Polarcus Ltd. (PLCS), a surveyor of underwater oil and gas fields, climbed in Oslo after RS Platou Markets AS said the recent share price decline on concerns about a lack of contracts and weak rates has been too severe.
The Dubai-based company rose as much as 4.4 percent, the most since Oct. 10, and traded 3.1 percent higher at 3.69 kroner as of 11:03 a.m. in the Norwegian capital. That makes Polarcus the best performer on the Oslo stock exchange’s OBX index of 25 most-traded stocks.
Polarcus, which operates eight seismic vessels, has dropped almost 45 percent since the start of the year on concerns about softer contract coverage and weaker day rates for 2014. The company’s fleet utilisation fell to 83 percent in the third quarter, down from 92 percent a year earlier, it said on Oct. 7.
“With the Western Geco lawsuit settled and a new covenant structure in place, we believe the recent share price drop has been too extreme,” Platou analysts Joergen Lande and Thomas Oerner said in a note today. “We reiterate buy.”
Polarcus said on Oct. 4 that it had settled a lawsuit with Schlumberger Ltd.’s WesternGeco unit related to steering marine seismic streamers and arrays, removing the risk of higher costs. It also agreed to changes to restrictions on its debt with lenders, it said on Sept. 27.
Polarcus, which is scheduled to announce its third-quarter results on Oct. 31, is expected to report net income of $22.2 million, according to the average of 11 analyst estimates compiled by Bloomberg. That’s up from $21.1 million a year ago.
With established oil and gas fields maturing and new resources harder to find and develop, Polarcus has joined Petroleum Geo-Services ASA (PGS) and TGS Nopec Geophysical ASA (TGS), Norway’s largest seismic companies, in betting on growing demand for the underwater maps it produces.
Polarcus trades at a price-earnings ratio of 3.44 for 2014, according to estimates compiled by Bloomberg. That compares with 7.04 for PGS and 8.61 for TGS.
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