Norway's Seismic Surveyors Say Hit by Lower Oil Price
OSLO, Oct 23 (Reuters) – Norwegian seismic surveyors TGS and PGS said on Thursday that demand from oil companies had deteriorated further due to falling oil prices during the quarter and tough market conditions were expected to last.
Seismic surveyors, which map out the seabed in search of oil and gas deposits, have been hit this year by energy firms cutting capital spending to protect profit margins and dividends to shareholders and, in recent weeks, by falling oil prices.
"Near-term uncertainty in exploration spending has been increased by a negative oil price development with the price of Brent dropping close to 25 percent during the last four months," TGS said in a statement.
"It is likely that energy companies will continue their efforts to reduce capital expenditures and become more selective when prioritizing investments such as seismic programs."
TGS' third-quarter operating profit lagged forecasts at $71 million, against expectations for $74.8 million in a Reuters poll of analysts, down from $79.8 million at the same time a year ago.
Despite this, the firm stuck to its guidance and said its full-year revenues would come in a range between $870 million and $950 million this year.
"Certain important events are expected to occur that will allow TGS to achieve its 2014 guidance," it said. "The most important of these is an announcement of the Norwegian 23rd exploration round blocks by mid-Q4."
Rival PGS repeated demand from oil companies had weakened as it confirmed its earnings before interest, taxes, depreciation and amortisation (EBIDA) was $181.7 million.
On Oct. 15, in its second profit warning in four months, PGS had said its EBITDA would be about $180 million.
Still, it said it would keep its dividend payment next year at the same level as this year, expected to be $0.23 per share according to Thomson Reuters SmartEstimate.
Shares in TGS trade on a forward 12-month price-to-earnings that is more expensive than peers', with a ratio of 11.0 against peers' ratio of 5.67, according to Thomson Reuters Eikon data.
Shares in the company are down 8.7 percent over the past three months, lagging an Oslo benchmark index down 8 percent.
PGS shares have performed worse over the same period, falling by over a third in value.
(Reporting by Gwladys Fouche, editing by William Hardy)
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