Geocsience firm TGS is to cut staffing by a further 130, or 16%, after continuing to review its cost base amid the ongoing weak market conditions.
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Image from TGS. |
The firm says this will reduce operating costs by about US$ 13 million/yr from the beginning of 2016, and it is reducing the valuation of some of its its multi-client library.
"TGS has... chosen to adopt more prudent assumptions with regards to the length of the downturn in the evaluation of the multi-client library. These assumptions are influenced by recent statements made by large oil companies regarding reductions in exploration and production budgets not only for 2016 but also for 2017 and beyond. The revised assumptions will lead to total impairments for selected surveys of approximately US$150 million to be recognized in the Q4 2015 accounts."
The impaired surveys account for approximately 10% of the total number of surveys in the balance sheet.
The impaired surveys, all acquired during the peak of the market, with substantially higher cost levels than seen currently, cover projects in frontier areas, where demand deterioration has been greater than the general market demand trends, and projects in areas with greater political and regulatory risk, which typically have attracted lower customer interest in the current challenging market.
"Although the TGS library continues to perform well compared to the industry, we have chosen to take a cautious view when evaluating the net book values. The cost of shooting the same seismic today is dramatically lower than two to three years ago and this has of course played a role in our assessment," says Robert Hobbs, CEO of TGS.
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