TGS - Q1 update
(Thomson Reuters ONE) -
ASKER, NORWAY (13 April 2015) - Today, TGS announced a Cost Reduction Program
reflecting the deterioration of the market for seismic data seen in the first
quarter of 2015. Based on preliminary reporting from operating units, TGS
management now expects net revenues for the first quarter of 2015 to be
approximately USD 172 million, about 23% lower than revenues reported for the
first quarter of 2014.
Net revenues were lower than management`s expectations due to weaker late sales
from the data library in all geographic regions. Demand for seismic data has
significantly deteriorated over the first three months of 2015 and the outlook
for improvement in the market remains quite uncertain.
TGS is in constant communication with its customers and many of those energy
companies have not finalized their spending plans for 2015. From these
discussions and an assumption that the price of oil will remain under pressure,
TGS expects annual net revenues of approximately USD 630 million for 2015, down
from USD 750 million as originally communicated in January. Operating profit
(EBIT) is expected to be negatively affected by the lower revenues, however
higher amortization will be partly compensated by the effects of the Cost
Reduction Program.
The Cost Reduction Program will position the company for the more challenging
seismic market caused by the significant drop in oil price. A key element of
this program is a reduction of more than 10% of TGS' global workforce effective
from April. Restructuring charges of approximately USD 4 million will be booked
in Q2 as a result of this Program. The company expects annual cost savings of
approximately USD 10 million as a result of the Cost Reduction Program. In
addition to the reduction in headcount, Management has taken concrete actions to
recognize additional operational cost savings from the original 2015 budget.
Management will continue to review the Company's cost structure and if
necessary, take additional action to reduce cost if the market continues to
deteriorate.
Cash flow was strong in Q1 as cash holdings increased from USD 256 million at
year-end 2014 to USD 352 million as of 31 March 2015. In addition, the company
has an undrawn credit facility of USD 50 million resulting in a total liquidity
reserve of USD 402 million. The strong balance sheet and liquidity position
continue to provide dividend support going forward. The Board of Directors has
reviewed the Company's financial situation, including the Company's
distributable reserves according to the annual accounts for 2014. On this basis
and in accordance with the Company's resolved dividend policy, the Board of
Directors wishes to be authorized to distribute quarterly dividend payments from
Q1 2016. Reference is made to the Notice to the Annual General Meeting published
this morning for more information on the quarterly dividend proposal.
The full first quarter earnings release is scheduled for 23 April 2015. A
conference call will be held the same day in association with that release.
Company summary
TGS-NOPEC Geophysical Company (TGS) provides multi-client geoscience data to oil
and gas Exploration and Production companies worldwide. In addition to
extensive global geophysical and geological data libraries that include multi-
client seismic data, magnetic and gravity data, digital well logs, production
data and directional surveys, TGS also offers advanced processing and imaging
services, interpretation products and data integration solutions.
For more information visit TGS online at www.tgs.com.
Forward-looking statements and contact information
All statements in this press release other than statements of historical fact
are forward-looking statements, which are subject to a number of risks,
uncertainties and assumptions that are difficult to predict, and are based upon
assumptions as to future events that may not prove accurate. These factors
include TGS' reliance on a cyclical industry and principal customers, TGS'
ability to continue to expand markets for licensing of data, and TGS' ability to
acquire and process data products at costs commensurate with profitability.
Actual results may differ materially from those expected or projected in the
forward-looking statements. TGS undertakes no responsibility or obligation to
update or alter forward-looking statements for any reason.
TGS-NOPEC Geophysical Company ASA is listed on the Oslo Stock Exchange
(OSLO:TGS).
TGS sponsored American Depositary Shares trade on the U.S. over-the-counter
market under the symbol "TGSGY".
For additional information about this press release please contact:
Kristian Johansen
COO / Interim CFO
Tel: +47 47 60 33 34
Email: kristian.johansen(at)tgs.com
Will Ashby
Director, Finance Western Hemisphere & Investor Relations
Tel: +1 713 860 2184
Email: will.ashby(at)tgs.com
This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: TGS via GlobeNewswire
[HUG#1910394]
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