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PGS Seeing Higher Fees for Vessels on Growing Brazil Demand

Petroleum Geo-Services ASA, Norway’s second-largest surveyor of underwater oil and gas fields, is seeing increased day rates for its seismic vessels next year amid growing demand from explorers in nations led by Brazil.

“What we have seen so far is that we have been able to increase prices for 2014 relative to 2013,” Chief Executive Officer Jon Erik Reinhardsen said at a presentation in Oslo today. “It’s too early to say if that’s sustainable.”

Oil and gas producers operating in the waters off Africa, Norway and South America have increased spending on exploration amid rising energy use. 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.

PGS, Norway’s biggest seismic surveyor after TGS in terms of market capitalisation, has 14 seismic vessels in operation and four more due for delivery during the next two years. Shares in the company dropped the most in a month on Jan. 24 after Goldman Sachs Group warned lower crude oil prices and increased seismic capacity could lead to a weakening of day rates.

“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 at the time. Large oil companies “will be more selective around investments, with discretionary capex such as seismic at risk,” he said.

Shares of Lysaker-based PGS gained as much as 3.4 percent to 95.2 kroner, the highest intraday level in a month, and closed 0.3 percent higher in Oslo. TGS fell 4 percent, Polarcus dropped 2.2 and Electromagnetic Geoservices ASA, which also surveys oil and gas fields, lost 2 percent.

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