Petroleum Geo-Services ASA: Second Quarter and First Half 2018 Results - CORRECTION
CORRECTION: in the table below Net income (loss) to equity holders should be
$10.4 million, not $(10.4) million. Everything else is unchanged.
Progressing as Planned
Note: Petroleum Geo-Services ASA and its subsidiaries ("PGS" or "the Company")
implemented the new revenue recognition standard, IFRS 15, as the Company's
external financial reporting method. This change, which took effect January
1(st) 2018, impacts the timing of revenue recognition for MultiClient pre-
funding revenues and related amortization. For internal management purposes PGS
continues to use the revenue recognition principles applied in previous years,
which are based on percentage of completion, and use this for numbers disclosed
as Segment Reporting. See Note 15 for definitions of terms discussed in this
report. See Note 16 for a description of the change in revenue recognition
resulting from the implementation of IFRS 15. PGS has not restated prior
periods.
Highlights Q2 2018
* As Reported revenues of $239.7 million and EBIT of $30.5 million, according
to IFRS
* Segment Revenues of $199.4 million, compared to $240.5 million in Q2 2017
* Segment EBITDA of $136.0 million, compared to $112.5 million in Q2 2017
* Segment EBIT of $13.6 million, compared to a loss of $8.7 million in Q2 2017
* Segment MultiClient pre-funding revenues of $94.0 million with a
corresponding pre-funding level of 116%, compared to $50.2 million and 115%
in Q2 2017
* Segment MultiClient late sales revenues of $68.7 million, compared to $77.4
million in Q2 2017
* Cash flow from operations of $121.7 million, compared to $49.4 million in Q2
2017
* Total Leverage Ratio, as defined in the Company's Credit Facility, of 2.83:1
"Most of our active 3D vessel capacity was allocated to MultiClient in the
quarter and pre-funding revenues dominated the sales mix. MultiClient late sales
did not benefit materially from any license rounds, but the quarter still
demonstrates a continuance of the strong trend from the two previous quarters.
Year-to-date late sales are up more than 30% compared to 2017.
We have generated a larger pipeline of new MultiClient projects and expect to
increase our MultiClient cash investment to approximately $300 million this
year, with an active 3D vessel capacity allocation to MultiClient of
approximately 65% and an unchanged pre-funding requirement.
Our contract activities in Q2 related mainly to completion of surveys we
commenced in Q1, offshore West Africa. The marine contract market is improving,
but still challenging, and it is encouraging that our estimate of the total
value of bids and leads for contract work is at its highest level for more than
three years.
The visibility of Q4 fleet utilization is strengthening. However, our reported
order book remains low at quarter end, as we are in the final phase of
formalizing projects. With the ongoing bid activities and our MultiClient plans,
we expect that we will achieve acceptable utilization of the vessels we plan to
operate in Q4.
Our cost reductions are progressing as planned and for the first time in two and
a half years we are reporting positive EBIT. We are on track to be cash flow
positive after debt servicing this year."
Rune Olav Pedersen,
President and Chief Executive Officer
Outlook
PGS expects the higher oil price, improved cash flow among clients and an
exceptionally low oil and gas discovery rate to benefit the marine seismic
market fundamentals going forward. The Company continues to plan its cost and
capital expenditures for 2018 to achieve positive cash flow post debt
service(1).
Based on the current operational projections and with reference to disclosed
risk factors, PGS expects full year 2018 gross cash costs of approximately $600
million.
2018 MultiClient cash investments are expected to be approximately $300 million.
Approximately 65% of 2018 active 3D vessel time is expected to be allocated to
MultiClient acquisition.
Capital expenditure for 2018 is expected to be approximately $50 million.
The order book totaled $187 million at June 30, 2018 (including $138 million
relating to MultiClient), compared to $211 million at March 31, 2018 and $248
million at June 30, 2017. The Company operated eight 3D vessels in Q2 2018.
(1 )The financial target of being cash flow positive after debt servicing
excludes payments relating to severance and other restructuring provisions made
in Q4 2017 as well as drawings/repayments on the RCF.
+---------------------------------+---------------+---------------+------------+
| | | | |
| | | | Year ended |
| | Quarter ended | Six months |December 31,|
|Consolidated Key Financial | June 30, | ended | |
|Figures | | June 30, | |
|(In USD millions, except per +-------+-------+-------+-------+------------+
|share data) | | | | | |
| | 2018 | 2017 | 2018 | 2017 | 2017 |
+---------------------------------+-------+-------+-------+-------+------------+
|As Reported under IFRS 15: | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Revenues | 239.7| 240.5| 441.0| 395.3| 838.8|
+---------------------------------+-------+-------+-------+-------+------------+
|EBIT | 30.5| (17.4)| 23.2|(111.1)| (383.6)|
+---------------------------------+-------+-------+-------+-------+------------+
|Income (loss) before income tax | 14.8| (37.5)| (14.7)|(140.5)| (468.1)|
|expense | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Net income (loss) to equity | 10.4| (32.2)| (29.2)|(138.7)| (523.4)|
|holders | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Basic earnings per share ($ per | 0.03| (0.10)| (0.09)| (0.42)| (1.55)|
|share) | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Net cash provided by operating | 121.7| 49.4| 195.1| 79.4| 281.8|
|activities | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Cash Investment in MultiClient | 81.3| 43.8| 135.0| 77.4| 213.4|
|library | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Capital expenditures (whether | 8.3| 12.9| 12.3| 114.5| 154.5|
|paid or not) | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Total assets |2,386.3|2,860.1|2,386.3|2,860.1| 2,482.4|
+---------------------------------+-------+-------+-------+-------+------------+
|Cash and cash equivalents | 24.4| 53.3| 24.4| 53.3| 47.3|
+---------------------------------+-------+-------+-------+-------+------------+
|Net interest bearing debt |1,145,3|1,126.2|1,145.3|1,126.2| 1,139.4|
+---------------------------------+-------+-------+-------+-------+------------+
| | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Segment Reporting: | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
|Segment Revenues | 199.4| 240.5| 397.2| 395.3| 838.8|
+---------------------------------+-------+-------+-------+-------+------------+
|Segment EBITDA | 136.0| 112.5| 228.4| 142.6| 374.1|
+---------------------------------+-------+-------+-------+-------+------------+
|Segment EBIT ex. impairments and | 13.6| (8.7)| (9.1)| (92.2)| (147.1)|
|other charges, net | | | | | |
+---------------------------------+-------+-------+-------+-------+------------+
A complete version of the Q2 2018 earnings release and presentation can be
downloaded from www.newsweb.no and www.pgs.com.
FOR DETAILS, CONTACT:
Bård Stenberg, SVP IR & Communication
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 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 2017. 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.