PGS has reported a first quarter net loss of -$117 million on revenues of $168 million compared to a net loss of -$65 million on revenues of $142 million in the first quarter of 2019.
PGS has reported a first quarter net loss of -$117 million on revenues of $168 million compared to a net loss of -$65 million on revenues of $142 million in the first quarter of 2019. First quarter operating loss was -$80 million (including $51 million of impairments) compared to -$45 million in Q1 2019.
Q1 contract revenues of $85 million compared to $44 million in Q1 2019. Cash flow from operations of $176 million compared to $120 million in Q1 2019.
Rune Olav Pedersen, president and chief executive officer, said: ‘High vessel utilization and good operational performance secured solid contract revenues in Q1 2020. Our multi-client business entered the quarter with a solid project pipeline. However, it has been difficult to secure more commitments and conclude multi-client data library sales processes due to the Covid-19 pandemic and the oil price reduction. Further, multi-client revenues were negatively impacted by delays of government block awards, where specifically pre-funding for one of our ongoing multi-client projects is contingent on final block ratification.’
PGS will cold-stack two vessels with immediate effect and a third vessel is likely to be cold-stacked in the third quarter, bringing the number of active vessels down from eight to five. This will help to reduce full-year 2020 gross cash costs by some $100 million to below $500 million.
‘Going forward, further capacity reductions will be continuously evaluated, and we are prepared to react quickly,’ Pedersen added. ‘Our cost reduction will also comprise of a combination of temporary lay-offs, cancellation of 2020 bonus plans, salary freeze and numerous other cost initiatives as we adjust to a lower activity level.’
PGS expects lower investment plans among energy companies to significantly reduce demand for seismic services in 2020, and likely into 2021. ‘Offshore reserves will be vital for future supply and support the demand for marine seismic services. The expected future recovery of the seismic industry is likely to be strengthened further by another round of industry capacity reductions and a pent-up exploration and production demand ,’ says PGS’ outlook.
Multi-client 2020 cash investments are expected to be $150-200 million. Approximately 50% of 2020 active 3D vessel time is currently expected to be allocated to multi-client acquisition. Capital expenditure for 2020 will be reduced by at least $30 million to below $50 million.
The order book totalled $217 million at 31 March 2020, including $89 million relating to multi-client. The order book was $322 million at 31 December 2019.
