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Edited Transcript of PLCS.OL earnings conference call or presentation 5-Nov-19 9:00am GMT

Q3 2019 Polarcus Ltd Earnings Call

Dubai Nov 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Polarcus Ltd earnings conference call or presentation Tuesday, November 5, 2019 at 9:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Duncan Eley

Polarcus Limited - CEO

* Hans-Peter Burlid

Polarcus Limited - CFO

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Conference Call Participants

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* Christopher Møllerløkken

Carnegie Investment Bank AB, Research Division - Research Analyst

* Fredrik Stene

Clarksons Platou Securities AS, Research Division - VP

* Glenn Lodden

Nordea Markets, Research Division - Analyst

* John A. Schj. Olaisen

ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's third quarter 2019 Polarcus Limited Earnings Conference Call. (Operator Instructions) I must also advise you the meeting is being recorded today, on Tuesday, the 5th of November 2019.

And it is my pleasure to introduce your first presenter, Mr. Duncan Eley, company Chief Executive Officer. Please go ahead, sir.

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Duncan Eley, Polarcus Limited - CEO [2]

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Good morning and thank you for joining us for the Polarcus Q3 2019 earnings release. We're hosting this call with a live audience here at the Felix Konferansesenter in Oslo, Norway. My name is Duncan Eley, CEO of Polarcus. And with me this morning is Hans-Peter Burlid, the Chief Financial Officer.

So moving first to our standard cautionary statements and onto the agenda for this morning's discussion, our first comment on the headlines of the quarter and how this positions us for 2020 which we view as the year of change for the marine seismic industry. HP will then delve into some of the details of our financial performance in the quarter before I come back with some insights on our operational performance and our outlook on the market.

So straight on to Slide 4 and the headlines for the quarter, I'm pleased with the quarterly results and very proud of what the Polarcus team has delivered during the third quarter of 2019. We expected Q3 to be strong based on the backlog that our sales team has secured for the summer months. And driven by our continued solid operational delivery, we were able to execute ahead of model on a number of these projects, resulting in us exceeding revenue targets at $103 million for the quarter, our EBITDA at $30 million for the quarter and with cash from operations increasing to $30 million for the quarter.

This resulted in Polarcus building cash from $24 million at the end of Q2 to $35 million at the end of Q3. And while we emphasized that Q3 was an exceptional performance for Polarcus, against a backdrop of a somewhat mixed market environment, we do see the underlying drivers continue to improve, with tender activity steadily growing and a solid opportunity pipeline for 2020.

So moving to Slide 5, whilst we've seen 2019 so far as a year of material improvement in the financial performance of Polarcus, we view 2020 as the year of change for the broader E&P industry. Positioning for this very important industry juncture, it?s critical to optimize the success of Polarcus as the market continues to improve. Our strong standing with many global E&P companies and multi-client companies who do no longer operate vessels is important to secure optimal backlog for the Polarcus fleet. The uniformity and capability of that fleet continue to differentiate us and our offering in terms of operational efficiency, environmental responsibility and geophysical innovation. And the work that we have done to prolong the lifetime and to optimize the performance of our streamer equipment inventory is paying off. HP will talk you through the new streamer investments we made during the quarter, which in combination with our increased output from the Polarcus streamer repair facility means we have created important flexibility in our requirement for additional new streamers with a much more gradual investment profile beyond the second half of 2021.

So as the Q3 2019 results specifically shows and more generally our last 12 months results, the Polarcus financial performance is improving significantly in terms of profitability and cash flow, emphasizing the operational leverage of the Polarcus platform. It's important to emphasize that we do control 20% of the active global marine seismic fleet and with the mixed market backdrop that I mentioned, we see our size and agility as a key advantage in this environment.

So with that, I'll hand over to Hans-Peter who will talk through some of the details of the quarter with you.

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Hans-Peter Burlid, Polarcus Limited - CFO [3]

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Thank you very much, Duncan, and good morning, all. On Slide 7, our third quarter segment revenue of $103.4 million increased 87% year-on-year. This was driven by pricing and strong operational performance. The segment EBITDA of $29.6 million represents a solid margin expansion on a growing top line. And the improvement is driven by the higher revenues and controlled costs, which resulted in an EBIT margin of 21% and a net profit of $13.7 million.

Turning to Slide 8 and a detailed look at the revenue increase year-on-year, as you can see, it was largely driven by pricing. We did realize very strong day rates in the quarter, up 155% year-on-year, which was accompanied by higher project specific costs. The price increase was slightly offset by lower utilization, reduced multi-client revenue and the management fees which was reduced to zero. In 2019, pricing has been established at an improved level and compared to 2018, we have seen 50% increase in the day rates like-for-like adjusted for cost.

On Slide 9, the revenue increase, as I said, was accompanied by high product specific costs. But the underlying cost base remained stable and this underlines our continued tight cost control. We expensed $7.7 million of transit and mobilization costs in the quarter which was related to repositioning of both our own fleet but also we sourced vessels ahead of the quarter. We now have $3.8 million of transit cost on the balance sheet to be expensed in Q4.

Turning to Slide 10, we recorded very strong cash generation during the quarter with cash before working capital movement of $29.7 million. CapEx investment continued to be disciplined with $8.6 million for the quarter, which includes $4 million of new streamer purchase at very attractive terms, but also costs related to a class docking that happened during the quarter. The vessel allocation in the quarter was entirely on contract, so there was no multi-client investments during the quarter. As we have announced, we will start a new multi-client project in the fourth quarter and based on that, we will record multi-client investments in the fourth quarter. The total cash balance improved during the quarter to $35.4 million compared to $23.8 million at the end of the second quarter, and the $40 million working capital facility remains undrawn.

Turning to Slide 11 and I look at the cash flow during the first 9 months of the year, the business generated $55 million of cash from operations before working capital movements. And after maintenance CapEx and the cash interest, the free cash flow was $33 million. During the quarter, we grabbed an opportunity to invest $4 million of the free cash flow in streamers on attractive terms and an additional $2 million for more streamers will be paid in Q4. The investments, along with increased output of the (inaudible) streamer facility as Duncan mentioned, has maintained our streamer pool at a very healthy level with excess capacity. So that provides flexibility and more gradual investment profile beyond 2021. And the debt repayments in the first 9 months was almost $9 million and the negative working capital movements was $16 million.

So with this, I will hand back to Duncan for an outlook.

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Duncan Eley, Polarcus Limited - CEO [4]

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Thanks, HP. And moving straight on to Slide 13, as I mentioned, I am proud of our operational performance and I'd just like to dwell on that for a moment just to emphasize how important that is to our ongoing success. So for Polarcus, operational performance encapsulates all of safety culture, technical uptime and environmental focus that together delivers our clients the operational efficiency for which we've become renowned. We believe our safety performance on the top right-hand side there is industry leading, whilst we continue to work hard to improve it. Technical downtime was less than 1% for the third quarter, providing a metric of less than 1.8% year-to-date, meaning that for every 100 hours that the vessel is on a project for a client, the Polarcus vessel is available for 98 hours of that for operational activity.

We continue to be the only marine seismic company to report our emissions to air on a quarterly basis. And in addition, Polarcus is the only marine seismic company that has been operating under IMO 2020 requirements for the last 10 years. And this regulation is obviously coming into play very soon. So such operational prowess has enabled us to build very strong client relationships with some of the players that you see there on the left-hand side of Slide 13 that are a combination of international oil companies, national oil companies, multi-client companies who no longer operate vessels and increasingly during 2019 the smaller independents that are becoming more active.

So Slide 14 outlines just 3 of the projects where the operational performance of Polarcus during Q3 has led to the highly successful outcomes for all parties: for the clients, delivering safe, environmentally responsible, efficient projects ahead of their budgets; and for Polarcus, delivering commercial outcomes ahead of our models due to meticulous planning, execution and overall efficiency of operations.

So Slide 15, which you have seen before, is important in that the supply picture has not changed throughout 2019. We see a global fleet of this 22 vessels that we've referred to with a very limited number of vessels that can be reactivated without significant investments in new streamer packages. Due to the steady increase in demand observed and the positive pricing momentum that has resulted in improved unit pricing that still needs to improve more by the way, we expect this supply picture to remain stable at least in the first half of 2020.

Slide 16 shows the rolling 6-month E&P company tender volumes measured each quarter. The improvement is steady, but certainly below the levels that we anticipated 12 to 18 months ago. So this emphasizes the importance of supply-side discipline to enable the realization of further improved margins for the industry. The healthy opportunity pipeline that we see for 2020 reflects the ongoing gradual and steady improvement in tender activity, also supported by the robust levels of investments indicated for 2020 by the multi-client companies who do no longer operate vessels.

Slide 17 shows our current backlog of $145 million. Whilst we have consumed a lot of backlog in acquiring projects during Q2 and Q3, we are maintaining our proprietary contract backlog above the level reported 12 months ago at just over $100 million. Currently, we have 3 Polarcus vessels booked through until Q2 2020. We do have some available capacity on one vessel in Q4 that we are aiming to close in the near future. This Q4 availability reflects our shift in focus to targeting projects with more appropriate margins as opposed to utilization-driven bidding strategy, which was unashamedly the approach taken during the cold winters of 2017-18 and '18-19. So we expect utilization in Q4 to be impacted by class docking of one vessel and repositioning of the fleet during the quarter.

So in closing, I would like to emphasize the exceptional performance of the Polarcus organization in both securing key projects and the near-flawless execution of these projects that has delivered this very strong Q3 financial result. Day rates were up dramatically for Q3 and we take the year-on-year to date, you adjust it to cost. And when we take that you adjust it to cost, we see rates up 50% year-to-date. A performance like Q3 demonstrates the significant operational leverage of the business and the ability to generate strong cash flows and it is important again for Polarcus to further optimize our streamer inventory through careful management of our streamer pool, increased throughput of the Polarcus streamer repair facility and disciplined investment in new streamer on attractive terms.

So this not only pushes the investment horizon for additional new streamer, but also enables a more gradual investment profile beyond the second half of 2021, a very important development. And most importantly perhaps looking forward, underpinning this outstanding quarter, the underlying market continues to improve steadily in terms of tender activity, multi-client investment and realized pricing.

So with that, I'll first of all pause for any questions in the room here in Oslo, before I do hand over to the moderator.

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Questions and Answers

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Glenn Lodden, Nordea Markets, Research Division - Analyst [1]

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Thank you, Glenn Lodden, Nordea. Two questions if I may, maybe 3. In terms of the increase in tendering activity, what more specifically is driving that? Is that exploration activity or is it more 4D-3D service?

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Duncan Eley, Polarcus Limited - CEO [2]

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I think as we mentioned during the presentation, I think there is quite a large volume that remains consistent with the comments last quarter on large exploration 3D. So that is also a little bit by definition, meant this focus in the southern hemisphere, where we see tender activity across the southern hemisphere, whether that's in South America, whether that's in Australia or whether that's in West Africa. I think 3D and 4D, the 4D market will probably come to life a little bit more for 2020 towards the late end of Q4 this year and early next year. So we haven't seen so much 4D tender activity yet above the sort of normal baseline.

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Glenn Lodden, Nordea Markets, Research Division - Analyst [3]

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And this exploration activity, is that in turn driven by the multi-client companies or the E&P companies?

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Duncan Eley, Polarcus Limited - CEO [4]

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I think ultimately it's all the E&P companies. But we do see the multi-client companies looking in the same areas. So that becomes where I think we talk about 3D exploration. When you add on frontier 3D exploration, that's when you talk about some of the bigger multi-client investments that we hear about in the southern hemisphere also. But obviously ultimately driven by the E&P companies, whichever sort of supply chain it takes.

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Glenn Lodden, Nordea Markets, Research Division - Analyst [5]

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And another seismic company recently indicated rates up around 15% for 2020. Is that along the lines of what you guys are seeing as well?

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Duncan Eley, Polarcus Limited - CEO [6]

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I think we would agree with that. We're seeing 10% to 15% up on what we're going to see as the day rates during 2019. Remembering that we did have a very strong Q3 due to both the nature of the projects and also because of the delivery on them, but across the board I think we do see [up] 30% to 40% across the market through 2019 and I think 10% to 15% is a realistic estimation for developments next year.

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Glenn Lodden, Nordea Markets, Research Division - Analyst [7]

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And finally on streamer CapEx, formally now can you give any sort of color or figure for 2020?

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Duncan Eley, Polarcus Limited - CEO [8]

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At the moment with these opportunities that we've taken in 2019, we take them in order to smooth out our investment profile and that means very minimal, if not no investments during 2020. That was all, by the way, Glenn.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [9]

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It's John Olaisen from ABG Sundal Collier. May I ask, the streamers that you're now acquiring, just streamers (inaudible), how many streamers are there? Who did you buy them from and why did you buy them now?

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Duncan Eley, Polarcus Limited - CEO [10]

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So we've committed to around a quarter of a full streamer spread. We've booked about a quarter of a full spread.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [11]

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And a full spread will be 8, 10?

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Duncan Eley, Polarcus Limited - CEO [12]

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So I mean if you look, it's around 200 sections.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [13]

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200 sections times 200 meters?

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Duncan Eley, Polarcus Limited - CEO [14]

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150 meters. And that purchase from the manufacturer [Sercel] and the reason why we purchased them now is that we had an opportunity to secure them at attractive terms. We've done that with a view to our future profile. I reference the comments to Glenn in terms of pushing out our investment horizon and flattening our investment profile going forward. So we took the opportunity while we could to secure those.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [15]

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And are you now in a position to bring back Nadia if you decided to?

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Duncan Eley, Polarcus Limited - CEO [16]

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We have enough streamer in the pool now to be able to do that. To be clear, we do not plan for Nadia to be reentering. We'll revisit that in building up to summer next year, but no intention on bringing Nadia back in the near term, very much in line with the discipline on the supply side that I mentioned, which is important for all the players.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [17]

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And if we assume that Nadia is not being brought back, for how many years are you now then for equipped with streamers? When will we truly expect to get more CapEx requirement for streamers?

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Duncan Eley, Polarcus Limited - CEO [18]

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So we tried to make the point during the presentation that we actually pushed that out to beyond the end of 2021, so call it the end of 2021, before we need to make more investments into the streamer pool with our current operating profile.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [19]

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No need before 2022 then?

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Duncan Eley, Polarcus Limited - CEO [20]

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End of 2021, yes. 2022.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [21]

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Now that you're starting to generate healthy free cash flow, we're seeing now that you're somewhat surprisingly spending somewhat on streamers. But between now and 2022, then we shouldn't expect to see more streamer spending I take it from your answer. So tell us then, how will you use the free cash flow for the next 2 years? Because it's potentially quite high.

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Hans-Peter Burlid, Polarcus Limited - CFO [22]

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Yes, so we do have some debt that we need to service. We haven't serviced that for a while. So that will be one part. And of course, if the cash flow generation from the vessel becomes very, very strong, we do have opportunities on Nadia, as you said, not in the near term, but if you look a bit further ahead.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [23]

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So bringing back Nadia could be prioritized before paying down debt, extraordinary (inaudible)?

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Duncan Eley, Polarcus Limited - CEO [24]

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Driven very much by the external environment on the Nadia. That would determine the prioritization.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [25]

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So what I would love to hear is that you're telling us that there's going to be capital discipline on the pay back debt and potentially be a bit more CapEx. Is that something you (inaudible) or would you be considering doing other more growth-related acquisitions or CapEx over the next couple years?

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Duncan Eley, Polarcus Limited - CEO [26]

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I mean I think we definitely, we try and make the point we have done certainly the last 12 month that capital discipline is key. The reason why we've made the investments during Q3 is to benefit our future operational profile and our future cash profile. So we've given ourselves a lot of headroom there. And we will absolutely be -- we want to be in a position where we can take opportunities if they arise, but we plan to run a very tight ship, disciplined capital investments. We watch the market for Nadia. But we want to make it clear that there is no plan to bring her back as of today.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [27]

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My final question is related to contract prices. At the Q2 presentation, you said that you saw prices up 25% to 30% and now you say 30% to 40%. What made that jump in such a relatively short amount of time? And then that was the first part of the question. And then the second, is it possible to elaborate a little bit on 2020? TGS Nopec says they expect prices up about 15% in 2020 on average compared to 2019? Do you have a number you can share with us?

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Duncan Eley, Polarcus Limited - CEO [28]

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Yes, so I think on the first question where we did say 25% to 30%, I think if anything there's positive momentum on that. But mentioning 30% to 40%, I don't think is a dramatic change. I think if you look at our numbers, I think we did see our numbers elevated because of the very, very strong Q3. And across the board, that's 50% taking into account that very, very strong Q3, the 30-plus percent paints together. But we think that's a good indication of what the market has done this year. And I think you'll probably see a variation between plus or minus 5% on that from the other players, which I would expect. So we've seen quite a spread of pricing as well. I think it's fair to say with some of the lingering projects that dragged into 2019 and some of the more strong project small players across the summer and leading into 2020. And on the pricing, I think we tried to make the point before. I think 10% to 15% is a responsible level. Of course, we would love to see more. It's great to hear TGS mention 15% because that possibly means they really think 20-plus percent. But I think that 10% to 15% is a responsible level of expectation for next year.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [29]

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And the contracts that you have booked already for 2020, does that reflect 10% to 15% up year-on-year?

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Duncan Eley, Polarcus Limited - CEO [30]

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I think we're reflecting the lower end of that. So I think we're seeing that sort of 5% to 10% up. And of course, I think as this year, I think we saw the kicker coming in the summer quarters, Q2 and Q3. So I think we can expect to see that development further. But the data points are sort of up from where we are today, but not dramatically.

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Christopher Møllerløkken, Carnegie Investment Bank AB, Research Division - Research Analyst [31]

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This is Christopher from Carnegie. I only have 2 questions. First of all, on the utilization in the fourth quarter, you expect it to drop, but could you give any indication by roughly how much?

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Duncan Eley, Polarcus Limited - CEO [32]

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Look, there's a lot of moving parts, depending on when projects finish, depending on when projects kick off. We mentioned we've got some open time. So I think we'd like to not get too specific on that. But I think to give you an idea, we are transiting 3 of the 4 vessels and we have 1 going into dock. So we do expect that to be down.

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Hans-Peter Burlid, Polarcus Limited - CFO [33]

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I think we can say it starts with the setup.

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Christopher Møllerløkken, Carnegie Investment Bank AB, Research Division - Research Analyst [34]

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And you also mentioned that the streamers you bought now were at an attractive price. If you had bought them at peak, let's say in 2012, how much cheaper did you get the streamers now?

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Duncan Eley, Polarcus Limited - CEO [35]

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I don't think it's appropriate for us to comment on that with the opportunities that we took. We don't really want to talk about the specific deal, if that's okay.

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Christopher Møllerløkken, Carnegie Investment Bank AB, Research Division - Research Analyst [36]

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That's okay.

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Fredrik Stene, Clarksons Platou Securities AS, Research Division - VP [37]

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Hi, Fredrik from Clarksons. I was wondering if you could give any color on how the dynamics or when you're negotiating contracts with your customer, has that dynamic changed over time. And I guess, also touching upon your focus as you mentioned with margins being a very high priority at the moment and also how the smaller independents or medium-sized independents are getting into that customer mix.

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Duncan Eley, Polarcus Limited - CEO [38]

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I think that's a really interesting question and I'll try and keep it concise. But I think we see a lot more constructive dialogue with our clients that are working very closely with us. And that's not only about the headline price, but it's around the protection, the terms and conditions associated with those deals. So I think we see a lot more constructive dialogue. I think we see -- we definitely see a willingness to recognize some of the complexity of the projects which we are bidding on. So I think those 2 points, it's really working on terms and conditions, much more constructive with our clients. When it comes to the small and medium-sized independents, I mean I think my comments remain similar to last quarter. I think we did see the small and mid independents take a step back in Q4 last year. And I think it's taken them quite a while to reemerge during 2019, longer than we expected. And I think that's part of the reason why we see activity up and pricing up solidly, but maybe not as high as some people would like to see. So we have seen them start to come back in and I do think with an oil price that's probably $60 plus or minus $5, as long as that's stable and not fluctuating much more, then I think we start to see those guys come back in, remembering that those small and mids are largely, they do have a link obviously to the capital markets. And if the capital markets aren't there which is a bit of a struggle today, then they are somewhat constrained. But we do start to see positive indications of their activity.

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Christopher Møllerløkken, Carnegie Investment Bank AB, Research Division - Research Analyst [39]

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Just one follow-up question, regarding the discussions on 2020, oil companies in general try to keep their spending flat next year on an overall level. Do you see any pushback from clients when you are increasing prices by 160% in Q3 '19 versus Q3 '18?

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Duncan Eley, Polarcus Limited - CEO [40]

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Look I think I mean it's not correct to say we're pushing prices 160%. I think that's reflective of maybe a growing number of complex projects. I think as reserve replacement ratios and frontier exploration comes back on the agenda, I think you do see more complex projects and I think those complex projects have much more robust budgets attached to them, rather than very tight 3D brownfield very much more safe projects that need to be delivered with low risk, very low cost. So I think these complex projects are coming more onto the table. So I think you maybe see a little bit of a shift in the budgets. And certainly, some of our discussions, while there is commentary around flat budgets, we do also get indications of 5% to 10% up with some shift towards seismic. So I do expect there to be a little bit more spend, again, in keeping with our 10% to 15% pricing and activity level which we expect to see going into next year.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [41]

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A follow-up from John here, you mentioned in the Q4 report that we might see mile time and therefore somewhat softer Q4. You also mentioned in the presentation that the idle vessel, you're expecting to see some contracts for it. I think you said in the next few weeks. Does that mean that if you get a contract your Q4 will be all right after all?

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Duncan Eley, Polarcus Limited - CEO [42]

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I think I mean I think if we can secure a contract, the utilization should be closer to an 8 than a 7. And of course that's beneficial. But I think we do want to give it a little bit of a heads up on Q4. And for that particular vessel, we do have a number of opportunities and we do expect to get clarity on those in the next few weeks.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [43]

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May I ask which vessel it is?

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Duncan Eley, Polarcus Limited - CEO [44]

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We prefer not to go into those details on this call, if that's all right, John.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [45]

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But you also write that you're still expecting even if there is mile time, you're expecting a better Q4 this year compared to last year?

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Duncan Eley, Polarcus Limited - CEO [46]

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We expect a comparable and better, yes.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [47]

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Is that on revenues or EBITDA?

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Hans-Peter Burlid, Polarcus Limited - CFO [48]

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On EBITDA, particularly on EBITDA. So this is lower utilization than last quarter, but higher prices, in line with what we have indicated should give you a better EBITDA.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [49]

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How much -- particularly how much better? Because last year it was $2 million.

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Hans-Peter Burlid, Polarcus Limited - CFO [50]

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Yes, I mean as Duncan said, there is a lot of uncertainty on that particular vessel and it is -- since the numbers are small it's very sensitive and the percentages become quickly big.

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John A. Schj. Olaisen, ABG Sundal Collier Holding ASA, Research Division - Co-head of Research & Managing Partner for Norway [51]

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As it did in Q3. We thought it was going to deliver $17-18 million and (inaudible). You have a track record of being conservative. So that's why I ask, how much better.

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Duncan Eley, Polarcus Limited - CEO [52]

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We're trying to be realistic, not conservative.

Okay, so if I could then hand over to the moderator to see if there any questions from the remote audience.

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Operator [53]

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(Operator Instructions) And there appears to be no telephone questions.

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Duncan Eley, Polarcus Limited - CEO [54]

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Very good. So with that, I think I'll thank everyone very much for joining us for this Polarcus Q3 earnings result, and we look forward to speaking to you again in 2020 which is coming very quickly. Thank you very much and good morning.

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Operator [55]

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That concludes the presentation today. Thank you for participating. You may disconnect.