PGS expects weak 1Q, but seismic market is recovering, CEO says

The Norwegian seismic company PGS expects to report “a weak” first quarter of 2019, citing low prefunding of multi-client surveys. Segment revenues of approximately $142 million are expected for the quarter and EBITDA of approximately $65 million. Full-year results, however, are expected to be alright.

A Ramform-class seismic vessel / Image source: PGS
A Ramform-class seismic vessel / Image source: PGS

“Total Segment MultiClient revenues for Q1 2019 are estimated to approximately $90 million. As communicated earlier, the Q1 2019 MultiClient acquisition activity was high in the quarter, but with a lower than average prefunding level,” PGS said.

“PGS is targeting a prefunding level in the range of 80-120%. In the company’s  MultiClient portfolio, there are significant variations of prefunding levels on individual surveys. In Q1 2019, the mix of MultiClient surveys had an overweight of surveys with low prefunding,” PGS said.

Prefunding revenues ended at approximately $30  million, 50% of approximately $60 million MultiClient cash investment. For the full year 2019, PGS expects the prefunding level to be in the upper half of the targeted range of 80-120%.

MultiClient late sales are estimated at approximately $60 million in Q1 2019.  The order book as of March 31, 2019, was approximately $240 million, compared to $163 million at December 31, 2018. Pricing for 2019 contract work booked to date remains strong and is now more than 35% higher than the average rate in 2018, PGS said.

“Our Q1 numbers reflect the seasonal distribution of 2019 MultiClient investment activities, as we had an overweight of low prefunded MultiClient projects in the first quarter. This will reverse in the coming quarters and the prefunding level for the full year 2019 is expected to be in the upper half of the targeted range of 80-120%. The seismic market is recovering and during the first quarter we have significantly improved the visibility of vessel utilization, MultiClient pre-funding and contract revenues with an increase in the order book of almost 50%,” says President & CEO Rune Olav Pedersen.

For comparison in the first quarter of 2018, PGS’s segment revenues were $197.8 million and Segment EBITDA was $92.3 million.

Apart from the 1Q forecast, PGS today has today announced it has teamed up with compatriot seismic company TGS to conduct two multi-client seismic surveys the North Tablelands 3D and the Southeast Grand Banks 2019 2D in the Atlantic Ocean offshore Canada. More on that here.

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