Earnings before interest, taxes, depreciation and amortization ('EBITDA') were US$ 3.7 million for the quarter, compared to US$ 4.0 million for Q3 2006. The Q3 2007 results from operations were below target for a variety of reasons. Osprey Explorer ended a contract at the end of July and has been in shipyard for two months to be upgraded from a source vessel to a long offset 2D vessel. Consequently, the vessel utilization for Osprey was only 27%. Geo Mariner had no production during the third quarter, while the Raven Explorer was sold in Q3 at a loss of around US$ 1 million.
Earnings before interest and taxes ('EBIT') were negative with US$ 1.3 million in Q3 2007 compared to 3.0 million for Q3 2006. Depreciations increased to US$ 5.0 million, up from US$ 1.0 million for Q3 2006, as five vessels were added in the period while Geo Mariner and Northern Explorer were revalued 31 December 2006, which also contributed to higher depreciations.
Interest expenses increased from US$ 0.5 million to US$ 3.6 million, in line with the increase of net interest bearing debt from US$ 31.7 million by the end of Q3 2006 to US$ 174.5 million by the end of Q3 2007. Other financial items for the quarter were US$ 2.9 million compared to zero for Q3 2006, mainly caused by unrealized foreign exchange loss on the NOK 200 million bond loan. Net loss for Q3 2007 was US$ 7.7 million, compared to a net profit of US$ 2.5 million for Q3 2006.
Operational highlights Q3:
Geo Mariner did a short project in the Mediterranean in May/June partly to get out of the region around East Africa before the monsoon and partly because of several potential projects coming up in the Mediterranean. However, the potential projects in the Mediterranean did not materialize and the vessel was out of production for several weeks in Q2 and the whole of Q3. The vessel did a short survey in The Arabian Gulf in October. Subsequent to that she mobilized to East Africa where she has started one of a series of contracts in East Africa giving her a contract backlog until March/April 2008. Utilization is still below target for Q4, while the backlog for Q1 2008 is satisfactory. The data from the Seychelles multi-client survey carried out in March/April 2007 is now processed and being marketed. Feedback from the market is positive, but the sales process has been slower than expected and anticipated sales from this survey have now been delayed to the beginning of 2008.
Northern Explorer was fully employed throughout the quarter, mainly continuing the contract with GX Technologies ('GXT') combined with a short oil company survey in West Africa for a couple of weeks in August/September. The GXT-contract is expected to continue until around February 2008.
Osprey Explorer completed the contract with CGGVeritas in the Gulf of Mexico at the end of July. We currently experience a high demand for 2D capacity, hence we decided to take the vessel to yard in August to outfit her to full long offset 2D operating mode, including streamer and other equipment. The related capital expenditures were around US$ 10 million. The previously announced letter of intent with GXT for a long-term charter has not materialized in a firm contract. The vessel is now in transit to the Eastern Hemisphere to start a short survey early December. There is high tender activity in this area and we are optimistic that we will fill the contract backlog for her shortly.
Kondor Explorer continued operations for CGGVeritas on a wide-azimuth survey in the Gulf of Mexico. This contract is now extended to February 2008. A dry-docking scheduled for 2008 has, for logistic reasons, been moved forward to Q4 2007. We expect a negative EBITDA effect caused by this of around US$ 1.5 million from reduced revenues under the off-hire period and maintenance cost recognized.
Hawk Explorer is on a two-year charter for Fugro ending in December 2008, with a one-year renewal option. Vessel utilization was somewhat below 95% for the vessel in the quarter caused by technical downtime on seismic equipment. Even though performance is improving, the seismic equipment continues to experience technical downtime below target in Q4 and we are considering taking the vessel out of production for a short period in Q1 2008 to do necessary improvements to the seismic equipment.
Aquila Explorer was delivered from yard 26 June 2007 and immediately started the transit to the Gulf of Mexico were she started her six months contract (with two six months options) with Petroleum Geo-Services ('PGS') as a source/2D vessel on 22 August 2007. Vessel utilization for the quarter was close to 100% from commencement of the contract with PGS and 42% for the full quarter. The total expenditure of the vessel including interest capitalization was around US$ 41 million.
Munin Explorer was delivered from the vessel owner 1 August 2007 and immediately started to operate as a source vessel in the North Sea on a short-term contract for PGS. Subsequently, she was upgraded to operate as a long offset 2D vessel with streamer and other necessary equipment. The vessel utilization was around 95% in operation and 47% for the full quarter. She continued on a survey in the North Sea until late October. She is now mobilizing to India for the previously announced ONGC contract and is expected to commence operations in India primo December. Total investments in equipment for the vessel were around US$ 18 million.
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