Norwegian seismic player, TGS, has announced a Cost Reduction Program reflecting the deterioration of the market for seismic data seen in the first quarter of 2015.

Based on preliminary reporting from operating units, TGS said it expects net revenues for the first quarter of 2015 to be approximately USD 172 million, about 23% lower than revenues reported for the first quarter of 2014.

The company’s net revenues were lower than expected due to weaker late sales from the data library in all geographic regions. Furthermore, TGS noted a significant slowdown in demand for seismic data over the first three months of 2015 and the outlook for improvement in the market remains quite uncertain.

TGS is in constant communication with its customers and many of those energy companies have not finalized their spending plans for 2015. From these discussions and an assumption that the price of oil will remain under pressure, TGS expects annual net revenues of approximately USD 630 million for 2015, down from USD 750 million as originally communicated in January. Operating profit (EBIT) is expected to be negatively affected by the lower revenues, however higher amortization will be partly compensated by the effects of the Cost Reduction Program.

According to TGS, the ‘Cost Reduction Program’ will position the company for the more challenging seismic market caused by the significant drop in oil price. A key element of this program is a reduction of more than 10% of TGS’ global workforce effective from April.

Restructuring charges of approximately USD 4 million will be booked in Q2 as a result of this Program. The company expects annual cost savings of approximately USD 10 million as a result of the Cost Reduction Program.

In addition to the reduction in headcount, TGS said it has taken concrete actions to recognize additional operational cost savings from the original 2015 budget.