Data firm plots bright prospect

The Leeds-based company, which provides complex geological and geophysical data to help oil companies including Shell, BP and Exxon Mobil decide where to sink new wells, said budgets are being freed up as confidence returns to the sector.

The business endured a tough time during the recession, as companies slashed budgets and deferred spending on its studies.

But with the oil price stabilising between $70 and $80 per barrel, Getech is now seeing a "return towards normality" in customers' buying patterns. With most oil companies operating on calendar year-based budgets, early signs this year suggest companies are more focused on exploration.

"This year we are not getting the message that they are not allowed to buy data or studies," said Getech chief executive Raymond Wolfson. "We cannot tell if constraints have been removed fully, but if they are there, they have not hit us this year.

"If feels like we are getting back towards normality but we have only had three months."

For the six months to the end of January, Getech reported a pre-tax loss of 392,000, compared to a 187,000 profit a year earlier. However, this was a substantial improvement on the 815,000 loss it made between February and July last year. Revenues more than halved to 1.2m.

Mr Wolfson said he believes the trough has passed for Getech, and the second half of its financial year should deliver a much improved performance.

"There's still a certain amount of uncertainty but we have got a very good client visit programme over the next three months," said Mr Wolfson. "We are meeting people who expect that they will be able to spend money if they like our products."

Getech hopes to complete six new geological studies by the end of July. The first, the initial phase of the Equatorial Atlantic study, which will form part of a global series, was completed in February and has attracted "significant interest", including sales to four customers. "That's quite a hot area at the moment so we would expect to sell more of that," said Mr Wolfson.

The second phase of the Equatorial Atlantic study, which is due to complete imminently, has been pre-sold twice. The next study due to be completed is a South East Asia structure and tectonic study, which already has four clients under contract.The company also has studies that cover the Russian Arctic. Getech said it has a larger order book for its proprietary studies than in previous years.

The company bought US exploration firm Lisle Gravity in 2008, acquiring the largest commercially-available library of US gravity data. Yesterday it said this business returned a "notable" profit and was cash-generative.

Getech has recruited more staff to support Lisle's operations, as interest grows in domestic US unconventional gas reserves.

"In the short run, they have had a gap where they did not do as much as they would like but now they have got to start exploration and development to be ready for when the market picks up again," said Mr Wolfson.

The company does not propose paying an interim dividend.

Eric Burns, Leeds-based analyst at house brokers WH Ireland, predicted a full-year loss of 200,000, down from previous expectations of

break-even.

"While the second half revenue line is expected to benefit from six new studies coming on stream, we think it appropriate to take a more cautious view on the full-year outcome," he said. "The operational gearing effect means that profits should recover quite strongly."

HISTORY OF GROWTH

Getech was spun out of the University of Leeds's Department of Earth Sciences, now part of the School of Earth and Environment.

It started in 1986 when founder Derek Fairhead collected gravity data for Africa for nine oil companies.

The data was then computerised to complete Getech's first study, and it gradually gathered the data of 19 companies, all the while winning commissions to create new studies.

It opened an office in Houston, Texas in 1996, and a limited company was formed in 2000 when Getech spun out of the university. It floated on AIM in 2005, raising 3m.

Getech expanded in the United States in 2008 by buying Lisle Gravity Inc, a Colorado-based company.

Getech paid an initial $1.7m (1.2m) for Lisle's data, equipment and name. It raised 400,000 in a placing to help fund the purchase.