Good morning, everyone. Welcome to this fourth quarter conference call for SeaBird Exploration. I am Ståle Rodahl, chairman in this company, and I'm here with Finn Atle Hamre, our CEO, and Sveinung Olvestad, our CFO. Before I leave it over to them, I will make some initial remarks. With the fourth quarter demerger of Green Minerals, the deep restructuring and cost-cutting process we embarked upon three years ago have been finalized. We are excited to bring a lean, efficient, and high-quality seismic operation back to the market in its pure form through SeaBird Exploration. The market headwind that we have faced the last many years has also turned to a tailwind. Ocean bottom seismic is a market in structural growth with demand up about 60% over the last five years. Active supply has dropped around 50% over the same period.
Usually, such a dramatic mismatch between supply and demand would drive rates quickly upwards. While rates certainly are up, almost doubling for OBN source, there has been a certain inertia that we believe are due to overall project economics that take some time to work themselves through. The market is, in our opinion, tighter now than at the last peak in 2014, but rates have yet not passed previous peaks of $80,000 a day. We believe rates need to move substantially higher as seismic vessel and equipment economics are far from where they need to be to give an adequate return on the substantial investments made into the equipment in this industry.
While the number of vessels, and importantly, also the number of players, have been reduced dramatically, we have been strong advocates for further consolidation for some time. Also, we have the capacity to do more, both in terms of equipment and organization. In an industry marked by privately owned smaller players, often family-owned, with fledgling ownership and commitment to the seismic business, we believe a publicly owned, professionally run company with a clear mission statement like SeaBird Exploration offers the best platform to consolidate from. We hope and we believe that our clients over time will think similarly around these important issues. Admittedly, while being a public company has many advantages, it may also put some constraints on you, depending on how popular your equity is in the marketplace at any time.
Understandably, just coming out of an eight-year-long downturn, our industry may not rank high in the popularity contest at the moment. Delivering strong operational performance and ditto cash flow to our owners is, in our opinion, the best way to have those valuation constraints and our strategic opportunity set removed, thereby accelerating some of the processes we are involved in. We hope that the results and outlook that Finn Atle and Sveinung will now present will shed some light on SeaBird in that perspective. Finally, as cash flow continues to improve, our priority is to pay down debt, and we look set to have come far in this regard already in the first half of this year. With this, I hand it over to Finn Atle.
Thank you, Ståle. SeaBird Exploration. SeaBird Exploration provides marine seismic acquisition with a current fleet of two 100% owned vessels. The Eagle Explorer is currently equipped to perform both 2D streamer acquisition and source services. Currently, the vessel is performing a 2D streamer work. The Fulmar Explorer is equipped for seismic source services and currently engaged in projects in the Gulf of Mexico. In addition, we have seismic equipment to rig chartered vessels, which again enable SeaBird to relatively quickly increase its fleets by up to two additional vessels with limited CapEx. Following divestment of Green Energy Group, SeaBird is now trading under the ticket SBX. The Green Minerals shares held by SeaBird were distributed as dividend to SeaBird shareholders in early 2023. Consequently, SeaBird Exploration is again a pure-play seismic acquisition company. Next, please. Key events of fourth quarter.
Fourth quarter 2022 was a busy quarter, with vessel mobilizations, project initiations, and dry-docking of the Fulmar Explorer. Eagle Explorer commenced the 2D streamer project in India and has had good, steady production since startup. Early 2023, a client awarded SeaBird with an extended work scope equivalent to about 20% of the original scope. We expect completion of the total scope in May this year. Fulmar Explorer had to be dry-docked due to a developing vibration in one of the main propellers. The timing of the dry-docking was agreed with the client between two prospect areas and was completed within planned time. Vessel thereafter started the second prospect area for the client and is performing very well. I would like to hand it over to our CFO, Sveinung Olvestad, to comment on the next slide, please.
Thank you, Finn Atle. First and foremost, with Green Minerals now being distributed, I want to highlight that Green Minerals has been recognized as discontinued operation held for distribution in the financial statements, meaning that all tables and graphs in the material released today is reflecting the seismic operation only.
For Q4, this was a turning point for us financial speaking as well. Revenue of $8.9 million was up from $8.4 million the prior year quarter. EBITDA of $2.3 million was a substantial improvement for a prior year quarter of -$2.5 million, but still held back by some project related startup costs and the Fulmar drydocking. Cash flow from operation was $1.3 million, where working capital build in India contributed negatively. Net interest-bearing debt as of year-end was $15.4 million, broadly flat from the start of the year. For the full year 2022, revenue was $20.2 million, broadly flat year-over-year. EBITDA for the year was $1.5 million, up from a loss of $4.2 million from the prior year.
Given to the strong operation and good visibility, year to date, we are happy to give you some more flavor of what we expect going forward. The SG&A is expected to remain at today's level with quarterly fluctuations aggregating to approximately $4 million for the year 2023. We see an EBITDA for Q1 in the range of $4 million-$5 million, and we expect a combination release of working capital and increased profitability to result in improving cash flow the coming quarters and consequently strengthening our financial position. With that, back to you, Finn Atle.
Thank you. Contract coverage and backlog. Ongoing, we are having now ongoing operations on our backlog on both the Fulmar and Eagle, as can be seen from the above. We expect Eagle to complete production in India towards the mid and end of May, including the extended work scope awarded. The extended work scope will render better overall project economics as initial startup and demo costs are already accounted for. The Fulmar Explorer was out of operations for about two weeks during her drydocking in November. Outlook. Delivering on our backlog coupled with interesting leads for both 2D and source work is the priority. We are entertaining discussions for flexible charters, which will tie into leads we are working on. Also encouraging to see the geographic footprint of the opportunities stretching all continents. Next one, please. Utilization.
Quarter four utilization was affected by drydocking of the Fulmar Explorer and start up timing of the Eagle Explorer. As you can see, to date, 2023, the utilization has, for all practical purposes, been 100%, and we expect that to be going for the next quarter as well. Next one, please. Market developments. In short, market trends and indicators are strong throughout. The slide clearly indicates the impact COVID had on the OBN market from 2019 into 2020 and the recovery and further development since. If you couple this with the fleet reductions, partly permanent reductions, it further indicates a tight market going forward. The market increase in 2022 and 2023 is of course a combination of volume and price increase.
As more and more OBN baseline surveys are done, we believe volume of projects in this market will increase in the years to come. Next, please. Market trends. Further regarding market trends, we are here represented with our usual slide and with leads received. Worth pointing out is the continued strong leads list into first quarter this year. Following on from the last quarter, again, we see a clear trend that leads have a longer duration overall. The mix between 2D and source leads seems to be more or less the same as before. Next one, please. We have since last quarter updated the list of available source vessels with about five vessels of total current and potential source vessels. We see these vessels can be potential source vessels.
Some of these vessels are also capable of 3D streamer work, and as such, in a strong towed streamer market can return to towed streamer work. Just to give you a availability of vessels that can swing between streamer work and source vessels included in the list. Note that this overview does not include Russian nor Chinese operators, and only two vessels of Shearwater fleet has been added as dedicated source vessels. We don't normally compete with the vessels from Shearwater as these are dedicated to work for Shearwater . Of course, Shearwater is competing with our clients and in the OBN space in general. As such, these vessels are part of the market mix, we believe. Volume of OBN projects is increasing and more and more baseline surveys are done, which will strengthen the market forward.
It is interesting to couple the previous two slides I've shown with the available source fleet development since 2018 and 2019. Next one, please. This slide should be known to our usual audience, but let's spend some time to give reflection on where we are and where we see the market developing the next year. When we introduced this slide about a year ago, there were some lifted eyebrows and comments that our rate expectations for 2023 were too high. Now with 2022 in the rear view mirror, we see that both our contracts on 2D and OBN source segment are within the range provided, although on a 100% utilization basis. That said, our utilization has not been a 100%, but nevertheless, this illustrates that the market is ballpark what we indicated a year ago, and as indicated in the previous slides, it is still improving.
Now looking into a crystal ball for coming year. As we have touched upon in the presentation today, there are increasing number of requests for prices, and our clients are increasingly asking for longer contract duration. This, to us, is a clear sign that the pricing power is increasingly tilting towards the operators. Given the low availability of vessels, we are seeing a willingness to discuss higher rates. More concrete, we expect to see high-end OBN source vessels to be fixed at rates at, and maybe above, indicated level above, yielding an annual EBITDA in the range of $14 million-$18 million per vessel on a 100% utilization basis.
In order to illustrate EBITDA potential for SeaBird, this would mean that we could generate $25 million-$35 million on a 100% utilization basis after SG&A with our two owned vessels, or $45 million-$55 million if we charter two additional vessels and equip these with our equipment. I would like to hand it over to Sveinung to run through the fourth quarter financials.
Thank you. Revenue for the quarter was $8.9 million, reflecting the strong utilization in the quarter. As we have talked about already, the Eagle mobilized during October and started production early November, and has produced solely since that. Fulmar has been on a contract the whole quarter, with the exception of the dry docking in November. After a challenging year with declining revenues, Q4 marked an inflection point for us. 2022 revenues ended up at around $20 million, and based on our contract backlog and strong tendering activity, we believe rolling 12 months revenue will increase in the coming quarters. Next slide, please. Although we had the operational strong quarter, we are not satisfied with the profitability.
The EBITDA of $2.3 million was negatively impacted by startup costs on the Eagle and dry docking cost and off-hire on the Fulmar. However, as discussed by Finn Atle previously, the operation is progressing well in 2023, with utilization close to 100% so far this year. This gives us the confidence to provide a guidance of Q1 EBITDA in the range of $4 million-$5 million. Next slide. To the cash flow. As you can see from the chart, SeaBird started the quarter with a cash balance of $1.1 million. During the quarter, we sold some non-core equipment, which generated proceeds just south of $500,000. Operating cash flow for the quarter when excluding working capital was $3.1 million.
The working capital build during the quarter mainly relates to startup of the operation in India, a development we expect to reverse during the coming quarters. Furthermore, we repaid $740,000 of debt and paid $435,000 in interest. All of this leaves us with a net cash flow for the quarter at -$230,000 and a cash balance of $855,000. Next one. Now to the net interest-bearing debt. The net debt was $15.4 million as of end 2022. This is relatively flat from the start of the year. The gross debt was $16.3 million at year-end, where $15.7 million is the bank facility with SpareBank 1 SMN, with maturity in June 2023.
Lastly, I want to highlight that with both our vessels in full production and a substantial working capital position, we expect cash release the coming quarters. With that, I leave the word for to Finn Atle for closing remarks.
Summary. Since an announcement of the restructurings from two years ago, our strategic review announced early this year, we have: we've refinanced, reduced head count, and at the same time strengthened our operational performance by way of better teamwork and cross-department cooperation. We've reduced our overall SG&A. We recycled three vessels, sold one vessel out for the unsuccessfully introduced the Fulmar Explorer to clients. Now with several prospect areas already completed. We secured 23 months of vessel backlog, which we are now delivering on with reference to our EBITDA guidance. With that, and on behalf of a hardworking, dedicated, and loyal SeaBird team, I would like to thank you for your attention and support. Thank you.
Thank you. To the Q&A. As many of you already have noticed, you can post questions in the Teams viewer, and I will try to summarize them here and distribute them to our team here today. First there is a lot of questions regarding the flexible charter as strategy and expectations we have. Maybe the first question for you, Finn Atle, maybe you can give us a quick overview of what exactly flex capacity is and what we have the capacity to do. How does it work? Or what capabilities do you have to make use of such capacity?
Yeah, sure. Well, first of all, the seismic companies, they have their own seismic vessels and equipment and operational capabilities. However, from historically, there are some vessel owners that are not seismic company as such. They are only purely seismic vessel owners. These vessels, some of them have been laid up for quite some time, and some of them have been on and off working. These vessels are available for bareboat charters, where we see ourselves as the charterer, taking them in on a bareboat, equipping them with, coupling that with our seismic equipment and presenting it to clients. Obviously, taking on something on a bareboat is a commitment. We are now working on tying this together with leads and discussions with clients so that we can go back to back, offering this to clients.
Also, we would like to see a project of on some duration to cover that because of course there's a cost involved in rigging and preparing these vessels for operations. These discussions are indeed going on in the background, and we are confident that we can do this, of course, coupled with client expectations and demand.
Thank you. Also, if I may add, what's very important for us is not to add on vessels, on our own risk. We are working very closely together with both vessel owners and clients in order to make a back-to-back arrangement so that SeaBird take limited downtime risk on the vessels we are looking to take on board. Maybe Finn Atle to you as well, there is a couple of questions of the capabilities of the vessel we have. I know we have arranged a quick overview in the appendix of this presentation, but maybe you can take us through and just give us a quick overview of the two vessels we have and equipment we have on storage.
Sure. Firstly, on the Eagle Explorer, she was originally designed and built as a 3D streamer vessel. We acquired the vessel back in 2018 and have operated her since as a 2D and source vessel to the OBN market. Back in the days when she was built, the new build price was around $120 million, which I guess would be even more now and if you were bold enough to do a new building contract. Vessel very capable in the market we are presenting her to and has proven very efficient in both in terms of fuel efficiency and project execution. The Fulmar Explorer, we acquired back in 2019, was previously engaged in the electromagnetic geoservice scope and designed for that purpose.
We reconfigured the vessel, equipped her with our source equipment, also some new equipment. We purchased a semi-digital source controller, which is now the norm more or less in the OBN source market and introduced her to the market last year, and it's been performing very well. The clients are really happy with the performance, the fuel efficiency, and the vessel general capacity. Equipment pool, taking off vessel equipment from some of the vessels that we've scrapped and seismic equipment that we've had in the company over the years is now being maintained, prepared, and readied in our warehouse at CCB in Bergen, and is more or less ready to be deployed on the vessel of choice. That's I think that's sort of concludes the question, hopefully, Sveinung.
Thank you. We have some question, a couple of question I can answer. First of all, will the distribution of GEM have Green Minerals have a impact in the SeaBird P&L? The answer to this is yes, it will in Q1 when we physical did the distribution. This will be a non-cash, obviously. But I will in the Q1 presentation make that very clear what items that is including and of course in the relevant presentation as I've highlighted. I will come back to the magnitude and everything, but it's non-cash and non-material for the company.
Then I had a question about, we received a contract extension on the job we are doing in India. The question is how does this impact the $18 million EBITDA we guided for the contracts we started working on last fall? First of all, there is a couple of plus and minuses which impacts the backlog we guided on. As you have seen, we haven't updated the current backlog figure for this quarter, and that's not something we are going to do going forward. Instead, we have tried to give the market visibility through guiding what we expect for the Q1 quarter.
Going back to the $18 million, I think it's important to note that we had unscheduled downtime on Fulmar relating to the dry docking and repair, which if you not touched upon earlier. This was, however, more than offset by the increased scope of 20% we received in India. The net effect of the events which has happened during the quarter should be positive to our EBITDA original EBITDA backlog of $18 million. More specific on what's remaining on that one, I think, yeah, I'll keep that for the analysts. We have a couple of questions around consolidation, and I guess this is for you, Ståle. It's there's a lot of questions on when do we expect M&A activity? Of course, that's very challenging to answer.
Yeah, let's leave it like when can we expect to hear more about consolidation, in terms of, a bit in terms of how we can use our own, listing as a, as, currency when we see that the valuation of our company is as low as it is, and, how we look upon that situation? Ståle, for you.
Yeah. Well, thanks. That's, it's a good question. I guess that's one of the sort of double edges here in terms of being listed. The obvious answer is, of course, to have cash. But in an industry, having just come out of an eight-year downturn, of course, cash is not abundant yet. Without that, of course, we are in a position, as you said, where our equity is well, basically limiting our maneuverability in terms of the opportunities we're seeing. What we do is to continue our work to consolidate the industry, then with on other parameters than using the equity.
One thing is certain, that is that equity will not be used, until the pricing of it is such that any transaction is value creative, to our shareholders. I think I would just leave it like that. We will use other, we are working on other parameters, to bring us forward in our determined effort to continue to consolidate the industry.
Thank you, Ståle. I think I'll give you one more question here. The question is, looking at your presentation, it looks as if you will generate significant amount of cash going forward. I guess the question is referring to the illustrative annual EBITDA slide we have here. Do you have any thoughts of how we're going to use that cash and when we're going to see that coming?
Yeah. I guess you touched upon it. Cash, and you also commented on the turning cash in your cash flow balance. What you pointed to there is that there will be a significant improvement in cash conversion more or less from now on as we're seeing it. That cash will be put to use the following way. Our main priority is to pay down bank debt. As I said, we will have come far in that regard already in the first half.
Thereafter, we have approval for a buyback program from the last AGM, and returning cash to shareholders through buybacks and/or dividends is going to be a priority when we've come for enough down on the bank debt. I, you know, I think we should add that we are operating in a market that has turned very exciting now. There are opportunities here. We are continuously viewing and we're continuously working on opportunities that we think will be, will support profitable growth for the company.
To the extent that we can do that, and that also ties into actually the other question that you had for me, in terms of the pricing of our equity. We will act on that. That should be mentioned as well.
Thank you. Then, Finn Atle, a direct question to you, and translating here. It's about contracts, and we have two contract, as you touched upon now, taking us to the end of May and end of June. I just can you give us a bit more flavor of when we should expect new contracts? Of course, that's hard to answer, but give us a bit flavor of the discussion you are in with clients and how do you see the opportunity for us to secure more backlog, from the summer and the second half of this year. You are on mute, still.
I think first of all, you need to understand the dynamics of awarding contracts first. The OBN companies need to be awarded projects from their clients, i.e. the oil companies, and thereafter we enter into more firm discussions on charters going forward. The timing here between when we tender or give them price indications and when our clients are awarded projects and when project starts is normally quite tight from when award happens until project starts. With the knowledge of all of us as being busy up until say, middle of May this year, that timing has not sort of come together.
We are in discussions on extension discussions, projects started more or less in continuation of the projects we're doing now in the third one in the evening. When it comes to flexible charters, it's a bit more delicate and complex than just signing a contract for a two or three month, typical OBN project. If we are gonna be taking on a bareboat on it and on the vessel back to back on only a two to three-month project, that's gonna be a business risk. We've seen this before when we've done this because a bareboat charter, you need to understand the complexity and the risks of taking on that commitment on such a short notice. Or sorry, contracts.
We have to build relationships with clients first, together with a dedicated vessel in mind and coupling that with discussions with the vessel owner. These discussions are ongoing. Difficult to say really when they will materialize, but indeed we are working hard on these discussions. Yeah, thank you. I think that's what I can, what I can say on that one, Sveinung.
Yeah, thank you for that. Also I just want to remind the audience that we just a couple of weeks ago announced that we did indeed was awarded a 20% increase on the operation we have in India. We are already expanding our contract coverage and backlog for the year. Of course, the second half is currently open as the questions alludes to, and that we are working very hard to do something with. With that, I think actually we have more or less touched upon all of the questions on the call. Of course, flexible charter is, and new contract is a very hot topic. I think both you Finn Atle and Ståle have touched upon it.
With that, I think I would take the opportunity to just say thank you and hand it back to Finn Atle for close if you have anything to close with.
No, I think, I don't have anything to add, Sveinung. My closing remarks still stands as previous. Thank you.
Okay. Thank you. All this, then concludes the call for today. As always, we in the team and our executive chairman is available for both meeting and follow-ups, post quarterly results. Thank you for this, and, goodbye.
Thank you.