,729,711)
--------------------------------------
Financing activities
Bank operating loan 1,024,218 (2,048)
Due from related party 40,000 (40,000)
Repayment of office condominium
mortgage (300,229) (1,088)
Proceeds from office condominium
mortgage - 301,317
Deferred financing costs - (255,490)
Issue of convertible debentures - 5,000,000
Issue of common shares - 12,288,125
--------------------------------------
763,989 17,290,816
--------------------------------------
Investing activities
Additions to seismic data libraries (15,478,708) (8,695,290)
Purchase of property and equipment (37,577) (1,235,346)
Non-cash working capital changes 1,023,520 984,491
--------------------------------------
(14,492,765) (8,946,145)
--------------------------------------
Decrease in cash and cash equivalents (531,888) (1,385,040)
Cash and cash equivalents,
beginning of period 540,834 1,925,874
--------------------------------------
Cash and cash equivalents,
end of period 8,946 540,834
--------------------------------------
--------------------------------------
Forward-Looking Information
Certain information contained in this press release, including information and
statements which may contain words such as "could", "plans", "should",
"anticipates", "expects", "believes", "will", "forecasts", "budget", "projects",
"estimates", "potential" and similar expressions and statements relating to
matters that are not historical facts are forward-looking information including,
but not limited to, information related to future: seismic surveys, data sales,
revenue, cash-flow, seismic annuity streams, expenditures, drilling activity
levels, oil and gas prices and demand, expansion and other development trends of
the oil and gas industry; business strategy, expansion and growth of VGS's
business and operations, including VGS's market share and other such matters.
This forward-looking information is based on certain material factors,
assumptions and analyses made by VGS in light of its experience and its
perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate in the
circumstances. However, whether actual results, performance or achievements will
conform with VGS's conclusions, forecasts, projections, expectations and
predictions expressed or implied by the forward-looking information in this
press release is subject to known and unknown risks and uncertainties which
could cause actual results to differ materially from VGS's conclusions,
forecasts, projections, expectations and predictions expressed or implied by the
forward-looking information in this press release, including: fluctuations in
the price and demand for oil and gas; fluctuations in the level of oil and gas
exploration and development activities; fluctuations in the demand for VGS's
services; the ability of VGS to raise capital and to meet its debt service
requirements; the ability of VGS's clients to raise capital for seismic data and
surveys; the ability of VGS to secure participants to conduct seismic surveys;
the existence of competitors; technological changes and developments in the oil
and gas industry; the effects of weather conditions on operations and
facilities; the seasonal impact on conducting seismic surveys; the ability of
VGS to participate financially in large seismic surveys due to increases in
costs of conducting such seismic surveys; the ability of VGS to protect its
proprietary rights to the seismic data; the existence of operating risks
inherent in VGS's services; the lack of availability of qualified personnel or
management; VGS's dependence on qualified seismic acquisition contractors to
conduct seismic surveys; general economic, market or business conditions,
including stock market volatility; changes in laws or regulations, including
taxation and environmental regulations; other unforeseen conditions which could
impact the use of services supplied by VGS and those risks and uncertainties
described in VGS's continuous disclosure filings, including those referred to in
the Management's Discussion and Analysis of VGS for the most recently completed
financial year end, which may be found on SEDAR at www.sedar.com. If any of the
above risks or uncertainties materialize, or if the material factors,
assumptions and analyses applied by VGS are incorrect, actual results may vary
materially from those expected in the forward looking information in this press
release.
Consequently, all of the forward-looking information contained in this press
release is qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by VGS, as
expressed or implied by the forward-looking information, will be realized or,
even if substantially realized, that actual results or developments will have
the expected consequences to, or effects on, VGS or its business operations.
Except as required by law, VGS assumes no obligation to update publicly any such
forward-looking information, whether as a result of new information, future
events or otherwise. Readers should not place undue reliance on forward-looking
information.
Based in Calgary, Alberta, VGS Seismic Canada Inc. identifies, creates and
markets digital seismic data for licensing to oil and natural gas exploration
companies. To date, the Corporation's growing data library is concentrated in
British Columbia, Southern Alberta and Eastern Saskatchewan. VGS shares trade on
the TSX Venture Exchange under the symbol VGS.
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