TGS optimistic about long-term. Profit falls, backlog up

Persistent oil price instability and further decline in oil firm’s exploration budgets are causing uncertainty for the near-term offshore seismic market development, however there’s room for optimism as well, Norway’s TGS said on Thursday.

The marine seismic data provider saw its $108 million net revenues for the second quarter of the year slightly drop compared to prior year’s 2Q revenue of $114 million, however the company highlighted that the result improved 25 percent versus the first quarter of 2017.

Net income for the second quarter of 2017 fell 43 percent to $10 million, down from $17 million in the corresponding quarter a year ago.

While the company expects near-term uncertainty as oil companies spend little on exploration, TGS sees lower costs as stimulating future exploration activity.

TGS has managed to increase its backlog some 24 percent relative to the second quarter of 2016. The backlog at the end of the quarter stood at $127 million.

“Despite the challenging market conditions, customers have, to an increasing extent been willing to support quality project ideas. As such, TGS has been able to increase the order backlog substantially since the beginning of the year. In the 3rd quarter the activity with respect to data acquisition volumes will be at historically high levels and the investment and pre-funding levels is set to increase significantly from the levels experienced so far this year.

“In the longer term the combination of substantial reduction of cost throughout the oil and gas value chain and the low reserve replacement ratios observed among the E&P companies should lead to increased exploration spending,” TGS said.

Offshore Energy Today Staff