Dec. 21 (Bloomberg) -- Electromagnetic GeoServices ASA, a Norwegian oil and gas surveyor, declined in Oslo trading as a global framework agreement with Royal Dutch Shell Plc failed to alleviate investor concerns it has insufficient orders for 2013.
EMGS, based in Trondheim, fell as much as 4.5 percent to 12.70 kroner and traded 1.9 percent lower as of 3:20 p.m. in the Norwegian capital. Almost 1.4 million shares have been traded so far today, compared with a three-month daily average volume of 1.6 million.
The company signed a three-year agreement with Shell for the provision of 3D electromagnetic services around the world, the Norwegian company said in a statement today, without giving any financial details. The accord follows deals with Shell in Malaysia and Petroleo Brasileiro SA in Brazil for a total of $19 million during the past month.
“There are no commitments from Shell,” ABG Sundal Collier Holding ASA analyst John Olaisen said by phone from Oslo today. “There’s nothing to put in the backlog.”
EMGS, which uses electromagnetic technology to search for oil and gas under the seabed, fell the most in more than a year on Nov. 8 amid investor concerns that the company lacked contracts for next year. The company has a “thin backlog” equivalent to about seven months’ work and still needs more contracts, Olaisen said.
The agreement with Shell isn’t binding and doesn’t guarantee work on any specific projects, TDN Finans reported, citing Chief Executive Officer Roar Bekker. ABG, which has a buy recommendation and 18.53 kroner price estimate on EMGS, still regards the Shell deal as “very positive,” Olaisen said.
“It shows Shell is super-committed in the long-term,” he said. “When Shell, which is so big, does this, it can trigger others to use” the company’s technology, he said.
The Norwegian company’s method of mapping the seabed competes with the seismic technology employed by companies such as Schlumberger Ltd. and Petroleum Geo-Services ASA.
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