AI assistant
TGS ASA Earnings Release 2023
3774_rns_2023-05-11_9a1891ec-1d64-4e13-9430-1fb4aaf8359b.pdf
Earnings Release
Open in viewerOpens in your device viewer
May 11, 2023
E A R N I N G S R E L E A S E
Q1 2023 Results
Kristian Johansen, CEO / Sven Børre Larsen, CFO O S L O , N O R W A Y
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 volatile market conditions, investment opportunities in new and existing markets, demand for licensing of data within the energy industry, operational challenges, and reliance on a cyclical industry and principal customers. 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.
Q 1 2 0 2 3
Financial Highlights
Total POC revenues of USD 229 million compared to USD 114 million in Q1 2022
- Late sales of USD 46 million in Q1 2023 vs. USD 76 million in Q1 2022
- POC Early sales of USD 98 million compared to USD 34 million in Q1 2022
- Acquisition business unit had net revenues of USD 79 million (gross USD 97 million) (18% growth)
POC EBITDA of USD 119 million compared to USD 83 million in Q1 2022
Strong free cash flow of USD 106 million vs. USD 26 million in Q1 2022
Continued momentum in contract inflow with USD 248 million of new contracts signed in the quarter
Continued recovery in sales and contract inflow
Source: TGS Percentages indicate year-on-year-growth
Pro-forma including Magseis Fairfield ASA. Percentages indicate year-on-year-growth
Acquisition Business Unit off to a good start!
- Acquisition Business Unit established through take-over of Magseis Fairfield ASA
- Strong revenue growth of 18% from Q1 2022*
- Positive EBIT margin and free cash flow in Q1 2023
- Acquisition backlog of USD 283 million and strong pipeline
- Synergy realization ahead of plan
- New organizational structure
- Continued safe operations
Magseis Fairfield ASA Excluding system sales
0
50
100
150
200
MUSD
250
300
350
400
DES provides diversification and exposure to growth markets
- Revenue growth of 63% from Q1 2022
- Lidar Buoy campaigns progressing well
- 4C continues to show profitable growth
- CCUS opportunities materializing in North America
- Strong customer engagement
Digital Energy Solutions revenues
0
Q1 2021
Q2 2021
2
4
6
8
MUSD
10
12
14
TGS Industry-Leading ESG Performance N E W R E C O G N I T I O N S
M E M B E R Bloomberg 2023 Gender Equality Index
Since 2016, TGS has been committed to the UN Global Compact corporate responsibility initiative and supports these initiatives.
E A R N I N G S R E L E A S E
Financials
Q1 2023
POC Revenues by Type
Proprietary Sales Revenue Total Revenue
POC Revenues by Business Unit
Multi-client & Imaging Digital Energy Solutions
Acquisition Total Revenue
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023
Operating Costs and POC EBITDA
12 15 14 31 MUSD
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023
Other Operating Costs POC EBITDA
MUSD
Q1 2023 Operating costs include non-recurring integration costs related to Magseis acquisition of USD 7.9 million (USD 5.5 million in Other Operating Costs and USD 2.4 million in Personnel Costs)
Amortization, Depreciation and POC EBIT costs and POC EBITDA
Bridge POC Revenues to IFRS Revenues
Profit & Loss Accounts
| (MUSD) | Q1 2023 |
Q1 2022 |
Change | |
|---|---|---|---|---|
| Early Sales |
41 9 |
51 9 |
-19% | |
| Late Sales |
45 5 |
76 2 |
-40% | |
| Proprietary Sales |
85 7 |
4 0 |
2019% | |
| Total revenues |
173 2 |
132 2 |
31% | |
| Cost of goods sold |
8 57 |
1 2 |
4589% | |
| Personnel cost |
31 3 |
17 5 |
78% | |
| Other operational costs |
20 6 |
12 4 |
66% | |
| EBITDA | 37% | 63 5 |
101 0 |
-37% |
| Straight-line amortization |
39 6 |
36 4 |
9% | |
| Accelerated amortization |
12 2 |
25 9 |
-53% | |
| Impairments | 0 0 |
0 0 |
n/a | |
| Depreciation | 18 5 |
5 3 |
252% | |
| Operating result |
-4% | -6 8 |
33 5 |
-120% |
| Financial income |
2 3 |
1 5 |
53% | |
| Financial expenses |
-6 1 |
-3 7 |
64% | |
| gains/losses Exchange |
-1 0 |
-3 1 |
-67% | |
| Gains/(losses) from JV |
-1 3 |
0 0 |
n/a | |
| before Result taxes |
-7% | -12 9 |
28 3 |
-146% |
| Tax cost |
33% | -4 2 |
7 4 |
-158% |
| Net income |
-5% | -8 7 |
20 9 |
-142% |
| EPS (USD) |
-0 07 |
0 18 |
||
| EPS fully diluted (USD) |
-0 07 |
0 18 |
Balance Sheet
| Change from |
||||
|---|---|---|---|---|
| (MUSD) | 31-Mar-23 | 31-Mar-22 | 31-Dec-22 | 31 Dec 22 |
| Goodwill | 384 6 |
304 0 |
384 6 |
0% |
| Multi-client library |
656 3 |
687 6 |
3 575 |
14% |
| Deferred tax asset |
86 0 |
89 3 |
82 2 |
5% |
| Other non-current assets |
287 4 |
88 8 |
282 9 |
2% |
| Total non-current assets |
1 414 4 , |
1 169 6 , |
1 325 1 , |
7% |
| Cash and cash equivalents |
208 0 |
215 5 |
188 5 |
10% |
| Other current assets |
244 1 |
226 6 |
325 4 |
-25% |
| Total current assets |
452 1 |
442 1 |
513 8 |
-12% |
| TOTAL ASSETS |
5 1 866 , |
1 611 7 , |
1 838 9 , |
2% |
| Total equity |
1 208 9 , |
1 117 6 , |
1 239 8 , |
-2% |
| Deferred taxes |
17 2 |
32 1 |
23 1 |
-26% |
| Non-current liabilities |
79 2 |
31 3 |
71 0 |
12% |
| liabilities Total non-current |
96 5 |
63 4 |
94 1 |
2% |
| Taxes payable withheld payroll social security and VAT tax , , |
71 9 |
80 6 |
2 77 |
-7% |
| Other liabilities current |
489 2 |
350 2 |
427 8 |
14% |
| Total liabilities current |
561 1 |
430 8 |
505 0 |
11% |
| TOTAL EQUITY AND LIABILITIES |
1 866 5 , |
1 611 7 , |
1 838 9 , |
2% |
Cash Flow
| (MUSD) | Q1 2023 |
Q1 2022 |
Change |
|---|---|---|---|
| Cash flow from operating activities: |
|||
| Profit before taxes |
-12 9 |
28 3 |
-146% |
| Depreciation/amortization/impairment | 70 3 |
67 6 |
4% |
| Changes in receivable and accrued accounts revenues |
76 1 |
-8 7 |
-974% |
| Changes in other receivables |
4 1 |
5 5 |
-26% |
| Changes in other balance sheet items |
48 5 |
5 6 |
763% |
| Paid taxes |
9 -7 |
-2 5 |
222% |
| Net cash flow from operating activities |
178.2 | 95 .9 |
86% |
| Cash flow from investing activities: |
|||
| Investments in tangible and intangible assets |
-7 6 |
-5 4 |
41% |
| Investments in multi-client library |
-66 9 |
-64 5 |
4% |
| Investments through mergers and acquisitions |
0 0 |
0 0 |
n/a |
| Interest received |
2 1 |
0 1 |
1627% |
| flow from investing activities Net cash |
-72.3 | -69.7 | 4% |
| Cash flow from financing activities activities: |
|||
| Interest paid |
-1 8 |
-0 8 |
125% |
| Dividend payments |
-17 4 |
-16 3 |
7% |
| of Repayment lease liabilities |
-11 6 |
-3 3 |
257% |
| Acquisition of shares |
-54 4 |
0 0 |
n/a |
| Repurchase of shares |
0 0 |
-2 7 |
-100% |
| Net cash flow from financing activities |
-85 .2 |
-23.0 | 271% |
| Net change in cash and cash equivalents |
20.6 | 3.2 | 543% |
| Cash and cash equivalents the beginning of period at |
188 5 |
215 3 |
-12% |
| Net unrealized currency gains/(losses) |
-1 1 |
-3 1 |
-65% |
| Cash and cash equivalents the end of period at |
208.0 | 215 5 |
-3% |
Dividends
3.51 % 3.63 % 3.96 % 3.92 % 4.94 % 5.20 % 3.71 % 2.77 % 2.63 % 4.02 % 4.51 % 4.58 % 4.29 % 3.39 % 0.0 % 1.0 % 2.0 % 3.0 % 4.0 % 5.0 % 6.0 % 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Year of payment
The Board has resolved to maintain the dividend of USD 0.14 per share for Q2 2023
▪ Ex date 22 May 2023 – payment date 5 June 2023
TGS has returned more than USD 1.4 bn to shareholders through dividends and buybacks since 2010
-
Quarterly dividends defined in USD from 2016. Annual dividends defined in NOK prior to 2016, converted to USD with the FX rate at ex-dividend dates
-
Average yield at the time of announcement of dividends
E A R N I N G S R E L E A S E
Outlook
Q1 2023
Strong momentum in client spending into 2023
Y/Y change in E&P capex
Y/Y change in Multi-client spending
Based on aggregate reported E&P capex for 23 E&P companies of all categories Source: SEB
Estimated and reported aggregate industry multi-client POC revenues Source: TGS
40%
License Round Activity
N O R T H A M E R I C A
Canada:
- Newfoundland Q4 2023 (close)
- Nova Scotia Q3 2023 (close)
US GOM:
• Lease Sale 261 – Q3 2023 (close)
L A T I N A M E R I C A
Brazil:
• Permanent Offer 4 – 2023 (Ongoing)
Suriname:
- Deep Water Q2 2023 (close)
- Shallow Water H1 2024 (close)
Guyana:
• Offshore – Q3 2023 (close)
Barbados:
• Offshore – H2 2023 (close)
Trinidad:
• Shallow Water Round – H2 23 (open)
Uruguay:
• Open Round – May and Nov (annual)
Argentina:
• Offshore Round 2 – 2023 (open)
E U R O P E
Norway:
- 2022 APA Round Q1 2023 (award)
- 2023 APA Round Q3 2023 (close)
- Carbon Storage Round Q1 2023 (award)
UK:
- Carbon Storage Round Q3 2023 (award) • 33rd UK Offshore Round – Q3 2023 (award)
Overview is showing scheduled Several countries, particularly in Africa and Latin America, are planning rounds over the next
A F R I C A
Angola:
- 2023 round 8 blocks
- 2025 round 10 blocks
- Out of Round direct awards legally decreed
Egypt:
• Onshore & Offshore Rounds – 2023 launch
Gabon:
• Open Door
Ghana: • Open Door for available blocks and farm-in
Lebanon: • 2022 Round – 30 June 2023 (close)
• Open Door – indefinite end
Nigeria:
• Unawarded Blocks available for direct award
Senegal:
• Open Door – LR after elections, Feb 2024
Sierra Leone:
• 2022 Round – 29 Sep 2023 (close)
Somalia:
• Expected March – Aug 2023
A S I A - P A C I F I C
Australia:
- 2021 Acreage Release awards expected H1 2023
- 2022 Acreage Release March 2023 (close)
India:
• Bid Round IX ongoing, closing date not yet announced
Indonesia:
• 2023 1st round – awards expected Q3 2023
Malaysia:
• 2023 MBR round – bid submission mid-Sep, awards expected Nov 2023
Bangladesh:
• Offshore round - expected H2 2023
rounds only and is not exhaustive. couple of years
- -
Liberia:
• Deep Water Mini Round – May 2023 (close)
Mozambique:
Acquisition Activity Plan
Contract Backlog & Inflow
Timing of expected recognition of IFRS Multi-client Early Sales backlog
Q2 2023 Q3 2023 Q4 2023 2024 +
Multi-client Early Sales backlog accounts for USD 318 million of the total backlog
Q1 2020 – Q3 2022 contract inflow and contract backlog figures are proforma assuming TGS ownership of Magseis.
A compelling investment case
Q 1 2 0 2 3
Summary
Total POC revenues of USD 229 million compared to USD 114 million in Q1 2022
- Late sales of USD 46 million in Q1 2023 vs. USD 76 million in Q1 2022
- POC Early sales of USD 98 million compared to USD 34 million in Q1 2022
- Acquisition business unit had net revenues of USD 79 million (gross USD 97 million) (18% growth)
POC EBITDA of USD 119 million compared to USD 83 million in Q1 2022
Strong free cash flow of USD 106 million vs. USD 26 million in Q1 2022
Continued momentum in contract inflow with USD 248 million of new contracts signed in the quarter
Thank you
TGS.com
