Productivity issues on the two newly delivered 3D vessels as well as difficulties in closing new Gulf of Mexico multi-client late sales commitments at the end of the quarter have caused 3Q revenues to fall short of management's expectations.
GeoBarents started operations in the Gulf of Mexico during the first week of August, but experienced a very high percentage of technical downtime from mid-August to mid-September. Since mid-September, performance has been very satisfactory.
BGP Pioneer re-started operations in West Africa during the first week of August but lost approximately one week of operational time in mid-September due to replacement of a malfunctioning fuel valve.
Multi-client late sales are often secured during the final weeks of a quarter. The company's Gulf of Mexico customers were largely unavailable during that window this quarter due to the high level of focus and preparations for the record-setting Central Gulf of Mexico lease sale held on October 3rd. Management believes that this situation created a different buying pattern in Q3 and that its customers will now focus on the annual March lease sale leading to a more typical "Q4 effect" in multi-client activity.
TGS and Wavefield-Inseis continue to progress the merger process and expect the merger to close as planned in late November. Currently, the management teams are preparing a joint plan for the optimal deployment of vessels for Q4 and 2008. TGS plans to issue Q4-2007 guidance based on the activity of the merged entity as a part of its Q3 Earnings Release on October 25th.
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