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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 results of operations for the three month period ended March 31, 2008.
At March 31, 2008 VGS had grown its seismic data library to 5,016 square
kilometres of 3-D seismic data and 5,013 linear kilometres of 2-D seismic data
with a total capital cost of $75.2 million.
VGS had a net loss of $1.99 million ($0.06 per share basic and fully diluted),
from revenues of $5.6 million compared to net income of $357,399 ($0.01 per
share basic and fully diluted) from gross revenues of $4.2 million for the three
months ended March 31, 2007. The most significant expense contributing to the
current period loss was amortization of $6.1 million.
Three months Three months
ended March ended March
31, 2008 31, 2007
$ $
Data acquisition revenue 4,519,655 -
License sales revenue 251,776 4,140,416
License sales - non monetary exchange 750,000 -
Brokerage and other revenue 86,903 77,198
-----------------------------
5,608,334 4,217,614
-----------------------------
Other operating expenses 876,150 1,174,087
-----------------------------
EBITDA (Non-GAAP measure) 4,732,184 3,043,527
-----------------------------
Interest on long term debt 337,399 397,034
Accretion of convertible debentures & deferred
costs 319,152 396,836
-----------------------------
656,551 793,870
Amortization 6,062,291 1,892,258
-----------------------------
Net income (loss) (1,986,658) 357,399
-----------------------------
Earnings per share
Basic $(0.06) $0.01
Diluted $(0.06) $0.01
Cash EBITDA (Non-GAAP measure) (537,471) 3,043,527
-----------------------------
Cash EBITDA is Calculated as follows:
Earnings before interest, taxes depreciation and
amortization 4,732,184 3,043,527
Less:
Non-monetary exchange revenue (750,000) -
Acquisition revenue (4,519,655) -
-----------------------------
Cash EBITDA (537,471) 3,043,527
-----------------------------
Data acquisition revenue recognized in the quarter was $4.5 million compared to
zero for the same quarter ended in the prior year. Previously, data acquisition
revenue was deferred until the data was released from its proprietary period and
available for sale to the industry. In late 2007, the Company prospectively
adopted a policy of recognizing this revenue on a percentage of completion
basis, and taking the initial amortization charge on the data in the month the
survey is completed. At March 31, 2007, there was $3.5 million in deferred
acquisition revenue that the Company recognized in the last quarter of 2007.
Data sales were $1,001,776 for the period, as compared to $4,140,416 for the
same quarter in the prior year. The large decrease was due to a general lack of
exploration activity in areas where VGS holds the majority of its data.
Management believes this decrease in activity was created by industry
expectation of a continuation of relatively low natural gas prices. Natural gas
prices are currently relatively high, and management hopes this will lead to a
renewed interest in exploration of gas prone areas, particularly North East
British Columbia. Brokerage and other income are $86,903 for the quarter
compared to $77,198 in the same quarter last year. This modest increase was due
to increased exploration for oil in Saskatchewan.
Interest and accretion on long term debt has decreased to $656,551 from
$793,870, as a result of the extension of the maturity date giving a longer
period over which to accrete the debentures and deferred financing costs. The
total long term debt increased since year end to pay for data purchase and
creation opportunities committed to in 2007. Interest on the convertible
debenture is 9.5 per cent plus all applicable withholding taxes, payable
semi-annually at February 15 and August 15. There is no option of early
repayment and the Company cannot force conversion, and the lender can convert at
any time up to maturity on February 16, 2010.
General and administrative expenses are $633,831, down 14% from the first
quarter of 2007, due to both less activity and management reducing discretionary
spending. Sales commissions are $81,414 compared to $231,539 for the same
quarter in the prior year. This reduction is related directly to the weaker
sales compared to last year. Professional and consulting fees are 35% lower than
Q1 of 2007 due to the company having more experience internally dealing with
public reporting requirements.
Overview
VGS is in the business of growing, through creation of new data and purchase of
pre-existing data, a seismic data library. VGS then actively markets licenses to
the seismic data in its library to oil and gas exploration companies. With its
head office based in Calgary, Alberta, VGS was formed in the fall of 2005 and
owns a significant and growing portfolio of seismic data for licensing. The
Company owns data across the Western Canadian Sedimentary Basin (WCSB or the
Basin), with the most concentrated coverage in North East British Columbia,
Southern Alberta and Eastern Saskatchewan. As of May 26, 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 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, it is still one of the smaller data library companies in
the WCSB. 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 data sets if management deems 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 appealing to oil and
gas explorers.
It is management's intent to build VGS into a Company that can successfully
manage and market more data than is currently contained in the library. All the
necessary elements are in place to enable VGS to grow the data library to twice
its current size without adding materially to the Company's current fixed costs.
The Company has the personnel, systems and space required to significantly
expand the library.
Non-GAAP Measures
The terms 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:
- 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 As at
March 31, December 31,
2008 2007
$ $
Assets
Current assets
Cash and cash equivalents 8,586 8,946
Accounts receivable 890,927 6,568,093
GST receivable 513,144 -
Prepaid expenses and deposits 81,409 64,094
-----------------------------
1,494,066 6,641,133
Seismic data libraries 45,489,426 39,145,800
Property and equipment 1,913,346 1,927,507
-----------------------------
48,896,838 47,714,440
-----------------------------
-----------------------------
Liabilities
Current liabilities
Bank indebtedness 766,311 1,024,218
Accounts payable and accrued liabilities 5,997,815 5,249,524
GST payable - 367,006
Deferred revenue - 2,230,303
Income taxes payable - 62,250
-----------------------------
6,764,126 8,933,301
Convertible debentures 11,758,860 7,560,266
-----------------------------
18,522,986 16,493,567
-----------------------------
Shareholders equity
Share capital 20,276,468 20,276,468
Contributed surplus 344,582 330,035
Warrants 696,620 692,088
Equity portion of convertible debentures 4,738,761 3,618,203
Retained earnings 4,317,421 6,304,079
-----------------------------
30,373,852 31,220,873
-----------------------------
48,896,838 47,714,440
-----------------------------
-----------------------------
Statements of Operations, Comprehensive Income (Loss) and Retained Earnings
for the three month periods ended March 31
2008 2007
$ $
Revenue 5,608,334 4,217,614
-----------------------------
Operating expenses
General and administrative 633,831 734,781
Sales commissions 81,414 231,539
Consulting and professional fees 110,624 170,854
Stock-based compensation 19,079 11,280
Advertising and promotion 31,202 25,633
-----------------------------
876,150 1,174,087
-----------------------------
4,732,184 3,043,527
Amortization 6,062,291 1,892,258
-----------------------------
(1,330,107) 1,151,269
-----------------------------
Interest on long-term debt 337,399 397,034
Accretion of convertible debentures 265,268 296,768
Accretion of deferred financing costs 53,884 100,068
-----------------------------
656,551 793,870
-----------------------------
Net income (loss) and comprehensive income (loss)
for the period (1,986,658) 357,399
Retained earnings Beginning of period 6,304,079 5,755,313
-----------------------------
Retained earnings End of period 4,317,421 6,112,712
-----------------------------
-----------------------------
Earnings (loss) per share
Basic (0.06) 0.01
Diluted (0.06) 0.01
Statements of Cash Flows for the three month periods ended March 31
2008 2007
$ $
Cash provided by (used in)
Operating activities
Net income (loss) for the period (1,986,658) 357,399
Items not affecting cash
Amortization of seismic database libraries 6,030,700 1,858,105
Amortization of property and equipment 31,591 34,153
Non-monetary license revenue (750,000) -
Accretion of deferred financing costs 53,884 100,068
Stock-based compensation 19,079 11,280
Accretion of convertible debentures 265,268 296,768
-----------------------------
3,663,864 2,657,773
Net change in non-cash working capital items
Accounts receivable 5,677,166 (809,938)
Due from related party - (943)
GST receivable (880,150) 302,613
Prepaid expenses and deposits (17,315) (37,359)
Accounts payable and accrued liabilities 908,162 2,785,390
Income taxes payable (62,250) -
Deferred revenue (2,230,303) 3,104,349
-----------------------------
7,059,174 8,001,885
-----------------------------
Financing activities
Issue of convertible debentures 5,000,000 -
Repayment of bank indebtedness (257,907) (1,908)
-----------------------------
4,742,093 (1,908)
Investing activities
Purchase of property and equipment (17,430) (29,873)
Additions to seismic data libraries (11,624,326) (10,261,760)
Change in non-cash working capital (159,871) 2,417,408
-----------------------------
(11,801,627) (7,874,225)
-----------------------------
Increase in cash and cash equivalents (360) 125,752
Cash and cash equivalents - Beginning of period 8,946 540,834
-----------------------------
Cash and cash equivalents - End of period 8,586 666,586
-----------------------------
-----------------------------
Cash paid for
Interest 649,748 636,769
Income taxes 60,565 -
Seismic license sold in exchange for data
ownership 750,000 -
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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