OSLO, Norway, Oct. 24, 2007 (PRIME NEWSWIRE) -- Petroleum Geo-Services ASA ("PGS" or the "Company") today announced its unaudited third quarter 2007 results under IFRS.
* New record quarter: Operating profit of $167.4 million, up
77.2 million (86%) compared to Q3 2006. Revenues of $439.1
million, up $113.0 million (35%)
* Marine: Strong operating profit of $182.4 million in Q3 2007,
up $95.3 million (109%) from Q3 2006 mainly driven by improved
contract margins and increased multi-client revenue
* Onshore: Disappointing operating loss of $4.2 million in Q3
2007 compared to a profit of $11.1 million in Q3 2006,
negatively impacted by lower activity levels, poor weather and
crew relocation
* Strategic acquisitions completed: Roxicon, providing improved
coverage and technological resources for further developing
the Company's multi-client MegaSurvey products, acquired for
$9.4 million (net of cash assumed) in August. Applied
Geophysical Services, Inc. ("AGS"), providing expertise in
depth processing using proprietary beam migration technology,
purchased for $51 million in October
* Acquisition phase of Crystal multi-azimuth survey completed
two months ahead of plan: The acquisition phase of the Crystal
survey in the Gulf of Mexico was completed October 22, 2007.
Excellent client feedback on fast track processed data
* North Sea EM campaign: PGS has launched a North Sea campaign
to acquire offshore surveys with MTEM's electromagnetic
technology; seeing strong industry interest
* Strong cash flow generation: Q3 2007 cash flow from operations
of $215.1 million, $517.7 million year-to-date
Key figures (IFRS)
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Quarter ended Nine months ended Year ended
September 30, September 30, December 31,
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(In millions of 2007 2006 2007 2006 2006
dollars, except per Unaudited Unaudited Unaudited Unaudited Unaudited
share data)
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Revenues $ 439.1 $ 326.1 $ 1,147.4 $ 947.4 $ 1,308.4
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Operating profit/EBI 167.4 90.2 418.0 285.3 359.5
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Income before income 146.5 66.9 393.5 236.3 310.9
tax expense (benefit
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Net income to equity 242.5 190.0 424.2 307.4 394.7
holders
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Basic earnings per 1.38 1.06 2.39 1.71 2.19
share ($ per share)
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Diluted earnings per 1.37 1.06 2.39 1.71 2.19
share ($ per share)
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Adjusted EBITDA (as 251.3 162.7 635.0 441.5 614.3
defined)
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Net cash provided by 215.1 175.1 517.7 365.8 575.8
operating activities
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Cash investment in 67.0 40.5 203.4 74.2 120.7
multi-client library
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Capital expenditures 74.4 41.3 154.2 98.6 165.4
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Total assets (period 1,982.1 1,270.3 1,982.1 1,270.3 1,369.3
end)
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Cash and cash 118.0 101.2 118.0 101.2 124.0
equivalents (period
end)
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Net interest bearing $ 739.7 $ 266.7 $ 739.7 $ 266.7 $ 195.5
debt (period end)
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Svein Rennemo, PGS President and Chief Executive Officer, commented:
"I am extremely satisfied with our third quarter performance, with a continuation of excellent growth in profitability as well as the significant progress made in executing our strategy in multi-client investment and technology differentiation.
The strength in the seismic market maintained its momentum, and aided by a very strong fleet productivity level we achieved a record contract EBIT margin of 56%, boosted by strong North Sea performance. Our guidance remains in the range of between 50% and 55% for full year 2007. We completed the acquisition part of the Crystal Survey in the Gulf of Mexico, nearly two months ahead of schedule. This meant that the first data was ready for the GoM October lease sale and the demand and client feedback has been excellent. We are starting a new large WAZ study in the GoM.
Onshore had a weak quarter, impacted by project permitting and schedule issues in Libya and Peru as well as heavy rainfall impacting all of the U.S. operations. These issues have been resolved at quarter end and we expect Onshore to be back on track in the fourth quarter.
The demand for our Next Generation Streamer has surpassed all expectations. We already have firm contracts with oil majors paying for early tests and have already sold all the acquisition capacity planned for this technology next year.
The greatest proportion of new capacity is currently being brought to the market, by new and smaller players. So far these players have been exposed to severe delays, in part due to dramatically underestimating the challenges of converting from asset construction ventures into practical full scale operations. On the one hand this is not good for the reputation of the industry; On the other hand this development creates opportunity for the larger service companies with proven operational and technological capabilities and invites further industry consolidation down the line.
The market outlook remains strong, measured by the very high current bidding levels. Bidding and pricing levels indicate further rises from 2007 to 2008. We believe that 2008 will be a stronger year than 2007.
Q3 Highlights
PGS group
* Revenues of $439.1 million, up $113.0 million (35%) from Q3
2006
* Operating profit (EBIT) of $167.4 million, up $77.2 million
(86%) from Q3 2006
* Income before income tax expense (benefit) of $146.5 million,
up $79.6 million (119%) from Q3 2006
* MTEM operations, including North Sea campaign and amortization
of intangible assets included with a negative EBIT impact of
$6.7 million
* Recorded previously unrecognized deferred tax benefits
aggregating $150 million
* Net income to equity holders of $242.5 million, up $52.5
million (28%) from Q3 2006
* Cash flow from operations of $215.1 million, up $40.0 million
from Q3 2006
* Cash investments in multi-client library of $67.0 million, up
$26.5 million from Q3 2006
* Capital expenditures of $74.4 million, compared to $41.3
million in Q3 2006
* Net interest bearing debt of $739.7 million at September 30,
2007, up $256.5 million in Q3
* Dividend payments in Q3 of $302.4 million
Marine
* Total revenues of $386.6 million, up $132.3 million (52%) from
Q3 2006
* Operating margin for Marine contract seismic at an all time
high level at 56% compared to approximately 38% in Q3 2006
* Contract seismic revenues of $234.8 million, up $115.3 million
(96%) from Q3 2006. In Q3 2007, 72% of the active vessel time
was used to acquire contract seismic up from 60% in Q3 2006
* Multi-client revenues of $135.0 million, up $14.8 million
(12%) from Q3 2006
* Operating profit of $182.4 million, up $95.3 million (109%)
from Q3 2006
* Capital expenditures of $66.1 million (includes $34.2 million
relating to new building projects), up $33.1 million compared
to Q3 2006
* Order backlog of $407 million at September 30, 2007 compared
to $438 million at June 30, 2007. The backlog number includes
$65 million of committed pre-funding on scheduled multi-client
projects. The Company is in the process of clarifying several
significant Letters of Intent and contract awards, not
included in the backlog as of end September, amounting to
approximately $300 million
Onshore
* Revenues of $52.8 million, down $18.2 million (26%) from Q3
2006
* Operating loss of $4.2 million, $15.3 million weaker than Q3
2006
* Order backlog of $92 million at September 30, 2007 compared to
$105 million at June 30, 2007
Outlook 2007
Marine
* Full year streamer contract EBIT margins are still expected to
be around 50-55%. Q4 contract EBIT margins will be adversely
impacted by disproportionately high yard and steaming time,
expected to total approximately 22% to 25% of total vessel
time
* Multi-client revenues are expected to be significantly higher
than 2006
* Multi-client investments are expected to be approximately $200
million
* Capital expenditure is expected to be approximately $200
million
Onshore
* Revenues and operating profit expected to end slightly below
2006 levels, due to a temporary weaker performance in Q3
* Multi-client investments are expected to be approximately $65
million
* Capital expenditure is expected to be approximately $30
million
Search for CEO successor started
Svein Rennemo, President and Chief Executive Officer, (aged 60) has informed the Board that he will retire from PGS in the second quarter 2008 in accordance with his contract, as previously described in the Company's Annual Report on form 20-F 2006. The Board has accordingly initiated a process for the appointment of a new Chief Executive.