Fourth Quarter and Preliminary Full Year 2018 Results & CMD Presentation
Note: PGS implemented the new revenue recognition standard, IFRS 15, as the Company's external financial reporting method. This change, which took effect January 1st 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 14 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.
As Reported revenues of $874.3 million and EBIT of $39.4million, according to IFRS
Segment Revenues of $834.5 million, compared to $838.8 million in 2017
Segment EBITDA of $515.9 million, compared to $374.1 million in 2017
Segment EBIT of $36.3 million, compared to a loss of $147.1 million in 2017
Total Segment MultiClient revenues of $654.3 million, up 22% compared to 2017
Record Segment MultiClient late sales revenues of $371.9 million, up 58% compared to 2017
Cash flow from operations of $445.9 million, compared to $281.8 million in 2017
Total Leverage Ratio, as defined in the Company's Credit Facility, of 2.58:1
In process of completing sale of Ramform Sterling to JOGMEC, including a service agreement of up to 10 years with annual renewals
"We have continued to invest in the MultiClient library through the downturn. In a gradually recovering market this has enabled us to deliver segment MultiClient revenue growth of 22% and achieve the highest MultiClient late sales in PGS' history. Despite the oil price volatility in Q4 we experienced strong and diverse customer interest for our data library securing record high quarterly MultiClient late sales revenues of $163.6 million.
The contract market was still challenging in 2018. We achieved higher pricing for contract work, compared to 2017, but were hurt by low vessel utilization, particularly in Q4.
We have delivered a substantial cost reduction and achieved our main financial target for 2018 of becoming cash flow positive after debt service*. I am proud of all PGS employees delivering on this target in the first year of operating in a new organization.
We expect the seismic market in 2019 to continue the improvement trend experienced during 2018. In the contract market we experience higher activity, improved visibility and better prices as we move into 2019. Revenue growth and lower costs will position us to improve cash flow further this year."
Rune Olav Pedersen,
President and Chief Executive Officer
PGS expects significant cash flow generation among clients and an increase in exploration and production spending, including offshore spending, to contribute to further recovery of the marine seismic market fundamentals going forward. Contract seismic is likely the activity benefitting most from the improvement, driven by more 4D acquisition and generally higher demand for new seismic data.
Based on current operational projections and with reference to disclosed risk factors, PGS expects full year 2019 gross cash costs of approximately $550 million. This number takes into account an estimated approximately $50 million reduction from the implementation of IFRS 16 in 2019. See Note 16 for a description of the estimated effects from implementation of IFRS 16.
2019 MultiClient cash investments are expected to be approximately $250 million.
More than 50% of 2019 active 3D vessel time is expected to be allocated to MultiClient acquisition.
Capital expenditure for 2019 is expected to be approximately $85 million, which includes the reactivation of Ramform Vanguard.
The order book totaled $163 million at December 31, 2018 (including $59 million relating to MultiClient). The order book was $144 million at September 30, 2018 and $135 million at December 31, 2017.
*The 2018 financial target of being cash flow positive after debt servicing is measured as Segment revenues less: gross cash costs, capital expenditures (as reported), taxes and interest paid, and scheduled repayment of debt.
|Consolidated Key Financial Figures
(In USD millions, except per share data)
| Quarter ended
|Profit and loss numbers Segment Reporting*|
|Segment EBIT ex. Impairment and other charges, net||47.9||(24.5)||36.3||(147.1)|
|Profit and loss numbers As Reported under IFRS 15:|
|Net financial items||(31.1)||(32.3)||(87.3)||(84.5)|
|Income (loss) before income tax expense||(4.8)||(191.5)||(47.9)||(468.1)|
|Income tax expense||(18.7)||(3.3)||(40.0)||(55.2)|
|Net income (loss) to equity holders||(23.5)||(194.8)||(87.9)||(523.4)|
|Basic earnings per share ($ per share)||(0.07)||(0.58)||(0.26)||(1.55)|
|Other key numbers As Reported:|
|Net cash provided by operating activities||117.3||84.3||445.9||281.8|
|Cash Investment in MultiClient library||40.2||54.0||277.1||213.4|
|Capital expenditures (whether paid or not)||16.1||23.4||42.5||154.5|
|Cash and cash equivalents||74.5||47.3||74.5||47.3|
|Net interest bearing debt||1,112.8||1,139.4||1,112.8||1,139.4|
For the definition of Segment Reporting see Note 14 of the unaudited fourth quarter and preliminary full year 2018 results, released on January 31, 2019.
|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.