TGS reported net revenues of US$64 million in Q1 2016, compared to US$172 million in Q1 2015. Operating profit for the quarter was USD -21 million compared to US$37 million in Q1 2015, reflecting the new amortisation policy for seismic surveys (effective from 1 January 2016) which is based on straight-line amortisation rather than linked directly to revenues. Strong cash collection and lower investments resulted in positive free cash flow of US$63 million driving an increased cash balance of US$210 million. Quarterly dividend is maintained at USD 0.15 per share (subject to renewal of the Board authorisation at AGM at 10 May 2016).
"This last quarter has arguably been the most severe of this down cycle and there are currently few tangible signs that a recovery is imminent. With E&P spending likely to decline 20-30% this year we expect the market for seismic data to remain weak throughout 2016. Oil companies are under significant pressure to reduce cost and as a result they are prioritising their seismic spend in areas where they have current work programs and license obligations. This could result in greater variability of seismic spend between quarters and across regions in the near term. However, the long-term future of our asset-light, multi-client business remains strong. Our focus on cost control, disciplined counter-cyclical investment and balance sheet strength positions TGS to enhance its leading position," TGS' CEO Kristian Johansen stated.
Adapted from a press release by Louise Mulhall
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