Petroleum Geo-Services ASA, the third-largest surveyor of underwater oil and gas fields, dropped the most in a month in Oslo after Goldman Sachs Group said lower crude prices and rising capacity will lead to weaker day-rates.
Shares of the Lysaker, Norway-based company lost as much as 2.6 percent, the most since Dec. 18, and were down 2.1 percent at 96.55 kroner as of 1:15 p.m. in the Norwegian capital, making it the biggest loser on the Bloomberg Europe Energy Index. More than 1.9 million shares have been traded so far today, compared with a three-month daily average volume of about 1.7 million.
“Marine contract pricing will be flat in 2014 and is at risk of falling in 2015, due to lower demand growth coinciding with new supply,” Michael Rae, an analyst at the investment bank, said in a note to clients dated yesterday. Large oil companies “will be more selective around investments, with discretionary capex such as seismic at risk.”
Oil and gas producers operating in the waters off Africa, Norway and South America have increased spending on exploration amid growing energy demand. With established fields maturing and new resources harder to find and develop, companies including PGS, TGS Nopec Geophysical Co. and Polarcus Ltd. have bet on growing demand for the underwater maps they produce.
A decline in oil prices next year will see offshore exploration plateau and demand for seismic services drop, said Goldman’s Rae. At the same time, supply of seismic capacity will increase with new-builds from established companies as well as new regional entrants, said Rae, who cut his recommendation on PGS to sell from buy.
PGS, the world’s biggest surveyor after CGGVeritas and Schlumberger Ltd., has 14 seismic vessels currently in operation and four more due for delivery during the next two years. Shares in the company have gained 31 percent during the last 12 months, giving it a market value of 21 billion kroner ($3.8 billion.)
The surveyor expects to report earnings before interest, tax, depreciation and amortization of $940 million to $980 million this year, it said on Dec. 18. Ebitda for 2012 will be less than $800 million, it said. PGS is scheduled to announce its fourth-quarter results on Feb. 14.
TGS Nopec, Norway’s second-largest seismic surveyor, traded 1 percent lower at 1:15 p.m. in Oslo, while Polarcus fell 1.7 and Electromagnetic Geoservices ASA, which also surveys oil and gas fields, dropped 0.6 percent.