Thalassa shares soar after WGP receives letter of intent from Statoil

Shares in Thalassa, an AIM-listed holding company with a focus on marine seismic operations, soared on Wednesday after the company's subsidiary, WGP, received positive news on a seismic acquisition contract.

Thalassa reported that WGP received and executed a letter of intent with Statoil ASA to provide long-term seismic acquisition services for permanent reservoir monitoring of the Snorre and Grane oil fields in the Norwegian section of the North Sea.

Thalassa reported that the seismic acquisition contract would be for an initial fixed term until the end of 2017, with Statoil's option to extend by two further terms of two years each.

It said that the first survey is scheduled to start on October 1st 2013 over the Snorre field.

Thalassa reported that the total seismic acquisition contract value, excluding any extensions, is approximately $32m and up to approximately $65m if Statoil exercises the options to extend the contract by a further four years.

The letter of intent also covers Statoil's purchase of a bespoke dual portable modular source system (D-PMSS), which WGP shall maintain and operate throughout the duration of the acquisition contract. The value of this contract is approximately $19.8m and delivery of the system is anticipated to occur by October 1st 2013. It is anticipated that both contracts will be executed imminently.

Thalassa Chairman: Letter of intent by Staoil is "game changing development"Duncan Soukup, Chairman of Thalassa, said: "I am delighted by the award of this letter of intent by Statoil, which has been long in the offing and is truly a game changing development for Thalassa.

"The group developed and assembled its first portable modular source system in 2008 and entered into its first long term service contact with BP to provide a permanent monitoring solution of its Valhall field in 2009.

"These new proposed contracts with Statoil serve as a major validation from within the oil and gas industry of the group's solutions and, together with our recent wins in Ecuador, form the basis of an exciting new period of growth for our business."

Analyst view: WH Ireland maintains buy rating and increases share price targetJohn Cummins, an analyst at WH Ireland, commented: "We maintain our Buy recommendation and increase our share price target to 130p based on an FY 2013E PER of 12x."

"We have raised our two year earnings expectations by 31% and 52% respectively. For FY 2013E, this is driven by an 85% increase in our revenue forecast to $28.6m, with a gross margin in the year of 23.0% from our previously forecast 40.0%, this reduction driven by the lower margin equipment sales.

"In FY 2014E, we look for revenue of $20.6m, with the gross margin increasing to a more normal 37.0%, resulting in PBT of $3.0m. We believe these assumptions to be conservative, with scope for these to be raised further in due course should this momentum continue."

Thalassa's share price was up 130.56% to 166p at 12:58 on Wednesday.

MF