13 November 2013, Oslo – – The offshore seismic oil exploration sector will continue to slow over the coming quarter with more idled vessels, and any recovery is unlikely before the second quarter, Norwegian seismic firm Dolphin said on Wednesday.
“Customers have suddenly stopped awarding contracts, controlling their budgets,” Dolphin CEO Atle Jacobsen said at an investor presentation. “They have moved some demand forward … and we think the market will normalise when we get into the second quarter of next year.”
Seismic explorers search for oil and gas deposits under the sea, bouncing seismic waves off rock from cables towed across the water.
Global energy companies are cutting back on investments to save cash after a decade-long boom in spending.
Analysts expect exploration expenditure could be flat or only slightly higher next year, hitting seismic firms – whose performance is an early indication of exploration appetite.
Jacobsen said he expected up to 10 mostly older and less advanced vessels to be idled by the first quarter and hoped for a rate improvement after steep falls. Analysts at Danske Bank estimate there will be 78 3D vessels, which produce three-dimensional images, on the market by the end of next year.
They said day rates would fall by 7 percent in 2014 as exploration spending grows by just 1 percent, well under the vessel supply increase.
Rates for the coming winter could drop as much as 10 to 15 percent, analysts at DNB Markets said, and could continue falling through 2015 as supply growth will outpace demand for several years.
Seismic shares have been among the worst performers in the oil sector with Dolphin down 12 percent over the past 12 months, underperforming a 3 percent rise in the European oil and gas index.
Shares in larger rival PGS are down 23 percent over the past year, while EMGS is down 23 percent and TGS is off 8 percent.