BusinessCompany NewsSeismic setback hits research companies

Seismic setback hits research companies

Geophysical research companies face writing off billions of pounds worth of assets in seismic data because it is proving difficult to sell it on as oil companies cut back on drilling.

Link: More pressure on Brown over oil taxes

Geophysics companies continuing to carry out field research accrue massive data libraries as balance sheet assets based on speculation they could sell them. Many companies have already begun writing-off seismic data. Experts forecast more to follow.

WesternGeco featured $1.18bn (£758,000) of data assets on its third-quarter balance sheet, and recently announced the closure of operations in the US and Canada and loss of 1,200 jobs worldwide. It employs 700 employees in the UK.

It said cutbacks were unrelated to valuations problems. But Bank of America Securities senior research analyst Jim Wicklund, said he expected ‘all’ geophysical companies to face further writedowns of data libraries. ‘It indicates a risk on the balance sheet,’ he said. ‘The industry is seeing sales decrease and companies are reducing capital expenditure.’

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