Earnings Release • Oct 26, 2017
Earnings Release
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Clobal News
Malaysia's First
∰
Earnings Presentation
Titan-class Acquisition Platform 40 UUU sq. km Sileying hustralia
PGS Enhances the Ramform
Global News
| COLLECTION | |
|---|---|
| College |
Improves Imagi
PGS
A Clearer Image | www.pgs.com
EBIT** Cash Flow from Operations
*EBITDA, when used by the Company, means EBIT excluding Other charges, impairment and loss/gain on sale of long-term assets and depreciation and amortization. **Excluding impairments and Other charges.
Marine market leadership
28%* of 2016 revenues
Marine Contract delivers exclusive seismic surveys to oil and gas exploration and production companies
MultiClient
Diverse MultiClient library – Improving financial performance
62%* of 2016 revenues
MultiClient initiates and manages seismic surveys which PGS acquires, processes, markets and sells to multiple customers on a non-exclusive basis
Productivity leadership
Operations supports Marine Contract and MultiClient with vessel resources and manages fleet renewal strategies
Technology differentiation – Rapidly becoming at par with industry best
9%* of 2016 revenues
Imaging and Engineering processes seismic data acquired by PGS for its MultiClient library and for external clients on contract and manages research and development activities
Project Planning & Bidding Servicing MultiClient & Contract sales
Project Delivery One project execution team
Seismic Acquisition & Support Continue efficiency improvements
Geoscience & Engineering Differentiating technology development
Maintaining PGS' competitive advantages
RAMFORM Hyperion RAMFORM Tethys RAMFORM Atlas RAMFORM Titan
RAMFORM Sterling RAMFORM Sovereign PGS Apollo SANCO Swift
*Ramform Challenger, Ramform Explorer, Ramform Valiant, Ramform Vanguard, Ramform Viking and Sanco Sword
2018 gross cash cost expected to be below USD 600 million Gross cash cost reduction of at least USD 100 million from 2017:
Financials
Unaudited Third Quarter 2017 Results
| Consolidated Statement of Profit and Loss Summary | ||||||
|---|---|---|---|---|---|---|
| Q 3 |
Q 3 |
Nine months Nine months | Full year | |||
| USD million (except per share data) | 2017 | 2016 | 2017 | 2016 | 2016 | |
| Revenues | 207.6 | 224.1 | 602.9 | 610.2 | 764.3 | |
| EBITDA* | 108.6 | 112.7 | 251.3 | 260.2 | 313.3 | |
| Operating profit (loss) EBIT ex impairment and other charges, net | (30.4) | (5.4) | (122.6) | (71.9) | (137.5) | |
| Operating profit (loss) EBIT | (113.3) | (11.5) | (224.4) | (87.8) | (180.3) | |
| Net financial items | (22.8) | (12.7) | (52.2) | (56.1) | (82.6) | |
| Income (loss) before income tax expense | (136.1) | (24.2) | (276.6) | (143.9) | (262.8) | |
| Income tax expense | (53.7) | (4.8) | (51.9) | 6.2 | (31.2) | |
| Net income (loss) to equity holders | (189.9) | (29.0) | (328.6) | (137.7) | (293.9) | |
| EPS basic | (\$0.56) | (\$0.12) | (\$0.97) | (\$0.58) | (\$1.21) | |
| EBITDA margin* | 52.3 % | 50.3 % | 41.7 % | 43% | 41.0 % | |
| EBIT margin ex impairment and other charges, net | -14.6 % | -2.4 % | -20.3 % | -12% | -18.0 % |
*EBITDA, when used by the Company, means EBIT excluding Other charges, impairment and loss/gain on sale of long-term assets and depreciation and amortization.
The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited third quarter 2017 results, released on October 26, 2017.
• Pre-funding revenues were dominated by North America
• Late sales revenues were primarily generated in Europe
| Key Operational Numbers | |||||||
|---|---|---|---|---|---|---|---|
| 2017 | 2016 | ||||||
| USD million | Q3 | Q 2 |
Q1 | Q4 | Q 3 |
Q 2 |
Q 1 |
| Contract revenues | 43.5 | 95.9 | 61.4 | 29.3 | 54.2 | 69.9 | 59.2 |
| MultiClient Pre-funding | 101.8 | 50.2 | 39.7 | 50.9 | 84.3 | 47.2 | 59.9 |
| MultiClient Late sales | 47.8 | 77.4 | 39.3 | 52.4 | 63.2 | 46.0 | 65.3 |
| Imaging | 12.5 | 14.9 | 13.8 | 19.6 | 16.0 | 17.9 | 16.6 |
| Other | 2.0 | 2.1 | 0.6 | 1.9 | 6.4 | 2.1 | 2.1 |
| Total Revenues | 207.6 | 240.5 | 154.8 | 154.1 | 224.1 | 183.0 | 203.1 |
| Operating cost | (99.0) | (127.9) | (124.7) | (101.0) | (111.3) | (114.2) | (124.6) |
| EBITDA* | 108.6 | 112.5 | 30.1 | 53.1 | 112.7 | 68.8 | 78.6 |
| MultiClient amortization and impairment | (153.6) | (80.5) | (70.6) | (97.6) | (95.4) | (62.9) | (68.1) |
| Depreciation and amortization of long-term assets (excl. MC library) | (27.1) | (42.9) | (44.5) | (42.0) | (31.9) | (42.1) | (40.7) |
| Impairment and loss on sale of long-term assets (excl. MC library) | (28.5) | (9.9) | 0.0 | (7.8) | 0.0 | (4.2) | 0.0 |
| Other charges, net | (12.7) | 3.4 | (8.8) | 1.9 | 3.1 | (4.2) | (1.4) |
| EBIT | (113.3) | (17.4) | (93.7) | (92.4) | (11.5) | (44.6) | (31.6) |
| CAPEX, whether paid or not | (16.6) | (12.9) | (101.6) | (28.7) | (19.0) | (51.9) | (108.9) |
| Cash investment in MultiClient | (82.0) | (43.8) | (33.6) | (47.8) | (63.0) | (41.8) | (48.3) |
| Order book | 167 | 248 | 340 | 215 | 190 | 230 | 204 |
**EBITDA, when used by the Company, means EBIT excluding Other charges, impairment and loss/gain on sale of long-term assets and depreciation and amortization. The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited third quarter 2017 results released on October 26, 2017.
-19-
*Gross cash costs are defined as the sum of reported net operating expenses (excluding depreciation, amortization, impairments and Other charges) and the cash operating costs capitalized as investments in the MultiClient library as well as capitalized development costs.
| Q3 | Q3 | Nine months | Nine months | Full year | |
|---|---|---|---|---|---|
| USD million | 2017 | 2016 | 2017 | 2016 | 2016 |
| Cash provided by operating activities | 118.4 | 80.4 | 197.8 | 256.2 | 320.9 |
| Investment in MultiClient library | (82.0) | (63.0) | (159.4) | (153.1) | (201.0) |
| Capital expenditures | (9.3) | (10.9) | (134.0) | (192.3) | (218.2) |
| Other investing activities | (8.7) | (2.4) | 9.1 | (102.6) | (109.5) |
| Net cash flow before financing activities | 18.4 | 4.1 | (86.5) | (191.8) | (207.8) |
| Financing activities | (47.6) | 23.4 | 48.9 | 187.4 | 187.9 |
| Net increase (decr.) in cash and cash equiv. | (29.1) | 27.6 | (37.5) | (4.3) | (19.9) |
| Cash and cash equiv. at beginning of period | 53.3 | 49.7 | 61.7 | 81.6 | 81.6 |
| Cash and cash equiv. at end of period | 24.2 | 77.3 | 24.2 | 77.3 | 61.7 |
| September 30 | September 30 | December 31 | |
|---|---|---|---|
| USD million | 2017 | 2016 | 2016 |
| Total assets | 2,644.3 | 2,988.5 | 2,817.0 |
| MultiClient Library | 566.1 | 682.1 | 647.7 |
| Shareholders' equity | 1,077.1 | 1,285.7 | 1,359.4 |
| Cash and cash equivalents (unrestricted) | 24.2 | 77.3 | 61.7 |
| Restricted cash | 114.7 | 100.2 | 101.0 |
| Liquidity reserve | 224.2 | 417.3 | 271.7 |
| Gross interest bearing debt | 1,252.1 | 1,386.1 | 1,191.4 |
| Net interest bearing debt | 1,113.2 | 1,208.6 | 1,029.7 |
| Long-term Credit Lines and Interest Bearing Debt | Nominal Amount as of September 30, 2017 |
Total Credit Line |
Financial Covenants |
|---|---|---|---|
| USD 400.0 million Term Loan ("TLB"), Libor (minimum 0.75%) + 250 basis points, due 2021 |
USD 386.0 million | None, but incurrence test: total leverage ratio ≤ 3.00x* |
|
| Revolving credit facility ("RCF"), due 2020 Libor + margin of 325-625 bps (linked to TLR) + utilization fee |
USD 200.0 million | USD 400.0** million |
Maintenance covenant: total leverage ratio 5.25x Q3-17, 4.75x Q4-17, 4.25x Q1-18, thereafter reduced by 0.25x each quarter to 2.75x by Q3-19 |
| Japanese ECF, 12 year with semi-annual instalments. 50% fixed/ 50% floating interest rate |
USD 428.1 million | None, but incurrence test for loan 3&4: Total leverage ratio ≤ 3.00x and Interest coverage ratio ≥ 2.0x |
|
| December 2020 Senior Notes, coupon of 7.375% | USD 212.0 million | None, but incurrence test: Interest coverage ratio ≥ 2.0x* |
|
| December 2018 Senior Notes, coupon of 7.375% | USD 26.0 million | None |
PGS Covers Nordland Ridge in 2016
Clobal News ∰ Malaysia's First MultiClient 3D Sr
U sq. km d Australia
mnroves Ima
Enhances the Rami
Titan-class Acquisition Platform
Unaudited Third Quarter 2017 Results
A Clearer Image | www.pgs.com
– Of which ~USD 225 million to be capitalized as MultiClient cash investments
– Including new build capex of ~USD 89 million
Thank You – Questions?
The presentation, including all text, data, photographs, drawings and images (the "Content") belongs to Petroleum Geo-Services ASA, and/or its subsidiaries ("PGS") and may be protected by Norwegian, U.S., and international copyright, trademark, intellectual property and other laws. Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior written permission by PGS and applicable acknowledgements. In the event of authorized reproduction, no trademark, copyright or other notice shall be altered or removed. © 2015 Petroleum Geo-Services ASA. All Rights Reserved.
| Vessel | When | Expected Duration |
Type of Yard Stay |
|---|---|---|---|
| Ramform Sovereign |
October/November 2017 |
21 days | 10 year classing and major engine overhaul |
| Ramform Titan | Q1 2018 | 7 days | 5 year main class and technical yard |
-31- *Yard stays are subject to changes.
3 propellers, each with 2 motors - fully operational with 2 propellers.
2 engine rooms, each with 3 generators fully operational with 1 engine room.
Widening the weather window and extending the seasons in northern and southern hemispheres without compromising HSEQ.
Fuel Capacity
Providing flexibility and endurance.
$Space = Flexibility$
Towing & Handling
24 reel and streamer capacity and back
deck automation provides flexibility.
rapid deployment and safe retrieval
Three times larger than modern conventional vessels, the Titans offer
a highly efficient work environment
with ample space for equipment.
maintenance and accommodation.
kW
104m
Ramform Titan - Zero maritime downtime and only 2.7% seismic downtime to date. Total so.km acquired by Titan-class vessels is 89,712 sq. km
16 streamers (each 8.1 km) safely deployed in just 73 hours.
13.75 sq. km fan spread with 18 streamers (each 7.05 km) x 100 m separation (130 m at tail end).
Highest production 175 sq.km in a day (average for this survey = 139 sq. km/day).
Layout supports One Culture operations improving all aspects of HSEO.
Health Social zones, gym, stability -
rested crews perform better.
back-deck automation.
Ultra high capacity seismic vessels are more cost effective.
Titan-class vessels cover all the bases from highly efficient reconnaissance exploration surveys to the detailed resolution required for 4D production seismic.
Future Proof
days on each job and leaves Design - max S0x content of <2.5%. Reactive catalysts reduce NOX emissions by 90%
Superior platform to deploy the best dualsensor technology - 100% GeoStreamer. Equipped with streamer and source steering.
Quality
Large Spread
Complementary recordings facilitate deghosting by wavefield separation at all water depths.
Deghosting using dual-sensor measurements with their complementary ghost spectra eliminates frequency gaps, and provides access to separate wavefield components for advanced processes like PGS SWIM, FWI and Reflection Tomography.
Rich low frequency content reduces sidelobe artifacts, providing clearer reservoir details.
Impedance from
Oil charged reservoir
Water wet sands.
GeoStreame
Impedance
om well log
GeoStreamer prestack deghosting provides reliable attributes for better understanding of rock and fluid distribution. Improved attribute computations reduce uncertainty and enable more precise estimation of reserves.
Wavefield reconstruction enables high repeatability for both legacy surveys and future 4D monitoring independent of sea-state. This reveals more subtle production-related changes.
SUB-SALT Improved signal recovery and amplitude characterization.
SUB-BASALT Clearer sub-basalt imaging and intrabasalt layer definition.
CLASTICS Reliable reservoir properties without the need for well control.
CARBONATES Detailed mapping of internal structures and better porosity prediction.
INJECTITES Resolution of complicated geometries and identification of true geological impedance boundaries.
Experience that counts 450 OOO I acquired worldwide Aug 2016
Separated Wavefield Imaging (SWIM) is an innovative depth-imaging technology that uses both up- and down-going wavefields, recorded by GeoStreamer® dual hydrophone and motion sensors.
source results in the survey area having increased source sampling and improved angular diversity and illumination.
surveys in shallow water SWIM yields better sampled data in the angle domain. WIDE AZ IMUTH The extra subsurface
NARROW AZIMUTH TO WIDE TOW SWIM
enables the design and use of cost
effective acquisition geometries such
as super-wide tow. For narrow azimuth
illumination of sea-surface reflections combined with Wide Azimuth (WAZ) acquisition facilitates the imaging of salt flanks and other steeply dipping structures.
Turning the receiver spread into virtual sources vs and receiver arrays reduces source sampling in the crossline direction from the distance between sail lines to that between streamers. Using SWIM in shallow water fills in gaps in near-surface coverage successfully reducing the acquisition footprint (AF).
SWIM has been successfully applied to seabed data such as ocean bottom node and cable recordings. SWIM can increase the shallow image area of the seabed and the underlying sediments by up to 700%.
SWIM enables the generation $\sqrt{V}$ of detailed shallow overburden images that are a requirement for some data-driven 3D SRME multiple removal methods.
REDUCING DRILLING RISK Superior illumination of the overburden using SWIM provides highresolution images suitable for shallow hazard work, helping to identify drilling risks.
The unique combination of GeoStreamer® technology and Ramform® vessels delivers a premium imaging product to locate and derisk your prospect
REC
Tailored acquisition geometries make it easier to solve imaging challenges. Subsurface complexity and geophysical objectives determine the acquisition and imaging solutions to produce the best quality images in the most effective way.
$\ast$
Multi
Azimuth
(MAZ)
From single sail line to the ultimate full azimuth coverage. Target illumination increases with each additional pass and direction.
m
FM
and
seismic
· Improved 4D repeatability
· Infill management
Source Steering
· Efficient deployment & recovery
$-35-$
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