Energy firms have signaled “further cuts” for the next two years, according to geoscientific data company TGS.
In its third quarter earnings report released Friday, TGS stated that oil companies seem “determined” to continue their efforts to reduce investments and cut costs and said that “most oil companies” have signaled further cuts in 2016, with some indicating reductions in 2017 as well.
In order to adapt to the changing market conditions, TGS implemented a cost reduction program in the first quarter of 2015, resulting in a significant reduction in operating expense. Due to the continued weak market conditions the company is in the process of further reviewing its cost base, with the aim of realizing additional cost reductions from the beginning of next year.
TGS’ consolidated net revenues in 3Q 2015 were $169 million, compared to $190 million in 3Q 2014. The company’s operating profit at the EBIT level was $46 million in the third quarter of this year, down from $71 million during the same period last year. In its previous earnings report, TGS revealed that net revenues reached $140 million in the second quarter of 2015, which represented a significant decrease to TGS’ $205 million revenue posted in 2Q 2014.
TGS CEO Robert Hobbs commented in a company statement:
“Energy companies continue to cut exploration spending, leading to continued pressure on demand for seismic data. Customer communication indicates that the current difficult market conditions will persist for some time. With a flexible cost structure and an asset-light balance sheet, TGS is positioned to take advantage of the uncertain market conditions and strengthen our position further. Although investments will decline substantially in 4Q, our 2015 revenue guidance remains unchanged”.
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