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TGS-Nopec Declines on U.S. Gulf of Mexico Oil Spill

TGS-Nopec Geophysical Co. ASA, the only seismic surveyor collecting data in the area of the U.S. Gulf of Mexico oil spill, fell in Oslo trading after saying the incident will affect the timing of a survey.

The shares fell 0.4 krone, or 0.4 percent, to 113.5 kroner today in Oslo, after falling 10.6 percent on April 30.

The spill will affect the timing and completion of TGS-Nopec’s wide azimuth survey in the area, the company said in a statement. It didn’t give a new timeframe for the survey, which was expected to be completed by mid-year. The crew has been moved to a nearby area until more information is available.

“This can have quite a big impact and can potentially affect their operations and earnings,” Kristian Diesen, an Oslo-based analyst at Pareto Securities AS who recommends buying the stock, said today. “They’re very exposed and their investments there are quite significant.”

TGS-Nopec gets about 40 percent of its sales from the Gulf of Mexico and 30 percent to 40 percent of this year’s investments have been allocated to the survey in the area, he said. “Their guidance can be at risk.”

Unprecedented Disaster

TGS in February forecast revenue of $560 million to $600 million this year and investments of $270 million to $300 million in its multi-client library. The company reports first-quarter results on May 6.

President Barack Obama said the oil spill, which followed an April 20 explosion on a drilling rig leased by BP Plc, may become a “potentially unprecedented” disaster. Officials have said it may exceed the 1989 Exxon Valdez spill in Alaska.

The short-term impact on TGS-Nopec, currently the only seismic surveyor in the area of the leak, should be “very limited,” according to John Olaisen, an analyst at Carnegie ASA in Oslo who has a “buy” rating.

It costs about $500,000 a day for TGS to move the crew in and out of the area, which takes two to three days each time, he said. TGS is also paying about $30 million to lease the seismic vessels for the next two months of the survey, although these vessels can be relocated elsewhere, recouping losses, he said.

“In the long-term, the question is whether exploration in the Gulf of Mexico will end or be reduced and whether indications of opening up new areas will be withdrawn,” he said. “I doubt there will be any significant negative effect on exploration in the Gulf of Mexico. They’re dependent on the oil.”

PGS Falls

The sell-off in TGS and Petroleum Geo-Services ASA, another Norwegian seismic surveyor, has been “overstated” given the U.S. dependence on oil and the weak economy, Paal Holdeoe Dahl, an analyst at First Securities in Oslo, wrote in a note, reiterating a “buy” rating on both companies.

Shares in Petroleum Geo, or PGS, fell 0.7 percent to 81.7 kroner after declining 8.5 percent on April 30.

PGS is completing a survey in the Gulf of Mexico that’s far away from the oil spill, spokesman Tore Langballe said by phone.

Seismic providers, which sell studies estimating the size of oil and gas deposits, saw demand fall last year as the global recession curbed energy use. So-called wide azimuth technology gathers seismic data from various directions.

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