TGS announced the early termination of a 2D vessel charter for the M/V Northern Genesis. This five year charter began in March 2007 and was previously due to expire in March 2012. Under current market conditions it is possible to charter more suitable 2D vessel capacity resulting in increased flexibility and significantly lower operating costs per unit of seismic data acquired. Conditions for the early termination have been agreed with the vessel owner and will result in a one-time operating expense charge of USD 5.2 million in Q2, of which USD 1.5 million is a cash settlement and the remaining USD 3.7 million is a non-cash write-down of TGS owned equipment onboard the vessel.
In addition, based on preliminary reporting from operating units, TGS management now expects net revenues for the 2nd quarter of 2010 to be approximately USD 111 million, about 10% lower than revenues reported for Q2-2009. For the first half of 2010, management expects net revenues of USD 259 million, 33% above Q1-2009 net revenues.
A delay in the announcement of Norway's 21st licensing round to June 23, did not allow for TGS to take full advantage of expected sales activity on its modern 2D and 3D Norwegian Continental Shelf data library in Q2. Since announcement of the round, sales activity has been as expected. In addition, the uncertain regulatory environment surrounding activity in the deepwater Gulf of Mexico caused some sales decisions on several large data quotes at the end of Q2 to be delayed. In contrast, activity is increasing in the West Africa market as E&P companies look for expansion opportunities in frontier and established plays.
Based on current and forecasted activity levels, TGS still expects to achieve annual net revenues of USD 560-600 million for 2010 as originally communicated in February.
As a result of the lower level of late sales in Q2, the blended multi-client amortization rate for Q2 is likely to be slightly higher than the forecasted range for the full year. This amortization rate does fluctuate from quarter to quarter, depending on the sales mix of projects, and TGS still expects that its full year amortization rate will be in the range of 37-43% of net revenues.
Most Popular Articles
From the Career Center
Jobs that may interest you