TGS Nopec Geophysical ASA climbed the most in three months in Oslo trading as RS Platou Markets AS advised investors to buy shares in Norway’s largest surveyor of underwater oil and gas fields after recent declines.
TGS, based in Asker near Oslo, gained as much as 3.5 percent, the most since April 2, and traded 3 percent higher at 182.2 kroner as of 12:55 p.m. That makes TGS the biggest gainer on the Oslo stock exchange’s OBX index today.
TGS, scheduled to release its second quarter results on Aug. 1, will report “strong late sales, partly offset by below year-average investment levels and pre-funding,” RS Platou analyst Goeran Andreassen said in an e-mail today. “We expect TGS to reiterate its full year guidance and consider the recent share price correction a buying opportunity.”
Shares in seismic surveyors, which use ships to search for petroleum reserves under the seabed, have rallied since mid-2010 as oil producers operating off Africa, Norway and South America increased spending on exploration. Those gains are now at risk as oil prices fail to top $100 a barrel, squeezing profits.
Shares in TGS and Petroleum Geo-Services ASA, Norway’s second-largest seismic surveyor, have slumped more than 20 percent since the start of April amid concerns that oil and gas producers may cut exploration spending as energy prices stagnate.
Growth in contract rates for seismic surveying will be 5 percent in 2014, ABG Sundal Collier said on June 5, reducing its estimate from 10 percent.
TGS will report “strong second quarter late sales of $158 million, partly driven by significant sale uplifts following the award of licenses” in the 22nd Norwegian licensing round, Andreassen said. “We reiterate buy, but reduce our target price to $40 from $45 on a combination of a slight reduction in estimates and higher risk premium.”
TGS is expected to report second quarter earnings before interest, tax, depreciation and amortisation of $202.7 million, according to the average of 14 analyst estimates compiled by Bloomberg. That compares with $162.9 million in the previous quarter and $183.1 million a year earlier, according to data compiled by Bloomberg.