EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

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FOR IMMEDIATE RELEASE
Contact:   Marcia Kendrick
  713-881-8900

SEITEL ANNOUNCES FOURTH QUARTER AND YEAR END 2010 RESULTS

Cash resales total $137.6 million for the year

HOUSTON, March 10, 2011 – Seitel, Inc., a leading provider of seismic data to the oil and gas industry, today reported results for the fourth quarter ended December 31, 2010.

Fourth Quarter and Full Year Highlights –

 

($ in millions)    Fourth Quarter     Full Year  
     2010      2009      % Increase     2010      2009      % Increase  

Cash Resales

    $ 40.8       $ 19.7         107 %    $ 137.6       $ 49.3         179 % 

Total Revenue

      64.1         38.7         66 %      175.6         115.3         52 % 

Cash EBITDA

      38.1         15.8         141 %      117.3         32.9         257 % 

Cash resales for the 2010 fourth quarter were $40.8 million, more than twice the 2009 fourth quarter level of $19.7 million. Cash resales from 3D data located in unconventional resource plays increased 65% from the fourth quarter of 2009 to the fourth quarter of 2010 while cash resales related to conventional 3D data increased 240% for the same period. For the year ended December 31, 2010, cash resales were $137.6 million, an increase of 179% compared to the same period in 2009, primarily driven by an increase in activity in the resource plays. Cash resales from 3D data located in unconventional plays increased 261% from 2009 to 2010 while cash resales related to conventional 3D data increased 114% between the years.

Total revenue for the fourth quarter was $64.1 million compared to $38.7 million during the fourth quarter of 2009. Total resale revenue increased $12.1 million, or 37%, and acquisition revenue increased $13.4 million, more than four times the 2009 fourth quarter level. Acquisition revenue was $17.8 million in the fourth quarter of 2010 compared to $4.4 million in the 2009 fourth quarter, reflecting increased activity in the Eagle Ford area in south Texas, the Haynesville area in east Texas and Montney area in British Columbia, Canada. In addition, we began an acquisition program in the Niobrara area in the fourth quarter of 2010.

Total revenue for the year ended December 31, 2010 was $175.6 million compared to $115.3 million for the same period in 2009. The 52% increase in revenue was primarily due to an increase in resale revenue of $57.9 million and a $3.1 million increase in acquisition revenue. Solutions revenue was $3.8 million for 2010, a decrease of $0.7 million from 2009.

For the fourth quarter of 2010, the net loss was $2.7 million compared to the 2009 fourth quarter net loss of $18.3 million. For the year ended December 31, 2010, the net loss was $63.4 million compared to the 2009 net loss of $96.8 million. The higher level of revenue was the primary driver of the improvement in both periods.

Cash EBITDA, generally defined as cash resales and solutions revenue less cash operating expenses (excluding various non-recurring items), was $38.1 million for the fourth quarter of 2010 compared to $15.8 million in the fourth quarter of 2009. This increase was driven by a $21.0 million improvement in cash revenue partially offset by a $2.9 million increase in cash operating expenses. Cash EBITDA was $117.3 million for the year ended December 31, 2010 compared to $32.9 million for the same period last year.

“Our cash resales rebounded in 2010 achieving a record level of $137.6 million. E&P companies focused their capital spending in unconventional resource plays. New data being shot as well as our existing data in these areas was the driver to our success,” commented Rob Monson, president and chief executive officer. “We also saw increased activity in our conventional data library but not to the levels experienced in 2008 and prior.

(more)

“With these improved activity levels, we began signing on new acquisition programs in the second half of 2010, focusing more on liquids-rich natural gas and oil-rich plays. We continue to grow our data library in areas where we currently have a strong foothold as well as expanding into other resource plays. We began a 400 square mile acquisition program in the Niobrara area in late 2010 and a 160 square mile program in the Marcellus play in early 2011,” stated Monson.

Selling, general and administrative (“SG&A”) expenses were $8.4 million for the fourth quarter of 2010 compared to $5.0 million last year. Cash SG&A expenses increased $2.9 million between the quarters mainly due to an increase in incentive compensation resulting from improved results in 2010. SG&A expenses were $31.8 million for the year ended December 31, 2010 compared to $25.1 million for the same period in 2009. Cash SG&A expenses increased $6.6 million between years primarily due to increased incentive compensation and an increase in allowance for doubtful accounts.

Our cash balances on December 31, 2010 were $90.0 million, an increase of $44.3 million during the quarter. Cash EBITDA of $38.1 million was offset by net cash capital expenditures for the quarter of $12.4 million and working capital generated an additional $18.5 million. For the year, we had $63.7 million in cash generation.

Gross capital expenditures for the year ended December 31, 2010 were $72.3 million, of which $59.4 million related to new data acquisition. Our underwriting revenue for the year ended December 31, 2010 was 68% of the gross investment. Our net cash capital expenditures totaled $23.9 million for the year.

We plan to increase activity for new data acquisition in 2011 and currently are forecasting our net cash capital expenditures for 2011 to be approximately $70 million. Our current backlog of net cash capex related to acquisition programs is $40.4 million. We currently have new acquisition shoots ongoing in Haynesville, Eagle Ford, Niobrara and Marcellus areas in the U.S. and in Horn River and Montney in Canada.

CONFERENCE CALL

Seitel will hold its quarterly conference call to discuss fourth quarter and year end results for 2010 on Friday, March 11, 2011 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). The dial-in number for the call is 866-510-0676, passcode Seitel. A replay of the call will be available until March 18, 2011 by dialing 888-286-8010, passcode 52567594, and will be available following the conference call at the Investor Relations section of the company’s website at http://www.seitel.com.

ABOUT SEITEL

Seitel is a leading provider of onshore seismic data to the oil and gas industry in North America. 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 approximately 43,000 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 loss 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.

(Tables to follow)

 

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SEITEL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

 

     December 31,  
     2010     2009  
     (unaudited)        

ASSETS

     

Cash and equivalents

    $ 89,971      $ 26,270   

Receivables:

     

Trade, net

      34,404        29,498   

Notes and other

      84        286   

Due from Seitel Holdings, Inc.

      156        147   

Net seismic data library

      106,104        200,389   

Net property and equipment

      5,446        7,003   

Investment in marketable securities

      3,102        3,173   

Prepaid expenses, deferred charges and other

      10,249        13,426   

Intangible assets, net

      33,117        38,440   

Goodwill

      208,050        203,060   

Deferred income taxes

      326        327   
                

TOTAL ASSETS

    $ 491,009      $ 522,019   
                

LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)

     

Accounts payable

    $ 21,013      $ 10,016   

Accrued liabilities

      25,588        25,974   

Employee compensation payable

      6,569        1,087   

Income taxes payable

      8        9   

Debt:

     

Senior Notes

      402,056        402,154   

Notes payable

      154        208   

Obligations under capital leases

      3,394        3,370   

Deferred revenue

      37,121        26,722   

Deferred income taxes

      2,128        6,118   
                

TOTAL LIABILITIES

      498,031        475,658   
                

COMMITMENTS AND CONTINGENCIES

     

STOCKHOLDER’S EQUITY (DEFICIT)

     

Common stock, par value $.001 per share; 100 shares authorized, issued and outstanding at December 31, 2010 and 2009

      —          —     

Additional paid-in capital

      277,488        274,331   

Retained deficit

      (311,401 )      (247,984 ) 

Accumulated other comprehensive income

      26,891        20,014   
                

TOTAL STOCKHOLDER’S EQUITY (DEFICIT)

      (7,022 )      46,361   
                

TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)

    $ 491,009      $ 522,019   
                

 

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SEITEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands)

 

     Quarter Ended December 31,  
     2010     2009  

REVENUE

    $ 64,078      $ 38,673   

EXPENSES:

     

Depreciation and amortization

      53,804        41,517   

Cost of sales

      24        52   

Selling, general and administrative

      8,417        5,031   
                
     62,245        46,600   
                

INCOME (LOSS) FROM OPERATIONS

      1,833        (7,927 ) 

Interest expense, net

      (10,016 )      (10,165 ) 

Foreign currency exchange gains

      321        135   

Gain on sale of marketable securities

      4,136        —     

Other income

      257        77   
                

Loss before income taxes

      (3,469 )      (17,880 ) 

Provision (benefit) for income taxes

      (797 )      417   
                

NET LOSS

    $ (2,672 )    $ (18,297 ) 
                

(more)

 

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SEITEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

 

     Year Ended December 31,  
     2010     2009  
     (unaudited)        

REVENUE

    $ 175,556      $ 115,345   

EXPENSES:

     

Depreciation and amortization

      175,592        150,199   

Cost of sales

      97        290   

Selling, general and administrative

      31,831        25,090   
                
     207,520        175,579   
                

LOSS FROM OPERATIONS

      (31,964 )      (60,234 ) 

Interest expense, net

      (40,536 )      (40,696 ) 

Foreign currency exchange gains

      441        1,008   

Gain on sale of marketable securities

      4,188        —     

Other income

      446        151   
                

Loss before income taxes

      (67,425 )      (99,771 ) 

Benefit for income taxes

      (4,008 )      (2,974 ) 
                

NET LOSS

    $ (63,417 )    $ (96,797 ) 
                

(more)

 

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Cash resales represent new contracts for data licenses from our library, including data currently in progress, payable in cash. We believe this measure is helpful 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):

 

     Quarter Ended      Year Ended  
     December 31,      December 31,  
     2010      2009      2010     2009  

Acquisition revenue:

           

Cash underwriting

    $ 16,270       $ 4,413       $ 37,823      $ 34,565   

Underwriting from non- monetary exchanges

      1,556         —           2,677        2,838   
                                  

Total acquisition revenue

      17,826         4,413         40,500        37,403   
                                  

Resale Licensing revenue:

           

Cash resales

      40,763         19,715         137,605        49,268   

Non-monetary exchanges

      628         754         4,678        1,764   

Revenue recognition adjustments

      3,762         12,607         (11,005 )      22,386   
                                  

Total resale licensing revenue

      45,153         33,076         131,278        73,418   
                                  

Total seismic revenue

      62,979         37,489         171,778        110,821   
                                  

Solutions and other

      1,099         1,184         3,778        4,524   
                                  

Total revenue

    $ 64,078       $ 38,673       $ 175,556      $ 115,345   
                                  

The following table summarizes the percentage increases between the periods indicated for cash resales and total revenue:

 

     4Q09 to     2009 to  
     4Q10     2010  

Unconventional 3D data cash resales

      65 %      261 % 

Unconventional 3D data total revenue

      65 %      63 % 

Conventional 3D data cash resales

      240 %      114 % 

Conventional 3D data total revenue

      106 %      44 % 

(more)

 

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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 and 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 (loss) (in thousands):

 

     Quarter Ended December 31,     Year Ended December 31,  
     2010     2009     2010     2009  

Cash EBITDA

    $ 38,103      $ 15,809      $ 117,252      $ 32,868   

Add (subtract) other revenue components not included in cash EBITDA:

         

Acquisition revenue

      17,826        4,413        40,500        37,403   

Non-monetary exchanges

      628        754        4,678        1,764   

Revenue recognition adjustments

      3,762        12,607        (11,005 )      22,386   

Less:

         

Gain on sale of marketable securities

      (4,136 )      —          (4,188 )      —     

Depreciation and amortization

      (53,804 )      (41,517 )      (175,592 )      (150,199 ) 

Severance and one-time costs associated with cost reduction measures

      (48 )      (2 )      (176 )      (1,170 ) 

Non-cash operating expenses

      (498 )      9        (3,433 )      (3,286 ) 
                                

Operating income (loss)

    $ 1,833      $ (7,927 )    $ (31,964 )    $ (60,234 ) 
                                

(more)

 

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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 periods indicated (in thousands):

 

     Quarter Ended December 31,     Year Ended December 31,  
     2010      2009     2010      2009  

Cost of Sales

    $ 24       $ 52      $ 97       $ 290   

Cash SG&A expenses (1)

      7,919         5,040        28,398         21,804   
                                  

Cash operating expenses

      7,943         5,092        28,495         22,094   

Non-cash equity compensation expense

      428         (76 )      3,157         3,034   

Non-cash rent expense

      70         67        276         252   
                                  

Total operating expenses

    $ 8,441       $ 5,083      $ 31,928       $ 25,380   
                                  

 

(1) Includes $0.2 million and $1.2 million of severance and one-time costs incurred to implement cost reduction measures for the years ended December 31, 2010 and 2009, respectively.

The following table summarizes our actual capital expenditures for 2010 and 2009 and our 2011 estimated capital expenditures (in thousands):

 

     Quarter                 Estimate for  
     Ended     Year Ended December 31,     Year Ended  
     Dec. 31, 2010     2010     2009     Dec. 31, 2011  

New data acquisition

    $ 28,052      $ 59,428      $ 48,931      $ 157,000   

Cash purchases and data processing

      326        1,767        2,771        7,000   

Non-monetary exchanges

      2,655        10,545        2,197        7,000   

Property and equipment and other

      329        527        400        1,000   
                                

Total capital expenditures

      31,362        72,267        54,299        172,000   

Less:

         

Non-monetary exchanges

      (2,655 )      (10,545 )      (2,197 )      (7,000 ) 

Cash underwriting

      (16,270 )      (37,823 )      (34,565 )      (95,000 ) 
                                

Net cash capital expenditures

    $ 12,437      $ 23,899      $ 17,537      $ 70,000   
                                

# # #

 

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