Petroleum Geo-Services ASA: Second Quarter and First Half 2017 Results
Strong MultiClient Sales
Further Cost Reductions Initiated
Highlights Q2 2017
* Revenues of $240.5 million, compared to $183.0 million in Q2 2016
* EBITDA of $112.5 million, compared to $68.8 million in Q2 2016
* EBIT, excluding impairments and other charges, a loss of $8.7 million,
compared to a loss of $36.2 million in Q2 2016
* MultiClient pre-funding revenues of $50.2 million with a corresponding pre-
funding level of 115%, compared to $47.2 million and 113% in Q2 2016
* MultiClient late sales of $77.4 million, compared to $46.0 million in Q2
2016
* Cash flow from operations of $49.4 million, compared to $42.4 million in Q2
2016, with higher working capital from revenue increase in the second half
of Q2 expected to benefit Q3
* Liquidity reserve of $228.3 million, compared to $273.8 million in Q1 2017
and $429.7 million in Q2 2016
* Initiated capacity adjustment and other cost initiatives with estimated $50-
60 million annual run rate cash cost saving from Q4
* Commenced large MultiClient campaigns offshore East Canada with solid pre-
funding
* The Board of Directors is working according to the planned timeline for
appointment of a new CEO. Announcement is expected early autumn
"The robust MultiClient late sales performance in Q2 was primarily driven by a
diverse customer base in Europe and South America buying from our high quality
GeoStreamer data library. The MultiClient acquisition activity focused on the
North Sea and the Mediterranean. We experienced solid client interest, which
combined with low unit cost from our high productivity Ramform vessels led to a
pre-funding level of 115%. Our Marine contract revenues increased significantly
in the quarter. We allocated a majority of the capacity to contract work and
were, with strong operations, able to realize improved prices compared to last
year.
The order book decreased sequentially primarily in the marine contract segment
as expected, but is still higher than at the same time last year. In preparation
for the coming winter season where there is uncertainty relating to especially
Q4, we are planning to cold-stack the Ramform Vanguard after the North Sea
season. The capacity adjustment and further cost reduction initiatives will
result in annual run rate cash cost savings of $50-60 million with effect from
Q4.
The first half of 2017 has played out in accordance with our expectations and
within the scenarios we envisaged when we refinanced in Q4 2016. The successful
refinancing combined with a significantly lower cost base make PGS well
positioned to benefit from future market opportunities."
Jon Erik Reinhardsen,
President and Chief Executive Officer
Outlook
PGS expects the improved cash flow among clients, combined with growing
limitations on streamer availability in the industry, to benefit marine 3D
seismic market fundamentals going forward. Increased seasonal variations will
impact activity in the coming winter season. The Company expects the volume of
marine 3D seismic acquired by the industry in 2017 to be in line with the volume
acquired in 2016, but with a mix more focused on smaller and more capacity
intensive 4D production monitoring surveys and more MultiClient 3D projects.
Based on the current operational projections and with reference to disclosed
risk factors, PGS expects full year 2017 gross cash cost to be below $700
million.
MultiClient cash investments are expected to be approximately $250 million, with
a pre-funding level of approximately 100%.
Approximately 50% of the 2017 active 3D vessel time is expected to be allocated
to MultiClient acquisition.
Capital expenditure for 2017 is expected to be approximately $150 million, of
which approximately $89 million relates to Ramform Hyperion which was delivered
in Q1 2017.
The order book totaled $248 million at June 30, 2017 (including $182 million
relating to MultiClient), compared to $340 million at March 31, 2017 and $230
million at June 30, 2016.
+---------------------------------+---------------+---------------+------------+
| | | | |
| | | | Year ended |
| | Quarter ended | Six months |December 31,|
|Key Financial Figures | June 30, | ended | |
|(In USD millions, except per | | June 30, | |
|share data) +-------+-------+-------+-------+------------+
| | | | | | |
| | 2017 | 2016 | 2017 | 2016 | 2016 |
+---------------------------------+-------+-------+-------+-------+------------+
|Revenues | 240.5| 183.0| 395.3| 386.1| 764.3|
+---------------------------------+-------+-------+-------+-------+------------+
|EBITDA | 112.5| 68.8| 142.6| 147.5| 313.3|
+---------------------------------+-------+-------+-------+-------+------------+
|EBIT ex. impairment and other | (8.7)| (36.2)| (92.2)| (66.3)| (137.5)|
|charges, net | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|EBIT as reported | (17.4)| (44.6)|(111.1)| (76.1)| (180.3)|
+---------------------------------+-------+-------+-------+-------+------------+
|Income (loss) before income tax | (37.5)| (57.7)|(140.5)|(119.6)| (262.8)|
|expense | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Net income (loss) to equity | (32.2)| (51.8)|(138.7)|(108.7)| (293.9)|
|holders | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Basic earnings per share ($ per | (0.10)| (0.22)| (0.42)| (0.46)| (1.21)|
|share) | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Net cash provided by operating | 49.4| 42.4| 79.4| 175.8| 320.9|
|activities | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Cash investment in MultiClient | 43.8| 41.8| 77.4| 90.1| 201.0|
|library | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Capital expenditures (whether | 12.9| 51.9| 114.5| 160.9| 208.6|
|paid or not) | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Total assets |2,860.1|2,970.3|2,860.1|2,970.3| 2,817.0|
+---------------------------------+-------+-------+-------+-------+------------+
|Cash and cash equivalents | 53.3| 49.7| 53.3| 49.7| 61.7|
+---------------------------------+-------+-------+-------+-------+------------+
|Net interest bearing debt |1,126.2|1,207.6|1,126.2|1,207.6| 1,029.7|
+---------------------------------+-------+-------+-------+-------+------------+
A complete version of the Q2 2017 earnings release and presentation can be
downloaded from www.newsweb.no and www.pgs.com.
FOR DETAILS, CONTACT:
Bård Stenberg, VP IR & Corporate Communications
Phone: +47 67 51 43 16
Mobile: +47 99 24 52 35
Petroleum Geo-Services ("PGS" or "the Company") is a focused Marine geophysical
company that provides a broad range of seismic and reservoir services, including
acquisition, imaging, interpretation, and field evaluation. The Company's
MultiClient data library is among the largest in the seismic industry, with
modern 3D coverage in all significant offshore hydrocarbon provinces of the
world. The Company operates on a worldwide basis with headquarters in Oslo,
Norway.
PGS has a presence in 17 countries with regional centers in London, Houston and
Kuala Lumpur. Our headquarters is in Oslo, Norway and the PGS share is listed on
the Oslo stock exchange (OSE: PGS).
For more information on Petroleum Geo-Services visit www.pgs.com.
****
The information included herein contains certain forward-looking statements that
address activities, events or developments that the Company expects, projects,
believes or anticipates will or may occur in the future. These statements are
based on various assumptions made by the Company, which are beyond its control
and are subject to certain additional risks and uncertainties. The Company is
subject to a large number of risk factors including but not limited to the
demand for seismic services, the demand for data from our multi-client data
library, the attractiveness of our technology, unpredictable changes in
governmental regulations affecting our markets and extreme weather conditions.
For a further description of other relevant risk factors we refer to our Annual
Report for 2016. As a result of these and other risk factors, actual events and
our actual results may differ materially from those indicated in or implied by
such forward-looking statements. The reservation is also made that inaccuracies
or mistakes may occur in the information given above about current status of the
Company or its business. Any reliance on the information above is at the risk of
the reader, and PGS disclaims any and all liability in this respect.
This information is subject to the disclosure requirements pursuant to section
5 -12 of the Norwegian Securities Trading Act.