PGS Down in Q1, Cold-Stacks Two Vessels

Oslo-listed seismic player Petroleum Geo-Services (PGS) has booked a net loss of $19.5 million for the first quarter of 2015, compared with a $4.6 million profit in the corresponding period in 2014.

In the first quarter of 2015, the company recorded revenues of $251 million ( out of which $143.3 million goes to MultiClient revenues), down 14 percent, versus $292 million a year earlier.

Pre-tax income was a negative $10 million, while the tax expense was $9.5 million and a foreign currency loss $4.7 million.

According to PGS, weak vessel utilization in the first quarter was what negatively impacted financial performance, including the company’s marine contract EBIT margin.

During the quarter we have intensified our efforts to improve bookings, which should lead to improved utilization in the coming two quarters, the company said in a statement.

To tackle the current situation on the seismic market, PGS upped its cost savings target to $220 million in 2015 and decided to cold stack two vessels, namely, Ramform Explorer and Ramform Challenger, upon completion of this year’s North Sea summer campaign.

The stacking of Ramform Explorer and Ramform Challenger should, according to PGS, reduce quarterly operating cash cost by $15-$20 million, with full effect for Q4 2015.

Following the stacking of these two vessels, PGS expects to upgrade Ramform Sterling to GeoStreamer.

As previously announced, PGS has two Ramform Titan-class newbuilds under construction at Mitsubishi Heavy Industries (MHI) with delivery scheduled for Q1 and Q3 2016.

PGS expects EBITDA in the range of $550-$700 million, MultiClient cash investments of approximately $275-$300 million and CAPEX of approximately $250 million (almost $150 million for the newbuild program).