Difficult Q1 – Encouraging market prospects
Takeout Q1 2022
- Revenue and other income of $136.2 million, compared to $165.7 million in Q1 2021
- Increase in MultiClient contract and late sales revenue compared to Q1 2021
- MultiClient pre-funding revenue sharply reduced due to a low volume of MultiClient projects finalized and delivered to clients during the quarter
- EBITDA of $51.8 million, compared to $117.6 million in Q1 2021
- EBIT loss (excluding impairment and other charges) of $20.6 million, compared to a loss of $5.2 million in Q1 2021
- Operating cash flow of $63.4 million, compared to $88.6 million in Q1 2021
- Announcement of award of acquisition contracts for Northern Endurance and Northern Lights CCS projects
- Enhanced New Energy – gained access to the market leading P-cable system through Ocean Floor Geophysics, of which PGS is the major shareholder
- Received a letter of intent with deepC Store Limited to co-develop a commercial carbon storage project offshore Australia
“The contract market conditions for the second half of 2021 have been maintained and extended into the first quarter. However, contract employment volumes were low during the winter season, which negatively impacted the use of our We entered Q1 with three vessels inactive.One vessel started a contract in West Africa in February when activity levels did not allow the other two vessels to operate.
Our MultiClient Late Sales revenue in the first quarter increased 11% year-over-year, continuing our positive MultiClient Late Sales performance from 2021. New MultiClient data acquisition was limited to Project Sarawak in Malaysia, which we acquired jointly with TGS and Schlumberger. MultiClient’s pre-funding revenue was weak in the first quarter as we did not finalize or deliver any major projects during the quarter.
As we enter the summer season, we expect improved vessel utilization and the operation of our six active vessels from the start of the second quarter. We believe that the contract market will improve further this year. We are experiencing growing demand for our MultiClient data due to renewed interest in exploration among our customers, and we expect MultiClient late sales to increase in 2022, compared to 2021.
I am excited about the progress of our New Energy business. We obtained two acquisition contracts for the development of the Endurance and Northern Lights CCS projects. Additionally, we have gained access to the market leading P-cable system, which we believe will be valuable in offshore wind and other applications requiring ultra-high resolution, and have agreed with deepC Store Limited to co -develop a carbon storage project. off Australia.
We expect strong cash generation this year, but there is a risk that we may not generate enough cash to make our 2022 debt amortization payments while maintaining an adequate cash reserve. We work with our advisors to find the best possible solution to solve these problems.
Rune Olav Pedersen,
President and CEO
PGS expects global energy consumption to continue to rise over the longer term, with oil and gas remaining an important part of the energy mix as the global energy transition evolves. Offshore reserves will be vital for future energy supply and will support the demand for marine seismic services. With rising oil and gas prices, the seismic market is slowly recovering and the positive trend is expected to continue in 2022 due to increased investment by energy companies. Russia’s invasion of Ukraine has dramatically increased the overall focus on energy security and low investment in new oil and gas supplies, and further increased oil and gas prices and pressures investment in energy companies.
The seismic acquisition market should benefit from a significant reduction in the supply of vessels operated over several years. In 2022, we see growing demand for seismic acquisition services related to carbon capture and storage projects and currently expect to generate revenue in the range of $20-30 million related to our New Energy business.
For funding status and risk, see Note 11.
PGS expects gross cash costs for the year 2022 to be approximately $475 million.
MultiClient’s cash investments in 2022 are expected to be approximately $125 million.
Approximately 65% of active 3D vessel time in 2022 is expected to be allocated to contract work.
Capital expenditures for 2022 are expected to be approximately $60 million.
Backlog totaled $315 million as of March 31, 2022. As of December 31, 2021 and March 31, 2021, backlog was $348 million and $426 million, respectively. Backlog increased in April, following the end of the first quarter of 2022. Please note that the Company’s backlog is now presented on an IFRS 15 compliant basis. This is a change from backlog disclosed in previous financial reports. Reference is made to Note 1 and Note 10.
Consolidated key figures
Year ended December 31
|Profit and loss figures|
|Income and other income||136.2||165.7||703.8|
|EBIT ex. Impairment and other charges, net||(20.6)||(5.2)||(32.0)|
|Net financial items||(20.6)||(33.6)||(97.6)|
|Profit (loss) before income tax expense||(44.2)||(35.9)||(163.8)|
|income tax expense||(5.0)||(3.2)||(15.6)|
|Net profit (loss) to shareholders||(49.2)||(39.1)||(179.4)|
|Basic earnings per share ($ per share)||(0.12)||(0.10)||(0.45)|
|Other key figures|
|Net cash flow generated by operating activities||63.4||88.6||326.6|
|Investing cash in the MultiClient library||21.5||43.3||127.2|
|Capital expenditures (paid or unpaid)||18.9||6.2||33.4|
|Cash and cash equivalents||163.9||143.9||170.0|
|Interest-bearing net debt||943.7||967.8||936.4|
|Interest-bearing net debt, including lease liabilities following IFRS 16||1,050.2||1,116.8||1,051.3|
A full version of the first quarter 2022 results release and presentation can be downloaded from www.newsweb.no or www.pgs.com.
The Q1 2022 audiocast is accessible from this link:
You can also use the YouTube link to access the Q1 2022 audiocast:
|FOR MORE DETAILS CONTACT:|
|Bård Stenberg, Vice President IR and Communications
Mobile: +47 99 24 52 35
PGS ASA and its subsidiaries (“PGS” or “the Company”) is an integrated marine geophysics company, which operates globally. The PGS business supports the energy industry, including oil and gas, offshore renewable energies and carbon storage. The company’s headquarters are in Oslo, Norway, and the PGS stock is listed on the Oslo Stock Exchange. (OSE: PGS). For more information on PGS visit www.pgs.com.
The information in this document contains certain forward-looking statements that address the business, events or developments that the Company expects, projects, believes or anticipates that it will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and uncertainties. The Company is subject to a large number of risk factors, including but not limited to demand for seismic services, demand for data from our multi-client data library, attractiveness of our technology, unpredictable changes in government regulations affecting our markets and extreme weather conditions. For a more detailed description of other relevant risks factors we refer to our annual report for 2021 and the Q1 2022 Press release. Due to these and other risk factors, actual events and our actual results may differ materially from those indicated or implied by these forward-looking statements. The reservation is also made that inaccuracies or errors may occur in the information given above on actual status of the Company or its activities. Any reliance on the above information is at the risk of the reader, and PGS disclaims all liability everything and everything responsibility in this regard.
Publication of first quarter 2022 results
Presentation Q1 2022