Ocean Seismic Firm PSG Q1 2014 Earnings Disappoint

Norwegian seismic surveyor Petroleum Geo-Services reported first-quarter earnings well below expectations on Friday, sending its shares down as much as 11 percent despite unchanged guidance.

PGS, which scans the ocean floor for oil and gas deposits, said its first quarter suffered because of low seasonal pricing, increased idle time, and low pre-funding for major work in the Gulf of Mexico.

The figures came as a surprise as rival TGS earlier reported strong first-quarter earnings, indicating that energy companies are still committing to exploration after months of cost cuts.

Oil majors sharply reduced their investment plans this year and seismic surveyors have been among the first hit as preparatory work for drilling is relatively easy to reduce quickly.

At 0720 GMT, PGS shares traded down 7.4 percent, underperforming a 0.4 percent fall in the European oil and gas index.

"We currently see a relatively stable pricing environment supported by low single digit growth on the demand side," Chief Executive Jon Erik Reinhardsen said. "The average pricing for 2014 will end up slightly below average pricing in 2013."

The firm said steady oil prices and declining oil rig rates buoy the market and it already has 80 percent of its capacity booked for 2014. It also operates some of the lowest-cost vessels in the industry, PGS added.

The firm still sees its full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) rising to $900-$950 million from last year's $829 million.

"First-quarter results were even weaker than expected, likely leading to a negative reaction today," Norne Securities said in a note to clients. "Further estimates may not change significantly, however, as the guidance is unchanged."

In the first quarter, EBITDA fell to $138.5 million from $202 million a year earlier, missing expectations for $159 million in a Reuters poll of analysts.

(By Balazs Koranyi and Henrik Stolen)