Seismic acquisition and geoscience companies are confident that the industry will start to recover soon despite posting more losses in their third quarter results as a result of the Covid-19 pandemic and low oil prices.
Seismic acquisition and geoscience companies are confident that the industry will start to recover soon despite posting more losses in their third quarter results as a result of the Covid-19 pandemic and low oil prices.
All the big companies in the sector reported substantial losses for the second quarter in a row, with CGG reporting a net loss of $98 million, TGS a net loss of $71 million, PGS a net loss of $32 million, ION Geophysical a net loss of $24 million and Polarcus a net loss of $13 million.
However, results statements released with the figures indicated the first signs of recovery as optimism rose that an effective vaccine for Covid-19 has been tested and widespread vaccination programmes will be implemented early next year.
Polarcus CEO, Duncan Eley, said that the company had won four awards since the end of the second quarter: ‘Our third quarter earnings demonstrated 10% improved revenue driven by day rates on contracts having increased 26%.
‘Tender activity slowly increased during the quarter with demand uncertainty remaining in the near term. We expect exploration and production spending to increase through 2021 with fundamentals supporting a longer-term recovery.’
Rune Olav Pedersen, president and chief executive officer of PGS, said: ‘Combining the effects of potential pent-up demand, a more stable oil price through the second half of 2020 and an expectation of higher oil prices in 2021, PGS believes in increasing activity levels through 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 benefit from the recent further industry capacity reductions.
‘We expect higher revenues from vessel operations going forward. We have an acceptable leads basket for multi-client data library sales and expect higher sales in the fourth quarter, compared to the average of the previous three quarters.’
CGG reported that it had been working on four multi-client programmes in the third quarter: three marine streamer surveys – Nebula in Brazil, Gippsland in Australia and North Viking Graben in Norway, and one ocean bottom node survey in the UK North Sea. Multi-client after-sales of $34 million were up 120% quarter-on-quarter.
Chris Usher, ION’s president and chief executive officer, said: ‘We are seeing a number of constructive developments evidenced by more stable oil prices and clearer definition of E&P budgets. Based on these trends and high levels of client engagement on specific deals, including a number postponed from the third quarter, we expect the fourth quarter to be significantly better than the second quarter with the potential to approach our fourth quarter results from last year.
‘Backlog increased 77% sequentially, reversing several consecutive quarters of steady decline due to our strategic shift to enter the 3D new acquisition multi-client market.
‘Although we expect the market will remain challenging, we see indications for improving offshore E&P industry dynamics and continue to anticipate significant growth in digitalization over the next decade.’
However, Duncan Eley warned that seismic fleets will need to be reduced even further for the industry to become viable again. ‘The reshaping of the marine seismic industry, resulting in fewer acquisition companies, has led to an improved industry structure. Four vessels have been removed from the global vessel count since the end of 2019 resulting in 19 global active vessels at the end of Q3 2020. With only 12 of these 19 vessels working on projects going into Q4 2020, further supply-side discipline will be required in order to mitigate reduced demand observed in 2020.’
