PGS revenues slip, loss narrows in 2Q

Norwegian marine seismic acquisition specialist Petroleum Geo-Services (PGS) has seen a 28 pct decrease in revenues during the second quarter of 2016 compared to the prior-year quarter, mainly impacted by reduction in MultiClient pre-funding revenues. 

In 2Q 2016, PGS’ revenues decreased by $72.8 million, or 28%, amounting to $183 million, compared to $255.8 million in 2Q 2015.

PGS explained that the lower revenues are mainly due to a 58% reduction in MultiClient pre-funding revenues, a 17% reduction in contract revenues and less vessel capacity in operation, partially offset by a 37% increase in MultiClient late sales revenues.

PGS narrowed its loss for the quarter totalling $51.8 million, versus a $63.8 million loss in the prior-year quarter.

The order book totalled $230 million at June 30, 2016, including $123 million relating to MultiClient, compared to $259 million at June 30, 2015.

Jon Erik Reinhardsen, PGS President and Chief Executive Officer, said: “With the gradual recovery of the oil price from its lows in early Q1, we are starting to see early signs of a stabilizing market and improving sentiment. We believe that this has started to impact our MultiClient performance positively.

Reinhardsen added: “The marine contract market is still characterized by very low pricing, but here too we see indications of more predictable patterns in customer survey planning and contracting processes. Due to stacking of capacity, the seismic vessel supply/demand balance has improved substantially since this time last year.”

The $4.2 million impairment PGS recorded in 2Q 2016 relates to adjustments to the expected schedule for returning stacked vessels to operation.

Fleet adjustment and other cost reductions have led to reorganization costs relating to restructuring activities. The company recorded $3.4 million of charges relating to restructuring and severance cost in the first half of 2016.


Last Ramform Titan-class vessel delayed


During the quarter, the Ramform Hyperion, the last in a series of four Ramform Titan-class vessels, was set afloat triggering the second last installment to the shipyard Mitsubishi Heavy Industries Shipbuilding Co. in Japan. PGS has agreed with Mitsubishi to move the delivery date of the last Ramform Titan-class vessel, Ramform Hyperion, to 1Q 2017.

The cash capital expenditure of Ramform Hyperion is expected to be approximately $265-270 million, including commissioning and a comprehensive seismic equipment package, but excluding capitalized interest and post-delivery cost. The geophysical company noted that the cost was reduced compared to earlier indications due to various cost savings, as well as re-use of available seismic equipment.

Accumulated capital expenditures related to Ramform Hyperion as of June 30, 2016 was $162.8 million.


Market to remain uncertain in 2016


According to PGS, the oil price and reduced oil company spending continue to impact seismic demand. Despite some oil price recovery and signs of an improved market sentiment, PGS stated it expects the market uncertainty to continue through 2016.

Based on the current operational projections, PGS said it expects full year 2016 gross cash cost at or below $700 million.

MultiClient cash investments are expected to be approximately $225 million, with a pre-funding level of approximately 100%. PGS said that 40-45% of active 3D vessel time is currently planned for MultiClient acquisition.

Further, capital expenditures are expected to be approximately $225 million, of which approximately $165 million is for the new builds Ramform Tethys and Ramform Hyperion.

Offshore Energy Today Staff

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