updated 5/9/2011 4:48:04 PM ET 2011-05-09T20:48:04

TAMPA, Fla., May 9, 2011 (GLOBE NEWSWIRE) -- Odyssey Marine Exploration, Inc. (Nasdaq:OMEX), pioneers in the field of deep-ocean shipwreck exploration, has reported results for the first quarter ended March 31, 2011.

Revenue for the first quarter 2011 was $2.1 million, compared to $2.9 million in the first quarter 2010. The Company also reported a net loss of $5.2 million, compared to a net loss of $3.1 million in 2010. Included in the net loss was a non-cash expense of $1.3 million, or $0.02 per share, to reflect the change in fair value of the derivatives related to the issuance of Series G convertible preferred stock caused primarily by the increase in Odyssey share price during the period. The net loss per share for the first quarter was $0.09, compared to a net loss of $0.05 per share in the first quarter 2010.

"While our first quarter revenue was down compared to last year, we have made substantial progress during the period and are well positioned for growth in 2011. This is the first year in Odyssey's history where we have the potential for multiple recoveries. Two of our projects with clients of Robert Fraser & Partners are in the verification phase and evidence suggests that we have located the target shipwreck in at least one of these projects. We're gearing up to begin operations on the Gairsoppa project this summer and are finalizing plans for additional shipwreck projects. We've seen very positive results in the first deep-ocean mineral mining expedition conducted with Dorado and have since added to our deep-ocean clientele by providing services to Neptune Minerals off the coast of New Zealand," said Greg Stemm, Odyssey Chief Executive Officer.

FIRST QUARTER 2011 RESULTS

Revenue

The decrease in total revenue of $.8 million was primarily related to a $1.1 million decrease in expedition charter revenue. The decrease in expedition charter revenue associated with "Enigma I" ($1.5 million) and the ET 409 aircraft recovery project ($1.3 million) in 2010 was partially offset by current year subsea mineral mining work in the waters of New Zealand with Neptune Minerals ($1.2 million) and miscellaneous Odyssey Explorer charter revenue in 2011 ($.5 million). Odyssey is currently working under a charter agreement with Neptune Minerals that will be completed in the second quarter 2011 along with completion of the "Firebrand" Robert Fraser syndicated project. 

Odyssey's exhibit, SHIPWRECK!Pirates & Treasure, was on display for one month in the first quarter 2010 (Discovery Place, Charlotte, NC) and two months in 2011 (Maryland Science Center & G. WIZ). The exhibit is currently on display at G.WIZ - The Science Center in Sarasota, Florida until August 31, 2011.

During the first quarter 2011 the Company has seen an increase in artifact sales of $.3 million versus 2010 primarily due to the addition of a major new distributor.

Operating Expenses    

Marketing, general and administrative expenses were $2.2 million in 2011 as compared to $2.3 million in 2010 primarily represented by a decrease in legal and outside professional services in 2011.

Operations and research expenses were $3.5 million in 2011 as compared to $3.6 million in 2010. The $.1 million decrease was primarily due to lower employee-related and contract labor expenses in the archeology, research and conservation department. Marine operations and vessel expenses were offsetting between the two periods. The Dorado Discovery comprised $1.1 million of the increase in the first quarter 2011 since the ship first came into service beginning in March 2010. These increases in vessel costs were offset by favorable expenses of the Ocean Alert ($1.0 million) which was not working in the first quarter of 2011 and favorable expenses of the Odyssey Explorer ($.1 million) which was primarily related to contract labor expenses. Odyssey is currently considering several options for the Ocean Alert including charter, work on a potential project in the Eastern Mediterranean, and potential sale.

QUARTERLY OPERATIONAL UPDATE

Odyssey has numerous shipwreck projects in various stages of development around the world. In order to protect the targets of Odyssey's planned search or recovery operations, in some cases Odyssey will defer disclosing specific information relating to projects until the Company has located a shipwreck or targets of interest and determined a course of action to protect Odyssey's property rights.

Additional information regarding Odyssey's announced projects may be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2010. Only projects with material status updates since that report was filed are discussed below. Odyssey may have other projects in various stages of planning or execution that may not be disclosed for security or legal reasons until considered appropriate by management.

Odyssey may use owned vessels, such as the Odyssey Explorer and Ocean Alert, the Dorado Discovery, which Odyssey has on long-term charter, or other chartered vessels to conduct operations based on availability.

"Atlas" Search Project

Between 2005 and 2010, Odyssey searched more than 5,000 square nautical miles of seabed in the western English Channel and the Western Approaches to the Channel, recording over 270 shipwrecks. The shipwrecks discovered include site "35-F," the Marquise de Tornay, and HMS Victory (1744). Additional high-value targets are believed to be within the "Atlas" search area.

2011 operations in the "Atlas" search area have commenced and planned work this year includes additional search, inspection and verification work on several target shipwrecks.

HMS Victory Project

Odyssey discovered and conducted a preliminary investigation of the shipwreck of Admiral Balchin's HMS Victory (which sank in 1744) during the 2008 "Atlas" season. HMS Victory was the inspiration for and direct predecessor to Nelson's Victory and was the mightiest and most technically advanced vessel of her age.

Odyssey has been cooperating closely with the United Kingdom (UK) Ministry of Defense (the "MOD") on the project. All activities at the site, including the recovery of two bronze cannon, have been conducted in accordance with protocols approved by the UK Government (UKG) and Royal Navy officials. The Victory discovery was announced publicly February 2, 2009. On September 18, 2009, Odyssey announced an agreement with the UKG on an 80% salvage award for the cannon recovered from the site. 

After notification and agreement with the UK Ministry of Defence, Odyssey conducted a reconnaissance of the site in March 2011 and discovered additional damage to the site. A full report on the findings is being submitted to the UKG.

Discussions with the UKG about the future of Balchin's HMS Victory are ongoing. Odyssey has submitted a proposal that would provide for the archaeological excavation of the shipwreck at no cost to the UKG, and expects that the results of the Consultation process, which will steer the direction of this project, will be made public soon.

Although the UK is not a signatory to the United Nations Educational Scientific and Cultural Organization's (UNESCO) Convention for the Protection of Underwater Cultural Heritage ("CPUCH") and therefore not bound by CPUCH, Odyssey's proposal is consistent with the archaeological principles of the Rules of CPUCH.

Robert Fraser Projects ("Enigma II," "Firebrand," "Shantaram")

Odyssey executed agreements in 2010 with clients of Robert Fraser & Partners LLP (RFP) for three shipwreck search projects code-named "Firebrand," "Shantaram" and "Enigma II."

Two of the three "Robert Fraser Marine" search projects conducted in 2010 have now moved into the "verification" phase. Based on preliminary results, there is evidence suggesting that at least one of the target shipwrecks has been located. Agreements for both of these projects have been executed and funded. In January 2011, Odyssey executed agreements to provide marine archaeological excavation and related services on an existing project to certain client companies of RFP. The work will be conducted on a shipwreck site that Odyssey discovered and inspected during a recently completed survey carried out under contract with the RFP client companies. Odyssey is providing the research vessel, equipment, technical and archaeological crew to conduct the operation. The contract provided for cash payments totaling approximately $2.3 million to Odyssey plus additional payments based upon revenue derived from the project. After the repayment of all recovery costs, Odyssey will receive at least 50% of net revenue until an additional £1.9 million (approximately U.S. $3.1 million) has been received and then will receive a minimum of 50% of further net revenue in accordance with the search contracts.

Subject to the verification of the shipwreck's identity, the condition of the cargo and confirmation of jurisdiction for administering legal rights and title to the shipwreck and its cargo, Odyssey expects to enter into additional agreements for the complete archaeological excavation of the site and for the conservation and documentation of any artifacts recovered.

In March 2011, Odyssey executed agreements to expand a search and provide marine archaeological excavation and related services to certain client companies of RFP. Additional work will be conducted on and around a site that Odyssey discovered and inspected during a recently completed survey carried out under contract with the RFP client companies. Odyssey is providing the research vessel, equipment, technical and archaeological crew to conduct the operation. The contract provides for cash payments totaling approximately $2.0 million to Odyssey, plus additional payments based upon revenue derived from the project. After the repayment of all recovery costs, Odyssey will receive 75% of net revenue until an additional £5.9 million (approximately U.S. $9.6 million) has been received and then will receive a minimum of 50% of further net revenue in accordance with the search contracts.

Subject to confirmation of the location and identity, and cargo verification of the target shipwreck, Odyssey expects to enter into additional agreements for the complete archaeological excavation of the site and for the conservation and documentation of any artifacts recovered. During the coming year, Odyssey will be conducting preliminary excavations on both of these projects to verify the identities of these shipwrecks and the condition of the reported cargoes.

To protect the security of the operations and search areas, specific location details for "Enigma," "Firebrand" and "Shantaram" are not being released at this time.

In March 2011, Odyssey executed its first agreement with client companies of RFP to provide mining exploration and drilling operations in a tenement area controlled by Dorado Ocean Resources. The drilling will be conducted on a Seafloor Massive Sulfide (SMS) deposit that was surveyed by Odyssey and Dorado teams during the first 100 days of exploration in Dorado's South Pacific concession areas in 2010. Three separate areas have been identified for sample drilling in one tenement based on preliminary sample analysis. This contract is for exploration and drilling services in one of those areas. Additional contracts for the remaining two areas in the tenement are expected to be executed during the second quarter. Odyssey is responsible for providing the research vessel, equipment, and technical crew to conduct the operation. The contract provides for preliminary cash payments totaling approximately $1.5 million to Odyssey plus additional payments based upon revenue derived from the project. After the repayment of mining costs, Odyssey will receive approximately 50% of net revenue until an additional £3.7 million (approximately U.S. $5.9 million) has been received. The additional two contracts are expected to have similar terms. Odyssey may also benefit from successful monetization of the deposits because of the company's ownership in Dorado.

Odyssey expects to execute additional agreements with clients of RFP in 2011 for subsea mineral exploration and shipwreck projects.

Gairsoppa Project

On January 25, 2010, Odyssey was awarded the exclusive salvage contract for the cargo of the SS Gairsoppa by the United Kingdom (UK) Government Department for Transport. The contract was awarded after a competitive bid process and is for two years, which commenced immediately. The SS Gairsoppa was a British cargo steamer enlisted in the service of the United Kingdom for the Ministry of War Transport during World War II. It was torpedoed by a German U-Boat in February 1941 in the North Atlantic while reportedly carrying a significant cargo of silver.

Odyssey will assume the risk, expense, and responsibility for the search, cargo recovery, documentation, and marketing of the cargo. If the salvage is successful, Odyssey will be compensated with a salvage award which consists of 80% of the net value of the recovered cargo after deduction of expenses of search and salvage. This project aligns with Odyssey's strategy to focus on partnership projects with several governments that provide straightforward legal ownership arrangements.

Planning is underway to begin search operations on this project during the summer of 2011. While Odyssey has identified several options for recovery of the cargo, specific plans for recovery operations will be completed after the shipwreck is located and the site assessed.

Subsea Mineral Mining and Exploration Project

During 2010, Odyssey proved that its team, tools and technology can successfully be applied to the search for deep-ocean mineral deposits. In addition to Odyssey's work for Dorado Ocean Resources (and the Company's approximate 41% ownership stake in Dorado), Odyssey is expanding its role in this emerging industry.

During February 2011, Odyssey expanded its deep-ocean mineral exploration client base by entering into a charter agreement with Neptune Minerals PLC (a UK Company), Neptune Minerals, Inc. (a Nevada Corp.) and Neptune Resources Ltd. (a New Zealand Company). Under the charter, the Dorado Discovery will supply geological exploration services to Neptune Minerals to explore tenements in the waters surrounding New Zealand during the first half of 2011. This agreement provides for 75% of the charter rate to be paid in cash to Odyssey and 25% to be paid in equity of Neptune Minerals, Inc. John Morris is a principal in Neptune Minerals, Inc. and is also the co-founder and former CEO of Odyssey and continues to be a consultant to Odyssey.

After completion of the Neptune project, it is anticipated that Odyssey will continue exploration activities using the Dorado Discovery in the South Pacific.

Other Syndication Projects

In February 2011, Odyssey entered into arrangements for a project syndication deal with Galt Resources LLC. Odyssey has received approximately $6.0 million from Galt which represent rights to future revenues of any project that Galt selects prior to December 31, 2011. If the project is successful, Galt will recoup its investment plus three times the investment. These amounts will be paid out of proceeds of the project. Galt will receive 50% of the proceeds until this amount is recouped. In addition Galt will share in additional net proceeds of the project at the rate of 1% for every million invested. The agreement allows Galt to select only one project, and Galt will be allowed to invest an additional $4 million in the project with the permission of Odyssey.

Admiralty Legal Proceedings

"Black Swan" Arrest

Odyssey filed its notice of appeal with the Federal District Court for the Middle District of Florida and Eleventh Circuit Court of Appeals on January 15, 2010, and filed the appeal with the Eleventh Circuit on May 11, 2010. Spain issued a reply to Odyssey's appeal on July 19, 2010, and Odyssey's reply to Spain's response was filed on August 19, 2010. The "Black Swan" case has been scheduled for oral argument on May 24, 2011 in Atlanta, Georgia. All of Odyssey's significant filings to date, including those made at the district court level, can be viewed at http://www.shipwreck.net/blackswanlegal.php .

Unidentified Shipwreck (Bray Case)

On March 31, 2011, the Eleventh Circuit Court of Appeals reversed the dismissal of the case ruling that the alleged oral agreement for purchase of research materials was a maritime contract. As reflected in the position taken in Odyssey's court filings, Odyssey is satisfied with this finding as it hoped to litigate what Odyssey considers a frivolous claim to deal with it as quickly as possible. Accordingly, the case will be set for trial at the District Court.

About Odyssey Marine Exploration, Inc.

Odyssey Marine Exploration, Inc. (Nasdaq:OMEX) is engaged in deep-ocean exploration using innovative methods and state-of-the-art technology. The Company is a world leader in shipwreck exploration, conducting extensive search and archaeological recovery operations on deep-ocean shipwrecks around the world. Odyssey also owns approximately 41% of Dorado Ocean Resources, a company formed in 2010 to discover and commercialize high-value mineral deposits from the ocean floor, and provides proprietary deep-ocean expertise and equipment to Dorado under contract. Odyssey also provides deep-ocean contracting services to governments and companies around the world.

Odyssey discovered the Civil War-era shipwreck of the SS Republic® in 2003 and recovered over 50,000 coins and 14,000 artifacts from the site nearly 1,700 feet deep. In May 2007, Odyssey announced the historic deep-ocean treasure recovery of over 500,000 silver and gold coins, weighing 17 tons, from a Colonial era site code-named "Black Swan." In February 2009, Odyssey announced the discovery of Balchin's HMS Victory. Odyssey also has other shipwreck projects in various stages of development around the world.

Odyssey offers various ways to share in the excitement of deep-ocean exploration by making shipwreck treasures and artifacts available to collectors, the general public and students through its webstore, exhibits, books, television, merchandise, educational programs and virtual museum located at www.odysseysvirtualmuseum.com .

Odyssey's shipwreck operations are the subject of a Discovery Channel television series titled "Treasure Quest," produced by JWM Productions. The 12-episode first season aired worldwide in 2009.

Following previous successful engagements in New Orleans, Tampa, Detroit, Oklahoma City, Charlotte and Baltimore, Odyssey's SHIPWRECK! exhibit is currently on display at G.WIZ - The Science Museum in Sarasota, Florida.

For details on Odyssey's activities and its commitment to the preservation of maritime heritage please visit www.shipwreck.net

The Odyssey Marine Exploration, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7185

For consolidated financial statements as well as the full filing, please go to http://www.sec.gov/Archives/edgar/data/798528/000119312511132336/d10q.htm

Odyssey Marine Exploration believes the information set forth in this Press Release may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. Certain factors that could cause results to differ materially from those projected in the forward-looking statements are set forth in "Risk Factors" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2010, which has been filed with the Securities and Exchange Commission.

CONTACT: Liz Shows
         Odyssey Marine Exploration, Inc.
         (813) 876-1776 x 2335
         lshows@shipwreck.net

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.94%
$30K home equity loan FICO 5.19%
$75K home equity loan FICO 4.58%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.40%
13.40%
Cash Back Cards 17.92%
17.91%
Rewards Cards 17.12%
17.11%
Source: Bankrate.com