Petroleum Geo-Services Q3 better-than-expected but pretax hit by currency

Petroleum Geo-Services Q3 better-than-expected but pretax hit by currency

Petroleum Geo-Services ASA (PGS) posted third quarter sales and earnings at an operating level ahead of forecasts, driven by record demand for both its onshore and offshore operations, but pretax profit fell below expectations on currency fluctuations.

For the third quarter, the Norwegian seismic company posted an operating profit of 95.2 mln usd against a restated 44.8 mln last year, on sales of 326.1 mln usd against the previous 211.4 mln.

The consensus forecast of analysts polled by TDN Finans was for an operating profit of 91 mln usd on sales of 293 mln.

PGS has restated its previous figures following the demerger and flotation of Petrojarl ASA, which was completed on June 29.

For the third quarter, however, pretax profit came in at 73.5 mln usd, up from a restated 22.1 mln, but below the 79 mln forecast by analysts.

Pretax’s failure to meet expectations, according to PGS, was due to a foreign exchange loss of 12.3 mln usd, owing to weakening of the Norwegian Kroner to the US Dollar and most other currencies.

Specifically, PGS said the loss related to unrealised losses on forward contracts to purchase Norwegian Kroner and British Pounds.

In terms of divisions, PGS president and chief executive Svein Rennemo said the quarter had seen a further strengthening of both pricing and contractual terms for its Marine contract business, while the Onshore division produced its best ever quarterly result, with sales up 49 pct year-on-year to 254.3 mln usd.

The EBIT margin, he said, increased over the quarter to 37 pct, despite being negatively impacted by the one-month loss of production from Ramform Victory.

Despite this, PGS said it still expects Marine to see contract margins of 40 pct for the full year.

Looking ahead, Rennemo said PGS sees continued strong demand and prices for seismic services through 2007, and added that prices and margins in 2007 are expected to exceed this year.

In terms of future work, PGS said work is already being rolled from 2007 to 2008, and that the current order backlog stands at 767 mln usd.

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