Q4 2022 Results
CEO CFO
9 February 2022
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 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.
Highlights
- Total POC revenues of USD 226.9 million compared to USD 119.5 million in Q4 2021
- Late sales of USD 136.6 million in Q4 2022 vs. USD 52.8 million in Q4 2021
- POC Early sales of USD 30.7 compared to 55.1 million in Q4 2021
- Magseis Fairfield ASA was consolidated from 11 October 2022, contributing USD 54 million to revenues after intercompany eliminations
- POC EBITDA of USD 151.4 million compared to USD 84.0 million in Q4 2021
- Robust balance sheet with net cash of USD 188.5 million
- Strong contract inflow of USD 283.4 million in Q4 2022, compared to USD 162.8 million in Q4 2021
Financial guidance for 2023
See the energy at
- Multi-client investments expected to be USD 320-350 million
- POC early sales rate above 70%
- Dividend of USD 0.14 per share per quarter
Recent highlights
Acquisition of Magseis Fairfield ASA
Status update
- 75% ownership reach on 11 October 2022 100% ownership reached in early January 2023
- Magseis will become separate Business Unit in TGS responsible for OBN and all other acquisition related activities
- Business Unit will be headed by EVP Carel Hooijkaas (former CEO of Magseis)
- Integration process ahead of plan
See the energy at
- Cost synergy potential increased from the initial range of USD 7-9 million
- Full run rate to be realized towards year-end 2023
Transaction rationale
- Secure access to best-in-class OBN technologies allowing TGS stronger position in ILX-areas (Multi-client, proprietary and 4D)
- Cost synergies and efficiency gains from stronger utilization
- Further enhance TGS' position in OBN processing
- Improve exposure towards energy transition related industries, like offshore wind, CCS and deep-sea minerals
Recently Announced Projects
Sleipner & Heimdal Terrace OBN Surveys, Offshore Norway
- Two significant multi-client OBN awards in the Norwegian North Sea for 2023 season
- Expands on existing OBN footprint (Utsira and NOAKA)
- Sleipner +1,201 km2
- Heimdal Terrace +500 km2
- These surveys increase the contiguous multi-client OBN coverage in the region to 3,778 km2
- Encompasses a mature part of the North Sea that includes existing oil & gas fields, recent oil & gas discoveries, and further infrastructure-led exploration (ILX) potential
- Heimdal Terrace acquisition commences April 2023
- Sleipner acquisition commences June 2023
Santos Sul 3D Offshore Brazil
- Covers more than 15,000 km2 of both open acreage and recently awarded Permanent Offer Round blocks
- Located in the southwest Santos Basin offshore Brazil
- Instrumental in providing invaluable data and actionable insights into new and emerging plays outside the Pre-Salt
- In Partnership with PGS
- Acquisition is scheduled to complete August 2023
Foz do Amazonas Phase II Offshore Brazil
- Survey covers 11,425 km2
- Located in the offshore Brazil equatorial margin
- Broadens the region's 3D coverage and deliver data essential for exploration efforts
- In partnership with CGG
- Data will be instrumental in enabling subsurface understanding in advance of future Permanent Offer rounds
- Early-out PSDM products available in Q4 2023
Tannat 3D Reprocessing Offshore Uruguay
- Consists of 25,000 km2 offshore Uruguay
- The data will be regionally integrated and reprocessed using advanced imaging techniques
- The newly enhanced data will allow for the definition of play fairways, leads and exploration targets
- Complements the 23,000 line km of 2D seismic coverage in the area
- Early out PSDM data available in Q1 2023
- Final data products to be delivered in Q3 2023
Bangladesh 2D Survey
- Regional scale 2D survey to enhance the geological understanding of the prospective Bengal Fan
- Initial phase comprises 11,700 km of high-resolution broadband 2D seismic data
- The overall program plans to encompass around 32,000 km covering most of offshore Bangladesh
- Supports future license rounds under the soon-to-be-revised fiscal terms widely anticipated by the industry
- Acquisition commenced in early January 2023
Beyond Far East Onshore 3D Permian Basin
- Project encompasses ~85 mi2 in Mitchell County, TX in the Midland Basin
- Will assist and evaluate and developing in the multiple zone potential, including Wolfcamp D
- Complimented by over 250,000 wells in the Midland Basin
- Will be processed utilizing modern land imaging technology
- Final data products available in Q3 2023
Two New OBN Awards in U.S. GOM
4D OBN survey award
- Proprietary 4D OBN survey located in Walker Ridge
- Planned to mobilize in Q3 2023
- Duration of ~100 days
Sparse node survey award
- Proprietary sparse node survey located in the Gulf of Mexico
- Planned to mobilize in Q2
- Duration of ~100 days
• Both projects position TGS well for further activities in the U.S. GoM
TGS Industry-Leading ESG Performance
New Recognitions
MEMBER Bloomberg 2023 Gender Equality Index
Since 2016, TGS has been committed to the UN Global Compact corporate responsibility initiative and supports these initiatives.
Financials
POC Operating Revenues
Proprietary Revenue Total Revenue
POC Revenues by Business Unit
Data Acquisition (incl. Magseis from 11 October 2022) Total Revenue
See the energy at TGS.com - 17 -
Operating Result and Cash Flow
Multi-client investments and POC Early sales Rate Free Cash Flow 2
See the energy at
IFRS Multi-client Library Financials
Investments and NBV by year of completion Q4 2022¹ Revenues and NBV by year of completion Q4 2022¹
See the energy at
IFRS Income statement
| (MUSD) |
|
Q4 2022 |
Q4 2021 |
Change |
YTD 2022 |
YTD 2021 |
Change |
| Early Sales |
|
22.8 |
40.2 |
$-43%$ |
257.3 |
353.8 |
$-27%$ |
| Late Sales |
|
136.6 |
52.8 |
159% |
374.1 |
140.4 |
167% |
| Proprietary Sales |
|
59.6 |
11.7 |
409% |
85.2 |
24.5 |
247% |
| Total revenues |
|
219.0 |
104.7 |
109% |
716.6 |
518.7 |
38% |
| Cost of goods sold |
|
27.1 |
8.5 |
218% |
37.5 |
11.6 |
223% |
| Personnel cost |
|
29.9 |
14.2 |
110% |
86.4 |
54.9 |
57% |
| Other operational costs |
|
18.5 |
12.7 |
45% |
53.8 |
46.4 |
16% |
| EBITDA |
66% |
143.5 |
69.2 |
107% |
538.9 |
405.8 |
33% |
| Straight-line amortization |
|
38.7 |
43.0 |
$-10%$ |
153.5 |
174.3 |
$-12%$ |
| Accelerated amortization |
|
13.9 |
50.9 |
$-73%$ |
201.7 |
213.2 |
$-5%$ |
| Impairments |
|
9.1 |
71.3 |
-87% |
19.3 |
71.3 |
-73% |
| Depreciation |
|
17.2 |
4.8 |
262% |
33.6 |
19.3 |
74% |
| Operating result |
30% |
64.6 |
$-100.8$ |
$-164%$ |
130.7 |
$-72.3$ |
-281% |
| Financial income |
|
0.6 |
1.9 |
$-67%$ |
2.4 |
2.5 |
$-5%$ |
| Financial expenses |
|
$-3.2$ |
$-2.3$ |
39% |
$-8.5$ |
$-6.4$ |
34% |
| Exchange gains/losses |
|
4.8 |
$-3.8$ |
$-227%$ |
1.7 |
$-8.9$ |
$-119%$ |
| Gains/(losses) from JV |
|
1.3 |
0.0 |
n/a |
1.3 |
0.0 |
n/a |
| Result before taxes |
31% |
68.1 |
$-104.9$ |
$-165%$ |
127.6 |
$-85.1$ |
$-250%$ |
| Tax cost |
38% |
26.0 |
$-27.9$ |
$-193%$ |
40.9 |
$-9.1$ |
$-549%$ |
| Net income |
19% |
42.1 |
$-77.0$ |
$-155%$ |
86.7 |
-76.0 |
$-214%$ |
| EPS (USD) |
|
0.34 |
$-0.66$ |
|
0.74 |
$-0.65$ |
|
| EPS fully diluted (USD) |
|
0.34 |
$-0.66$ |
|
0.73 |
$-0.65$ |
|
IFRS Balance sheet
|
|
|
Change
from |
| (MUSD) |
31-Dec-22 |
31-Dec-21 |
31 Dec 21 |
| Goodwill |
371.7 |
304.0 |
22% |
| Multi-client library |
591.7 |
704.9 |
$-16%$ |
| Deferred tax asset |
131.5 |
95.9 |
37% |
| Other non-current assets |
282.9 |
89.8 |
215% |
| Total non-current assets |
1,377.8 |
1,194.5 |
15% |
| Cash and cash equivalents |
188.5 |
215.3 |
$-12%$ |
| Other current assets |
325.4 |
220.0 |
48% |
| Total current assets |
513.8 |
435.3 |
18% |
| TOTAL ASSETS |
1,891.6 |
1,629.8 |
16% |
|
|
|
|
| Total equity |
1,242.6 |
1,115.3 |
11% |
| Deferred taxes |
73.1 |
32.1 |
128% |
| Non-current liabilities |
71.0 |
35.7 |
99% |
| Total non-current liabilities |
144.1 |
67.8 |
113% |
| Taxes payable, withheld payroll tax, |
|
|
|
| social security and VAT |
77.2 |
77.9 |
$-1%$ |
| Other current liabilities |
427.8 |
368.8 |
16% |
| Total current liabilities |
505.0 |
446.7 |
13% |
| TOTAL EQUITY AND LIABILITIES |
1,891.6 |
1,629.8 |
16% |
See the energy at TGS.com - 21 -
Cash Flow Statement
| (MUSD) |
Q4 2022 |
Q4 2021 |
Change |
YTD 2022 |
YTD 2021 |
Change |
|
|
|
|
|
|
|
| Cash flow from operating activities: |
|
|
|
|
|
|
| Profit before taxes |
68,085 |
$-104,911$ |
$-165%$ |
127,567 |
$-85,087$ |
$-250%$ |
| Depreciation/amortization/impairment |
78,903 |
169,988 |
$-54%$ |
408,122 |
478,116 |
$-15%$ |
| Changes in accounts receivable and accrued revenues |
$-27,701$ |
12,272 |
$-326%$ |
$-46,665$ |
131,727 |
$-135%$ |
| Changes in other receivables |
$-5,557$ |
41,677 |
$-113%$ |
31,503 |
15,632 |
102% |
| Changes in other balance sheet items |
7,847 |
910 |
762% |
$-162.041$ |
$-197.865$ |
$-18%$ |
| Paid taxes |
$-2,045$ |
353 |
$-679%$ |
$-15,036$ |
$-14,179$ |
6% |
| Net cash flow from operating activities |
119,532 |
120,289 |
$-1%$ |
343,450 |
328,344 |
5% |
|
|
|
|
|
|
|
| Cash flow from investing activities: |
|
|
|
|
|
|
| Investments in tangible and intangible assets |
$-8,911$ |
$-5,038$ |
77% |
$-23,663$ |
$-13,579$ |
74% |
| Investments in multi-client library |
$-77,860$ |
$-62,183$ |
25% |
$-200,889$ |
$-154,830$ |
30% |
| Investments through mergers and acquisitions |
$-13,711$ |
$-11,000$ |
25% |
$-54,860$ |
$-34,304$ |
60% |
| Interest received |
4,636 |
1,942 |
139% |
6,396 |
2,525 |
153% |
| Net cash flow from investing activities |
$-95,846$ |
$-76,279$ |
26% |
$-273,016$ |
$-200,188$ |
36% |
|
|
|
|
|
|
|
| Cash flow from financing activities activities: |
|
|
|
|
|
|
| Net change in short term loans |
|
0 |
n/a |
0 |
$-2,500$ |
$-100%$ |
| Interest paid |
$-3,209$ |
$-2,356$ |
36% |
$-5,608$ |
$-6,362$ |
$-12%$ |
| Dividend payments |
$-17,426$ |
$-16,295$ |
7% |
$-66, 136$ |
$-65,524$ |
1% |
| Repayment of lease liabilities |
$-11,705$ |
$-3,218$ |
264% |
$-20,599$ |
$-10,695$ |
93% |
| Repurchase of shares |
$\mathbf{0}$ |
$-2,983$ |
$-100%$ |
$-7,015$ |
$-15,689$ |
-55% |
| Net cash flow from financing activities |
$-32,340$ |
$-24,852$ |
30% |
$-99,358$ |
$-100,770$ |
$-1%$ |
|
|
|
|
|
|
|
| Net change in cash and cash equivalents |
$-8,654$ |
19,158 |
$-145%$ |
$-28,924$ |
27,386 |
$-206%$ |
| Cash and cash equivalents at the beginning of period |
192,291 |
198,120 |
$-3%$ |
215,329 |
195,716 |
10% |
| Net unrealized currency gains/(losses) |
4,815 |
$-1,949$ |
$-347%$ |
2,047 |
$-7,773$ |
$-126%$ |
| Cash and cash equivalents at the end of period |
188,452 |
215,329 |
$-12%$ |
188,452 |
215,329 |
$-12%$ |
Dividends and Share Buybacks
Dividend per share 1 Dividend yield 2
- The Board has resolved to maintain the dividend of USD 0.14 per share for Q4 2022
- Ex date 16 February 2023 payment date 2 March 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
Market Outlook
Signs of continued recovery in seismic spending
Source: ABGSC Research
- Global seismic market grew by more than 30% in 2022
- TGS late sales growth of 167%
- Planned offshore drilling activity supports continued recovery in seismic market
- TGS well positioned with leading position both in frontier and mature regions
- Broad portfolio offering 2D,3D, 4D, OBN Imaging, geological data, leading multiclient library
Strong growth in OBN demand
- Infrastructure-led exploration (ILX) and 4D driving strong growth in OBN market
- Magseis well positioned 35-40% market share
"We continue to drive down unit cost. We continue to drive capital productivity in the Wells area. We've deployed new technology. Ocean Bottom Seismic now is being deployed widely across our portfolio, giving a better view of the barrels that remain."
From BP's Q4 2022 conference call, 7 Feb 2023
Source: TGS
*Estimated value of awards to date
Contract Backlog & Inflow
Contract Inflow
See the energy at
TGS.com - 27 - Q1 2020 – Q3 2022 contract inflow and contract backlog figures are proforma assuming TGS ownership of Magseis.
Early Sales expected recognition schedule in IFRS
Early Sales backlog accounts for USD 283 million of the total backlog
OBN crew activity plan
|
Q4 22 |
|
|
|
Q1 23 |
|
Q2 23 |
|
|
| Crew |
Oct |
Nov |
Dec |
Jan |
Feb |
March |
Apr |
May |
Jun |
| ZXPLR Crew 1 |
|
|
|
|
|
|
|
|
|
| ZXPLR Crew 2 |
|
|
|
|
|
|
|
|
|
| Z700 Crew |
|
|
|
|
|
|
|
|
|
| MASS Crew |
|
|
|
|
|
|
|
|
|
| RM Source Crew 1 |
|
|
|
|
|
|
|
|
|
| RM Source Crew 2 |
|
|
|
|
|
|
|
|
|
| RM Source Crew 3 |
|
|
|
|
|
|
|
|
|
| Renewables projects |
|
|
|
|
|
|
|
|
|
US Gulf of Mexico Latin America North Sea Asia Available / maintenance
License Round Activity
North America
Canada:
• Newfoundland - Q4 2023 (close)
US GOM:
• Lease Sale 259 – Q1 2023 (close) • Lease Sale 261 – H2 2023 (close)
Latin America
Brazil:
• Permanent Offer 4 – 2023 (Ongoing)
Suriname:
- Deep Water Q2 2023 (close)
- Shallow Water Q1 2024 (close)
Guyana:
• Offshore – Q2 2023 (close)
Barbados:
• Offshore – H2 2023 (close)
Trinidad:
• Onshore/Near Shore – H1 23 (close)
Uruguay:
• Open Round – May and Nov (annual)
Argentina:
• Offshore Round 2 – 2023 (open)
Europe
Norway:
- 2022 APA Round Q1 2023 (award)
- 2023 APA Round Q3 2023 (close)
UK:
- Carbon Storage Round Q1 2023 (award)
- 33rd UK Offshore Round Jan 2023 (close)
Africa
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)
Liberia:
• Open Door – indefinite end
Nigeria:
• Deep Water Mini Round Jan –May 2023
Mozambique:
• Blocks awarded
Sierra Leone: • 2022 Round – 29 Sep 2023 (close)
- Somalia:
- Expected March Aug 2023
Asia-Pacific
Australia:
- 2021 Acreage Release awards expected H1 2023
- 2022 Acreage Release 2 March 2023 (close)
India:
• Bid Round IX announced Q4 2022
Indonesia:
• 2022 1st round – awards expected H1 2023
Malaysia:
- 2022 MBR round PSC awards Jan-Feb 2023
- 2023 MBR round Feb 2023 (open)
Bangladesh:
• Offshore round - expected H2 2023
Overview is showing scheduled rounds only and is not exhaustive. Several countries, particularly in Africa and Latin America, are planning rounds over the next couple of years
Guidance 2023
- Multi-client investments USD 320-350 million
- More than USD 200 million committed currently
- POC Early sales rate >70%
- Dividends of USD 0.14 per share per quarter
- Further details on financial outlook to be provided at Capital Markets Day on 7 March 2023
Expected 2023 multi-client investments
Expected 2023 POC early sales rate*
TGS Capital Markets Day LIVE in Oslo 7 March 2023 | 13:00 CET
Key Topics
- The dual challenge Energy and Environment
- Market outlook for energy data and acquisition
- Financial outlook for TGS
- Status Magseis integration
- Strategic priorities
- Meet the executives
Scan to register!
KEYNOTE DR. SCOTT TINKER
Summary
• Significant market improvement
- Best Q4 late sales since 2014
- Continuous improvement in order inflow
- Total backlog of USD 451 million
• Robust balance sheet
- Cash balance of USD 189 million after significant M&A activity
- Low interest-bearing debt
- Strong working capital position from end-of-year sales
• Industry leading OBN position
• Healthy backlog
See the energy at
• Promising pipeline and lack of supply
• MC investments back to pre-COVID levels
- Guided investments of USD 320-350 million
- High visibility and pre-funding levels
Thank you
IFRS Operating Revenues
Proprietary Sales Revenue Total Revenue