PGS Increases 2015 Cost Reduction

Petroleum Geo-Services ASA (PGS) announced in its third quarter financial results Friday that its estimated cost reduction for 2015 has increased to approximately $320 million.

The company is in the process of cold-stacking the Ramform Explorer and Challenger vessels, with the Ramform Viking also scheduled to be stacked at the end of October. Equipment from the Ramform Viking will be used on vessels in operation, which will reduce the company's capital expenditure related to maintenance in 2016 by approximately $50 million, according to PGS.

PGS posted revenues of $225.7 million in the third quarter of 2015, which marked a significant decrease from the company’s revenues of $394.2 million registered during 3Q 2014. EBITDA was $115.3 million in 3Q 2015, compared to $181.7 million during the same period last year, and the company’s cash flow from operations reduced to $71.3 million from $230.7 million in 3Q 2014.

On July 23 PGS announced a revenue loss of over $80 Million in 2Q 2015, compared to the same period last year. PGS’ revenues in 2Q 2015 were $255.8 million, which was $81.2 million down on the 2Q 2014 revenue figure of $337 million. EBITDA for the quarter was $125.1 million, which was $45.5 million less than the $170.6 million EBITDA figure recorded in 2Q 2014.

PGS President and Chief Executive Officer, Jon Erik Reinhardsen, commented in a company statement:

"We continue to cut costs and reduce capital expenditures to optimize cash flow. With the cold-stacking of Ramform Viking and other initiatives taken in 3Q, our estimated cost reduction for 2015 is now increased to approximately $320 million. We have implemented a significant reduction of 2015 capex and further, benefiting 2016 capex, agreed with the shipyard to postpone the delivery of Ramform Hyperion to 1Q 2017, subject to approval from the ECA financing banks.

“In order to position our fleet for the future and address the industry's vessel oversupply, we have entered into agreements to charter the two vessels Sanco Sword and Sanco Swift, both among the most competitive conventional vessels in the seismic industry."

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