PONTE VEDRA, Fla. — Geospatial imagery provider DigitalGlobe says the commercial market for satellite Earth imagery is growing faster than the U.S. government market and that the company remains sold out in certain regions despite its purchase, in January, of rival GeoEye and GeoEye’s satellites.
Longmont, Colo.-based DigitalGlobe said it is raising the orbit of the GeoEye-1 satellite, a move that will reduce the maximum precision of its images but broaden its field of view.
DigitalGlobe officials said the maneuver will increase the image-gathering capacity of their five-satellite fleet by about 5 percent.
GeoEye-1, launched in September 2008, has been flying at an altitude of about 681 kilometers and is capable of producing imagery with a ground sampling distance of 41 centimeters, meaning it can detect objects of that diameter or greater.
U.S. government rules prohibit the sale of imagery sharper than 50 centimeters. With the satellite no longer providing imagery under a U.S. National Geospatial-Intelligence Agency (NGA) contract, the satellite has been freed to focus on commercial-only customers, meaning the orbit raise should increase, not decrease, its revenue-generating capability.
GeoEye-1 is expected to continue operations for another five years or more, according to DigitalGlobe. In an Aug. 6 conference call with investors, DigitalGlobe officials said raising the orbit would have no appreciable effect on the satellite’s life expectancy.
It was GeoEye’s loss of a key NGA contract that ultimately made the company a target for DigitalGlobe, which has recently received confirmation that NGA has renewed the 10-year EnhancedView contract for a fourth year, through August 2014.
Under EnhancedView, DigitalGlobe receives $250 million per year from NGA if the company meets service milestones. The payment rises to $300 million per year starting in the contract’s fifth year, after the launch of the WorldView 3 satellite, now scheduled for mid-2014.
Reporting its financial results for the three months ending June 30, DigitalGlobe said the commercial market, which includes contracts with government agencies outside the United States, is growing faster than the U.S. government market.
Adding capacity by raising GeoEye-1’s orbit will better position the company to meet demand in regions where it is now sold out.
DigitalGlobe Chief Executive Jeffrey R. Tarr said during an Aug. 6 conference call that the company is “seeing pricing opportunities, especially in parts of the world where we are sold out — and we still are sold out in parts of the world — and that represents an opportunity to optimize our pricing where there’s a disequilibrium between supply and demand.”
GeoEye-1 will be able to deliver imagery at the 50-centimeter limit for commercial customers from its new orbit. The company declined to disclose the new orbit’s altitude.
When its purchase of GeoEye closed in January, DigitalGlobe took ownership of the GeoEye-2 high-resolution optical satellite, which is under construction. The satellite had been scheduled for launch in 2013.
DigitalGlobe had said it would place GeoEye-2 in storage for several years until it was needed, an example of the $100 million in annual synergies to be found in combining the two rival companies.
The company said it has already effectuated the work needed for 70 percent of those savings, much of which comes from maintaining, over time, a three-satellite fleet instead of the five satellites that DigitalGlobe and GeoEye maintained as separate entities.
In the conference call, DigitalGlobe Chief Financial Officer Yancey L. Spruill said the company has now decided to perform additional work on GeoEye-2 to give it unspecified enhancements. That work will delay the satellite’s completion until the end of this year, Spruill said.
In an Aug. 6 filing with the U.S. Securities and Exchange Commission, DigitalGlobe said “preliminary estimates are that the cost to store and maintain the satellite will likely be significant.” The company has tentatively forecast that GeoEye-2 will remain in storage for between two and five years.
