TGS ASA — Interim / Quarterly Report 2021

May 12, 2021

Q1 2021 Financial Results

Kristian Johansen Fredrik Amundsen Jan Schoolmeesters CEO CFO EVP Operations & NES

12 May 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.

Financial Highlights Q1

• Q1 2021 net revenues of USD 74.8 million (segment)
  • Late sales USD 44.8 million
  • Pre-funding USD 25.3 million

• Lower opex and capex result in strong free cash flow* of USD 83.9 million

• Cash balance of USD 254 million plus undrawn credit facility of USD 100 million
• Supporting dividend payment of USD 0.14 per share
• Buyback program continues with USD 17.3 million left to spend
• Weak market conditions expected to continue for 2021 despite positive oil price momentum
  • Clients prioritizing dividend and deleveraging balance sheets rather than exploration
• Lower MC investments and more risk share until permanent pick-up of activity
  • New MC-investment range expected to be USD 150 180 million
  • Positive for free cash flow
  • Allows strategic investments / M&A

See the energy at TGS.com - ³ -

Other Highlights

• Acquisition of 4C announced

• First M&A in renewables building block for additional organic and inorganic growth
• Ambition to become the leading global provider of energy data and insights
• Supporting the establishment of new vessel company PXGeo with cash and vessel commitment
  • Hedging 3D and OBN investment plan for 2022 and 2023

Key projects in Q1 2021

MALVINAS 3D – Argentina

• Acquisition of the 17,800 square kilometer Malvinas 3D multi-client survey completed in Q1.
• Data covering the highly prospective Malvinas basin has been acquired over two seasons with final data expected Q1 2022.

ESPERITO SANTO 3D - Brazil

• Covering 1,347 square kilometers of the Espirito Santo basin offshore Brazil.
• Commenced in Q1 and completed acquisition on April 12th.
• Fast-track data is expected Q4 2021 processed using Dynamic Matching Full Wave Inversion (DM-FWI).

PELOTAS 2D - Brazil

• Commencement of 8,559 km 2D Survey in the Pelotas Basin.
• New data set will complement the existing TGS 2D data coverage in the area and allow for better prospect mapping.
• Depth imaged products will be available in early Q3, in time for the 17th Brazil license round.

Financials

Segment and IFRS Reporting

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• Q1 presentation remains focused on Segment Reporting
• Gradually shifting to IFRS going forward
• IFRS will be accompanied by Alternative Performance Measures
  • Cash Flow
  • Order Generation and Backlog
  • Operational Progress
  • Return on Investments

Net Revenues

Segment reporting

Operating Expenses, EBIT, MC Investments

Segment reporting

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

Income Statement

Segment reporting

(MUSD)		Q1 2021	Q1 2020	Change
Net operating revenues		74.8	152.1	-51%
Cost of goods sold		1.3	2.3	-45%
Personnel cost		14.1	13.5	4%
Other operational costs		8.2	10.7	-23%
EBITDA	68%	51.3	1,25.5	-59%
Amortization of multi-client library		66.9	142.2	-53%
Depreciation		4.4	2.7	63%
Operating result	-27%	-20.0	-19.4	3%
Financial income		-0.4	0.1	-459%
Financial expenses		-0.5	-0.4	28%
Exchange gains/losses		-3.2	13.1	-124%
Result before taxes	-32%	-24.1	-6.6	n/a
Tax cost	10%	-2.4	-5.9	n/a
Net income	-29%	-21.7	-0.7	n/a
EPS (USD)		-0.16	-0.01
EPS fully diluted (USD)		-0.16	-0.01

Balance Sheet

Segment reporting

Balance sheet	Q1 2021	Q1 2020	Change
Goodwill	288.4	288.4	0%
Multi-client library	593.6	841.9	-29%
Deferred tax asset	52.2	17.1	205%
Other non-current assets	104.5	96.9	8%
Total non-current assets	1,038.7	1,244.2	-17%
Cash and cash equivalents	253.5	248.4	2%
Other current assets	375.6	531.8	-29%
Total current assets	629.1	780.1	-19%
TOTAL ASSETS	1,667.8	2,024.4	-18%
Total equity	1,353.9	1,562.7	-13%
Deferred taxes	39.1	42.0	-7%
Non-current liabilities	42.2	31.3	35%
Total non-current liabilities	81.3	73.3	11%
Taxes payable, withheld payroll tax, social security	10.2	34.5	-70%
Other current liabilities	222.4	353.9	-37%
Total current liabilities	232.6	388.3	-40%
TOTAL EQUITY AND LIABILITIES	1,667.8	2,024.4	-18%

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Cash Flow Statement

(MUSD)	Q1 2021	Q1 2020	Change
Received payments	136.2	206.4	-34%
Payments for operational expenses	-23.0	-67.6	-66%
Paid taxes	-4.3	-20.6	-79%
Net cash flow from operating activities	108.9	118.2	-8%
Investment in tangible fixed assets	-0.4	-7.2	-95%
Investments in multi-client library	-25.1	-145.3	-83%
Investments through mergers and acquisitions	0.0	-15.0	-100%
Interest income	0.0	0.5	-97%
Net Cash Flow from investing activities	-25.4	-167.1	-85%
Net change in loans	-2.5	0.0	n/a
Interest expense	-0.9	-0.7	24%
Payment of dividends	-16.4	-40.9	-60%
Purchase of own shares	-2.7	-6.6	n/a
Net cash flow from financing activities	-22.5	-48.2	-53%
Net unrealized currency gains/(losses)	-3.2	6.6	n/a
Net change in cash and cash equivalents	57.8	-90.5	n/a

1. Sales committed by customers but not yet recognized in the Segment Reporting accounts

Dividends and Share Buyback

• The Board has resolved to maintain the dividend to USD 0.14 per share for Q2 2021
• Ex date 19 May 2021 payment date 2 June 2021

• In addition, the Company repurchased 160,000 shares for USD 2.7 million under the authorization of a USD 20 million share buyback program started in Q1 2020

• 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

The link between oil price and spending seems to be broken

• Oil price has increased significantly over the past six months – back at pre-COVID levels
• Seismic spending has remained muted – few signs of near-term recovery

Clients' preferences are changing

• Major International Oil Companies

• Strong budget discipline
• Incremental cash flow allocated to deleveraging and shareholder returns
• Transforming from oil and gas companies into broad energy companies
• Exploration focused on near-infrastructure and selected proven greenfield areas

• National Oil Companies

• Increasing international presence
• More stable exploration spending
• Less in-house capacity more potential vendor scope

• Smaller Independent Oil Companies

• Still exploring, but often with regional focus
• Opportunity set growing as IOCs exit prolific basins
• Little focus on renewables/alternative energy

See the energy at

Shell's aim is to build material low-carbon businesses of significant scale by the early 2030s. Upstream will continue to deliver vital energy supplies, which will help to generate the cash and returns needed to fund shareholder distributions while accelerating investment in the growth businesses to capture new market opportunities..

Shell Energy Transition Srategy ¹

It also facilitated the launch of our Low Carbon Solutions business in the first quarter, a strategic business that we expect to grow with significant investments as we advance low-carbon technologies. Darren Woods, CEO, Exxon2

[…]with the perspectives that we have, we need to look for oil which will have a low cost to be produced. There is a lot of oil with a low cost to be produced, but it's in the hand mainly of some national oil companies.

Patrick Pouyanné, Chairman and CEO, Total3

Our Board has mandated us to get ready for another super-cycle.

CEO of small independent

^1. Strategy Day 2021, 11 February 2021

^2. Q1 2021 conference call

^3. Investor Day 2020, 19 September 2020

Vessel Market Becoming More Concentrated

• Number of available vessels reduced from 65 to 26 in less than 5 years

• Recent consolidation in vessel market

• Leading player controlling almost 60% of supply
• Five players controlling the remaining 42% of the market
• Risk sharing continues to be available
• TGS entering into long-term agreement with PXGeo to secure capacity at competitive rates

2021 Revised Operational Guidance

Investment Distribution

• Investment plan for 2021 remain flexible
• Current backlog of USD 82 million in prefunding largely relate to the 2021
• The current cash cost provides flexibility to increase activity as COVID restrictions are lifted, and still be below USD 25

Long-term Energy Market Trends

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Strategic Priorities

Strategic update

Long-term Strategic Ambition Launched

TGS today:

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• World's leading subsurface data company
• Asset light and multi-client business model

• 95% of revenues from oil & gas

• Emissions (scope 1 & 2): 23.4 kilotons of CO2e
• New strategy launched February 2021

TGS Long-term ambition

• World's leading energy data company
• Asset light and multi-client business model
• Revenues reflecting overall energy mix
• Carbon neutral
• High portion of recurring revenues

Status New Energy Solutions

Acquisition of 4C Offshore Ltd.

• TGS acquiring 4C Offshore Ltd.
• Fits perfectly with TGS' ambitions of becoming a leading data provider to the New Energy space
• 4C Offshore at a glance:
  • Based in Lowestoft, UK
  • Leading interactive market intelligence platform to the offshore wind and offshore grid sectors
    • Complete global database of offshore wind farms
    • Complete overview of projects, vendors, logistics, subsea cables etc.
  • Bespoke research and consultancy
  • Almost 80% of sales from subscriptions
  • Loyal and growing client base

The intelligence offering

New Partnerships and Collaborations

• CCS

• Horisont Energi MOU: Aim to jointly research reservoir identification and monitoring solutions
• E&P Supermajor: Joint research of suitability of different data types for CCS monitoring
• Canadian Discovery Ltd.: Collaboration to develop a regional CO2 storage risk assessment Atlas in North America

• Geothermal

• Eavor Technologies: Providing input to ensure value creation for development of new geothermal data products and applications

• Wind

• Renewable Energy company: Reviewing data requirements for wind development

• NES Ecosystem

• Cognizant: providing renewable industry related expertise to develop the NES Ecosystem

The NES Ecosystem – Our Delivery Platform

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• Developing the Ecosystem with Cognizant, taking use cases as the starting point
• Aiming to provide Software as a Service solution of Use cases for all 5 segments

Summary

• Q1 2021 net revenues of USD 74.8 million
• Free Cash flow of USD 83.9 million strong return to shareholders
  • Quarterly dividend maintained at USD 0.14 per share
  • Bought back 160,000 shares under share buy-back program

• 2021 financial guidance updated

• Multi-client investments of approximately USD 150-180 million
• Continued sector outperformance on cash flow and ROACE
• Industry-leading distribution to shareholders

• Delivering on diversification strategy

• Acquisition of 4C provides exposure to wind energy data & insight
• Strategic partnerships signed within other focus areas for NES

Thank you

Appendix

Income Statement IFRS

(MUSD)			Q1 2021 Q1 2020	Change
Net operating revenues		185.7	52.2	256%
Cost of goods sold		1.3	2.3	-45%
Personnel cost		14.1	13.5	4%
Other operational costs		8.2	10.7	-23%
EBITDA	87%	162.2	25.6	532%
Amortization of multi-client library		89.1	80.8	10%
Depreciation		4.4	2.7	63%
Operating result	37%	68.6	-57.9	n/a
Financial income		0.0	0.1	-88%
Financial expenses		-0.9	-0.4	130%
Exchange gains/losses		-3.2	13.1	-124%
Result before taxes	35%	64.5	-45.1	n/a
Tax cost	34%	21.9	-14.8	n/a
Net income	23%	42.6	-30.3	n/a
EPS (USD)		0.36	-0.26	n/a
EPS fully diluted (USD)		0.36	-0.26	n/a

Balance Sheet IFRS

Balance sheet		Q1 2021 Q1 2020	Change
Goodwill	288.4	288.4	0%
Multi-client library	893.7	1,163.8	-23%
Deferred tax asset	76.3	21.7	251%
Other non-current assets	104.5	96.9	8%
Total non-current assets	1,362.8	1,570.7	-13%
Cash and cash equivalents	253.5	248.4	2%
Other current assets	262.3	378.9	-31%
Total current assets	515.9	627.2	-18%
TOTAL ASSETS	1,878.7	2,198.0	-15%
Total equity	1,291.1	1,453.3	-11%
Deferred taxes	33.7	4.0	743%
Non-current liabilities	42.2	31.3	35%
Total non-current liabilities	75.8	35.3	115%
Taxes payable, withheld payroll tax, social security	10.2	34.5	-70%
Other current liabilities	501.6	674.9	-26%
Total current liabilities	511.7	709.4	-28%
TOTAL EQUITY AND LIABILITIES	1,878.7	2,198.0	-15%

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Reconciliation IFRS

(All amounts in USD 1,000s)	Q1 2021	Performance		Q1 2021
	As reported	obligations met	In progress projects	Segment
Revenues	185,741	-156,949	46,045	74,836
Amortization and impairment of multi-client library	89,122	-42,238	19,971	66,855
Income before tax	64,512	-199,188	66,016	-24,125
Taxes	21,943	-30,758	6,389	-2,426
Net income	42,568	-229,946	72,405	-21,699
		31-Mar-21		31-Mar-21
(All amounts in USD 1,000s)		As reported	Adjustments	Segment
Multi-client library		893,707	-300,144	593,564
Deferred tax asset		76,254	-24,051	52,202
Total non-current assets		1,362,845	-324,195	1,038,650
Accrued revenues		111,474	113,269	224,743
Total current assets		515,858	113,269	629,128
Equity		1,291,143	62,763	1,353,906
Deferred taxes		33,661	5,485	39,146
Total non-current liabilities		75,813	5,485	81,298
Accounts payable and debt to partners		93,188	54,346	147,534
Deferred revenues		363,886	-333,520	30,367
Total current liabilities		511,747	-279,174	232,574

Multi-Client Library

Segment reporting

1. Operational multi-client seismic investments

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