Pulse Seismic Inc. Reports Q1 2015 Results and Declares Quarterly Dividend

TSX: PSD
OTCQX: PLSDF

CALGARY, May 8, 2015 CNW – Pulse Seismic Inc. ("Pulse" or "the Company") reports its financial and operating results for the three months ended March 31, 2015. The unaudited financial results were in line with the preliminary unaudited financial results announced in the Company's news release on April 13, 2015. The unaudited condensed consolidated interim financial statements and the management's discussion and analysis will be filed on SEDAR (www.sedar.com) and will be available on Pulse's website (www.pulseseismic.com).

Pulse has declared a quarterly dividend of $0.02 per common share to be paid on June 19, 2015 to shareholders of record at the close of business on June 5, 2015. Dividends are designated as an eligible dividend for Canadian income tax purposes. For non-resident shareholders, Pulse's dividends are subject to Canadian withholding tax.

HIGHLIGHTS FOR THE THREE MONTHS ENDED MARCH 31, 2015

Pulse's key performance metrics all declined in the three-month period ending March 31, 2015 from the prior year's first quarter, due to the period's record low data library sales. Highlights for the quarter:

• Total seismic revenue of $4.5 million, consisting of data library sales of $1.3 million and participation survey revenue of $3.2 million, compared to $5.5 million during the three months ended March 31, 2014, consisting entirely of data library sales;
  
  
• Cash EBITDA^(a)  was negative $240,000 ($0.00 per share basic and diluted), compared to $3.8 million  ($0.06 per share basic and diluted) in the comparable period in 2014;                        
  
  
• Shareholder free cash flow^(a) was negative $347,000 ($0.01 per share basic and diluted), compared to $3.6 million ($0.06 per share basic and diluted) in the comparable period in 2014;
  

• Funds from operations^(b) of $2.9 million ($0.05 per share basic and diluted) compared to $3.6 million ($0.06 per share basic and diluted) in the comparable period in 2014;
  
  

• Net loss of $3.3 million ($0.06 per share basic and diluted) compared to a net loss of $1.8 million ($0.03 per share basic and diluted) in the comparable period in 2014;
  
  

• Pulse purchased and cancelled, through its normal course issuer bid, a total of 335,200 common shares at a total cost of approximately $1.0 million (average cost of $3.01 per common share including commissions);
  
  

• At March 31, 2015 Pulse's cash balance was $586,000 and total debt^(c) was $5.5 million, resulting in a net debt position of $4.9 million. This was an improvement of $12.8 million from net debt of $17.7 million at March 31, 2014; and
  

• The Company added 136 square kilometres of new high-quality 3D seismic data to the library through the completion of a survey in west central Alberta which commenced in January and was completed in March 2015.

Selected Financial and Operating Information
(thousands of dollars except per share data, number of shares and kilometres of seismic data)
		Three months ended
		March 31,				Year ended
		2015		2014		December 31,
		(unaudited)				2014
Revenue
	Data library sales	$	1,316	$	5,506	$	35,743
	Participation surveys	$	3,220	$	-	$	-
Total revenue		$	4,536	$	5,506	$	35,743
Amortization of seismic data library		$	7,292	$	5,832	$	22,507
Net earnings (loss)		$	(3,347)	$	(1,820)	$	3,478
	Per share basic and diluted	$	(0.06)	$	(0.03)	$	0.06
Cash EBITDA ^(a)		$	(240)	$	3,763	$	28,615
	Per share basic and diluted ^(a)	$	0.00	$	0.06	$	0.49
Shareholder free cash flow ^(a)		$	(347)	$	3,550	$	27,858
	Per share basic and diluted ^(a)	$	(0.01)	$	0.06	$	0.47
Funds from operations ^(b)		$	2,894	$	3,611	$	31,580
	Per share basic and diluted ^(b)	$	0.05	$	0.06	$	0.54
Capital expenditures
	Participation surveys	$	3,968	$	-	$	36
	Seismic data digitization and related costs		183		183		733
	Property and equipment additions		6		14		64
Total capital expenditures		$	4,157	$	197	$	833
Weighted average shares outstanding
	Basic and diluted	56,990,683		59,346,453		58,957,072
Shares outstanding at period end		56,882,889		59,314,120		57,247,843
Seismic library
	2D in kilometres	339,991		339,991		339,991
	3D in square kilometres	28,409		28,284		28,284
Financial Position and Ratios
(thousands of dollars except ratio calculations)
		March 31,		March 31,		December 31,
		2015		2014		2014
Working capital		$	1,862	$	4,832	$	5,296
Working capital ratio		1.38:1			2.32:1	2.79:1
Total assets		$	70,786	$	91,927	$	75,482
Total debt ^(c)		$	5,500	$	18,500	$	5,500
TTM cash EBITDA ^(d)		$	24,612	$	11,567	$	28,615
Shareholders' equity		$	52,796	$	62,880	$	58,401
Total debt to equity ratio		0.10:1		0.29:1		0.09:1
Total debt to TTM cash EBITDA ratio		0.22:1		1.60:1		0.19:1

^(a)The Company's continuous disclosure documents provide discussion and analysis of "cash EBITDA", "cash EBITDA per share", "shareholder free cash flow" and "shareholder free cash flow per share". These financial measures do not have standard definitions prescribed by IFRS and, therefore, may not be comparable to similar measures disclosed by other companies. The Company has included these non-GAAP financial measures because management, investors, analysts and others use them as measures of the Company's financial performance. The Company's definition of cash EBITDA is cash available for interest payments, cash taxes if applicable, debt servicing, discretionary capital expenditures and the payment of dividends, and is calculated as earnings (loss) from operations before interest, taxes, depreciation and amortization less participation survey revenue, plus any non-cash and non-recurring expenses. Cash EBITDA excludes participation survey revenue as these funds are directly used to fund specific participation surveys and this revenue is not available for discretionary capital expenditures. The Company believes cash EBITDA assists investors in comparing Pulse's results on a consistent basis without regard to participation survey revenue and non-cash items, such as depreciation and amortization, which can vary significantly depending on accounting methods or non-operating factors such as historical cost. Cash EBITDA per share is defined as cash EBITDA divided by the weighted average number of shares outstanding for the period. Shareholder free cash flow further refines the calculation of capital available to invest in growing the Company's 2D and 3D seismic data library, to repay debt, to purchase its common shares and to pay dividends by deducting non-discretionary expenditures from cash EBITDA. Non-discretionary expenditures are defined as debt financing costs (net of deferred financing expenses amortized in the current period) and current tax provisions. Shareholder free cash flow per share is defined as shareholder free cash flow divided by the weighted average number of shares outstanding for the period.

^(b) Funds from operations is an additional GAAP measure. Funds from operations is defined as cash provided by operations as prescribed by IFRS, excluding the impact of changes in non-cash working capital. Funds from operations represents the cash that was generated during the period, regardless of the timing of collection of receivables and payment of payables. Funds from operations per share is defined as funds from operations divided by the weighted average number of shares outstanding for the period.

^(c) Total debt is defined as long-term debt, excluding deferred financing costs.

^(d) TTM cash EBITDA is defined as the sum of the trailing 12 months' cash EBITDA and is used to provide a comparable annualized measure.

OUTLOOK

The advantage of Pulse's low cost structure is that the Company requires only $7.5 million of data library sales per year to cover its cash operating and interest costs at the current debt level. Therefore, for the remainder of 2015, an additional $11.0 million of data library sales would be sufficient to cover these cash costs, and continue to pay the quarterly dividend.

Pulse's outlook for the remainder of 2015 is cautious. Natural gas in Alberta continued to be priced well below $3 per thousand cubic feet in late April. In addition, Pulse believes that significant uncertainty surrounding development of liquefied natural gas (LNG) export facilities on Canada's West Coast remains.

Energy producers continue to reduce capital spending, trim staffing and, in some cases, defer the completion of recently drilled wells, with hydraulic fracturing providers generally reporting poor operating results. In the April update of its earlier 2015 forecast, the Petroleum Services Association of Canada reduced the number of wells forecast to be drilled across Canada in 2015 by 47 percent, to 5,320 wells.

The Company's broader view, however, is that crude oil prices in the range of US$50 to US$55 per barrel are not sustainable. There has been significant response in the exploration and production sectors in Canada and the United States, with the aforementioned capital spending reductions in Canada and a dramatic recorded reduction in the U.S. active drilling rig count for several consecutive months. In April, the total number of active drilling rigs in the United States fell below 1,000 for the first time since August 2009, according to Baker Hughes Inc. This is conducive to falling North American oil production, followed by a draw-down in oil inventories and, in turn, a supply-demand rebalancing.

On the natural gas side, the continued strong progress on five LNG export facilities in the United States, with first LNG exports expected this quarter and significant volumes flowing in 2016, could be positive for Canadian natural gas exports over the medium to longer terms. Low commodity prices amid general economic growth are conducive to rising demand and a recovery in prices. The timing and effects on upstream activity in Western Canada and on Pulse's business remain unknown.

Times of capital scarcity, declining cash flows and increasing corporate debt servicing challenges encourage asset sales, bringing in of partners and corporate mergers and acquisition. Pulse foresees a significant role for private companies, funded by private equity, in purchasing and redeveloping assets, creating opportunities for transaction-based sales. Pulse's low debt and significant borrowing capacity also position the Company to pursue any emerging opportunities to acquire seismic datasets that meet its criteria for geographical and geological coverage, technical quality, regional industry activity and valuation.

Throughout this period of weaker sales, the Company will continue to rely on its advantages of low costs, minimal capital spending commitments and low debt.

CONFERENCE CALL

The Company's next conference call will be held after the release of its year-end 2015 results.  Should investors or analysts wish to contact the Company, please feel free to contact Neal Coleman or Pamela Wicks at the information provided below.

CORPORATE PROFILE

Pulse is a market leader in the acquisition, marketing and licensing of 2D and 3D seismic data to the western Canadian energy sector. Pulse owns the second-largest licensable seismic data library in Canada, currently consisting of approximately 28,400 square kilometres of 3D seismic and 340,000 kilometres of 2D seismic. The library extensively covers the Western Canada Sedimentary Basin where most of Canada's oil and natural gas exploration and development occur.

Forward Looking Information

This news release contains information that constitutes "forward looking information" or "forward looking statements" (collectively, "forward looking information") within the meaning of applicable securities legislation. This forward looking information includes, among other things, statements regarding:

• Pulse's outlook for the remainder of 2015 is cautious;
• The Company's view is that crude oil prices in the range of US $50 to $55 per barrel are not sustainable;
• The Company foresees a significant role for private companies, funded by private equity, in purchasing and redeveloping assets, creating opportunities for transaction based sales;
• General economic and industry outlook;
• Pulse's capital allocation strategy;
• Pulse's dividend policy;
• Industry activity levels and capital spending;
• Forecast commodity prices;
• Forecast oil and natural gas drilling activity;
• Forecast oil and natural gas company capital budgets;
• Forecast horizontal drilling activity in unconventional oil and natural gas plays;
• Estimated future demand for seismic data;
• Estimated future seismic data sales;
• Estimated future demand for participation surveys;
• Pulse's business and growth strategy; and
• Other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results and performance.

Often, but not always, forward looking information uses words or phrases such as: "foresees", "expects", "does not expect" or "is expected", "anticipates" or "does not anticipate", "plans" or "does not plan", "estimates" or "estimated", "projects" or "projected", "forecasts" or "forecasted", "believes" or "does not believe", "intends" or "does not intend", "likely" or "unlikely", "possible", "probable", "scheduled", "positioned", "goal", "objective", "hopes", "optimistic"  or states that certain actions, events or results "should", "may", "could", "would", "might" or "will" be taken, occur or be achieved.   

Undue reliance should not be placed on forward-looking information. Forward looking information is based upon current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to vary and in some instances to differ materially from those anticipated in the forward looking information.

The material risk factors that could cause actual results to differ materially from the forward-looking information include, but are not limited to:

• oil and natural gas prices;
• seismic industry cycles and seasonality;
• the demand for seismic data and participation surveys;
• the pricing of data library license sales;
• relicensing (change of control) fees, partner copy sales and asset disposition related sales;
• the level of pre-funding of participation surveys, and the ability of the Company to make subsequent data library sales from such participation surveys;
• the ability of the Company to complete participation surveys on time and within budget;
• environment, health and safety risks;
• the effect of seasonality and weather conditions on participation surveys;
• federal and provincial government laws and regulation, including taxation, royalty rates, environment and safety;
• competition;
• dependence upon qualified seismic field contractors;
• dependence upon key management, operations and marketing personnel;
• loss of seismic data;
• protection of Intellectual Property; and
• the introduction of new products.

The foregoing list of risks is not exhaustive. Additional information on these risks and other factors which could affect the Company's operations or financial results are included in the Risk Factors section of the Company's MD&A for the most recent calendar year and interim periods. Forward looking information is based upon the assumptions, expectations, estimates and opinions of the Company's management at the time the information is presented.

SOURCE Pulse Seismic Inc.

Neal Coleman, President and CEO; Or Pamela Wicks, VP Finance and CFO, Tel.: [phone], Toll-free: 1-877-460-5559, E-mail: [email protected]. Please visit our website at www.pulseseismic.com