LONDON (Alliance News) - SeaEnergy PLC shares plummeted on Wednesday after it said it will not meet its full-year expectations and said it expects to make an operating loss in 2015 before returning to profitability in 2016.
"The company considers that it is no longer confident that it can meet its previous expectations of performance and now anticipates an operating loss for 2015 before a recovery into profitability in 2016," it said in a statement.
SeaEnergy shares were down 25% to 5.50 pence per share on Wednesday morning.
The company, which provides strategic and technical advice and products to the oil and gas, renewable energy and other industries, said although the last quarter of the calendar year has historically been its busiest, a detailed review has shown the majority of new enquiries it is receiving will not contribute to revenue in 2015.
"While a number of opportunities for reducing this shortfall remain and are being very actively pursued, the exact timing of orders and the commencement dates for projects is uncertain," it said.
SeaEnergy reported a GBP2.9 million pretax loss in the first six months of 2015, significantly wider than the GBP105,000 loss reported a year earlier as revenue dropped to GBP1.9 million from GBP2.5 million.
Despite revenue falling in the period, cost of sales rose to GBP1.7 million from GBP1.4 million, squeezing its margin to produce a GBP183,000 gross profit in the first half of 2015 compared to a GBP1.1 million profit a year ago.
SeaEnergy also booked a GBP2.0 million impairment against its investment in Lansdowne Oil & Gas PLC, in which it holds a 18.67% stake. SeaEnergy said the impairment was booked due to Lansdowne's share price decline and reduction in royalty acreage.
"The business has been impacted by the decline in oil price and deferrals and reductions in operators' budgets," said Chairman David Sigsworth.
SeaEnergy moved its focus toward the R2S Visual Asset Management software earlier in 2015, which the company said is the "most profitable" part of the business and the area with the most potential for growth. RS2 is a "visual asset management solution" assisting the oil and gas, maritime and commercial sectors.
"The oil services sector is enduring a major slowdown in activity, as operators retrench in response to sustained lower oil prices. The company's core activity - the provision of R2S VAM software and services - has been affected by cost cutbacks and work deferrals, although there are emerging signs of recovery," said the company.
SeaEnergy's other business, SE Innovation, which provides consultancy and forensic services, has been affected by the downturn in the oil and gas market, but the forensic segment has not been affected and is "performing ahead of budget", it said.
SeaEnergy said it has reduced its number of executive directors, which also included all of the main board directors waiving part of their remuneration. It also renegotiated or cancelled some third-party contracts in order to save on costs.
"These savings will become more evident in the second half of the year and further cost reductions are planned for 2016 as the group structure is simplified for a more focussed business following the exit from ship management and the planned relinquishment of part of the lease on the head office," it said in a statement.
"Although business performance during the first half of the year has been significantly impacted by the oil price collapse, we have taken steps to minimise this impact and to position the business for recovery as activity levels pick up into 2016. The focus of the business on R2S positions it well for growth, and internationalisation and diversification have near-term potential to contribute strongly," added SeaEnergy.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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