Norwegian seismic surveyor Petroleum Geo Services (PGS) expects to have “significantly” higher profitability in 2019 as demand and prices are increasing, despite lower earnings in the first quarter, the company said on April 25.
With oil prices rising after a downturn in 2014-2016, oil companies are keener to invest in exploring for new barrels and need seismic data to pinpoint spots to drill.
“We have seen a strong order book increase, and that has continued into April,” PGS CEO Rune Olav Pedersen told a news conference. “The seismic market is recovering, and we expected gradual recovery to continue in 2019.”
The company’s order book rose by $75 million to $238 million, including $90 million relating to multiclient sales, where data is acquired for sale to a number of clients, compared to last quarter of 2018, PGS said in its first-quarter report.
Pedersen also said prices for contract seismic acquisitions, where data is acquired under exclusive rights and is owned by oil companies, were 35% higher than in 2018, driven by demand from oil supermajors.
Two-thirds of the contract seismic work was so-called 4-D or regular surveys over the producing oil fields to improve recovery, which have higher profit margins, Pedersen added.
Contract seismic prices were 20% to 30% below peak levels in 2012-2013, and could reach those levels in 2021 if the trend continued, he told Reuters.
Following decisions by WesternGeco and CGG to exit the seismic vessel acquisition market, PGS remains the world's only fully-integrated seismic company, offering data acquisition using its own fleet and selling data from multiclient libraries.
The company's first-quarter EBITDA was $66.6 million versus a preliminary $65 million reported on April 8 and compared with $92.3 million in the first quarter of 2018.
Earnings were down due to lower pre-funding levels in its multiclient surveys, but the company said it expected those levels to reverse later in 2019.
In multiclient pre-funding, the company typically obtains funding from a limited number of customers before the project is complete in exchange for early access to the data.
The company repeated on April 24 that it expected prefunding levels for the full-year 2019 to be in the upper half of the targeted range of 80% to 120%.
“I hope we can have a positive bottom line in 2019,” Pedersen told Reuters.
The last time PGS had annual net profit was in 2013.
PGS shares were up 4.55% at 0917 GMT. European oil and gas stocks was up 0.6%.
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