October 15, 2014: Oslo, Norway, Petroleum Geo-Services ASA ("PGS" or "the Company") has during Q3 experienced deteriorating market conditions, including a weakening of the oil price. The cautious spending behavior among oil companies continues to negatively impact bidding activity and pricing levels for marine contract work and makes utilization and vessel logistics more challenging. The general market uncertainty may further impact demand for MultiClient library data towards the end of the year.
Q3 Update
Based on preliminary numbers, the Company expects to report consolidated Q3 revenues of approximately $395 million; EBITDA of approximately $180 million and EBIT excluding impairment charges of approximately $75 million.
The Company expects to report impairment charges of approximately $20-25 million, in line with earlier announcement. The quarter is also impacted by a primarily non-cash exchange rate loss of approximately $8 million and exploration expenses in Azimuth Ltd. of approximately $8 million. The exchange rate loss relates to the stronger USD and primarily the effect on legal deposits in Brazilian Real. The stronger USD, which also increases the deferred tax expense in the quarter by approximately $7 million since most deferred tax assets are in Norwegian Kroner, has a positive impact on the Company's cost base going forward.
PGS Apollo started a five year classing in late Q3, which was previously planned for early 2015, reducing earnings capacity somewhat in Q3 and Q4.
Strong Cash Flow and Solid Balance Sheet
Q3 cash flow provided by operating activities is expected to be approximately $230 million, giving a cash flow after capital expenditures and before financing activities of approximately $75 million. A solid cash flow combined with a strong balance sheet means PGS is well positioned to handle the challenging market environment.
Well Positioned in a Challenging Market
Subsequent to Q3, PGS has received confirmation of pre-funding for the Triton GeoStreamer full azimuth MultiClient survey in the Gulf of Mexico. The Company has confirmed pre-funding for Q4 2014 of $60 million excluding Triton and PGS is confident that the total pre-funding revenues for Q4 will exceed $100 million.
Booking of Q4 3D capacity has increased from 70% in early September to now approximately 90%, with approximately 80% of active 3D capacity scheduled for Marine contract acquisition work. PGS marine contract revenues for the remainder of the year therefore carry less uncertainty. Q4 operational performance and MultiClient late sales remain as the main variables for the full year.
Guidance Update
Considering these factors PGS has revised its full year 2014 EBITDA guidance to be approximately $725 million.
The Company provides this information based on preliminary consolidated Q3 2014 numbers. The Company has not completed all review and control procedures relating to its quarterly reporting, and significant evaluations have not yet been concluded, including tax provisions. The estimates provided in this release are therefore subject to change and the Q3 2014 financial statements finally approved and released by the Company may deviate materially from the information herein.
A more complete review of financial performance and market perspectives will be provided at the issuance of the Company's Q3 2014 earnings release on October 23, 2014.
| FOR DETAILS, CONTACT: |
Bård Stenberg, VP Corporate Communications
Phone: +47 67 51 43 16
Mobile: +47 99 24 52 35
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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.
For more information on Petroleum Geo-Services visit www.pgs.com.
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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 2013. 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.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.