PGS Surges as Seismic Demand Boosts Earnings Outlook: Oslo Mover

Petroleum Geo-Services ASA, Norway’s second-largest surveyor of underwater oil and gas fields, jumped the most in a year in Oslo trading as growing demand from explorers and rising hire prices boosted earnings prospects.

PGS climbed as much as 6.1 percent, the biggest intraday gain since July 26, 2012, and the most among companies in the Bloomberg EMEA Oil and Gas Services Index. Trading volumes already exceeded the three-month daily average.

The seismic surveyor, Norway’s largest after TGS Nopec Geophysical Co., expects marine contract prices to be on average 10 percent to 15 percent higher this year than in 2012, it said today in a statement. That reflects stronger demand from oil and gas producers exploring in deep waters off Africa, South America and Norway as traditional fields go into decline.

PGS’s contract sales are “solid” and active tenders have “sharply recovered,” Thomas Oerner, an analyst at RS Platou AS, said in an e-mailed note. “We find qualitative support for our market view with continued strong market development through the year, laying the foundation for an even stronger 2014.”

PGS, which has 14 seismic vessels in operation and four due for delivery in the next two years, today reported second-quarter net income of $71.5 million, beating the $66.9 million average of 15 analyst estimates compiled by Bloomberg.

The company, based in Lysaker near Oslo, traded up 5.5 percent at 81.25 kroner as of 10:55 a.m. in the Norwegian capital. The shares have declined 15 percent this year as weaker oil prices sparked concerns that demand may wane.

The company today cut its full-year forecast for earnings before interest, tax, depreciation and amortization to $900 million to $950 million from as much as $980 million previously. That reflects lower-than-expected payments in advance for multi-client surveys, it said.

“Much of the guidance disappointment has been incorporated into the share price ahead of the numbers,” Oerner said.