October 28, 2005: OSLO, NORWAY - Petroleum Geo-Services ASA ("PGS" or the "Company") (OSE and NYSE: PGS) announced today its unaudited third quarter 2005 results under U.S. GAAP.
Key figures as reported
Pro forma key figures[1] excluding Pertra
|
|
Quarter ended
September 30, |
Nine months ended
September 30, |
Year ended December 31, | ||
|
(In millions of dollars) |
2005
Unaudited |
2004
Unaudited |
2005
Unaudited |
2004
Unaudited |
2004
Unaudited |
|
Revenues |
$ 278.2 |
$ 252.3 |
$ 829.7 |
$ 721.1 |
$ 1,017.5 |
|
Operating profit (loss) |
56.6 |
22.5 |
146.3 |
46.4 |
9.5 |
|
Adjusted EBITDA (as defined) |
$ 97.4 |
$ 90.7 |
$ 282.2 |
$ 252.0 |
$ 347.0 |
Svein Rennemo, PGS Chief Executive Officer, commented:
"Current Global E&P activity has a strong upward momentum, which we see continuing in 2006. Our third quarter results reflect this trend, driven by higher world-wide exploration activity in particular.
PGS' Marine Geophysical contract performance improved significantly and our EBIT margin for marine streamer contract for the quarter was in excess of 25 percent. Demand for 3D contract seismic is currently at historical high levels and we expect a strong seismic market in 2006. PGS order backlog and current bidding levels support this expectation. Demand for multi-client data in the third quarter resulted in late sales in line with our previous expectations.
Our Onshore operations have successfully entered the North African market with two new contracts for a total of three crews in Libya, the first one starting in December. The Nigerian shallow water project commenced in October. Mobilization costs on these contracts negatively impacted the Onshore results in third quarter and for the year.
As previously communicated our Production segment was negatively affected in the quarter by planned maintenance, which significantly slowed down the Petrojarl Foinaven production. All maintenance projects have been successfully completed. We continue to believe that our total FPSO production in second half will be in line with first half 2005.
Q3 Highlights
PGS group
- Revenues of $278.2 million, up $25.9 million (10%) from Q3 2004 (pro forma excluding Pertra), driven by strong contract revenues and multi-client sales in Marine Geophysical
- Operating profit of $56.6 million, up $34.1 million (152%) from Q3 2004 (pro forma excluding Pertra)
- Net income of $22.4 million compared to net loss of $4.8 million in Q3 2004 (including Pertra)
- Net interest-bearing debt reduced by $92.0 million (11%) compared to June 30, 2005
- Q3 cash flow from operations of $116.8 million, reflecting reduced working capital compared to June 30, 2005
Marine Geophysical
- Revenues totaling $171.0 million, up $36.5 million (27%) from Q3 2004
- Multi-client late sales and pre-funding revenues up 34% and 172%, respectively, compared to Q3 2004
- Contract acquisition revenues of $107.6 million, up $15.2 million (16%) from Q3 2004, despite reduction in the portion of vessel capacity used for contract work
- Operating profit of $50.0 million, up $43.2 million from Q3 2004
- Strong increase in contract order backlog with September 30, 2005 contract acquisition order backlog of $283 million compared to $170 million at the end of 2004 and $160 million at June 30, 2005
- 4C operation to be converted to towed streamer operations, adding 2 vessels to towed streamer fleet at low conversion cost
Onshore
- Performance affected by delays in start up of Nigeria project into October and expected multi-client late sales delayed into Q4. Operating loss of $3.6 million
- Mobilization and other start-up costs had a negative EBIT impact of approximately $6 million in Q3
- Substantial improvement of order backlog at September 30, 2005 of $147 million compared to $66 million at the end of 2004
- Awarded two contracts in Libya, for a total of three seismic crews with start up Q4 2005 and Q1 2006. Total expected contract value of approximately $60 million
Production
- Revenues of $66.9 million, down $8.1 million from Q3 2004 mainly as a result of lower production levels
- Planned Q3 maintenance shut downs executed for all of the FPSOs for one to two weeks each
- Shut down on Petrojarl Foinaven for 11 days in August, and subsequent single process operation reduced revenues with an estimated $3 million for the quarter
- Operating profit of $6.6 million, down $15.2 million from Q3 2004 mainly due to lower revenues and higher maintenance costs
Outlook Full Year 2005
Marine Geophysical
- Marine 3D industry seismic fleet at full capacity utilization with streamer contract margins expected to further improve into 2006
- Full year 2005 multi-client late sales are expected to be at approximately 2004 levels. However, visibility of late sales by quarter is by nature low
- Increased multi-client amortization is expected in Q4 2005 as sales related amortization is forecasted to increase, and, as in Q4 2004, a material additional minimum amortization charge is expected in Q4
- Cost levels impacted by general cost increases, including fuel costs, as well as activity related costs and depreciation of U.S. dollar compared to 2004
- Accelerated upgrade of Nordic Explorer and Orient Explorer to solid 24 bit streamers increases forecasted capital expenditures in 2005 to around $60-65 million
Onshore
- Full year revenues and operating profit expected above 2004 levels
- Strong late sales expected in Q4 which is therefore likely to result in full year late sales in line with or higher than 2004 levels. However, visibility of late sales by quarter is by nature low
- Transition zone project in Nigeria started in October with positive revenue streams for Q4 through Q2 2006
- Continued strong activity in continental U.S.
- Gradual start up in Libya in Q4, with mobilization cost charged to earnings in Q4
Production
- Total oil production from the Company's four FPSOs for 2005 is expected to be significantly higher in Q4 than the average for Q1 to Q3. Production levels in second half of 2005 expected to be in line with first half
- Main increases in production levels come from Petrojarl Foinaven and Petrojarl Varg following maintenance on Foinaven and resolution of previous down hole issues on Varg
- Q4 operating costs are expected to be lower than Q2 and Q3 levels
In addition, $5-10 million (after tax) is expected from the 2005 portion of the profit sharing agreement relating to the sale of Pertra.
[1] Pro forma key figures as presented in the table show revenues, operating profit (loss) and Adjusted EBITDA as if Pertra had not been part of the consolidated PGS group of companies for any of the periods presented. Pertra was sold March 1, 2005.
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