Pulse is pleased with the overall revenues and seismic data library sales in the first quarter of 2013, and remains optimistic about the year ahead. Pulse exceeded average seismic data library sales for the first quarter, except for the first quarter of 2012 which included a single record sale of $27.8 million.
Short-term visibility for industry activity and revenue remains poor, and Pulse is fully prepared for quarterly variations in activity and data library sales. Considerably higher natural gas prices from a year ago - $3.70 per thousand cubic feet (mcf) at AECO on May 8, 2013 versus only $2.12 per mcf a year earlier - as well as a reasonable price forecast for the year ahead are positive, but have not triggered an observed increase in natural gas-related activity in western Canada.
Other near-term risks discussed in the Outlook of Pulse's MD&A for the year ended December 31, 2012 all remain. These include volatile crude oil prices, high regional oil price differentials due to crude oil export transportation constraints, uncertainty over proposed oil export pipelines, geopolitical instability in certain international regions and capital constraints on oil and natural gas producers.
Signals for 2013 oil and natural gas field activity are flat to a slight improvement. The Petroleum Services Association of Canada's April update of its 2013 drilling forecast anticipates 12,000 oil and natural gas wells to be drilled across Canada in 2013, up 5% from the original November 2012 forecast of 11,400. Of the total, approximately 68 percent are forecast to be horizontal wells and 79 percent will target crude oil. According to the Canadian Association of Oilwell Drilling Contractors, well completions in January and February 2013 were down slightly from the same months in 2012 and 2011, while the number of active drilling rigs in January, February and March 2013 was lower than in the corresponding months one year earlier.
Pulse remains hopeful of additional transaction-based sales of seismic data generated by corporate-level activity such as mergers and acquisitions, joint ventures, asset sales and farm-ins/farm-outs (in which one or more parties to the transaction requires a licensed seismic data set) in areas where it holds data. The Company cannot predict these sales. There have been few reported corporate transactions to date in 2013.
Over the longer term, Pulse is optimistic that the development of large, long-term, capital-intensive plays such as the liquids-rich and oil-prone sections of the Montney Formation, as well as the Duvernay shale, will trigger substantial sustained industry activity, including seismic data sales and new 3D participation surveys. In addition, the continued progress of proposed liquefied natural gas terminals in British Columbia is conducive to a revival of natural gas drilling, including for "dry" natural gas targets, over the medium term.
Pulse is continuing with vigorous business development activity. Following the success of its record capital program of three large 3D participation surveys, the Company anticipates opportunities for additional participation surveys in the Duvernay and Montney plays, areas that remain highly active and also contain multiple other prospective zones, creating the sought-after prospect of future re-licensing sales. The Company's solid balance sheet, working capital and recently-closed credit facility provide a solid financial base from which to operate, with decision-making flexibility.
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