Seismic surveyors PGS and TGS warn on first-quarter sales, shares drop By Reuters

By Victoria Klesty

OSLO (Reuters) – Seismic surveyors Petroleum Geo Services and TGS, key data suppliers to the oil industry, warned of lower-than-expected first-quarter sales on Monday as initial project funding from explorers fell short.

The rival Norwegian companies sell geological surveys to exploration and production (E&P) companies seeking to drill for hydrocarbons, as the data helps them determine the presence of oil and gas in offshore and onshore reservoirs.

PGS said first-quarter revenue for its multiclient segment – seismic surveys that can be sold to several customers – is estimated at $142 million, down from $201 million in the first quarter in 2018, while analysts had expected sales of $190 million, according to Refinitiv data.

TGS said preliminary net segment revenue for the three months was about $110 million, compared with $135 million in the year-earlier period and below analysts’ forecast of $146 million.

Seismic surveyors saw sales dwindle in the 2014-2016 downturn after oil prices fell sharply and exploration came to a halt. While demand has since risen with a higher price of crude, the industry still suffers from overcapacity.

PGS shares were down 2.8 percent at 1100 GMT, while TGS shares fell 1 percent. European oil and gas stocks on average rose by 0.5 percent.

PGS said while multiclient acquisitions were high in the quarter, prefunding from energy companies at a lower-than-average 50 percent impacted revenues.

“This will reverse in the coming quarters and the prefunding level for the full year 2019 is expected to be in the upper half of the targeted range of 80-120 percent,” said PGS Chief Executive Officer Rune Olav Pedersen in a statement.

The company’s preliminary first-quarter segment earnings before interest, tax, depreciation and amortization (EBITDA) was about $65 million, compared with $92.3 million in the first quarter of 2018.

The earnings missed market expectations by about 45 percent, brokers DNB Markets wrote in a note to clients.

TGS said its pre-funding represented only 12 percent of its overall first-quarter revenues.

“While operational investments and pre-funding revenues came in behind plan due to postponed start-up of projects, this was offset by late sales coming in above internal expectations,” said TGS Chief Executive Kristian Johansen in a statement.

Late sales are revenues booked from the sale of older data from the company’s library.

TGS said it has committed about $240 million of investments for 2019 and is “well on track” to meet its guidance of about 20 percent growth.

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