TGS Climbs as Rising Seismic Library Sales Offset Spending Cuts
TGS Nopec Geophysical ASA (TGS), Norway’s largest surveyor of offshore oil and gas deposits, rose the most in 3 1/2 months in Oslo as sales of seismic data increased more than estimated, defying a slowdown in spending by explorers.
The Asker-based company gained as much as 8.4 percent, the most since Jan. 9, and traded 7.8 percent higher at 209.5 kroner as of 10:33 a.m. That’s the highest intraday level in almost a year. About 890,000 shares have been traded so far, 80 percent more than the average daily volume in the three last months.
First quarter net income rose 13 percent to $68 million, beating the $58.8 million average of 12 analyst estimates compiled by Bloomberg. Late sales, the sale of data once a survey has started, climbed 9 percent to $137 million from a year earlier. That’s a record for the first three months of a year, the company said.
TGS delivered “a strong first quarter above all expectations,” RS Platou Markets AS analyst Joergen Lande said in an e-mail. Late sales “were solid and multi-client investments slightly higher, coupled with very strong prefunding.”
Seismic surveyors earn money in the multi-client market, where they amass data that’s then offered to oil and gas explorers, and through specific contracts for one or several customers. These surveys can either be funded by clients or by TGS itself. Multi-client surveys accounted for 87 percent of TGS’s activity in the first quarter.
The company also maintained its targets for 2014 of investing $390 million to $460 million in its multi-client library and generating revenue of $870 million to $950 million. That’s even as oil and gas explorers cut spending plans amid rising costs and stagnating energy prices. Global investments by exploration and production companies are expected to grow by “mid-single digit percentages” this year, TGS said.
“Despite the near-term uncertainty, TGS believes the long-term future of its business and particularly the company’s focused asset-light multi-client model, is strong,” it said.
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