Red ink for PGS in 4Q

Petroleum Geo-Services, a geophysical company that provides a range of seismic and reservoir services, has posted a loss for the 4Q 2015 and a 47% drop in revenues when compared to the corresponding period of 2014. 

In the company’s 4Q 2015 report on Monday, PGS posted a net loss of $334.6 million for the fourth quarter of 2015, versus $93.6 million loss in the fourth quarter of 2014.

PGS’ revenues for the fourth quarter of 2015 were $229.3 million, a 47% drop when compared to revenues of $430.1 million in the corresponding period of 2014.

According to the company, this reflects a 75% reduction in contract revenues and a 44% reduction in multi-client late sales, partially offset by a 13% increase in multi-client pre-funding revenues.

As a result of the weak market fundamentals the company recorded impairments of goodwill and intangible assets, primarily stemming from acquisitions made in a significantly stronger market, of $172.4 million in 4Q 2015. There is no remaining carrying value of goodwill in the company’s balance sheet as of December 31, 2015, PGS said.

The multi-client library book value was written down by $102.5 million in 4Q 2015. The multi-client library is accounted for on a survey by survey basis. The write downs generally relate to surveys where the company, owing to the lower oil price, is experiencing lower revenues and where total expected sales are reduced and/or pushed out in time, the company explained. The carrying value of the company’s multi-client library was $695 million as of December 31, 2015.

Jon Erik Reinhardsen, PGS President and Chief Executive Officer, said: “2016 will be another difficult year for the seismic industry. We continue to focus on what we can control, including customer relations, costs, maintaining a financially sound balance sheet and capitalizing on the youngest and most productive fleet in the industry.

“Our fleet productivity will further improve when we take delivery of the Ramform Tethys in late Q1. I am convinced PGS is well positioned to manage the challenging market.”

Four vessels stacked, one delivery delayed

During the fourth quarter, four of the company’s Ramform vessels were cold-stacked: Ramform Challenger, Ramform Explorer, Ramform Valiant and Ramform Viking.

PGS has two Ramform Titan-class new builds, Ramform Tethys and Ramform Hyperion, under construction at Mitsubishi Heavy Industries Shipbuilding Co. Ltd (MHIS) in Japan. Ramform Tethys is scheduled for delivery in 1Q 2016.

PGS has agreed with MHIS to move the delivery date of Ramform Hyperion to 1Q 2017. The agreement on Ramform Hyperion is subject to final documentation and approval from the ECA financing banks.

No market improvement in 2016

The low oil price and continued reduction in oil companies’ spending continue to impact seismic demand and pricing negatively, the company noted on Monday. PGS further said it expects market uncertainty and low earnings visibility to continue through 2016.

According to PGS, capital expenditures for 2016 are estimated to be approximately $250 million, of which approximately $180 million is for the new builds Ramform Tethys and Ramform Hyperion. PGS explained that the increase compared to the original guidance of $240 million was primarily due to cut off between 2015 and 2016, with 2015 ending correspondingly lower than guidance.

Offshore Energy Today Staff