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.

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

Recommended

Three sustainable stocks that are doing well by doing good
Share tips

Three sustainable stocks that are doing well by doing good

Professional investor Peter Michaelis of the Liontrust Sustainable Investment Team picks three stocks to buy that are helping to create a cleaner, saf…
26 Jul 2021
Share tips of the week – 23 July
Share tips

Share tips of the week – 23 July

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
23 Jul 2021
Will Zoom’s $15bn purchase help it expand?
Tech stocks

Will Zoom’s $15bn purchase help it expand?

The videoconferencing platform became a household name during the pandemic, but it now needs new sources of growth. Alex Rankine reports
23 Jul 2021
Philip Morris goes “beyond nicotine”
Stocks and shares

Philip Morris goes “beyond nicotine”

US tobacco giant Philip Morris International has agreed to pay £1bn for British inhaler specialist Vectura.
23 Jul 2021

Most Popular

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Why the UK's 2.5% inflation is a big deal
Inflation

Why the UK's 2.5% inflation is a big deal

After years of inflation being a financial-assets problem, it is now an “ordinary things” problem too, says Merryn Somerset Webb. But central banks st…
16 Jul 2021
Commodity supercycle or not, here’s a metal that’ll still be in demand – tin
Industrial metals

Commodity supercycle or not, here’s a metal that’ll still be in demand – tin

Commodity prices may have come off the boil recently. But for tin, the only way is up. Dominic Frisby picks the best ways to invest.
7 Jul 2021