TGS ASA — Interim / Quarterly Report 2021

Oct 28, 2021

Q3 2021 Financial Results

Kristian Johansen Sven Børre Larsen

CEO CFO

28 October 2021

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.

Highlights

• Q3 2021 net revenues of USD 61 million (segment)
• Late sales USD 33 million
• Pre-funding USD 22 million
• Strong financial position net cash of USD 198 million
• Quarterly dividend of USD 0.14 per share (USD 16 million)
• Buy-backs of USD 7 million
• Continued challenging market conditions
• But some early signs of improvement
• Progressing well on New Energy Solutions strategy
• Launching Versal a unified seismic data ecosystem
• In JV with CGG and PGS

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TGS Investment Case

1. Quarterly dividends of USD 0.14 per share, share price of NOK 81.56, NOK/USD exchange rate 8.33. Buy-backs at the same rate as past three quarters (average of USD 4.2m per qtr)

2. Free Cash Flow (FCF) defined as cash flow from operations minus multi-client investments

3. Sustainalytics 2021 ESG Risk Ranking. TGS ranking no. 1 of 110 companies in Energy Services industry

4. Scope 1 and 2 emissions

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Operational Highlights

Investment Activity – Latin America

• Agreement with Staatsolie, in a consortium with CGG and BPG
• Consortium able to acquire, promote and license new multi-client 3D programs and legacy data reprocessing offshore Suriname
• Suriname's offshore acreage includes 3 blocks recently awarded and current open acreage offered in the 2023 bid round
• New 3D seismic acquisition begins in Q4 2021
• Data available in H1 2022

Investment Activity – Europe

• The NOAKA OBN is part of TGS' strategy to provide next generation seismic data in ILX area of the NCS
• First season of NOAKA OBN completed in October 2021
• TGS successfully acquired approximately 300 sq km or 2/3 of the full program
• Data is in processing and will be delivered in October 2022
• TGS is committed to complete the acquisition over the remaining area in 2022 – fully funded

Investment activity – Asia Pacific

• Sarawak Phase 1 3D commenced late October 2021 and will cover an area of up to 8,609 sq km
• First phase of a multi-year contract awarded by Petronas MPM in 2020 to the consortium of TGS, Schlumberger and PGS
• Phase 1 acquisition expected to complete in Q1 2022 with final data available in Q4 2022
• Survey includes acreage in Malaysia 2021 Bid Round

Improving Outlook in Gulf of Mexico

• Low break-even cost and low GHG emissions from production position GoM well in competition with other basins
• Most IOCs have GoM on the strategic priority list
• NOCs entering the basin
• Small independents preparing
• License rounds to be re-started
• Scheduled for Q4 2021 and H1 2022
• New OBN projects in advanced planning phase
• Permits secured

Progressing on New Energy Solutions Strategy

• MagSeis XHR Seismic test subsurface imaging for wind + CCS
• Wind Modeling Data
• CCS Atlas development
• 4C Offshore developing well 44% growth in order inflow YTD
• Further M&A opportunities being evaluated
• Expected pro-forma revenues of approximately USD 10 million in 2021

Introducing Versal: A Unified Seismic Data Ecosystem

• A landmark collaboration between TGS, CGG and PGS providing access to over 70% of the seismic multi-client market
• Versal connects multiple multi-client libraries for a unified data experience
• Versal allows customers to access their data, entitlements and identify new opportunities in a secure, cloud-based common ecosystem
• Visit www.versalearth.com for more info

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TGS' Industry-Leading ESG Performance

Financials

Net Revenues

Segment reporting

Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021

Total Revenues

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Operating Expenses, EBIT, MC Investments

Segment reporting

1. Personnel costs and other operating expenses excluding reported non-recurring items

Amortization and Impairments - Multi-Client Library

Income Statement

Segment reporting

(MUSD)		Q3 2021	Q3 2020	Change
Net operating revenues		60.9	80.6	$-24%$
Cost of goods sold		0.8	1.1	$-25%$
Personnel cost		14.8	12.2	21%
Other operational costs		16.8	5.1	232%
EBITDA	47%	28.5	62.1	-54%
Amortization of multi-client library		51.5	86.1	$-40%$
Depreciation		4.7	4.1	15%
Operating result	$-46%$	$-27.7$	$-28.0$	$-1%$
Financial income		0.6	$-0.2$	n/a
Financial expenses		$-0.3$	$-1.0$	$-71%$
Exchange gains/losses		$-1.3$	$-1.3$	$-3%$
Result before taxes	$-47%$	$-28.7$	$-30.5$	-6%
Tax cost	10%	$-2.8$	$-5.6$	-49%
Net income	$-42%$	$-25.8$	$-25.0$	3%
EPS (USD)		$-0.19$	$-0.19$
EPS fully diluted (USD)		$-0.19$	$-0.19$

Balance Sheet

Segment reporting

Balance sheet	Q3 2021	Q3 2020	Change
Goodwill	304.0	288.4	5%
Multi-client library	584.5	763.2	-23%
Deferred tax asset	57.8	44.9	29%
Other non-current assets	102.5	108.9	-6%
Total non-current assets	1,048.7	1,205.4	-13%
Cash and cash equivalents	198.1	179.8	10%
Other current assets	328.6	451.9	-27%
Total current assets	526.7	631.7	-17%
TOTAL ASSETS	1,575.4	1,837.1	-14%
Total equity	1,267.4	1,435.6	-12%
Deferred taxes	38.4	30.5	26%
Non-current liabilities	39.7	50.9	-22%
Total non-current liabilities	78.1	81.4	-4%
Taxes payable, withheld payroll tax, social security	30.8	22.9	35%
Other current liabilities	199.1	297.2	-33%
Total current liabilities	230.0	320.1	-28%
TOTAL EQUITY AND LIABILITIES	1,575.4	1,837.1	-14%

Cash Flow Statement

(MUSD)	Q3 2021	Q3 2020	Change
Received payments from customers	77.6	109.4	-29%
Payments for salaries, pensions, social security tax	-11.9	-16.3	-27%
Payments of other operational costs	-12.2	-18.7	-35%
Paid taxes	-5.1	-12.5	-59%
Net cash flow from operating activities	48.3	62.0	-22%
Investments in tangible and intangible assets	-8.2	-4.1	101%
Investments in multi-client library	-42.7	-57.5	-26%
Investments through mergers and acquisitions	1.1	0.0	0%
Interest received	0.1	0.1	-7%
Net cash flow from investing activities	-49.7	-61.5	-19%
Interest paid	0.2	-1.0	-123%
Dividend payments	-16.4	-16.2	1%
Repayment of interest bearing debt	0.0	0.0	0%
Purchase of own shares	-6.6	0.0	0%
Net cash flow from financing activites	-22.7	-17.2	32%
Net change in cash and cash equivalents	-24.0	-16.7	44%
Cash and cash equivalents at the beginning of period	223.4	198.5	13%
Net unrealized currency gains/(losses)	-1.3	-2.0	-37%
Cash and cash equivalents at the end of period	198.1	179.8	10%

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Dividends and Share Buybacks

• The Board has resolved to maintain the dividend to USD 0.14 per share for Q3 2021
• Ex date 4 November 2021 payment date 18 November 2021
• In addition, the Company has repurchased 603,420 shares for USD 6.6 million under the authorization of a USD 20 million share buyback program started in Q1 2020. In total USD 12.5 million is spent on repurchasing shares under this program.

• TGS has paid out more than USD 1.1 bn of dividends 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

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Market Outlook

Current Exploration Activity Level Not Sustainable

^{1. 2020} discoveries based on TGS estimates. 2011-19 as reported by IEA

Source: IEA, TGS

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• Current exploration activity level delivering <20% reserve replacement ratio
• Pricing for exploration related services (incl. seismic) at unsustainably low prices
• Substantial amounts of proven resources will never be developed due to high cost, high risk or high GHG emissions in production

Value Proposition of Exploration Approaching All-Time-High Early signs of improvement

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• E&P spending yet to recover from pandemic related cuts conducted in 2020
• Value proposition of exploration at attractive levels
• High oil price
• Low cost of exploration related services
• Continued challenging market conditions in the near-term, but signs of through being reached
• High oil price strong oil company cash flow
• Declining share of legacy commitments in E&P spending going forward – more room for discretionary spending
• Licensing round activity recovering
• Pipeline of potential new projects improving
• Historical low supply of new multi-client data due to low investments

Improving License Round Activity

Summary

• Q3 2021 net revenues of USD 61 million (segment)
• Late sales USD 33 million
• Pre-funding USD 22 million
• Strong financial position net cash of USD 198 million
• Quarterly dividend of USD 0.14 per share (USD 16 million)
• Buy-backs of USD 7 million
• Continued challenging market conditions
• But some early signs of improvement
• Progressing well on New Energy Solutions strategy
• Launching Versal a unified seismic data ecosystem
• In JV with CGG and PGS

Appendix

Segment and IFRS reporting

• 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 continues 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

Income Statement IFRS

(MUSD)		Q3 2021	Q3 2020	Change
Net operating revenues		199.8	58.2	243%
Cost of goods sold		0.8	1.0	-17%
Personnel cost		14.8	12.2	21%
Other operational costs		16.8	5.1	232%
EBITDA	84%	167.3	39.9	319%
Amortization of multi-client library		127.0	125.5	1%
Depreciation		4.7	4.1	15%
Operating result	18%	35.6	-89.7	n/a
Financial income		0.1	0.1	11%
Financial expenses		0.2	-1.3	n/a
Exchange gains/losses		-1.3	-1.3	-3%
Result before taxes	17%	34.6	-92.2	n/a
Tax cost	0.4	15.5	-21.9	n/a
Net income	10%	19.1	-70.3	n/a
EPS (USD)		0.16	-0.60	n/a
EPS fully diluted (USD)		0.16	-0.59	n/a

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Balance Sheet IFRS

Balance sheet	Q3 2021	Q3 2020	Change
Goodwill	304.0	288.4	5%
Multi-client library	800.5	1,062.0	-25%
Deferred tax asset	90.9	106.3	-15%
Other non-current assets	102.5	108.9	-6%
Total non-current assets	1,297.8	1,565.6	-17%
Cash and cash equivalents	198.1	179.8	10%
Other current assets	267.9	346.0	-23%
Total current assets	466.0	525.8	-11%
TOTAL ASSETS	1,763.8	2,091.3	-16%
Total equity	1,256.4	1,274.5	-1%
Deferred taxes	63.1	25.9	144%
Non-current liabilities	39.7	50.9	-22%
Total non-current liabilities	102.8	76.8	34%
Taxes payable, withheld payroll tax, social security	30.8	22.9	35%
Other current liabilities	373.8	717.2	-48%
Total current liabilities	404.6	740.0	-45%
TOTAL EQUITY AND LIABILITIES	1,763.8	2,091.3	-16%

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Reconciliation Between Segment and IFRS

	Q3 2021	Performance	In progress	Q3 2021
(All amounts in USD 1,000s)	IFRS	obligations met in	projects	Segment
Revenues	199,778	-163,304	24,463	60,937
Amortization and impairmentof MCL	127,032	-86,984	11,442	51,490
Income before tax	34,617	-250,288	35,905	-28,683
Taxes	15,490	-14,904	-3,424	-2,838
Net income	-11,969	-265,192	32,481	-25,845

	Q3 2021		Q3 2021
(All amounts in USD 1,000s)	IFRS	Adjustments	Segment
Multi-client library	800,535	-216,070	584,465
Deferred tax asset	90,863	-33,029	57,834
Total non-current assets	1,297,838	-249,099	1,048,739
Accrued revenues	59,723	60,732	120,455
Total current assets	465,975	60,732	526,707
Equity	1,256,443	10,914	1,267,357
Deferred taxes	63,081	-24,672	38,409
Total non-current liabilities	102,772	-64,363	38,409
Accounts payable and debt to partner	138,163	2,821	140,983
Deferred revnues	205,684	-177,430	28,253
Total current liabilities	404,599	-174,610	229,989

Multi-Client Library

Segment reporting

Investments and NBV by year of completion 1) Q3 2021

1. Operational multi-client seismic investments

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Net Revenues and NBV by year of completion 1) Q3 2021