Second Quarter 2019 Results
Solid Order Intake – Continued Market Improvement
Highlights Q2 2019
- Segment Revenues of $215.6 million, compared to $199.4 million in Q2 2018
- Segment EBITDA of $135.2 million, compared to $136.0 million in Q2 2018
- Segment EBIT of $17.7 million, compared to $13.6 million in Q2 2018
- Contract revenues of $94.4 million, compared to $29.7 million in Q2 2018
- Segment MultiClient pre-funding revenues of $66.8 million, with a corresponding pre-funding level of 102%, compared to $94.0 million and 116% in Q2 2018
- MultiClient late sales revenues of $45.6 million, compared to $68.7 million in Q2 2018
- Cash flow from operations of $108.1 million, compared to $121.7 million in Q2 2018
- Order book of $300 million, an increase of $62 million from Q1, and an increase of $113 million compared to Q2 2018
- As Reported revenues according to IFRS of $192.4 million and EBIT loss of $7.3 million, compared to $239.7 million and positive $30.5 million in Q2 2018
“Our order book increased by 26% in the second quarter. Pricing for recent contract awards is consistent with our earlier indication of more than 35% increase of 2019 prices compared to 2018 average.
Contract revenues of close to $100 million in the quarter benefitted from a strong price increase and good vessel productivity. I am pleased that we are back to making a solid profit and generating significant cash flow from our contract activities. Our MultiClient late sales did not benefit from any specific license rounds or transfer fees in the quarter, and were lower than normal. We expect late sales to pick up again in the second half of the year.
The seismic market continues to improve. The order book increase in the quarter is mainly driven by a higher volume of contract work. At the same time we are progressing on firming up MultiClient programs for the second half. We are now fully booked for the third quarter, and also fully booked for seven vessels in the fourth quarter, which is one additional vessel compared to the six vessels we operated last winter season.
In May we initiated a refinancing which was subsequently withdrawn due to a negative change in capital market conditions. We expect to generate positive cash flow and reduce net debt in 2019. Our existing capital markets debts still have 17 and 20 months to maturity and are at attractive terms. We expect to refinance these facilities in 2019.”
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 the activity currently benefitting the most from the improvement, driven by more 4D acquisition and generally higher demand for new proprietary 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 approximately $50 million reduction from the implementation of IFRS 16 in 2019. See Note 16 for a description of the effects from implementation of IFRS 16.
2019 MultiClient cash investments are expected to be approximately $225 million.
Approximately 50% of 2019 active 3D vessel time is currently expected to be allocated to MultiClient acquisition.
Capital expenditure for 2019 is expected to be approximately $70 million.
The order book totaled $300 million at June 30, 2019 (including $65 million relating to MultiClient)*. The order book was $238 million at March 31, 2019 and $187 million at June 30, 2018.
*The order book as of June 30, 2019, includes $27 million related to a service and support agreement in Japan up to the next annual renewal.
Consolidated Key Financial Figures
(In USD millions, except per share data)
Year to date
|Profit and loss numbers Segment Reporting|
|Segment EBIT ex. Impairment and other charges, net||17.7||13.6||(11.7)||(9.1)||36.3|
|Profit and loss numbers As Reported|
|Net financial items||(31.8)||(15.7)||(53.8)||(38.0)||(87.3)|
|Income (loss) before income tax expense||(39.1)||14.8||(103.7)||(14.7)||(47.9)|
|Income tax expense||(9.8)||(4.4)||(10.4)||(14.5)||(40.0)|
|Net income (loss) to equity holders||(48.9)||10.4||(114.1)||(29.2)||(87.9)|
|Basic earnings per share ($ per share)||(0.14)||0.03||(0.34)||(0.09)||(0.26)|
|Other key numbers As Reported:|
|Net cash provided by operating activities||108.1||121.7||227.6||195.1||445.9|
|Cash Investment in MultiClient library||65.7||81.3||127.8||135.0||277.1|
|Capital expenditures (whether paid or not)||19.2||8.3||30.7||12.3||42.5|
|Cash and cash equivalents||33.2||24.4||33.2||24.4||74.5|
|Net interest bearing debt*||1,035.7||1,145.3||1,035.7||1,145.3||1,109.6|
|Net interest bearing debt, including lease liabilities following IFRS 16*||1,256.2||1,256.2|
*Following implementation of IFRS 16, prior periods are not comparable to March 2019.
|FOR DETAILS, CONTACT:|
Bård Stenberg, SVP IR & Communication
Phone: +47 67 51 43 16
Mobile: +47 99 24 52 35
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 2018. 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.