TGS Shares Fall after Q2 Sales Disappoint

Shares of the world's leading provider of geoscience data to oil companies TGS fell by more than 6 percent on Thursday, after disappointing sales in the second quarter.

 

TGS reported $108 million in quarterly revenues, 6 percent below consensus, and compared with $114 million in the second-quarter a year ago.

 

"Part of the problem was that TGS failed to sell more in Brazil, where PGS and CGG did well, or in Mexico, where it had data in the wrong place or it was simply too expensive," Iver Baatvik at ABN-AMRO bank said.

 

The so-called late sales of seismic data were down to $79 million from $84 million a year ago. Peers including Schlumberger (SLB), PGS and CGG all reported year-on-year growth in the second quarter. TGS typically collects commitments, defined as "pre-funding revenues", from one or more clients before launching seismic data acquisitions. Data licenses sold after the acquisition are called "late sales".

 

TGS Chief Executive Kristian Johansen told a call with analysts that the company had a plan how to increase its presence in Brazil, which has announced plans to hold a number of licensing rounds to expand acreage for oil exploration.

 

TGS shares fell more than 6 percent, and were down 5.4 percent at around 164 Norwegian crowns ($20.48) at 1527 GMT.

 

Net pre-funding revenue stood at $27 million in the second-quarter, covering about 46 percent of TGS's multi-client investment.

 

TGS does not own seismic vessels and outsources data acquisition, focusing on its in-house processing to help oil companies to pick the best spots to drill.

 

The company has kept its full-year investment guidance unchanged at $260 million, expected seismic acquisition activity to be historically high in the third-quarter as new surveys are launched off Canada and Norway, and onshore the U.S.

 

Johansen said he expected oil majors to increase spending on exploration and seismic acquisitions as their cash flows improved due to cost-cutting efforts, echoing the views of its peers.

 

However, he said oil companies had modest expectations for oil price growth of around $50-60 a barrel, meaning that pressure on supplier prices will remain.


($1 = 7.9099 Norwegian crowns)

(Reporting by Nerijus Adomaitis and Camilla Knudsen; editing by Susan Thomas)