INTERNATIONAL geophysical firms CGG and Seabird say that while there has been some positive signs for the petroleum sector following the improvement in the oil price in the first half of 2016 it has not been reflected in the exploration sector.
Releasing the company’s second quarter results, CGG’s CEO, Georges Malcor, said the company continues to focus on reigning in costs.\
“With the rise in crude oil prices during the first few months of the year, we can see early signs of a change in the sentiment of our clients, but this has not, for the time being, led to a recovery in exploration spending, which is still at a very low level,” Mr Malcor said.
“Within this context, the Group remains focused on its priorities of strong operational performance, delivering its Transformation Plan, tightly controlling costs and stringent cash management.
“During this quarter, GGR has seen a satisfactory level of activity with multi-client sales boosted by a high prefunding rate, and a good performance by Subsurface Imaging & Reservoir (SIR).
“Our Equipment activity continued to be strongly impacted by very low volumes. As announced in our Plan, the contribution from our Contractual Data Acquisition activity is decreasing, with our marine fleet being mainly focused on multi-client programmes.”
Mr Malcor said that by right-sizing and successfully implementing its Transformation Plan, strictly managing its costs and cash, CGG has been able to deliver positive free cash fow over the full half-year, afer non-recurring charges relating to the Transformation Plan.
“In a still uncertain market environment, we plan to continue optimising our external costs base and to reduce our annual capital expenditure by an additional 50 million dollars.
We confrm our aim of net debt below 2.4 billion dollars by the end of 2016.”
Commenting on its results, Seabird also noted that seismic demand remained weak in a challenging market.
The second quarter of 2016 was challenging with weak seismic market demand. Timing of a sustained market recovery is still highly uncertain.
The company reported that its utilisation of its seismic vessel fleet in the second quarter was down to was 82 per cent, as compared to 90.3 per cent in the first quarter. Contract surveys represented 74.9 per cent of vessel capacity compared to 90.3 per cent for the first quarter of 2016.
Technical downtime for the fleet was 5.8 per cent in Q2 2016, down from 6.8 per cent in Q1.
Multi-client surveys represented seven per cent of vessel utilisation in the quarter, compared to nil per cent in the previous quarter and the same figure in the same quarter last year. Multi-client revenues were US$0.8 million in the period, compared to nil in the previous quarter.
On a more positive front the company signed two new contracts during the quarter; one for source work in the North Sea and one 2D survey in the North West Europe region, representing approximately four vessel months in total.
The company was also able to reduce operational expenses were reduced during the second quarter relative to previous quarters as a result of ongoing cost cutting initiatives.