Loss-Making SeaBird Exploration Plc (OB:SBX) Expected To Breakeven In The Medium-Term

SeaBird Exploration Plc (OB:SBX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. SeaBird Exploration Plc, through its subsidiaries, provides marine 2D and 3D seismic data for the oil and gas industry in Europe, Africa, the Middle East, North and South America, and the Asia Pacific. On 31 December 2020, the kr290m market-cap company posted a loss of US$13m for its most recent financial year. The most pressing concern for investors is SeaBird Exploration's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for SeaBird Exploration

SeaBird Exploration is bordering on breakeven, according to some Norwegian Energy Services analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$10m in 2022. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 138% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of SeaBird Exploration's upcoming projects, though, keep in mind that typically an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 21% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of SeaBird Exploration to cover in one brief article, but the key fundamentals for the company can all be found in one place – SeaBird Exploration's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Valuation: What is SeaBird Exploration worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether SeaBird Exploration is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on SeaBird Exploration’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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