(Updates with CEO comment in eighth paragraph.)
Nov. 9 (Bloomberg) -- CGGVeritas, the world’s largest seismic surveyor of oil fields, surged to a two-month high after reporting a profit in the third quarter and strong demand for equipment.
Net income was $41 million compared with a loss of $33 million a year earlier, the company said today in a statement. That beat the $23 million average estimate of seven analysts surveyed by Bloomberg. Sales climbed 21 percent to $797 million.
The French seismic company said it is “confident” in achieving its objectives this year.
CGGVeritas rose as much as 11 percent to 18.10 euros, the highest intraday price since Sept. 1, before paring gains to trade up 90 cents at 17.15 euros at 9:48 a.m. in Paris. The shares are down 25 percent since the start of the year.
Rates for surveying vessels are likely to rise in the second half of this year as oil companies plan to spend more on exploration and production, CGGVeritas, which conducts seismic studies and sells equipment to estimate the size of oil and natural-gas deposits, has forecast. President Barack Obama’s administration yesterday announced plans for 15 offshore oil- lease sales from 2012 to 2017 in the Gulf of Mexico and off Alaska’s coast.
CGGVeritas’ “good set of results” combined with the U.S. offshore leasing plan is positive for the company, Bertrand Hodee, an analyst at Kepler Capital Markets, said in a note today. Kepler has a “buy” rating on the stock.
The company’s backlog at the end of the quarter fell to $1.24 billion compared with $1.31 billion the previous quarter.
CGGVeritas reported a group operating margin of 12 percent, compared with 4 percent a year earlier. The measure of profitability grew to 32 percent for its Sercel seismic equipment division from 30 percent a year earlier and was 9 percent for the service business from a negative 4 percent.
“We expect demand for seismic equipment to remain strong, activity to build globally in key basins and marine overcapacity to progressively be absorbed,” Chief Executive Officer Jean- Georges Malcor said in the statement. “Strong underlying oil and gas fundamentals” are expected to drive “high levels” of demand for seismic surveys.
The seismic company seeks to achieve a positive free cash flow this year and has forecast that a performance plan will help raise operating income by $75 million.
The French surveyor, created in 2006 when Massy, France- based Compagnie Generale de Geophysique SA bought Houston-based Veritas DGC Inc., has about 65 percent of the global market for seismic equipment and around a third of the market for services, executives have said.
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