PGS shrinks quarterly loss

Norwegian seismic player Petroleum Geo-Service (PGS) reduced its loss for the second quarter this year helped by increase in revenues. 

The company cut its net loss for the second quarter 2017 to $32.2 million from $51.8 million loss in the prior-year quarter.

During the second quarter 2017 period, PGS recorded revenues of $240.5 million, which marks an increase compared to $183 million in 2Q 2016.

MultiClient pre-funding revenues were $50.2 million with a corresponding prefunding level of 115%, compared to $47.2 million and 113% in 2Q 2016.

MultiClient late sales in 2Q 2017 were $77.4 million, compared to $46 million in same period of 2016.

Jon Erik Reinhardsen, President and CEO, commented: “The robust MultiClient late sales performance in Q2 was primarily driven by a diverse customer base in Europe and South America buying from our high quality GeoStreamer data library. The MultiClient acquisition activity focused on the North Sea and the Mediterranean. We experienced solid client interest, which combined with low unit cost from our high productivity Ramform vessels led to a pre-funding level of 115%. Our marine contract revenues increased significantly in the quarter. We allocated a majority of the capacity to contract work and were, with strong operations, able to realize improved prices compared to last year.”

At the end of the quarter, PGS’ order book totaled $248 million of which $182 million relates to MultiClient, compared to $340 million at the end of first quarter 2017, and $230 million at the end of 2Q 2016. About $25 million of 2Q/3Q 2018 work was taken out of order book due to dry well, causing project cancellation.

Reinhardsen further said: “The order book decreased sequentially primarily in the marine contract segment as expected, but is still higher than at the same time last year. In preparation for the coming winter season where there is uncertainty relating to especially Q4, we are planning to cold-stack the Ramform Vanguard after the North Sea season. The capacity adjustment and further cost reduction initiatives will result in annual run rate cash cost savings of $50-60 million with effect from Q4.”

Benefits of improved cash flow

Going forward, PGS expects the improved cash flow among clients, combined with growing limitations on streamer availability in the industry, to benefit marine 3D seismic market fundamentals. Increased seasonal variations will impact activity in the coming winter season. The company expects the volume of marine 3D seismic acquired by the industry in 2017 to be in line with the volume acquired in 2016, but with a mix more focused on smaller and more capacity intensive 4D production monitoring surveys and more MultiClient 3D projects.

Based on the current operational projections and with reference to disclosed risk factors, PGS expects full year 2017 gross cash cost to be below $700 million.

MultiClient cash investments are expected to be approximately $250 million, with a pre-funding level of approximately 100%. Approximately 50% of the 2017 active 3D vessel time is expected to be allocated to MultiClient acquisition. Capital expenditure for 2017 is expected to be approximately $150 million, of which approximately $89 million relates to Ramform Hyperion which was delivered in 1Q 2017.

Offshore Energy Today Staff