Q Earnings Release

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Transcription:

Q2 2015 Earnings Release Robert Hobbs CEO 30 July 2015 Kristian K. Johansen COO / Interim CFO

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 forwardlooking statements for any reason. 2

Q2 2015 Highlights Q2 Net revenues of 140 MUSD compared to 205 MUSD in Q2 Net late sales of 82 MUSD, down 40% from 137 MUSD in Q2 Net pre-funding revenues of 53 MUSD were down 12% from Q2, funding 45% of TGS operational multi-client investments for the quarter (116 MUSD) Operating profit for the quarter was 36 MUSD, 26% of net revenues, compared to 82 MUSD (40% of net revenues) in Q2 Cash flow from operations was 86 MUSD compared to 66 MUSD in Q2 Cash balance of 176 MUSD at 30 June 2015 Two 3D vessels, three 2D vessels, one WAZ 3D crew and three land crews operating under TGS control in Q2 2015 TGS was also a participant in one 3D ocean bottom seismic, three 3D seismic, one P-Cable and one EM joint venture projects Counter-cyclical investment strategy organic and inorganic (Polarcus data library) 3

Operational Highlights 4

Q2 2015 Operations Ramform Valiant 3D JV Atlantic Guardian EM JV Polarcus Adira 3D Ohio Crews Oklahoma Crew Polar Duchess 3D JV Bergen Surveyor P-Cable JV Ogo FAN JV CGG WAZ Crew Hawk Explorer 2D Osprey Explorer 2D Sanco Swift 3D JV Sanco Swift 3D Aquila Explorer 2D 5

Q2 Activity North America Mexico Gigante 181,500 km multi-client 2D survey Regional 2D survey commenced in Q2 2015 and expected to complete in H2 2016 Survey includes world class producing trends such as the Perdido fold belt and Campeche Bay Line ties will be made to the US Gulf of Mexico regional grids previously acquired by TGS East Canada Flemish Pass 4,300 km 2 multi-client 3D survey TGS first 3D acquisition offshore East Canada in partnership with PGS Survey will be acquired during the 2015 summer season U.S Central Gulf of Mexico Ogo FAN TM - multi-client Full Azimuth Nodal survey 136 shelf blocks over existing fields and exploratory acreage Part of multi-year collaboration agreement with FairfieldNodal Declaration - 9,600 km 2 multi-client M-WAZ survey 3,000 km 2 extension completed in Q2 2015 Long offset data being acquired orthogonal to TGS' underlying Justice WAZ survey with single pass vessel configuration derived from CGG s StagSeis TM technology 6

Q2 Activity Asia Pacific Australia Monuments 2,500 km 2 multi-client 3D survey Acquisition completed in Q2 2015 in partnership with Dolphin Geophysical Extends TGS data coverage in North Carnarvon Basin Nerites Season 2 13,000 km 2 multi-client 3D survey Acquisition completed in Q2 2015 Prospective frontier acreage with block relinquishment expected in 2019 Solid prefunding but high amortization due to timing of relinquishments New Zealand NWF14-17,500 km 2D multi-client survey Acquisition completed in Q2 2015 Within the Reinga, Northland and Taranaki basins, offshore Northwest New Zealand 2015 New Zealand block offer launched with bids due 30 September 2015 7

Q2 Activity Europe Barents Sea Europa - 2,900 km 2 multi-client 3D survey Acquisition completed in Q2 2015 South-East Norwegian Barents Sea Hjalmar 3,000 km 2 multi-client 3D survey Acquisition expected to complete in Q3 2015 Extends TGS 3D data coverage in the Hoop area to over 25,000 km 2 Ringvassøy - 4,100 km 2 multi-client 3D survey Acquisition completed in Q2 2015 Data acquired in partnership with Dolphin Geophysical in Hammerfest Basin Barents P-Cable TM 2015-500 km 2 multi-client 3D survey Acquisition of high resolution survey expected to complete in Q3 2015 Further expansion of partnership with WGP Barents EM 2015 9 new blocks in the Nordkapp and Tiddly areas Survey completed in Q2 2015 Further expansion of cooperation with EMGS In addition to its modern regional 2D seismic grid, the TGS data library has been expanded to include high quality 2D, 3D, P-Cable and EM data targeting client interest ahead of the 23rd Round and future licensing rounds in Norway 8

Q2 Activity North America Onshore Freeport - 1,777 km 2 3D multi-client survey Utica play, central Ohio Acquisition will complete in H2 2015 Blanchard 1,100 km 2 3D multi-client survey South Central Oklahoma Oil Play (SCOOP), Oklahoma Acquisition will complete in H2 2015 9

Polarcus Library: Western Atlantic Margin Corridor Letter of Intent to acquire Polarcus multi-client library (excluding Australia) for 27.5 MUSD, target close date early August Deal includes payments of and 2015 acquisition costs deferred under previous contractual agreements Polarcus revenue share after TGS has realized a predetermined return on its investment 22 3D seismic surveys comprising a total area of 40,000 km 2 and one 2D survey comprising 5,000 linear km Brings TGS seismic library to approximately 511,000 km 2 3D and 2,600,000 km 2D 10

Financials 11

Investment Closing NBV Key Financials 350 300 250 200 150 100 50 0 9 138 10 43 44 Q3 2013 218 137 Q4 2013 11 8 137 130 226 74 60 51 62 Q1 Net Revenues 191 271 222 205 190 298 172 140 Q2 9 Q3 9 Q4 Prefunding Late sales Proprietary 6 72 94 Q1 2015 5 82 53 Q2 2015 140 120 100 80 60 40 20 0 80 Q3 2013 EBIT before non-recurring items 120 Q4 2013 94 82 Q1 Q2 EBIT 71 111 Q3 Q4 Q1 2015 EBIT Margin 37 36 Q2 2015 50% 40% 30% 20% 10% 0% Cash Flow from Operations Multi-client NBV and Investments (operational) 300 250 200 150 100 50 0 118 Q3 2013 215 221 Q4 2013 Q1 66 Q2 184 Q3 131 Q4 260 Q1 2015 86 Q2 2015 175 150 125 100 75 50 25 0 111 Q3 2013 92 Q4 2013 129 Q1 114 Q2 93 Q3 126 Q4 163 Q1 2015 116 Q2 2015 1,000 900 800 700 600 500 400 300 200 100 0 Investment NBV 12

Net Revenue Breakdown Q2 2015 GPS 10% 2D 15% Q2 GPS 8% 2D 11% 3D 75% 3D 81% Other 14% Q2 2015 Q2 Other 12% AMEAP 16% NSA 51% AMEAP 17% NSA 50% Europe 19% Europe 21% 13

Q2 2015 Income Statement USD million, except EPS Q2 2015 Q2 Change in % Net revenues 140 205-32% Cost of goods sold proprietary and other 0.1 0.4-85% Amortization of multi-client library 55% 74 85-13% Gross margin 66 119-45% Personnel costs 17 21-19% Other operating expenses 9 10-15% Cost of stock options 0.9 1-38% Depreciation 3 4-20% Operating profit 26% 36 82-56% Net financial items 2 2-6% Profit before taxes 27% 37 84-55% Taxes 13 23-42% Net Income 18% 24 61-60% EPS, Undiluted 0.24 0.60-60% EPS, Fully Diluted 0.24 0.59-59% 14

Q2 2015 Cash Flow Statement USD million Q2 2015 Q2 Change in % Received payments from customers 141 163-14% Payments for operational expenses (25) (33) 23% Paid taxes (29) (64) 54% Operational cash flow 86 66 30% Investments in tangible and intangible assets (3) (9) 70% Investments in multi-client library (162) (92) -75% Interest received/paid 2 3-45% Dividend payments (99) (126) 21% Proceeds from share issuances 0.0 0.8-96% Change in cash balance (175) (157) -12% 15

YTD 2015 Income Statement USD million, except EPS YTD 2015 YTD Change in % Net revenues 311 427-27% Cost of goods sold proprietary and other 0.6 3-80% Amortization of multi-client library 59% 178 173 3% Gross margin 132 251-47% Personnel costs 34 45-26% Other operating expenses 17 20-13% Cost of stock options 1 3-49% Depreciation 7 7-10% Operating profit 23% 73 176-58% Net financial items 0.4 5-93% Profit before taxes 24% 73 181-59% Taxes 20 52-61% Net Income 17% 53 129-59% EPS, Undiluted 0.52 1.27-59% EPS, Fully Diluted 0.52 1.25-58% 16

YTD 2015 Cash Flow Statement USD million YTD 2015 YTD Change in % Received payments from customers 478 468 2% Payments for operational expenses (57) (69) 19% Paid taxes (75) (111) 33% Operational cash flow 346 287 21% Investments in tangible and intangible assets (5) (18) 71% Investments in multi-client library (312) (219) -42% Payments made to acquire debt instruments (5) - Interest received/paid 4 4 0% Dividend payments (99) (126) 21% Purchase of treasury shares (5) (3) -41% Proceeds from share issuances 2 1 37% Change in cash balance (74) (74) 0% 17

Balance Sheet USD million Q2 2015 Q1 2015 Change in % Q4 Assets Cash and cash equivalents 176 352-50% 256 Other current assets 308 312-1% 521 Total current assets 484 664-27% 778 Intangible assets and deferred tax asset 82 83-1% 85 Other non-current assets 25 24 4% 44 Multi-client library 919 876 5% 818 Fixed assets 36 39-7% 43 Total Assets 1,546 1,686-8% 1,768 Liabilities Current liabilities 234 282-17% 393 Non-current liabilities 4 9-59% 7 Deferred tax liability 31 30 3% 29 Total Liabilities 269 321-16% 428 Equity 1,277 1,365-6% 1,339 Total Liabilities and Equity 1,546 1,686-8% 1,768 The Company holds no interest-bearing debt 18

Investments per Vintage 700 600 609 685 100% 500 400 381 60% 60% 300 270 48% 200 100 153 40% 28% 20% 0 2% 6% 0% 2011 2012 2013 WIP Original investments Maximum allowed NBV (year-end) Net Book Value 19

Net Revenues vs. Net Book Value per Vintage 60% 57% 50% 50% 40% 35% 63% 30% 24% 20% 13% 10% 0% 7% 6% 4% 2% 2% 0% 0% pre-2011 2011 2012 2013 WIP Net revenues Net book value 20

Strong Cash Generation Delivers Shareholder Value Dividend per Share (NOK) and Dividend Yield* 2015 Dividend Yield vs OSX Index* 9 8 7 6 5 4 3 2 1 0 8.5 8.5 8 6 5 4 2009 2010 2011 2012 2013 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 5.2% 4.1% 3.4% 3.4% 3.1% 2.5% 2.2% 2.0% 2.0% 1.9% 1.6% 1.5% 1.2% n/a n/a n/a Dividend NOK Dividend yield * Dividend yield calculated based on share price at day of announcement * The OSX Index (PHLX Oil Service Sector Index) is a price weighted index composed of companies involved in the oil services sector. Yields based on share price at day of announcement Shareholder approval received for dividend of NOK 8.5 per share at AGM on 6 May 2015 Shares quoted exclusive of dividend on 7 May 2015 Dividend paid on 21 May 2015 to shareholders of record as of AGM Shareholder authorization to distribute quarterly dividend payments from Q1 2016 USD 30 million share buy back program completed in Q1 2015 21

Outlook 22

Outlook Demand for seismic data has significantly deteriorated over the first six months of 2015 and the outlook for improvement in the market remains quite uncertain EUR NSA Hjalmar 3D and P-Cable surveys expected to complete in Q3 2015 Norwegian 23rd Licensing Round and 2015 APA Round bids due 2H 2015 2015 season of Greenland 13,500 km multi-year program to commence in Q3 181,500 km Gigante regional 2D survey commenced Active summer season in East Canada including first 3D multi-client projects BOEM five-year plan (2017-2022) proposal includes 10 lease sales in GOM and one Atlantic lease sale TGS positioning for particularly high GOM lease turnover 2017-2019 AMEAP Exploration success offshore Mauritania (Kosmos) drives industry interest in NW Africa Expansion of Western Atlantic Margin Corridor data through Polarcus library purchase Ongoing scheduled license rounds in Australia, New Zealand and Indonesia 23

License Round Activity and TGS Positioning North & South America Central GOM Mar 2016 (5-Year Plan) Western GOM Aug 2015 (5-Year Plan) Alaska Offshore - 2016 & 2017 (5-Year Plan) Newfoundland & Labrador Nov 2015 (bids due, Scheduled Land Tenure) Nova Scotia Oct 2015 (bids due, 3-Year Rolling Plan) Canada Onshore at least monthly Brazil 13 th Round - Oct 2015 (public presentation of bids) Mexico Round 1 phased across 2015, 3 more rounds proposed by 2019 Africa, Middle East, Asia Pacific Madagascar 2015 (expected) Liberia Basin awards pending Australia Oct 2015, Feb & Apr 2016 (bids due) New Zealand Sep 2015 (bids due) Indonesia 2015 (expected) Europe / Russia Norway APA Sep 2015 (bids due) Norway 23 rd Round Dec 2015 (bids due) United Kingdom 2016 (expected) Greenland Dec 2016, 2017, 2018 (bids due) 24

Backlog 350 Historical Backlog (MUSD) 2011-2015 300 250 200 150 100 50 134 211 242 188 185 153 143 146 178 281 213 224 260 293 193 242 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 Q2 Q3 Q4 Q1 2015 Q2 2015 25

Land Crew 2D & Other OBN 3D & WAZ 2015 Projects Schedule NSA EUR AMEAP Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sanco Swift Australia Australia JV Sanco Sword Australia Polarcus Adira U.S. Gulf of Mexico Barents Sea Barents Sea CGG StagSeis TM Crew U.S. Gulf of Mexico Polar Duchess Barents Sea Dolphin JV Bergen Surveyor Ramform Valiant Ramform Viking Ogo FAN Barents Sea P-Cable TM JV Canada PGS JV Canada PGS JV U.S. Gulf of Mexico Fairfield Nodal JV Nessie FAN GOM JV Akademik Shatskiy Greenland Atlantic Guardian (CSEM) Aquila Explorer Barents Sea EMGS JV New Zealand Sanco Spirit Atlantic Explorer Hawk Explorer Canada PGS JV Canada PGS JV Mexico Osprey Explorer Northern Explorer Gulf of Mexico Mexico Mexico Harrier Explorer Mexico Canada Crew Kaybob-Bigstone Ohio Crews (2) Freeport Oklahoma Crew Blanchard 26

Summary Q2 net revenues of 140 MUSD Q2 operating profit of 36 MUSD, 26% of net revenues Q2 multi-client investment of 116 MUSD Challenging seismic market characterized by uncertainty. However, long-term future of asset-light, focused multi-client business remains strong TGS has a strong backlog of 242 MUSD Cash balance of 176 MUSD at 30 June 2015 Dividend of 99 MUSD distributed in May 2015 Attractive counter-cyclical investment opportunities identified including the purchase of the Polarcus data library Guidance for 2015 (investment guidance revised on 30 July 2015) TGS expects multi-client investments of approximately 490 MUSD and additional Capex of 15 MUSD TGS expects revenues of approximately 630 MUSD 27

TGS Performs in all Cycles EBIT margin vs. Seismic peers Return on Capital Employed 80% 80% 60% 70% 60% 40% 50% 20% 40% 0% 30% 20% -20% 10% -40% 0% Peer Average TGS ROCE WACC Average EBIT margin above 40% - stable EBIT performance through the cycles ROCE significantly above WACC substantial value creation in any industry cycle *Peer group includes CGG, Spectrum, Geokinetics, ION Geophysical, PGS, Dolphin, Polarcus 28

Thank you www.tgs.com