PGS ASA

Q1 2020 Results

High Vessel Utilization - Challenging outlook

Takeaways Q1 2020

• Segment Revenues of $168.3 million, compared to $141.9 million in Q1 2019
• Segment EBITDA of $80.5 million, compared to $66.6 million in Q1 2019
• Segment EBIT (excluding impairments and other charges) loss of $15.8 million, compared to a loss of $29.3 million in Q1 2019
• Contract revenues of $85.4 million, compared to $44.3 million in Q1 2019
• Cash flow from operations of $176.0 million, compared to $119.4 million in Q1 2019 
• As reported revenues according to IFRS of $128.8 million and an EBIT loss of $80.2 million, after impairments of $51.4 million, compared to $129.3 million and EBIT loss of $42.5 million, respectively, in Q1 2019
• Successful completion of refinancing and equity raise
• Implementing cost and CAPEX reduction to address an uncertain market outlook

“High vessel utilization and good operational performance secured solid contract revenues in Q1 2020. Our MultiClient business entered the quarter with a solid project pipeline. However, it has been difficult to secure more commitments to ongoing projects and conclude MultiClient data library sales processes due to the Covid-19 pandemic and the oil price reduction. Further, MultiClient revenues were negatively impacted by delays of Government block awards, where specifically pre-funding for one of our ongoing MultiClient projects is contingent on final block ratification.

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 warm-stack one additional vessel in Q3. Going forward, further capacity reductions will be continuously evaluated, and we are prepared to react quickly.

We are reducing cost and capital expenditures significantly. In addition to the vessel adjustments, our cost reduction will comprise of a combination of temporary lay-offs, cancellation of 2020 bonus plans, salary freeze and numerous other cost initiatives as we adjust to a lower activity level. Our full year gross cash cost will reduce by at least $100 million, with further measures being considered depending on market development, compared to our initial 2020 guidance. Capital expenditures will be reduced by at least $30 million, with investments relating to items we consider strategically important or critical for business continuity.