PGS: Improving Sentiment in Offshore Seismic Market

Norwegian seismic survey firm Petroleum Geo-Services said Thursday that it is beginning to see early signs that its market is stabilizing along with improving sentiment. 

"We believe that this has started to impact our MultiClient performance positively," PGS CEO Jon Erik Reinhardsen said in a company statement. "The marine contract market is still characterized by very low pricing, but here too we see indications of more predictable patterns in customer survey planning and contracting processes. Due to stacking of capacity, the seismic vessel supply/demand balance has improved substantially since this time last year.

"Capital expenditures were relatively high in the quarter, primarily due to the yard instalment at floating and equipment for our last new build, Ramform Hyperion. Of the guided $165 million in new build capital expenditures this year we have already incurred $140 million in the first half and thus our cash flow will be more balanced for the remainder of the year."

In an outlook statement, PGS said it expected cash investments for its multi-client surveys to be $225 million in 2016, with a pre-funding level of 100 percent. Between 40 and 45 percent of active 3D seismic survey vessel time is planned for multi-client acquisition. The firm also plans capital spending of approximately $225 million, of which approximately $165 million is for new-build seismic survey vessels Ramform Tethys and Ramform Hyperion.

PGS's order book totalled $230 million at the end of June, compared with $204 million on March 31, 2016.

During the second quarter, PGS generated revenues of $183 million (2Q 2015: $255.8 million) and produced an adjusted loss before interest and tax (EBIT) of $36.2 million (2Q 2015: $15.9 million profit).

A fortnight ago Kristian Johansen, CEO of fellow seismic explorer TGS said that he still anticipated "variability of seismic spending between quarters and across regions in the near time" due to oil companies continuing to be under pressure to reduce exploration and production spending. However, he added: "We believe that following the unprecedented reduction in exploration activity it is inevitable that oil companies will return to exploration spending in the future as the demand-supply balance continues to tighten."