Results mark a turning point for Getech

The group, spun out of the University of Leeds, sells complex geological and geophysical data to help oil companies including Shell, BP and Exxon Mobil decide where to sink new wells.

Its data spans the globe, ranging from the oil-rich west coast of Africa to the largely untapped Arctic circle.

After a tough recession, which saw customers slash budgets and defer spending on studies, chief executive Raymond Wolfson said recovery is now underway.

Leeds-based Getech narrowed pre-tax losses for the year to the end of July by almost two thirds to 228,497. Revenues were stable at 3.26m.

Getech experienced a tough first half but a better second half. It made 392,000 of losses between August and January, as trading was hampered by oil majors' constrained 2009 budgets. Getech also saw no significant December boost, usually a month when companies spend unused budgets.

However, the new year saw looser budgets and healthier sales of data and proprietary studies. Despite the impact of the volcanic ash cloud, which stranded staff, Getech made profits of 163,000 between February and July.

"It was a year of two halves," said Mr Wolfson. "I don't think things are totally back to normal but they're well on their way. We are seeing the budgets become more available."

Last month the company sealed a $1.1m contract with an unnamed national oil company, to model structures below the earth's surface in an unspecified area. This month it also signed a contract worth 230,000 to provide South American data.

The company has also resumed recruitment, appointing an experienced salesman. It sees good growth potential with national oil companies.

AIM-listed Getech said better trading allows it to consider commissioning its own data gathering, as well as buying it from third parties such as governments.

Mr Wolfson said this could involve working directly with flight contractors which collect gravity and magnetic data from the air.

"This is something we're looking at," said Mr Wolfson. "We're not going to fly the planes ourselves. It might happen, it might not. But we're talking to the right people."

The group is also investing in new models and ways of presenting data. One of the new products it is working on is a "global thematic model". Initially a tectonic model, based on the earth's plates, it will provide an overview of different regions around the world. Getech said it will reduce exploration risk and could save millions of pounds in unnecessary seismic and drilling costs.

It also plans to launch a new magnetic data study of Europe, as well as a study of the Haynesville Basin in the US.

"I think we're on the way now and look forward to reporting the next half year," said Mr Wolfson. "Getech has invested heavily over the last few years and we believe that from 2010/11 we will begin to see a return on those investments."

The group ended the year with gross cash of 847,000 and bank debt of about 977,000. It does not propose paying a dividend. Shares were unchanged yesterday at 14.5p.

Eric Burns, analyst at house brokers WH Ireland, said the results should mark a "turning point" for Getech. "It is our expectation that Getech will build on the recovery seen in the second half and therefore full-year 2011 should see a positive pre-tax profit number," he said.

"With arguably the worst behind it – and given the world-class expertise within the business – we raise our recommendation from market perform to speculative buy."

Earlier this week Getech's non-executive director Charles Tavner resigned and was replaced by Alison Fielding.

Growing from the earth

Getech has its roots in 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.