Key points
- Odyssey Marine Exploration (Nasdaq: OMEX) reported Q2 2018 results with a 27% cut in operating expenses versus Q2 2017.
- CEO Mark Gordon said the company expects operations to soon generate returns sufficient to cover current expenses.
- Subsidiary Exploraciones Oceanicas’ Mexican phosphate deposit remained Odyssey’s most advanced project after a favorable Mexican Federal Court ruling on its environmental permit.
- Odyssey’s team was also developing two additional strategic mineral deposits under contract and ownership models.
TAMPA, Fla., Aug. 09, 2018 (GLOBE NEWSWIRE) — Odyssey Marine Exploration, Inc. (NASDAQ:OMEX), a pioneer in the field of deep-ocean exploration, reported results for the second quarter ended June 30, 2018, and provided an update on current projects.
“We have been very productive both onshore and offshore as our global team continues to achieve goals necessary to complete the company’s transformation. In the near-term, we expect to begin generating returns from operations sufficient to cover current operating expenses, and we look forward to working with the Mexican authorities to develop the strategic phosphate resource for the benefit of Mexico,” said Mark Gordon, CEO and President of Odyssey Marine Exploration, Inc.
“We’re continuing to manage our cash carefully, achieving an additional 27% reduction in operating expenses compared to second quarter of 2017, and we’re keeping external funding to a minimum to bridge to the cash we soon expect from operations. Our efforts remain on our core focus: the development of offshore mineral resources both directly for Odyssey and conducting contracted work for third-parties that provide cash and equity or profit sharing stakes.
“The strategic phosphate deposit controlled by our subsidiary Exploraciones Oceanicas, S. De R.L. De C.V. (“ExO”) is our most advanced mineral project. Earlier this year, we received positive news from the Mexican Federal Court regarding the environmental permit on this project, and we anticipate receiving further news within the next several weeks. Our mineral research and science team is also developing two additional strategic mineral deposits—one Odyssey-owned mineral project and another under contract with Odyssey receiving cash and equity in the new venture.”
Odyssey’s Current Projects
Currently planned or operational shipwreck and mineral projects are conducted under leveraged contract models whereby Odyssey is paid to perform services while retaining a significant back-end share of the future net proceeds from these projects or an equity ownership share of the project. The combined potential cash flows from these projects are expected to fund operations for multiple years while simultaneously increasing the value of projects in which the company has an equity ownership position.
Offshore operations are currently underway on a contracted project that is expected to begin generating cash in 2018 to fund company operations and is forecast to produce cash returns for a minimum 12-18 months.
Odyssey holds a controlling interest in Oceanica Resources, S. de R.L., and ExO, a subsidiary of Oceanica. ExO controls exclusive 50-year mining permits in an area in Mexican waters that contains a large amount of phosphate mineralized material. To move to the next phase of this project in Mexico, Odyssey and its subsidiaries are awaiting the issuance of an environmental permit.
On March 21, 2018, the 11-judge panel of the Superior Court of the Federal Court of Administrative Justice in Mexico ruled unanimously in favor of ExO, nullifying the original denial of the environmental permit application. Odyssey is under contract to provide a variety of services related to the project once approvals are in place. This contract has the potential to produce positive cashflows and enhance the value of Odyssey’s investment in this project.
Two additional strategic mineral deposits are currently under development. One is an Odyssey mineral project and the other is being conducted under contract with Odyssey receiving cash and equity in the new venture.
Another new subsea mineral project that will require offshore exploration work and resource evaluation by Odyssey is currently being evaluated for acquisition.
Second Quarter 2018 Financial Results
Net loss for the current quarter was $0.6 million, or ($0.08) per share, compared to a loss of $1.9 million or ($0.23) per share in the same period a year ago, an improvement of $1.3 million or 68%.
Total revenue in the current quarter was $1.1 million, a $0.5 million increase over the revenue in the same period a year ago. The revenue generated in each period was a result of performing marine research, search and recovery operations for our customers. We provided these services to our related-party customer Magellan during both of these periods. In 2018, we began providing these marine related services to a deep-sea mineral exploratory company indirectly owned and controlled by the Chairman of our Board.
Marketing, general and administrative expenses primarily include all costs within the following departments: Executive, Finance & Accounting, Legal, Information Technology, Human Resources, Marketing & Communications, Sales and Business Development. Marketing, general and administrative expenses decreased by $0.3 million from $1.8 million in 2017 to $1.5 million in 2018 primarily as a result of (i) a reduction of $0.1 million of admiralty legal fees, (ii) a $0.1 million decrease in independent director meeting fees and (iii) a $0.1 million reduction in personnel compensation related to share-based compensation.
Operations and research expenses primarily include all costs within Archaeology, Conservation, Exhibits, Research, and Marine operations, which includes all vessel and charter operations. Operations and research expenses decreased by $0.4 million from 2017 to 2018 primarily as a result of the following offsetting items: (i) increases of $0.1 million for our deep-sea mining concession fee and $0.2 million in professional services and travel related associated with the onset of a new marine services client and (ii) a $0.1 million decrease related to depreciation and related equipment insurance and a gain of $0.6 million from the sale of certain marine equipment.
Consolidated financial statements as well as Odyssey’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, are available on the company’s website at www.odysseymarine.com as well as at www.sec.gov.
About Odyssey Marine Exploration
Odyssey Marine Exploration, Inc. (Nasdaq:OMEX) is engaged in deep-ocean exploration using innovative methods and state-of-the-art technology to provide access to critical resources worldwide. Our core focus is the discovery, development and extraction of deep-ocean minerals. Odyssey also provides marine services for private clients and governments. For additional details, please visit www.odysseymarine.com.
