UPDATE 2-Norway's TGS-Nopec defies seismic industry gloom with profit rise

Thu Apr 24, 2014 6:33am EDT

Related Topics

* Q1 EBIT $94 mln vs $82 mln seen in Reuters poll

* Seismic sector has been hit by oil firms cutting costs

* Shares up more than 7 percent (Adds analysts, share, broadens to whole seismic sector)

By Gwladys Fouche and Henrik Stolen

OSLO, April 24 (Reuters) - Strong sales to oil firms helped seismic surveyor TGS-Nopec report better-than-expected first quarter profits, indicating energy companies are still committing to exploration after months of cost cuts.

TGS-Nopec's results pushed its share price up by more than 7 percent and lifted shares across its sector.

Seismic surveyors, which map the seabed for oil and gas deposits, have been hit hard by lower exploration spending by energy companies which are seeking to protect margins and dividends after a decade-long spending boom.

Norwegian rival Petroleum Geo-Services warned in February its first-quarter results would be weaker due to lower demand from oil companies.

But it would appear the slowdown in exploration spending was not as brutal as expected, said analyst Christian Yggeseth at Arctic Securities, an Oslo-based brokerage.

"There is little in today's numbers from TGS indicating there is a full stop in the oil companies' desire to explore. We think this is positive for the sector as whole," said Yggeseth.

Smaller peer Dolphin Group told Reuters earlier this month it saw good momentum in the seismic market and that the visibility for the industry in general was improving.

Shares in TGS-Nopec were among the best performers on the Oslo bourse on Thursday. They were up 7.25 percent by 0819 GMT, outperforming Norway's benchmark index which was up 0.78 percent.

French peer CGG was up 4.22 percent, Norway's Dolphin Group rose 2.31 percent and Petroleum Geo-Services gained 2.88 percent.

CONFIDENCE

TGS-Nopec's first-quarter operating profit rose to $94 million from $89 million at the same time a year ago, ahead of expectations for $82 million in a Reuters poll of analysts.

The results were lifted by strong sales of pre-funding surveys - surveys that oil firms pay for in advance - suggesting confidence from oil companies in committing to exploration.

"This was good in all aspects, good pre-funding and good late sales. There are a lot of old data that are selling well," said John Olaisen, an analyst at ABG Sundal Collier, a brokerage based in Oslo.

TGS-Nopec said late sales in the quarter - sales of seismic data from its library collected in previous campaigns - were very strong.

"We had 137 million (dollars) of late sales ... so it's a growth of 9 percent compared to Q1 2013. In fact, this is the strongest late sales in any Q1 in the history of TGS," Chief Financial Officer Kristian Johansen said.

The firm said it expected global exploration and production (E&P) spending to increase by a mid-single digit percentage in 2014 - which would still be far behind the strong growth of recent years.

Since hitting a two-year low in December 2013, TGS-Nopec's shares have risen by 51 percent, outperforming a marginal rise in the Oslo benchmark index. (Editing by Pravin Char)

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