PGS announces capacity adjustments, to lay-up its 3D vessels as a response measure to COVID-19
The corona virus pandemic and the disruption in the oil market present unprecedented challenges for the offshore services industry. PGS says it is doing its utmost to ensure the health and safety of employees, their families and other personnel, and to maintain uninterrupted operations. The Company has implemented preventive measures and contingency plans, and is managing all its activities in close dialogue with clients, authorities and other relevant stakeholders.
So far, PGS have been able to continue vessel operations without interruptions. Short-term, severe logistical challenges caused by travel restrictions and quarantine provisions impacting crew-changes have been resolved by cancelling all crew changes since March 18, with all crews continuing on a second full rotation. The extended crew periods will start coming to an end in the latter part of April, and the Company believes it will be able to find viable methods for crew rotations.
The low oil price will have a material negative impact on demand for seismic services and activity levels. The Company is implementing substantial cost and capital expenditure measures to meet an expected significant revenue reduction. Details relating to such measures will be provided in connection with the Q1 2020 earnings release on April 23, 2020. Meanwhile the following business update is provided:
To date PGS has not received contract cancellations. However, most processes to conclude contract negotiations have since early March been substantially delayed or resulted in postponement of projects;
- The Company has decided to cold-stack two of the eight currently operated 3D vessels early in Q2, after completion of current projects. Further capacity adjustments will be evaluated on an ongoing basis.
- PGS completed a successful refinancing earlier this year and currently has a substantial liquidity reserve. In order to maintain a strong liquidity position while experiencing uncertain market conditions, the Company believes that it may later in the year be prudent to seek extensions of the revolving credit facility (RCF) reduction scheduled for September and/or other scheduled debt amortization. The Company has drawn all of its RCF to hold its liquidity reserve in cash.
PGS 2020 guidance and outlook statements published at the capital markets day on January 30, 2020 is under review, and will be revised in connection with the first quarter results on April 23, 2020.
GS 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).