TGS says seismic market will remain weak in 2016Company News // January 8, 2016
Weak conditions in the seismic market are expected to continue in 2016. As a result, TGS is planning for a lower level of activity, which results in the following guidance for 2016: TGS expects multi-client investments of approximately US$220 million; multi-client investments are expected to be prefunded 45-50 per cent.
"TGS' 2016 operational multi-client investments will be reduced by more than 50 per cent compared to 2015. This is partly a result of lower cost of acquiring seismic data as average vessel day rates will be substantially lower than in 2015. Furthermore, the activity level will be reduced as oil companies have become less willing to prefund new surveys," said Robert Hobbs, CEO, TGS.
"As a result of the weak market conditions there is higher uncertainty than usual with respect to late sales of seismic data. Late sales are normally heavily dependent on oil companies' E&P spending. This relationship will continue in 2016 and as a result, TGS expects late sales to move in line with or slightly better than general E&P spending trends. However, the significant reduction in investments combined with the effect from the cost cutting measures implemented last year should support positive cash flow development despite the challenging environment."