Marine seismic industry in numbers after exploration capex slash

The low oil price has led energy companies to scale back near-term investment plans significantly, and 2020 will be very challenging for the marine seismic industry.

Adding COVID-19 pandemic and energy transition from fossil fuels to this scenario has made the situation even worse, forcing seismic players to adjust their business plans to better prepare themselves for this downturn.

Market analysts predict that seismic industry will take the biggest hit in the offshore oilfield services arena with revenues falling between 50 per cent and 80 per cent.

According to reports, seismic will decline to $12 billion in 2020 from $15 billion in 2019. It should continue slipping to $10 billion next year, only to bounce back to $11 billion in 2022.

To see the impact the downturn has until now had on this sector’s bottom line we will compare this and last year’s numbers of some of the companies we’ve followed in the past.

While we still wait on some marine seismic companies to release their second quarter results, those that have do not instil to much confidence.

Norwegian seismic player PGS has seen its revenues fall more than 50 percent in the second quarter of 2020 at $90 million, against $192 million in the prior-year quarter.

For the first six months of 2020 PGS generated revenues of $219 million, down from $328 million in 1H 2019.

Polarcus has slipped deeper into the red in Q2 2020 as revenues dropped close to 66 per cent compared to prior year.

The Oslo-listed company generated quarterly revenues of $22.1 million, down from revenues of $64.8 million same time last year.

Norwegian geophysical services company EMGS has seen its second-quarter revenues slip almost 50 per cent.

Revenues for the quarter fell at $7.5 million from $14.5 million in Q1 2019.

Revenues for the first half of 2020 amounted to $18.8 million, compared with $25.3 million for the first half of 2019.

Seabed seismic player Magseis Fairfield is yet to present its Q2 earnings.

However, during the Q1 2020, the company has seen a major revenue drop against the prior-year quarter, sinking from $120 million at $53 million.

Revenue was also down from Q4 2019 revenue of $74 million.

Another ocean bottom node seismic player Axxis Geo Solutions (AGS) is also still to deliver Q2 results.

In the first quarter of this year, AGS returned to profit as revenues hiked close to 83 per cent.

The Oslo-listed firm generated quarterly revenue of $45 million, versus approximately $25 million in the prior-year comparable period.

Nevertheless, just this week, AGS said it will reduce operations due to significant uncertainty in the market as a result of the COVID-19 crisis.

The company’s CEO Lee Parker also resigned this week, with Ronny Bøhn taking over from 10 August.

US-based seismic data and equipment firm ION Geophysical reported total net revenues of $22.7 million in the second quarter 2020, a 46 per cent decrease compared to $41.8 million one year ago.

Seismic data specialist TGS generated 37 per cent less in Q2 2020 and saw revenues drop from $105 million in the second quarter 2019 at $66 million.

During the first quarter this year, TGS also saw revenues down close to 48 per cent from proir-year comparable period.

PGS reported quarterly loss of $111.4 million, or 29 cents per share compared against loss of $49 million, or 14 cents per share same time last year.

The company also booked quarterly impairment and loss on sale of non-current assets and MC library of some $80 million.

It has also seen its first-half 2020 loss widened from $114 million in 1H 2019 at $229 million.

Polarcus reported second quarter 2020 loss of $20.7 million, versus loss of $0.6 million in Q2 2019.

For the first six months, Polarcus recognised net loss of $25 million on revenues of $77.4 million, compared to $4.7 million loss and revenues of $140 million in the prior-year comparable period.

EMGS booked Q2 2020 loss of $6.6 million or 5 cents, versus loss of $2 million in Q2 2019.

Magseis Fairfield has slightly widened its first quarter loss despite major revenue drop against the prior-year comparable period.

AGR recorded Q1 2020 profit of $7 million, bouncing back from loss of some $4 million same time last year.

ION’s net loss was $5.2 million, compared to a net loss of $8.6 million in the second quarter 2019.

TGS net loss amounted to $80 million in Q2 2020, compared to close to $2 million in Q2 2019.

Oslo-listed SeaBird has recognized net loss of $0.3 million for Q1 2020, against net loss of $0.4 million in the same period in 2019 and is yet to tell us about Q2.

SeaBird recorded revenues of $25.3 million in Q1, a 105 per cent increase compared to $12.3 million in Q1 2019.

E&P companies are reviewing and revising exploration and production investment portfolios. As a result, many tender processes and decisions have been deferred. This indicates a challenging market in the second half of 2020.

Tender activity significantly reduced during Q2 2020 due to the combined effects of a sharp decline in oil price and the global slow-down related to the COVID-19 pandemic.

E&P companies are expected to finalise their budgets for 2021 exploration and production investments during the second half of 2020. Sentiment during this period, related to oil price and COVID-19 restrictions, will be an important factor determining 2021 demand levels.

Despite the short-term uncertainty, seismic players believe that even when taking the most optimistic energy transition scenarios into account substantial amounts of new oil and gas production are required for meeting demand and compensating for decline.

It remains to be seen what the future holds for seismic industry. We could see companies consolidating or taking over each other’s businesses.

Just this Thursday, TGS made an offer to buy PGS’ data library for a cash consideration of $600 million.

The deal would secure PGS liquidity to repay the $135-million revolving credit facility due September 2020.

To remind, last year TGS snapped up Spectrum creating a global multi-client geophysical data provider.