TGS ASA — Earnings Release 2018

May 9, 2018

Q1 2018 Earnings Release

CEO CFO 9 May 2018

Kristian Johansen Sven Børre Larsen

Forward-Looking Statements

All statements in this presentation other than statements of historical fact, are forward-looking statements, which are subject to a number of risks, uncertainties, and assumptions that are difficult to predict and are based upon assumptions as to future events that may not prove accurate. These factors include TGS' reliance on a cyclical industry and principal customers, TGS' ability to continue to expand markets for licensing of data, and TGS' ability to acquire and process data products at costs commensurate with profitability. Actual results may differ materially from those expected or projected in the forward-looking statements. TGS undertakes no responsibility or obligation to update or alter forward-looking statements for any reason.

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Q1 2018 Highlights

• Q1 net revenues of 135 MUSD, up 56% from 86 MUSD in Q1 2017
• Net late sales of 115 MUSD, up 67% from 69 MUSD Q1 2017
• Net pre-funding revenues of 18 MUSD were up 15% from 15 MUSD in Q1 2017, funding 57% of TGS' operational multi-client investments for the quarter
• Operational multi-client investments of 31 MUSD in addition to 3 MUSD from risk sharing arrangements
• Operating profit for the quarter was 25 MUSD compared to 2 MUSD in Q1 2017
• Free cash flow was 71 MUSD compared to 74 MUSD in Q1 2017
• Cash balance of 302 MUSD at 31 March 2018 in addition to undrawn 75 MUSD Revolving Credit Facility
• Quarterly dividend maintained at USD 0.20 per share, up 33% from Q1 2017
• Improved market conditions driven by higher oil price and improved E&P cash flow

Operational Highlights

Q1 2018 Operations

Q1 Activity – U.S. Gulf of Mexico

Fusion M-WAZ reimaging program

• M-WAZ reimaging program in collaboration with Schlumberger in Mississippi Canyon, Atwater Valley and Ewing bank areas
• ~27,000 km2 (1,166 OCS blocks ) 3D M-WAZ data previously acquired by TGS and Schlumberger between 2008 and 2012
• Reimaging is >95% complete with final data delivery mid-2018

Alonso 3D

• 6,172 km2 multi-client 3D located in the Atwater Valley and Lloyd Ridge protraction areas
• Broadband, high resolution data to delineate plays at multiple levels from Miocene to Jurassic, in a frontier area that is experiencing renewed interest from E&P companies
• Acquisition expected to complete in Q2 2018

Q1 Activity – Egypt

Egypt Red Sea 2D

• 10,000 km multi-client 2D project in collaboration with Schlumberger
• Advanced new acquisition and imaging techniques will provide better illumination of complex subsalt structures
• 15-year period of exclusive multi-client rights in a ~70,000 km2 open area in the Egyptian Red Sea
• Acquisition completed in Q1 2018

Q1 Activity – Brazil

Brazil Southern Basins SeaSeep

• 200,000 km2 multi-client multibeam and seep study in the Campos and Santos Basins, offshore Brazil
• Complements the extensive historical data library in this region
• Multibeam acquisition commenced in late Q1 with coring operations and geochemistry analysis starting in Q2
• Data will be available in Q4 2018 over the Round 16 licensing areas with final results expected to be available in late 2019

Q1 Activity – North America Land

PERMIAN - West Lindsey 3D

• 440 km2 high-resolution 3D multi-client project targeting multiple zones
• Acquisition completed in Q1 2018

PERMIAN – Sanderson 3D

• 464 km2 high-resolution 3D multi-client project TGS' third 3D Permian survey
• Acquisition to complete in Q2 2018

SCOOP/STACK – Hackberry Complex

• 777 km2 high-resolution 3D multi-client project in the Anadarko Basin
• Acquisition to complete in Q3 2018
• TGS' strong position in this play continues to grow with the two additional projects announced in 2018 (Canton 3D and Gloss Mountain 3D)

MONTNEY – Dawson 3D

• 70 km2 high-resolution 3D multi-client in British Columbia
• Acquisition completed in Q1 2018

Financials

Implementation of IFRS 15

• The accounting standard IFRS 15 regarding revenue recognition implemented from 1 January 2018
• Implications for TGS
• Recognition of revenues related to Multi-client projects postponed until projects are delivered to customers
• No amortization until completion of the project
• No impact on sales from the library of completed surveys
• Internal reporting
• TGS will continue to use the previous Percentage-of-Completion-method for internal segment and management reporting (referred to as Segment Reporting)
• Provides the best picture of the performance and value creation of the business
• External reporting
• Two sets of accounts: Segment Reporting and IFRS Reporting
• Main focus in external communication will be on Segment Reporting

Net Revenues

Segment Reporting

Prefunding revenues

Proprietary revenues

Net Revenues Breakdown

Segment Reporting

By Business Unit

Operating Expenses, EBIT, Free Cash Flow Segment Reporting

Operating costs1

1. Personnel costs and other operating expenses excluding restructuring charges and larger impairments of operating items

EBIT2

2. Earnings before interest and taxes excludng restructuring charges and larger impairments of operating items

Amortization and impairments

Free Cash Flow3

3. Cash flow from operations minus operational investments in multi-client projects

Multi-client Library

Segment Reporting

Operational investments and prefunding ratio

Investments and NBV by year of completion

NBV multi-client library

Net revenues and NBV by year of completion

Income Statement

Segment Reporting

(MUSD)	Q1 2018	Q1 2017	Change
Net operating revenues	134.8	86.2	56 %
Cost of goods sold	0.1	0.1	104 %
Amortization of multi-client library	83.6	61.8	35 %
Gross margin 38 %	51.0	24.3	110 %
Personnel cost	15.5	12.4	25 %
Other operational costs	8.3	6.9	21 %
Cost of stock options	0.0	0.1	-100 %
Depreciation	2.3	3.0	-25 %
Operating result 18 %	24.9	1.9	1208 %
Net financial items	-0.2	0.8	-126 %
Result before taxes 18 %	24.7	2.7	806 %
Tax cost 47 %	11.5	1.2	894 %
Net income 10 %	13.2	1.6	741 %
EPS (USD)	0.13	0.02	737 %
EPS fully diluted (USD)	0.13	0.02	734 %

Cash Flow Statement

(MUSD)	Q1 2018	Q1 2017	Change
Received payments	138.2	218.8	-37 %
Payments for operational expenses	-35.4	0.0	n/a
Paid taxes	-0.2	-6.2	-96 %
Net cash flow from operating activities	102.5	212.6	-52 %
Investment in tangible fixed assets	-2.7	-3.9	-31 %
Investments in multi-client library	-31.9	-110.3	-71 %
Investments through mergers and acquisitions	0.0	-3.3	-100 %
Interest income	0.6	0.4	59 %
Net Cash Flow from investing activities	-34.0	-117.2	-71 %
Net change in loans	0.0	0.0	n/a
Interest expense	0.0	0.0	125 %
Payment of dividends	-18.5	-16.9	9 %
Paid in equity	1.7	6.7	-74 %
Net cash flow from financing activities	-16.8	-10.2	65 %
Net change in cash and cash equivalents	51.8	85.2	-39 %

Balance Sheet

IFRS Reporting

(MUSD)	Q1 2018	Q1 2017	Change	Q4 2017
Goodwill	67.9	67.9	0 %	67.9
Multi-client library	839.7	819.9	2 %	799.0
Deferred tax asset	3.9	7.8	-50 %	4.4
Other non-current assets	29.1	41.6	-30 %	29.2
Total non-current assets	940.7	937.2	0 %	900.5
Cash and cash equivalents	301.7	248.1	22 %	249.9
Other current assets	255.8	219.4	17 %	273.6
Total current assets	557.5	467.5	19 %	523.6
TOTAL ASSETS	1,498.1	1,404.7	7 %	1,424.1
Total equity	1,124.0	1,162.4	-3 %	1,200.1
Deferredt taxes	9.5	41.7	-77 %	23.7
Non-current liabilities	5.0	8.1	-39 %	5.4
Total non-current liabilities	14.5	49.8	-71 %	29.1
Taxes payable, withheld payroll tax, social security	42.5	4.0	966 %	25.2
Other current liabilities	317.1	188.4	68 %	169.7
Total current liabilities	359.6	192.4	87 %	194.9
TOTAL EQUITY AND LIABILITIES	1,498.1	1,404.7	7 %	1,424.1

Dividends

calulated using the average of the quarterly payments

• Quarterly dividend of USD 0.20 per share to be paid in Q2 2018
• Ex-date 16 May 2018
• Payment date 30 May 2018
• TGS aims to pay a cash dividend that is in line with its long-term underlying cash flow
• Ambition to keep a stable quarterly dividend through the year
• Actual quarterly dividend level paid will be subject to continuous evaluation of market outlook, cash flow expectations and balance sheet development

Outlook

Fundamentals improving

Boost to E&P Cash flow

Seismic spending on a growing trend

1. TGS, CGG, SLB, PGS, ION, PLCS, Seitel, SPU. For Q1 2018 companies that have not yet reported (CGG, PLCS, Seitel) are included with same y/y growth rate as the weighted avr. of the rest of the group

Visibility still low and market expected to remain volatile in near-term

• U.S Inventories below five-year average
• OPEC / Russia quota compliance good
• Venezuela production continues to decline
• Pipeline constraints in Permian (new capacity onstream in mid-2019)
• U.S. withdrawal from Iran Nuclear deal
• Negative impact from potential U.S / China tariffs
• U.S Unconventional growth accelerating
• OPEC / Russia quota due to expire at end 2018

Backlog

Historical Backlog (MUSD) 2014 - 2018

2018 Projects Schedule*

EUR AMEAP NSA

		Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
	Dong Fang Kan Tan 1		Egypt (Red Sea JV)
D 2	Fugro Brasilis				Brazil (Multibeam)							(Brazil Multibeam)
	Fugro Searcher				Brazil (Multibeam)
	TDI Brooks Proteus								Brazil (Coring)

	Polarcus Asima	U.S. GOM (Alonso)
D 3	Polarcus Adira	Norwegian Sea (Atlantic Margin)
	Polar Duchess	Norwegian Sea (Atlantic Margin)

d n a L	Permian Crew	West Lindsey	Sanderson
	SCOOP/STACK Crew			Hackberry Complex
	SCOOP/STACK Crew II					Canton
	SCOOP/STACK Crew III						Gloss Mountain
	Canada Crew		Dawson

*Acquisition schedule excludes Fusion M-WAZ Reprocessing, other processing projects and GPS investments

License Round Activity and TGS Positioning

• Central & Western GOM Mar & Aug (2017-22 Plan)
• Newfoundland Labrador Jeanne d'Arc & E. Newfoundland, Nov 2018 (bids due)
• Nova Scotia Dec 2018 (3-Year Rolling Plan)
• Canada Onshore at least monthly
• Brazil 4th Production Sharing Round Jun 2018 (bids due)
• Brazil 16th Round -2019 (planned)
• Mexico Round 3.2 (onshore) Jul 2018 (bids due)
• Mexico 3.3 (unconventional) Sep 2018 (bids due)
• Mexico Round 4 2019 (planned)

Africa, Middle East, Asia Pacific

• Sierra Leone 4th Round Jun 2018 (bids due)
• Australia 2018 Area H2 2018 (announcement expected)
• Indonesia 2018 Round Apr & Jun 2018 (bids due)

Europe / Russia

• Norway APA Q2 2018 (announcement expected)
• Norway 24th Round before Summer 2018 (awards)
• UK 31st Round H1 2018 (announcement expected)
• Greenland Dec 2018 (bids due)

Q1 18 Summary

• Strong Q1 18 performance
• Net revenues of 135 MUSD
• EBIT of 25 MUSD EBIT margin of 18%
• Free cash flow of 71 MUSD
• Cash balance of 302 MUSD in addition to undrawn 75 MUSD Revolving Credit Facility
• Quarterly dividend at USD 0.20 per share
• Improved market conditions driven by higher oil price and improved cash flow
• Seismic spending on a growing trend
• TGS will continue to pre-announcing quarterly segment revenues no later than the sixth trading day at the Oslo Stock Exchange after quarter close
• 2018 guidance unchanged:
• New multi-client investments of approximately USD 260 million
• Additional multi-client investments expected from sales of existing surveys with risk sharing arrangements
• Pre-funding of new multi-client investments expected to be approximately 45%-50%
• Amortization expected to be approximately USD 310 million

Appendix

Income Statement

IFRS Reporting

(MUSD)	Q1 2018	Q1 2017	Change
Net operating revenues	106.7	86.2	24 %
Cost of goods sold	0.1	0.1	104 %
Amortization of multi-client library	72.4	61.8	17 %
Gross margin 32 %	34.2	24.3	41 %
Personnel cost	15.5	12.4	25 %
Other operational costs	8.3	6.9	21 %
Cost of stock options	0.0	0.1	-100 %
Depreciation	2.3	3.0	-25 %
Operating result 8 %	8.1	1.9	324 %
Net financial items	-0.2	0.8	-125 %
Result before taxes 7 %	7.9	2.7	189 %
Tax cost 11 %	11.5	1.2	894 %
Net income -3 %	-3.6	1.6	-333 %
EPS (USD)	-0.04	0.02	-278 %
EPS fully diluted (USD)	-0.04	0.02	-276 %

Reconciliation Segment Reporting - IFRS

Q1 2018 Income Statement (MUSD)	Segment Reporting	IFRS Diff. Reporting
Net revenues	134.8	-28.0	106.7
Amortization and impairment of multi-client library	83.6	-11.2	72.4
Total operating expenses	83.6	-11.2	72.4
Net income	51.1	-16.8	34.3

	Segment		IFRS
Q1 2018 Balance sheet (MUSD)	Reporting	Diff.	Reporting
Multi-client library	749.7	90.0	839.7
Total non-current assets	749.7	90.0	839.7
Other equity	1,192.0	-71.7	1,120.3
Total equity	1,192.0	-71.7	1,120.3
Non-current liabilities
Deferred taxes	21.1	-11.6	9.5
Total non-current liabilities	21.1	-11.6	9.5
Accounts payable and debt to partners	83.6	-38.1	45.4
Taxes payable, withheld payroll tax, social security	46.3	-3.7	42.5
Other current liabilities	56.5	215.2	271.7
Total current liabilities	186.3	173.3	359.6

Thank you