PGS Lowers Full Year Expectations

Petroleum Geo-ServiceS (PGS) has during Q3 experienced deteriorating market conditions, including a weakening of the oil price. The cautious spending behavior among oil companies continues to negatively impact bidding activity and pricing levels for marine contract work and makes utilization and vessel logistics more challenging.


The general market uncertainty may further impact demand for MultiClient library data towards the end of the year.

Based on preliminary numbers, the Company expects to report consolidated Q3 revenues of approximately $395 million ($365 million in Q3 2013)  EBITDA of approximately $180 million and EBIT excluding impairment charges of approximately $75 million ($108 million in Q3 2013).

The Company expects to report impairment charges of approximately $20-25 million, in line with earlier announcement. The quarter is also impacted by a primarily non-cash exchange rate loss of approximately $8 million and exploration expenses in Azimuth Ltd. of approximately $8 million. The exchange rate loss relates to the stronger USD and primarily the effect on legal deposits in Brazilian Real. The stronger USD, which also increases the deferred tax expense in the quarter by approximately $7 million since most deferred tax assets are in Norwegian Kroner, has a positive impact on the Company’s cost base going forward.

PGS Apollo started a five year classing in late Q3, which was previously planned for early 2015, reducing earnings capacity somewhat in Q3 and Q4.

PGS has received confirmation of pre-funding for the Triton GeoStreamer full azimuth MultiClient survey in the Gulf of Mexico. The Company has confirmed pre-funding for Q4 2014 of $60 million excluding Triton and PGS is confident that the total pre-funding revenues for Q4 will exceed $100 million.

Booking of Q4 3D capacity has increased from 70% in early September to now approximately 90%, with approximately 80% of active 3D capacity scheduled for Marine contract acquisition work. PGS marine contract revenues for the remainder of the year therefore carry less uncertainty. Q4 operational performance and MultiClient late sales remain as the main variables for the full year.

Considering these factors PGS has revised its full year 2014 EBITDA guidance to be approximately $725 million, which is 12,5% drop, compared to the previous EBITDA of $829 million.

1106.tifRelated: PGS Faces Fleet and Cost Cuts

PGS has stacked, and will consider selling or scrapping, the seismic vessels Pacific Explorer and Nordic Explorer. The seismic vessel Atlantic Explorer which is currently conducting a 2D survey will be taken permanently down to 2D mode and is planned to be used as a combined 2D, source and EM acquisition vessel.


 PGS-Expects-Weaker-Q2-ResultsRelated: PGS Expects Weaker Q2 Results

Petroleum Geo-Services ASA (“PGS”) expects to report weaker Q2 results than current market expectations.
Customers’ intentions with regard to seismic purchases, particularly MultiClient, have become less predictable recently. Accordingly, and considering the Q2 results, PGS lowers its full year EBITDA guidance to circa $850 million.


October 15, 2014


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