PGS reports strong results amid challenging market

Petroleum Geo-Services has released its third quarter 2014 results, recording good contract and cash flow performance, despite challenging market conditions.

Highlights

• Revenues of US$ 394.2 million, compared to US$ 365.6 million in Q3 2013.
• EBITDA of US$ 181.7 million, compared to US$ 216.0 million in Q3 2013.
• EBIT, excluding impairments, of US$ 77.5 million, compared to US$ 108.3 million in Q3 2013.
• Group EBIT margin, excluding impairments, of 20%, compared to 30% in Q3 2013.
• Cash flow from operations of US$ 230.7 million, compared to US$ 189.4 million in Q3 2013.
• Strong balance sheet with US$ 470.4 million liquidity reserve.
• Sold Pacific Explorer and decommissioned Nordic Explorer, while Atlantic Explorer is rigged down to 2D - giving quarterly operational cost savings of approximately $10 million effective Q4 2014.
• Cost reduction programs expanded and on track.

Comments

Commenting on the results, CEO Jon Erik Reinhardsen, said: "We have during Q3 experienced deteriorating market conditions, including a weakening of the oil price. The cautious spending behaviour among oil companies continues to negatively impact bidding, pricing and utilisation. Despite the challenging market environment we have delivered solid marine contract performance. The benefits of attractive rates secured well in advance and good production levels drove a significant improvement in marine contract EBIT margins from the first half of the year, rising to 27%.

“However, in MultiClient we experienced lower sales than expected. The shortfall is primarily due to lack of pre-funding from the Triton MultiClient survey in the Gulf of Mexico.

“Subsequent to Q3 we have signed up the first Triton pre-funding. This combined with a well pre-funded portfolio of other MultiClient projects, and the visibility we have with 90% of Q4 capacity already booked, although at lower rates, forms the basis for our projected Q4 earnings. The main uncertainty for the full year now relates to MultiClient late sales. Considering the weaker market we adjust our full year EBITDA guidance to approximately US$ 725 million."

Adapted from press release by Katie Woodward

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/23102014/pgs-third-quarter-2014-results-1697/