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UPDATE 1-Seismic surveyor PGS sees higher demand from oil companies, Q4 lags
February 16, 2017 / 12:45 PM / 7 months ago

UPDATE 1-Seismic surveyor PGS sees higher demand from oil companies, Q4 lags

(Adds CFO and CEO quotes, analysts, details)

OSLO, Feb 16 (Reuters) - Seismic surveying company PGS posted a bigger loss than forecast for its fourth quarter on Thursday due to weaker than expected sales of its data, but said it expects demand for its services to grow as the oil market picks up.

The Norwegian company, which maps out the seabed for oil firms in search of hydrocarbon deposits, has been struggling in recent years as persistently low crude prices have sapped demand for its services.

However, it expects business to grow by around 10 percent this year as oil prices stabilise and oil companies seek data to help them replenish depleted reserves.

At 0952 GMT, PGS shares traded 2.9 percent down in Oslo, underperforming European oil and gas shares .SXEP which traded 0.7 percent down.

PGS posted a fourth-quarter loss before interest and taxes and excluding one-offs of $65 million, deeper than the expected loss of $38 million expected in a Reuters poll, and than the loss of $23 million posted at the same time a year ago.

“The fourth quarter results were very disappointing due to lower than expected multi-client sales, while the outlook is neutral,” John Olaisen at ABG Sundal Collier brokerage said.

Swedbank’s analyst Teodor Sveen-Nilsen said PGS’s late sales were around 30 percent of his expectations for the fourth quarter.

PGS’s multi-client late sales were down to $52.4 million in the fourth quarter, from $67.5 million a year ago, and $63.2 million in the third quarter.

Late sales are sales of seismic data after the surveys are complete, as opposed to initial sales to pre-fund the projects.

MORE ACTIVITY IN 2017

“Looking forward, (vessel) utilisation will be much higher,” PGS Chief Financial Officer Gottfred Langseth told investors at a presentation in Oslo. The PGS utilisation rate fell to 52 percent in the fourth-quarter.

“We are starting more or less fully booked for the first half, with 100 percent (vessel booking) for the first and 80 percent for the second quarter.”

The day rates, which varied from $130,000 to $220,000 last year, are not expected to fall further in 2017, but upside potential was uncertain, PGS executives said.

PGS’s Chief Executive Officer Jon Erik Reinhardsen said he expected the range’s top rate of $220,000 to be broken in 2017.

“We are trying to see how far we can push the rates given higher utilisation in the overall fleet globally,” he added.

PGS competitor TGS said on Feb. 2 that 2017 vessel rates faced more upside than downside risks.

But higher activity also meant gross cash costs rising year-on-year by 6 percent to around $700 million in 2017, partly due to higher fuel costs, PGS added. (Reporting by Nerijus Adomaitis; editing by Terje Solsvik/Ruth Pitchford)

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