NORWEGIAN oilfield service firms Subsea 7 and Petroleum Geo-Services (PGS) both pointed to signs of a gradual recovery in their sector as they posted third-quarter results yesterday.
The companies also warned of continuing tough times ahead as a result of the global economic crisis and lower energy prices forcing oil and gas producers to slash investment.
With oil back to about $80 per barrel, service companies are expecting demand to rise in the medium to long term, however, their margins are under pressure from fierce competition and overcapacity in some market segments such as seismic work.
Subsea 7, whose base at Westhill, near Aberdeen, employs about 1,000 people and supports the company’s global activities, and PGS both revealed lower third-quarter operating profits.
Operating profits at Subsea 7 fell 21% year-on-year to £65.84million in the three months to September 30 but exceeded analyst expectations.
The firm, which specialises in seabed engineering and construction projects, said its North Sea business performed well during the period. It also benefited from “a number of significant contracts”, while it said orders had increased every month since April.
Pre-tax profits came in at £74.11million, against £60.34million a year ago.
Third-quarter revenue totalled £403.56million, against £383.73million previously.
Subsea 7 said: “The medium to long-term outlook continues to be positive,” but added that the short term remained challenging.
PGS, whose worldwide operations include an office in Aberdeen, saw a 70% fall in operating profits to £34.5million.
The firm, which helps to locate oil and gas reserves with seismic scans of the seabed, reported pre-tax income of £44.6million, against £96.3million a year earlier.
Revenue in the latest period was £254.2million, compared with £326.3million previously.
PGS chief executive Jon Erik Reinhardsen said bookings for the firm’s seismic vessels had increased every month since April and the dollar value of its order book had stabilised, but the seismic sector remained weak because of overcapacity.
The company has cancelled the building of two seismic ships and trimmed its forecast for full-year earnings before interest, tax depreciation and amortisation to £427.6million from an earlier view of up to £488.7million.
PGS said, however, it had registered strong vessel bookings with all capacity for 2009 already sold and substantial forward orders secured at acceptable margins.
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