TGS Swedbank First Securities 2013 Nordic Energy Summit Kristian K. Johansen Chief Financial Officer
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. 2
Another Record Year for TGS 1,000 900 800 700 600 500 400 300 200 100 0 Revenue development last 10 Years CAGR 22% 932 609 582 568 478 453 396 240 172 124 137 2002 2003 2004 2005 2006 2007 2008 2009 2010 In 10 years, TGS revenues have grown by 7 times from 124 MUSD to 932 MUSD (CAGR of 22%) Record high net revenues of 932 MUSD, up 53% from All-time high operating profit of 402 MUSD, 43% of net revenues. This is up 67% from Strong cash flow from operations before multi-client investments of 663 MUSD, up 36% from Healthy 2013 outlook for seismic spending and continued growth TGS proposes a dividend of NOK 8 per share for the accounting year (up from NOK 6 last year) 3
This is TGS Leading provider of multi-client seismic data and related geoscientific products to the oil & gas industry Main offices: Houston and Oslo Regional offices: London, Stavanger, Perth, Calgary and Rio de Janeiro Calgary Houston TGS Main Offices Stavanger Oslo London Fundamental values: Unmatched Quality and Service, Growth for Stakeholders Approximately 850 employees Rio de Janeiro Perth Traded on Oslo Stock Exchange, in OBX Index (25 most liquid shares at the OSE) Market Cap: ~$3.5 billion Leading and global provider of multi-client seismic data 4
TGS Value Proposition Strong balance sheet provides flexibility Unique high-quality data in the right place at the right time Multi-client model allows customers to access data at a reduced cost. Vendor neutral philosophy allows access to capacity and technology as needed Project modeling and investment merit drive major project decisions Diversified portfolio with a variety of data types and geographical locations covering frontier, emerging and mature markets 5
Track Record of Performing through the Cycles 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 60% MC Sales/MC average 4 year Investment 2004 2005 2006 2007 2008 2009 2010 EBIT margin vs. vessel rates 300 TGS multi-client projects return 2-2.5 times cost. Demand for data drives TGS performance TGS best at top of the cycles, but multiclient model also provides protection at the bottom of the cycle 50% 250 40% 30% 20% 10% 200 150 100 50 EBIT margin correlates strongly with oil price, E&P spending and vessel prices due to increased library sales 0% 2003 2004 2005 2006 2007 2008 2009 2010 0 EBIT margin ** Vessel rates* * Average vessel rates per year for an 8 streamer 3D boat. Source: ODS Petrodata. (Note that rates may differ from actual rates paid by TGS). 6 ** TGS historical EBIT margins excluding one off items.
Key Quarterly Financials 300 250 200 150 100 50 0 132 11 85 98 37 Q1 136 11 27 Q2 160 15 91 146 54 Q3 Net Revenues 181 5 30 Q4 191 4 113 75 Q1 215 6 109 7 100 99 Q2 245 281 13 139 204 Q3 65 Q4 120 100 80 60 40 20 0 59 Q1 EBIT before non-recurring items 58 Q2 61 Q3 82 89 94 Q4 Q1 Q2 101 Q3 118 Q4 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Prefunding Late sales Proprietary EBIT EBIT Margin Cash Flow from Operations Multi-client Investments (operational) 250 200 150 100 50 0 138 Q1 93 Q2 66 Q3 189 Q4 147 144 Q1 Q2 129 Q3 243 Q4 180 160 140 120 100 80 60 40 20 0 44 62 Q1 Q2 111 Q3 61 Q4 101 Q1 162 Q2 138 Q3 95 Q4 7
Cash Flow Statement USD million Received payments Payments for operational expenses Net gain/(loss) from currency exchange Paid taxes Operational cash flow Investments in tangible and intangible assets Investments in multi-client library Investments through mergers and acquisitons Proceeds from sales of short-term investments Interest received Interest paid Dividend payments Purchase of own shares Proceeds from share offerings Change in cash balance 12M 12M 862 (119) (98) - (80) (62) 663 487 (26) 5 72% (0.4) (0.2) 43% (103) 648 (2) (13) (483) (283) (76) (44) 16 4 3 (93) - (30) 7 16 3 46 Change in % 33% 22% -100% 29% 36% 98% 70% 73% 292% 11% -100% -58% -93% 8
Strong Balance Sheet Backing TGS Strategy Other Goodwill Cash Receivables Multi-client Library 126 112 339 458 651 Assets 375 143 1168 Equity and Liability Current liabilities Cash balance per Q4 Non-current liabilities Equity represents 339 MUSD Dividend paid in June of 103 MUSD Proposed dividend of 149 MUSD in 2013 Strong balance sheet provides excellent opportunities to continue growth M&A Strong credit quality attracts prefunding Flexibility No interest bearing debt and strong cash balance 9
Net Book Value ()NBV) in % of Original Investment (year-end) Library Book Value per Vintage 20700 % 3 % 600 558 100% 500 400 300 258 299 270 100% 59% 200 100 0 153 132 40% 41% 60% 20% 20% 28% 0% 6% 2008 2009 2010 WIP Original investments Maximum allowed NBV (year-end) Net Book Value Allowed Maximum % (year-end) 10
TGS Dividend Payments 160 149* 4.2% 140 120 100 93 103 4.0% 3.8% 80 60 40 20 0 65 2010 2013 Dividend USD Dividend yield 3.6% 3.4% 3.2% 3.0% * Proposed dividend NOK 8 per share Dividend yield calculated based on share price at day of announcement 11
12 Outlook
Positive Market Drivers in Oil Services World Liquid Fuel Supply Oil and gas reserves continue to decline More oil produced from existing reserves than we are discovering Source: IEA World Energy Outlook Political instability and closed markets reduces available acreage in known oil producing areas, putting more pressure on exploring new frontiers offshore and onshore Increasing investments are required just to maintain reserve replacement 13
E&P Spending Increase of 7% Expected For 2013 Barclays expect 2013 global E&P spending to surpass 640 BUSD More than 300 oil and gas companies worldwide participated in the Barclays Capital survey about their spending intentions for 2013 According to the Barclays Capital survey, global E&P spending in 2013 is expected to increase 7% to 644 BUSD, versus 604 BUSD in Acceleration expected to be led by increased expenditures internationally (up 9%) Companies are on average basing 2013 capital spending budgets on an average oil price of $85 WTI and $98 Brent 14
License Round Activity and TGS Positioning Northeast Greenland: Pre-round for Kanumas Consortium closed with awards expected Mar 2013 Ordinary Round closes Oct 2013 Canada - Onshore Alberta (bi- weekly), British Columbia (monthly), Saskatchewan (bi-monthly) Canada Newfoundland/ Labrador: Scheduled lease round expected H2 2013 Canada Nova Scotia: License round expected 2013/14 Norway: 22nd Concession Round closed with awards expected Q2 2013 Next Concession Round expected 2014 APA Round closed with awards expected Q1 2013 2013 APA round expected Sep 2013 United Kingdom: 28th round expected 2014 Gulf of Mexico 5 Year Plan -2017 Central GOM: 20 Mar 2013 Western GOM: H2 2013 Brazil: Round 11 announced for May 2013 Pre-Salt expected Nov 2013 Expected Announced Sierra Leone: License round expected 2014 Liberia: Ultra Deep round expected in 2013 Australia Acreage Release planned May 2013 31 blocks proposed spanning 6 basins Indonesia: Bid deadline for Second Petroleum Round Regular Tenders 19 Feb 2013 2013 Petroleum Rounds to be announced 15
Commercial Agreement with Fugro to License Data Exclusive right to license and market the majority of Fugro s multi-client 2D library and receive commission fees on the sales of this data. The agreement covers more than 1,000,000 km of seismic data in areas of great strategic interest for TGS. Significant data coverage in existing focus areas such as Northwest Europe Access to a broad range of new client contacts Exposure to seven new countries/areas where TGS is not active today Reprocessing opportunities and planning tool for new 3D surveys 16
Key Drivers for Continued Seismic Outperformance Geographic region Share of revenues Key drivers for future investments and growth EUR EUR Recent discoveries in mature markets in North Sea triggers increased optimism and demand for modern seismic Exploration success in the Barents Sea attracts new entrants Strong industry interest for 22 nd Norwegian License round trigger potential uplifts on awards and new investments for further license rounds NSA NSA GOM slowly getting back to normal with new seismic surveys and March 2013 Central Gulf of Mexico Lease Sale New 5 year plan 2017 approved by BOEMRE providing visibility for future activity growth Technological developments generate new opportunities in mature areas Expected license rounds in Brazil in 2013 fuels further industry interest AMEAP AMEAP Strong industry interest in the West African transform margin with proven potential Increasing industry interest in Australia and changed regulations facilitate for new multi-client projects South Atlantic pre-salt plays in Africa could prove potential similar to Brazil 17
Strong Position in Onshore Market Ille Lake 3D United States Firestone 3D - expanded to 658 km 2 in liquid rich Utica play Bucklin 3D - 421 km 2 of 3D data in Mississippi Lime Oil Play Wellington 3D - 510 km 2 of 3D data in the Mississippi Lime Oil Play Canada Neptune South - 218 km 2 of 3D data in the Bakken Oil play Unity North - 130 km 2 of 3D data in the Birdbear play of Western Saskatchewan Cameron River - 461 km 2 of 3D data in the liquids rich Triassic Montney and Doig unconventional fairways Ille Lake 180 km 2 of 3D data in the deep basin of Central Alberta Legacy 3D Data - 12,689 km 2 18
Geological Products & Services 19 TGS added 299,000 new LAS wells to its industry leading digital well log database in Q4 : 47,000 US LAS wells 252,000 Canada LAS wells 5,860 DS+ (directional surveys) also added
Improved Imaging From Clari-Fi TM Original processing Processing methodology that increases bandwidth and improves imaging May be applied to conventionally acquired pre- or post-stack data Addresses ghost and filtering effects Opportunities for reprocessing of existing library Strengthens technology offerings on new projects Clari-Fi 20
Acquisition Capacity Secured 3D Vessels committed per 31 Jan 2013 EUR AMEAP NSA Option 3D Vessel Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Geco Eagle Angola Geo Caribbean Gulf of Mexico Option Polarcus Asima Liberia Option Geo Barents NW Europe Option Oceanic Challenger NW Europe Option Sanco Swift NW Europe 2D Vessels committed per 31 Jan 2013 2D Vessel Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Akademik Shatskiy Colombia Option Geo Arctic Sanco Spirit NW Europe Canada Option Land Crews committed per 31 Jan 2013 Crew Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Kansas Crew Ohio crew Canada Crew 1 Canada Crew 2 Wellington Firestone Cameron River Ille Lake 21
Summary Record high net revenues of 932 MUSD, up 53% from All-time high operating profit of 402 MUSD, 43% of net revenues. This is up 67% from Strong cash flow from operations before multi-client investments of 663 MUSD, up 36% from Strong seismic demand in all key markets allows TGS to continue profitable growth. Guidance for 2013: Multi-client investments 530 600 MUSD Average pre-funding 50 60% Average multi-client amortization rate 40 46% Net revenues 970 1050 MUSD Contract revenues approximately 5% of total revenues 22
TGS Performs in all Cycles ROCE vs. Seismic Peers EBIT Margins vs. Seismic Peers 100% 80% 80% 60% 60% 40% 20% 0% -20% 40% 20% 0% -20% -40% -40% -60% -80% -100% -120% 2007 2008 2009 2010 TGS Peer Range Peer Average -60% -80% -100% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 TGS Peer Range Peer Average ROCE consistently outperforming peers Average EBIT margin above 40% Stable EBIT performance through the cycles * ROCE is based on EBIT divided by average capital employed. Peer group includes CGG, Fugro, Geokinetics, ION Geophysical, PGS, Western Geco, and GGS Source Platou Markets and TGS 23
Thank you 2013 TGS-NOPEC Geophysical Company ASA. All rights reserved.