PGS Expects Fall in 2010 Core Earnings

16 December 2009 (Last Updated December 16th, 2009 18:30)

Seismic surveyor Norway's Petroleum Geo-Services (PGS) predicts a decline in earnings in 2010 to $450m compared with the $700m expected to be achieved for the full year 2009. The reason for the decline before interest, taxes, depreciation and amortisation (EBITDA), is attributed to the

Seismic surveyor Norway's Petroleum Geo-Services (PGS) predicts a decline in earnings in 2010 to $450m compared with the $700m expected to be achieved for the full year 2009.

The reason for the decline before interest, taxes, depreciation and amortisation (EBITDA), is attributed to the market's expected slow recuperation from low oil prices, resulting in delays in exploration spending.

The company's surveyor's capital expenditure in 2010 is expected to be $175m with a multi-client cash investment of $175m.

Capital expenditure for the full year 2009 is likely be at the low end of its $250m to $300m guidance range.

PGS CEO Jon Erik Reinhardsen told Bloomberg the decline in EBITDA was due to a backlog before the financial crisis hit.

"Next year, the company will see some early signs of improvement as the seismic market is expected to improve after oil rebounds," Reinhardsen said.

For the fourth quarter, the company predicts strong sales from its multi-client library of seismic data, but a 15-20% decline in profit margins on contract sales.

Reinhardsen said contract margins would pick up in late next year with more seismic vessels in full operation.