Norwegian seismic acquisition and processing company TGS has reported a drop in the first quarter 2016 revenue and profit, citing continued weak seismic market conditions.
TGS’s net operating revenue was $63.7 million, down from around $171.6 million in the corresponding quarter of 2015. The company reported a net loss of $21 million for the quarter, down from a net profit of $28.6 million a year ago.
As it previously warned, TGS expects that the market for seismic data will remain weak in 2016 as the companies are keeping their exploration budgets tight due to low oil prices.
TGS’ backlog amounted to $125.4 million at the end of 1Q 2016, a decrease of 35% from 1Q 2015 and 13% lower than last quarter.
The decrease is mainly due to high production on the regional 2D seismic survey in the Gulf of Mexico, where the company is conducting a giant 186.000 kilometers 2D survey – Gigante.
In conjunction with the Gigante 2D seismic survey, TGS is acquiring the Gigante multibeam, coring and geochemical survey over an area of approximately 600,000 km².
The company said that the multibeam crew started acquisition in Mexican waters in 4Q 2015 with coring operations commencing during 1Q 2016.
The Gigante multibeam, coring and geochemical project is estimated to be completed in 4Q 2016. Interpretation of data will integrate with the 2D seismic survey and enhance the value proposition to clients, TGS said.
No recovery any time soon
TGS, which in March appointed the new CEO, said that there are currently few tangible signs that a recovery is imminent, saying it expects to see a decline of 20-30% decline in exploration and production spending in 2016, in addition to a similar percentage reduction experienced in 2015.
“Furthermore oil companies are likely to prioritize their seismic spend in areas with more favorable economics and payback times as well as areas where they have current work programs and license obligations. This could result in greater variability of seismic spend between quarters and across regions in the near term,” TGS said.