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PGS Climbs as Ship Utilization Boosts Profit Outlook: Oslo Mover

Petroleum Geo-Services ASA, Norway’s second-largest surveyor of underwater oil and gas fields, rose in Oslo as better-than-expected vessel utilization in the first quarter boosted earnings prospects.

The Lysaker-based company climbed 3.1 percent to 92.80 kroner as of 11:18 a.m. in the Norwegian capital, making it today’s third-biggest winner on the Oslo stock exchange’s OBX index of 25 most-traded stocks.

PGS, Norway’s biggest seismic surveyor after TGS Nopec Geophysical Co., reported vessel utilization of 92 percent in the three months to March 31, it said on April 5.

That’s higher than the 86 percent figure that Carnegie AB was expecting, the broker said by e-mail. Carnegie expects to increase its first-quarter forecast for earnings before interest, tax, depreciation and amortization to $192 million from $176 million, said Ole Martin Westgaard, an analyst.

“We continue to find the stock attractively valued trading at a 10 percent to 25 percent discount to historical price earnings multiples on both 2013 and 2014 estimates even in the absence of further improvement in contract day rates,” Westgaard wrote. PGS is expected to report first-quarter Ebitda of $198.4 million, according to the average of 12 analyst estimates compiled by Bloomberg.

Increased Rates

PGS is seeing increased day rates for its seismic vessels next year amid growing demand from explorers in nations led by Brazil, Chief Executive Officer Jon Erik Reinhardsen said April 4. “It’s too early to say if that’s sustainable,” he said.

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 and Polarcus Ltd. have bet on growing demand for the underwater maps they produce.

PGS 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 Inc. 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.

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