PGS raises cost-cutting as it sinks to wider loss

PGS has seen its Q1 2020 loss widened, mostly on impairments related to library and sale of non-current assets.

The Oslo-listed seismic player reported quarterly loss of $117.5 million, or 32 cents per share on revenues of close to $129 million, against loss of $65 million, or 19 cents per share on almost relatively flat revenues in the prior-year quarter.

The company booked impairment and loss on sale of non-current assets and MC library of some $95 million.

PGS secured order book of $217 million, down from $238 million compared to Q1 2019.

Rune Olav Pedersen, president and CEO of PGS, said:

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

“We are adjusting our vessel capacity to the lower demand by cold-stacking two vessels now in Q2, and we expect to warmstack one additional vessel in Q3.

“Going forward, further capacity reductions will be continuously evaluated, and we are prepared to react quickly.”

PGS expects significant reduction in demand for seismic services in 2020, and likely into 2021.

In addition to the vessel adjustments, PGS will temporary lay-off workers, cancel 2020 bonus plans, initiate salary freeze and also launch other cost initiatives.

PGS previously said it expects full year 2020 gross cash costs to be approximately $600 million.

However, it has now lowered that guidance by at least $100 million, with further measures taken into consideration.

The company now estimated 2020 multi-client cash investments to be $150-200 million.

Capex for 2020 should drop from $80 million to at least $50 million.

Also, approximately 50 per cent of 2020 active 3D vessel time should allocate to multi-client acquisition.