Electromagnetic Geoservices (EMGS), a company providing electromagnetic survey services to the oil and gas industry, reported a net loss for the first quarter of 2016.
The loss was $15.5 million, down from a loss of $1.2 million in the first quarter of 2015. Revenues fell to $13.0 million in the fourth quarter 2016, down $22.1 million in the first quarter 2015.
The revenues this quarter consisted of contract sales only, as no multi-client revenues were booked in the quarter, the company said.
According to EMGS, the company has reduced its quarterly cost base, consisting of all operational costs including multi-client investments, from $49.0 million in the first quarter last year to USD 18.2 million in the first quarter of 2016.
To remind, EMGS in April said it would reduce its global headcount by 15 percent in an effort to cut costs in line with the level of expected activity.
“Although the market continues to be challenging, we are encouraged by the recovery of the oil price and the interest shown by various customers, including regulators, in our EM services. The reduction of the cost base is also expected to put us in a much better position as the market recovers,” says Christiaan Vermeijden, who took over new CEO on February 1, 2016.
EMGS had two vessels in operation in the first quarter 2016, compared to four vessels it had a year ago. During the quarter, the vessel BOA Thalassa completed the announced contract work in India for ONGC and acquired 3D EM multi-client data off the west coast of India. The Atlantic Guardian was on a planned yard stay in February and started acquiring data on a multi-client project in the Hammerfest basin in the Barents Sea from mid-March.
Providing the outlook for the market, EMGS has echoed what has been said all over the seismic industry,
“The market outlook for oil services continues to be challenging and is characterised by high uncertainty. Oil companies have continued to announce further reductions in their spending for 2016 compared to 2015 as a response to the sharp decline in oil price. The interest in the EM technology from the oil companies is healthy, although challenged by the reduced budgets and project deferrals.”
The company is looking forward to the awards for the 23rd licensing round in Norway, expected in the second quarter of 2016. EMGS expects that the awards will trigger both uplift multi-client sales and multi-client late sales.