Marine Seismic - Current State and Outlook

The market of Marine Seismic has been a roller-coaster market for a long time, but the last the 5 years amplified this effect even more. There are various reasons for it, but high-cost base and uncertainty around exploration, in general, are perhaps the main ones. To give an idea of the magnitude of change - as of Oct 2020, there are around 20 active high-end seismic vessels operating worldwide, down from circa 140 in 2013/2014. This represents a whopping reduction of 75% in vessel count.

Where is the industry today and what to expect going forward? 

Here is the current market structure for Marine Seismic acquisition. It went through a series of M&As, bankruptcies and significant strategic changes. While SeaBird Exploration and Russian contractors SMNG could be called integrated players ( the former officer 2D only and the latter may have limited geographical reach), PGS is a clear leader in a truly integrated model. 

What is happing today in the market?

• According to Polarcus, current utilization globally is less than 50% (9 of 19 active global vessels working on projects). Yet, it is believed that this only includes vessels operated by Polarcus, PGS and Shearwater
• Companies report a significant reduction in demand in 2020 and potentially more vessels to be stacked in 2^nd quarter of 2020. Capacity is sought to be diminished by 20% by the year-end
• Highly competitive environment due to low utilization and limited project opportunities

What the near-term future holds?

• 2021 is uncertain, yet an uptick in activity is expected, most projects are postponed, not cancelled
• Many reports an improvement in leads and tender activity during Q3 2020, primarily for projects in 2021
• The vessel count and streamer capacity is likely to be reduced during the winter season, with the capacity increasing back towards summer 2021.
• Continues pressure on acquisition and day rates

Sources: companies reports and presentations, SCM Daleel estimates and analysis.