Offshore Hydrocarbon Mapping (OHM) said yesterday it would be nearly £9million in the red for the year to the end of this month.
The Aberdeen-based specialist in controlled-source electromagnetic (CSEM) imaging surveys for the oil and gas industry expects to make pre-tax losses of £8.6-£8.8million. This compares with an £8.7million deficit in the previous 12 months.
OHM has also announced an agreement with ship owner Seatrans for the conversion of a day-rate contract for CSEM vessels OHM Leader and OHM Express to a “pay-as-used” and revenue-sharing deal for the full period of the charters, plus an extension of the charter period from five to six years.
The Aberdeen firm said the amendments removed about £27.4million of its future financial commitments and significantly reduced its fixed costs and working-capital requirements. In exchange, and in compensation for amending the charter agreements, the group has agreed to pay Seatrans £3million through the issue of new shares at 21.52p each. OHM also said it was to raise £2.6million through a share placing at the same price; principally for working capital.
Regarding trading in the current financial year, OHM said the period had seen a significant contraction in spending by oil and gas companies driven by a sharp drop in oil and gas prices.
The group’s revenue this year is expected to be about £9.2million, versus £10.8million the previous year, while the end-of-year cash balance is expected to have dropped to £800,000 from £8.2million in August 2008.
Overheads have declined to an average of £360,000 a month compared with £520,000 at the end of the previous year.
Bid activity for CSEM projects is said to be showing a year-on-year increase and order backlog for seismic reservoir characterisation remains strong. Chief executive Richard Cooper said: “We are delighted to have reached this new agreement with Seatrans and very pleased with the continuing support they and our major shareholders have shown in our new integrated strategy for OHM.
“The revisions to our vessel charter agreements put us in the optimum position to address the still-volatile CSEM data acquisition market.
“The benefits of close integration of CSEM data with well and seismic data continue to become increasingly clear to us. To date, the CSEM method has been promoted heavily as an exploration tool, perhaps even a frontier exploration tool, however, we are finding that the CSEM method offers exciting additional opportunities for reservoir appraisal and monitoring applications, where seismic and well data are readily available to help build robust background resistivity models.”
Mr Cooper said the CSEM method remained the most important new geophysical tool to have been developed since the introduction of 3D seismic, but the method required tight integration with well and seismic data to extract maximum value.
OHM shares closed up nearly 60% at 13.5p.