16th Sep 2014 09:21
LONDON (Alliance News) - Thalassa Holdings Ltd Tuesday said EU and US sanctions against Russia, alongside the appointment of a new chief executive at its Russian state-owned customer to whom it provides seismic surveys, has jeopardised its ability to convert its pipeline into revenue.
The company reported revenue of USD9.3 million in the six months to June 30, compared to USD11.6 million in the first-half of 2013. The decrease is following the conclusion of one-off manufacturing contract worth USD4.5 million in 2013. Revenue in the recent half was generated solely by Thalassa's seismic operations, which increased by 31%.
Its pretax profit for the first six months of 2014 was USD900,000 compared to USD1.4 million in the same period in 2013.
The company's ability to convert some of this pipeline into 2014 revenue has been jeopardised by the increased EU and US sanctions against Russia and the appointment of Andrew Zayonchek as chief executive at the Russian state-owned parent of Joint Stock Company Sevmorgeo (SMG), it said.
As a result, USD10 million of budgeted revenue from Russia in the second-half of 2014 is unlikely to materialise in the period, said Thalassa.
Thalassa said that projects in Ecuador and the Arctic would not be resumed until it has met the new management at SMG and the impact of any further sanctions became clear.
"We have approached the chief executive of Rosgeo (SMG's parent company) to arrange an immediate meeting and look forward to the continuation of a 15-year mutually beneficial relationship," said Chairman Duncan Soukup.
"The group has made excellent progress on its core seismic activities from the solid foundations laid in 2013 with the addition of two new service contracts in the first-half of 2014," Thalassa said. Improved profitability from seismic operations reflects the group's focus on increasing both equipment utilisation and higher pricing, it said.
"Both of the two oil majors who have invested in the multi-client high-resolution project in the Barents Sea and our operating partner are impressed with the initial data results and we remain confident in securing additional revenue in the second-half of 2014 from data sales," said Thalassa.
The final outcome for the year is heavily dependent on the scale of data sales, pipeline conversion and any SMG deployment, said Thalassa.
"Notwithstanding the current political situation, we continue to believe that the group, with its strong position in niche markets, is very well placed to create significant shareholder value over the next few years," said Chairman Soukup.
Thalassa's share price was down 28% to 129.30 pence per share Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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