Early morning on April 20, ION Geophysical Corp. (IO) announced being awarded a five-year contract from Brunei Shell Petroleum. Leading its shares on a bullish roll, the news caused IO to surge by 91.23% in regular trading. Soaring by over 135% at one point, the stock closed the session at $0.6980 a share. But as expected the rally was soon followed by corrections in the after hours. Thus, succumbing to corrections, the stock lost 5.57% in the session to reach a value of $0.6591 per share.
IO’s New Contract
Awarded by Brunei Shell Petroleum Co. (BSP), the 5-year contract is for a digital solution to manage Marine Logistics. Brunei Shell Petroleum is a joint venture between Shell and the Government of Brunei.
Leveraging the company’s MarlinTM software suite, the solution will encompass vessel monitoring and berth management along with visual reporting tools for material supply workflows. Furthermore, it will also digitize numerous manual processes while interfacing existing tools and helping BSP make informed decisions regarding its 70 vessels fleet over 200 offshore structures.
However, none of the financial details of the deal were revealed by any of the companies. Despite this, investors were cheering over the deal as there is a very real possibility of extension given that Brunei’s oil reserves have still a long way to go.
What Else is Happening?
While the deal did bring some major good news for the company, it has been struggling lately. After going through a long process of strategic alternatives evaluation, IO recently filed for Chapter 11 relief in the U.S. Bankruptcy Court in Texas. Additionally, the company also entered into a Restructuring Support Agreement in connection with the filing. Hence, the company will be restructuring almost $150 million in debt after its multi-month review failed to yield tangible results.
The cherry on top, the company is also in non-compliance with certain listing rules of the New York Stock Exchange.
Market and IO’s Future
The oil and gas industry has been facing high volatility and instability due to Russia’s invasion of Ukraine adding to its woes. Supply chain hurdles, price hikes, inflation, and geopolitical instability all have been playing their roles. On the other hand, the shift to renewable energy on top of diminishing natural resources is also a very real threat. But for now, the near future has much growth in the industry as it continues to shift towards technology.
IO’s future, on the other hand, depends fully on the results of its restructuring and financial position improvement. The latest deal has definitely brought a sigh of relief.