PGS has reported a second quarter net loss of -$111 million on revenues of $139 million, compared with a net loss of -$49 million on revenues of $216 million in Q2 2019.
PGS has reported a second quarter net loss of -$111 million on revenues of $139 million, compared with a net loss of -$49 million on revenues of $216 million in Q2 2019.
Segment EBIT (excluding impairments and other charges) of $7 million, compared to $17.7 million in Q2 2019.
From a cash investment of $64 million, segment multi-client pre-funding revenues were $66.2 million, with a corresponding pre-funding level of 102%, compared to $66.8 million and 102%, respectively, in Q2 2019. Multi-client late sales were approx. $36 million. Contract revenues ended at $31 million.
Cash flow from operations of $67.5 million, compared to $108.1 million in Q2 2019.
Rune Olav Pedersen, president and chief executive officer, said: ‘The Covid-19 pandemic has caused widespread disruptions in the oil market and a significant reduction in energy companies’ 2020 budgets. This has led to reduced demand for seismic data and deferral of seismic projects, requiring a rapid response from PGS to manage vessel supply and costs. However, client feedback indicates the reduction this year is to protect cash flow and that their exploration models are generally intact with projects deferred rather than cancelled.
‘During Q2 we cold-stacked PGS Apollo and Sanco Swift, and we have completed the stacking of Ramform Vanguard in early Q3. Further capacity reductions will be evaluated, and we are prepared to react quickly. We are in the process of completing a comprehensive reorganization whereby our office-based personnel is reduced by approximately 40%, including reductions implemented earlier this year. In combination with other initiatives, these measures are expected to reduce our annual gross cash cost run rate to approximately $400 million, compared to approximately $600 million at the start of the year.
In its outlook statement PGS said that a large portion of postponed projects relates to either 4D or licensing commitments and are very likely to proceed when the oil market stabilizes. ‘The recent partial recovery of the oil price has not caused energy companies to revise their 2020 spending cuts significantly and PGS expects 2020 to be very challenging. If the improved balance in the oil market and recovery of the oil price continues in the second half when most energy companies set their budgets for next year, we expect activity levels to improve in 2021.
‘Despite the impacts of the Covid-19 crisis, energy consumption is expected to continue to increase in the future with oil and gas continuing to play an important role in the energy mix. 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.’
Based on current operational projections, with five vessels in operation for the remaining part of 2020, PGS expects full-year 2020 gross cash costs to be approximately $450 million, excluding severance and other restructuring costs of approximately $35 million. For 2020 multi-client cash investments are expected to be in the range of $175-200 million. Capital expenditure for 2020 is expected to be $40 million. The order book totalled $155 million at June 30, 2020 (including $39 million relating to multi-client). The order book was $217 million at 31 March 2020 and $300 million at 30 June 2019.
