July 29, 2004: OSLO, NORWAY - Petroleum Geo-Services ASA ("PGS" or the "Company") (OSE: PGS; OTC: PGEOY) announced today its unaudited second quarter 2004 results under Norwegian generally accepted accounting principles ("Norwegian GAAP").
|
|
Quarter ended June 30, |
Six months ended June 30, |
Year ended | ||
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(In millions of dollars) |
2004
Unaudited |
2003
Unaudited |
2004
Unaudited |
2003
Unaudited |
December 31,
2003
Audited |
|
Revenue |
$ 279.2 |
$ 295.1 |
$ 529.9 |
$ 592.4 |
$ 1,120.7 |
|
Operating profit (loss) |
21.0 |
10.4 |
60.1 |
(169.3) |
(645.3) |
|
Net income (loss) |
(28.1) |
(51.8) |
(29.2) |
(289.4) |
(818.2) |
|
Adjusted EBITDA (A) |
100.6 |
124.8 |
198.6 |
261.2 |
479.1 |
|
Cash investment in multi-client (B) |
(10.6) |
(20.9) |
(25.8) |
(59.9) |
(91.5) |
|
Capital expenditures (C) |
(38.8) |
(16.3) |
(62.4) |
(26.5) |
(57.7) |
|
Cash Flow Post Investment
(Defined as A+B+C) |
$ 51.2 |
$ 87.6 |
$ 110.4 |
$ 174.7 |
$ 329.9 |
Svein Rennemo, PGS Chief Executive Officer, commented, "A mixed quarter. Clearly we did not meet our expectations for revenues and cash flow. A net loss is not acceptable to us, even if geophysical contract market prices were soft and operational disturbances were unusually high. Still, strong multi-client late sales, increase in geophysical order backlog at improved prices, and Pertra's successes were points of strength. And for 2004 we expect Cash Flow Post Investment to meet the $231 million forecasted in our Business Plan disclosed last year. Corrections and improvements for the coming quarters will build on repeating our record of high regularity and uptime, underlying cost improvements, capturing the upside in the Varg field and benefiting from improvement in geophysical order backlog and prices."
Q2 Highlights
Consolidated
* Q2 Revenues of $279.2 million, down $15.9 million (5%) compared to Q2 2003
* Q2 Adjusted EBITDA of $100.6 million, down $24.2 million (19%) from Q2 2003
* Q2 2004 Net loss of $28.1 million, reduced from a Net loss of $51.8 million in Q2 2003
* Decline in revenues and Adjusted EBITDA largely driven by:
o $35.9 million decrease in Marine Geophysical contract sales, partially offset by $30.3 million increase in multi-client late sales
o Shut down of the ocean bottom 2C crew in late 2003 (contract revenues of $11.6 million included in Q2 2003 numbers),
o $20.0 million increase in Pertra revenues for Q2 2004
o Lower multi-client investments, which reduced the Adjusted EBITDA as $10.3 million less cash operating costs were capitalized
* Cash Flow Post Investment, down $36.4 million (42%) from Q2 2003 primarily related to:
o Decline in Adjusted EBITDA, discussed above
o Increase in Q2 2004 capital expenditures of $22.5 million from Q2 2003 due to:
* Pertra drilling program
* Marine Geophysical streamer replacement program
* Upgrade of data processing equipment
Marine Geophysical
* Aggressive industry bidding for contract work through first part of Q2 2004 negatively affected pricing
* Improved order backlog going into second half of 2004
o Improved prices and contract terms
o Order backlog of $115 million compared to $65 million at the end of Q1
* Abnormal operational disturbances negatively affected contract revenues
* Multi-client sales improved despite less than expected sales from Brazilian library
* Positive cash-flow from multi-client library of $55 million in Q2 2004 versus $25 million in Q2 2003
Onshore
* Continued stable performance
* Increased activity in the U.S. market with full crew schedule for most of 2004
* Significant new opportunities in Eastern Hemisphere
* Order backlog going into second half of 2004 - $98 million
Production
* Lower production on Petrojarl Foinaven and Petrojarl I due to well and compressor maintenance and expected natural field production decline
* Improved average daily production expected for reminder of 2004, except for Petrojarl Foinaven 16 day planned maintenance shut down during Q3 2004
* Petrojarl Varg contract under mediation to reinstate tariff structure
Pertra
* Increased oil production at favorable prices
* Successful enhanced oil recovery drilling program on schedule
* Favorable outcome in Norwegian 18th Licensing Round
Outlook
* Marine Geophysical contract prices and terms are improving going into second half of 2004
* Continuation of contract market focus in geophysical
* Generally increased production for FPSO's, except Petrojarl Foinaven 16 day scheduled maintenance shut down in Q3 2004
* Expected to meet $231 million Cash Flow Post Investment forecasted in previously disclosed Business Plan due to numerous offsetting factors, including:
o Lower than expected Marine Geophysical results in first half of 2004
o Declining production on certain fields
o Pertra improvements
o Reduced Production capital expenditure, resulting from Varg contract prolongation
Webcast and Conference Call
Petroleum Geo-Services has scheduled a webcast and conference call for Thursday, July 29, 2004, at 3:30 p.m. Central European Time (9:30 a.m. Eastern Time) to review its second quarter 2004 financial results. Interested parties can listen to management's remarks while viewing a corresponding slide presentation, posted at PGS' web site, over the Internet.
Participants can listen to the conference call over the Internet by accessing PGS' web site, www.pgs.com, and logging on at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live web cast, an archive will be available shortly after the call.
Alternatively, to access the live broadcast of the conference call by telephone, please dial-in at the number provided below, corresponding to your location, and reference "PGS":
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Location |
Dial-In Number |
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Norway (Toll-Free): |
+47 8008 0119 |
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U.S. (Toll-Free): |
+1 888-428-4474 |
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Canada: |
+1 651-291-0900 |
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U.K. and Other: |
+47 2300 0400 |
A replay of the conference call will be available through Thursday, August 5, 2004 at +47 2276 9121. After dialing in, enter account number 1270, followed by the pound key (#); press 1, enter conference number 270, followed by the pound key (#); then press 1 to play.
The full report including tables can be downloaded from the following link:
