MARINE geophysical company PGS was hit by a 33 per cent decline in revenue in the fourth quarter, but revealed in its quarterly report that its net loss had dropped to US$156.1 million compared to US$334 million in the corresponding period of 2015.
The company’s net loss before tax was US$118.7 million, compared to US$357.1 million in the prior-year quarter.
The company recorded impairment charges, excluding impairment of MultiClient library, of US$12 million for the full year 2016 and US$7.8 million in the fourth quarter. This primarily related to adjustments to the expected schedule for returning cold-stacked vessels to operation.
Jon Erik Reinhardsen, PGS President and Chief Executive Officer, said: “As a result of low activity levels and continued excess supply of vessels, the marine contract market remained challenging through 2016.”
PGS’ revenues during the last quarter of 2016 decreased by US$75.2 million, or 33%, to US$154.1 million, compared to US$229.3 million in the corresponding period of 2015. Marine contract revenues slumped by 33% and MultiClient revenues reduced by 38%.
PGs said lower marine contract revenues in 4Q 2016, compared to 4Q 2015, correlated to low pricing for contract work, more nonchargeable vessel time and limited capacity allocated to marine contract activities.
MultiClient pre-funding revenues decreased US$47.1 million in 4Q 2016, or 48%, compared to 4Q 2015, due to less capacity used for MultiClient surveys and weaker sales from surveys in the processing phase.
MultiClient late sales revenues in 4Q 2016 decreased by US$15.1 million, or 22%, compared to 4Q 2015. MultiClient sales vary significantly between quarters and regions and the company said it had relatively greater success in realizing sales in 3Q than it had in 4Q.
Looking ahead, PGS said it expected the higher and more stable oil price and improved cash flow among clients, combined with an increasing constraint on available streamers in the industry, to benefit the marine 3D seismic market. PGS is bullish about the volume of marine 3D seismic increasing in 2017, partly driven by an expected increase of 4D streamer monitoring surveys and more MultiClient 3D projects.
PGS expects full year 2017 gross cash cost to be approximately US$700 million, primarily driven by more operated capacity and an expected increase in fuel prices, but partly offset by further cost reductions.
MultiClient cash investments are expected to be approximately US$275 million, with a pre-funding level of approximately 100%. Approximately 55% of the 2017 active 3D vessel time is expected to be allocated to MultiClient acquisition.
Capital expenditure is expected to be approximately US$150 million, of which approximately US$85 million relates to completion of the new build Ramform Hyperion, which is currently under construction at the shipyard Mitsubishi Heavy Industries Shipbuilding in Japan.
It is scheduled to be delivered in March 2017.
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