October 9, 2020: Oslo, Norway, based on a preliminary review, PGS expects to report Segment* revenues for Q3 2020 of approximately $115 million. Contract revenues ended at approximately $9 million. MultiClient pre-funding revenues were approximately $52 million, from a capitalized MultiClient cash investment of approximately $57 million. MultiClient late sales were approximately $26 million.
Q3 2020 revenues include approximately $23 million of government grants related to the Covid-19 pandemic. The government grants are recorded as Other revenues.
“A majority of our active vessel capacity was allocated to MultiClient in Q3. The market remains challenging, but we believe this quarter represents the trough of this Covid-19 driven downturn. We expect increasing revenues from vessel operations and MultiClient sales going forward.
During the quarter, we completed our reorganization to adapt to the challenging market environment. We are now down to an annual run rate gross cash cost of approximately $400 million, assuming five vessels in operation. The process to complete documentation with lenders on the agreement to extend maturities is progressing according to plan”, says President & CEO Rune Olav Pedersen.
PGS routinely releases information about 3D vessel utilization after the end of each quarter.
Summary of vessel utilization:
The Q3 2020 vessel statistics includes five vessels. All cold-stacked** vessels are excluded from the statistics. The comparative periods (Q3 2019 and Q2 2020) are based on eight vessels.
The Company provides this information based on a preliminary summary of Q3 2020 revenues. The Company has not completed its financial reporting and related consolidation, review and control procedures, including the final review of all sales against the established revenue recognition/cut-off criteria. The estimates provided in this release are therefore subject to change and the Q3 2020 financial statements finally approved and released by the Company may deviate from the information herein.
PGS will release its Q3 2020 financial statements on Thursday October 22, 2020, at approximately 8:00am Central European Summer Time (CEST). A corresponding presentation is scheduled for 09:00am CEST the same day.
*For the purpose of Segment reporting, MultiClient prefunding revenues are recognized on a percentage of completion basis, and the related amortization of MultiClient library is based upon the ratio of aggregate capitalized survey costs to forecasted sales. This differs from IFRS reporting which recognizes revenue from MultiClient prefunding agreements and related amortization at the “point in time” when the customer receives access to, or delivery of, the finished data. For further description of the principles applied, see details in the 2019 annual report.
**The term "cold-stacked" is used when a vessel is taken out of operation for an extended period of time. Costs are reduced to a minimum, with the vessel preserved for a long idle time, all or most in-sea seismic equipment removed from the vessel, and typically the Company does not have available crew to operate the vessel.
PGS ASA and its subsidiaries (“PGS” or "the Company") is a focused marine geophysical company that provides a broad range of seismic and reservoir services, including acquisition, imaging, interpretation, and field evaluation. The Company MultiClient data library is among the largest in the seismic industry, with modern 3D coverage in all significant offshore hydrocarbon provinces of the world. The Company operates on a worldwide basis with headquarters in Oslo, Norway and the PGS share is listed on the Oslo stock exchange (OSE: PGS). For more information on PGS visit www.pgs.com.
The information included herein contains certain forward-looking statements that address activities, events or developments that the Company expects, projects, believes or anticipates 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 the demand for seismic services, the demand for data from our multi-client data library, the attractiveness of our technology, unpredictable changes in governmental regulations affecting our markets and extreme weather conditions. For a further description of other relevant risk factors we refer to our Annual Report for 2019. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward-looking statements. The reservation is also made that inaccuracies or mistakes may occur in the information given above about current status of the Company or its business. Any reliance on the information above is at the risk of the reader, and PGS disclaims any and all liability in this respect.