PGS Announces Q4 & Preliminary Full Year 2021 Results

Source: 1/27/2022, Location: Europe

- Segment Revenues and Other Income of $590.0 million, compared to $595.9 million in 2020, which included $38.8 million of Covid-19 related government grants
- Segment EBITDA of $320.2 million, compared to $397.7 million in 2020, impacted by a significant change of activity mix with less MultiClient and more contract acquisition
- Segment EBIT loss (excluding impairments and other charges) of $54.6 million, compared to a profit of $12.2 million in 2020
- Cash flow from operations of $326.6 million, compared to $366.5 million in 2020
- Returning to positive net cash flow generation in 2021, with cash flow before financing activities (interest payments and debt service) of $154.7 million for the full year
- As Reported Revenues and Other Income according to IFRS of $703.8 million and an EBIT loss of $66.2 million, compared to $512.0 million and an EBIT loss of $188.0 million, respectively, in 2020
- Leveraging PGS’ integrated business model in a market trending towards more near-field exploration and 4D seismic
- Year over year order book improvement
- Established New Energy and made the first significant carbon capture and storage (CCS) specific MultiClient sales

“The overall seismic market was weaker in 2021 than in 2020 and our peers generally reported lower revenues. However, the market started to recover, and we delivered higher revenues compared to 2020, when adjusting for Covid-19 related government grants received in 2020. The recovery is primarily driven by more activity and improving prices in the contract market. We achieved a 42% increase in our contract revenues.

Our clients are increasingly focusing on proven hydrocarbon areas and extracting more resources from producing fields, which positively impacts demand for proprietary contract work. Development of the MultiClient market has been more mixed. Total industry MultiClient revenues and investments were down, compared to 2020. However, it is encouraging to report the highest MultiClient revenues in the industry. Our MultiClient pre-funding level was 105% and our late sales increased by more than 30%, compared to 2020.

To position for changing customer behavior, we have revised and updated our strategy. We will continue to develop our leading position in the near-field exploration and production (4D) seismic markets. Further, to position PGS for contribution in the ongoing energy transition we established our New Energy business early 2021. We have identified CCS, offshore wind and marine minerals as markets where we can use our expertise to solve industry challenges and build a significant business. We have already made several CCS specific MultiClient sales, and we are awarded two seismic acquisition surveys for important CCS projects in 2022. With our strategic adjustments we are improving our competitive position in a recovering seismic market.

The winter season has become more challenging than expected. However, going into the summer season the activity level and our booked position is healthy and we expect the market for contract work to continue improving.

We returned to generating positive net cash flow after debt service in 2021 and we achieved a cash flow before financing activities of $155 million for the full year 2021. The guided increase of gross cash cost and capital expenditures for 2022 reflects a higher planned activity level and we expect to continue to improve cash flow generation from revenue increase compared to 2021.

The seismic market recovery in 2021 was slower than assumed in the business plan we used for the debt rescheduling implemented to address the Covid-19 disruption in 2020. We will proactively address this during the coming months and quarters of 2022.” Rune Olav Pedersen, President and Chief Executive Officer

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