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Kristian Johansen Sven Børre LarsenCEO CFO26 October 2017
Q3 2017 Earnings Release
Forward-Looking Statements
2
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.
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Q3 2017 Highlights
• Q3 net revenues of 142 MUSD, up 25% from Q3 2016• Net late sales of 79 MUSD, up 18% from 67 MUSD in Q3 2016
• Net pre-funding revenues of 62 MUSD were up 58% from Q3 2016, funding 54% of TGS’ operational multi-client investments for the quarter
• Operational multi-client investments of 114 MUSD in addition to 1 MUSD from risk sharing arrangements
• Operating profit for the quarter was 26 MUSD compared to 11 MUSD in Q3 2016
• Cash flow from operations at 86 MUSD compared to 91 MUSD in Q3 2016• Cash balance of 205 MUSD in addition to undrawn 75 MUSD Revolving Credit Facility
• Quarterly dividend maintained at USD 0.15 per share
3©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Operational Highlights
Q3 2017 Operations
5©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Atlantic Explorer JV
TDI Brooks Coring
Polarcus Alima
Polar Duchess
Polarcus Asima
Polar Empress
Polar Marquis
Ramform Tethys JV
SCOOP/STACK Crew
Permian Crew
Ramform Titan JV
Ramform Sterling JV
Q3 Activity – U.S. Gulf of Mexico
Fusion M-WAZ reimaging program• M-WAZ reimaging program in collaboration with Schlumberger in
Mississippi Canyon, Atwater Valley and Ewing bank areas• ~27,000 km2 (1,166 OCS blocks ) 3D M-WAZ data previously
acquired by TGS and Schlumberger between 2008 and 2012• Reimaging is >70% complete with final data delivery mid-2018
Otos multibeam and seep study• ~289,000 km2 multibeam acquisition completed in early Q2;
acquisition of 350 cores and associated advanced geochemistry analysis will complete in Q4
• Designed to mirror the successful Gigante multibeam and seep study in the Mexican GOM
6©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Q3 Activity – East Canada
Newfoundland Labrador 2D – 2017 Season• 22,000 km multi-client 2D survey infilling and extending existing JV*
data in the region; targeting 2019 and 2020 Sectors of the Scheduled Land Tenure
Newfoundland Labrador 3D
• ~18,000 km2 multi-client 3D covering a mix of held and open acreage within the 2018 and 2019 Sectors of the Scheduled Land Tenure
• Long Range 3D• East Flemish Pass 3D Phase II• Harbour Deep 3D• Cape Broyle 3D
Well positioned for future licensing rounds• Following the most active year ever in this region, the TGS/PGS JV
library will exceed 175,000 km of 2D data and 29,250 km2 of 3D data in addition to 83,700 km of TGS vintage data, an expansive well log library and advanced multi-client interpretation products
7©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
* In JV with PGS
Q3 Activity – Norway
AM17 Atlantic Margin 3D• 40,000 km2 project in the central-southern Norwegian Sea – largest 3D
survey carried out by any company in Northern Europe
• Covers largely open blocks in a relatively under-explored area with limited drilling to date
• Several underlying blocks included in the 24th licensing round
• Acquisition in 2017 and 2018
Carlsen 3D • 5,490 km2 multi-client survey located in the Southwest Barents Sea
• Open acreage with blocks included in the 24th licensing round
• Acquisition completed in Q3 2017
8©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Q3 Activity – Ireland
Crean 3D - Ireland• ~5,400 km2 multi-client survey located in the South Porcupine
Basin between the Porcupine High and the Irish Mainland Platform
• Adding to TGS’s Atlantic Margin offering – building on the exploration success on the Newfoundland Labrador conjugate margin coupled with historical exploration in Atlantic Ireland
• Acquisition completed in October 2017
9©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Q3 Activity - U.S. Land
West Kermit 3D• 1,050 km2 high-resolution 3D multi-client project in Loving and Winkler
counties, TX, in the Delaware basin
• Data acquisition expected to complete in Q4 2017
Geary 3D• 200 km2 high-resolution 3D multi-client project in the SCOOP & STACK
play in the Anadarko Basin, OK
• Data acquisition expected to complete in Q4 2017
Permian Well Database• Comprehensive Permian well database announced to clients in Q1 2017
• Expanded to ~460,000 wells in Q3 2017 (including validated well headers and digital LAS) supported by multiple interpretive products
10©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Financials
53 3
7
3 2 2 10
2
4
6
8
10
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Proprietary revenues
90
38
8467
145
69 79 79
020406080
100120140160
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Late sales revenues
18% Y/Y
3723 26
39
17 15 27
62
0
20
40
60
80
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Prefunding revenues
13264
114 113165
86 108142
0
50
100
150
200
250
300
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Total revenues
12
Net Revenues
58% Y/Y
-82% Y/Y
25% Y/Y
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
NSA56%
Europe29%
AMEAP4%
Other11%
Q3 2016
NSA39%
Europe40%
AMEAP13%
Other8%
Q3 2017
2D17%
3D76%
GPS7%
Q3 2017
13
Net Revenue Breakdown
2D48%
3D43%
GPS9%
Q3 2016
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
230
62 69 74 92 62 69 95
0
50
100
150
200
250
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Amortization and impairment
-20
63
-35
29 33
74
12-19
-50
0
50
100
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Free cash flow *
14
Operating Expenses, EBIT, Free Cash Flow
67% - rate
31
-19
2411
45
217 26
-40%
-20%
0%
20%
40%
-30-20-10
01020304050
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
EBIT *
EBIT EBIT Margin* Earnings before interest and taxes and excluding larger
impairments and restructuring costs
* Defined as cash flow from operational activities minus operational cash investments in multi-client projects
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
28
18 17 2024
19 19 19
0
5
10
15
20
25
30
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Operating expenses *
-4% Y/Y
* Include personnel costs and other operating expenses. Adjusted for restructuring costs and larger impairments of operating items
839 830 823 816 812 820 812 838
0100200300400500600700800900
1,000
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Multi-client library - NBV
8851 59 64
46 58 59
114
0%10%20%30%40%50%60%70%80%90%100%
0
50
100
150
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Pref
undi
ng ra
tio
Ope
ratio
nal i
nves
tmen
ts
Operational investments* and prefunding ratio
Operational investments Prefunding ratio
15
Multi-Client Library
9%4%
13%
2%9%
5%
59%
0%3%
8%12%
15%19%
44%
0%
10%
20%
30%
40%
50%
60%
70%
Fullyamortized
2013 2014 2015 2016 2017 WIP
Net revenues Net book value
Net revenues vs net book value – year of completion
381
609
427
252 243
454
0
100
200
300
400
500
600
700
2013 2014 2015 2016 2017 WIP
Original investments Net Book Value
20 %
43%58%
21%5%
9%
72%
Investments – year of completion
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
*Operational investments excluding risk-sharing arrangements
USD million, except EPS Q3 2017 Q3 2016 Change in %Net revenues 142 113 25%Cost of goods sold – proprietary and other 0.2 5 -97%
Amortization of multi-client library 67% 95 74 27%
Gross margin 47 34 38%Personnel costs 13 12 10%
Other operating expenses 6 8 -23%
Cost of stock options 0.1 0.2 -75%
Depreciation 2 3 -37%
Operating profit 18% 26 11 140%Net financial items 1 2 -48%Profit before taxes 19% 27 13 108%Taxes 18 11 56%
Net Income 7% 9 2 441%EPS, Undiluted 0.09 0.02 441%
EPS, Fully Diluted 0.09 0.02 441%
16
Q3 2017 Income Statement
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
USD million Q3 2017 Q3 2016 Change in %Received payments from customers 115 110 4%
Payments for operational expenses (26) (25) -4%
Paid taxes (2) 6 -141%
Operational cash flow 86 91 -6%Investments in tangible and intangible assets (1) (2) 15%
Investments in multi-client library (105) (62) -69%
Interest received 0.8 0.7 18%
Interest paid (0.04) (0.03) -52%
Dividend payments (15) (17) 9%
Proceeds from share issuances - - N/A
Change in cash balance -35 11 -411%
17
Q3 2017 Cash Flow Statement
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
USD million Q3 2017 Q2 2017 Change in % Q4 2016AssetsCash and cash equivalents 205 239 -14% 191Other current assets 272 268 1% 353Total current assets 477 508 -6% 544Intangible assets and deferred tax asset 82 84 -2% 86Other non-current assets 0.5 2 -73% 11Multi-client library 838 812 3% 812Fixed assets 21 21 -3% 23Total Assets 1,418 1,426 -1% 1,477LiabilitiesCurrent liabilities 223 227 -2% 262Non-current liabilities 5 5 -8% 6Deferred tax liability 33 33 -1% 39Total Liabilities 261 265 -2% 307Equity 1,157 1,161 0% 1,169Total Liabilities and Equity 1,418 1,426 -1% 1,477
Balance Sheet
18©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Dividend stable at USD 0.15 per share
• Shareholder authorization to distribute quarterly dividend payments• Aim to keep a stable quarterly dividend through the year• Actual quarterly dividend level paid will be subject to continuous evaluation of market outlook, cash flow
expectations and balance sheet development
• Q4 2017: USD 0.15 per share to be paid on 16 November 2017 • Shares will trade ex-dividend on 2 November 2017
19©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
5 NOK6 NOK
8 NOK 8.5 NOK
8.5 NOK
USD 0.15per Quarter
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2011 2012 2013 2014 2015 2016 2017*
USD
per
sha
re
Year of Payment*Quarterly Dividends, defined in USD from 2016Historical NOK dividends converted to USD using FX rate on ex-dividend date
Q1
Q2
Q3
Q4Q4
Q1
Q3
Q2
3.7% 3.6%4.0% 3.9%
4.9%5.2%
3.6%
2.7%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2010 2011 2012 2013 2014 2015 2016* 2017*
Yiel
d (o
n da
y of
ann
ounc
emen
t)
Year of Payment
Dividend Paid* (2010 – 2017) Dividend Yield (2010 – 2017)
*2016 and 2017 Dividend Yield annualized based on the weighted yield at the time of announcement of quarterly dividends
Outlook
Oil market uncertainty to persist in the short-term
21
Brent oil price
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Cha
nge
to S
tock
s m
mbd
Source: EIA Short Term Energy Outlook, October 2017
Global liquid production / consumption balance
0
20
40
60
80
100
120
140
Jan-
13M
ar-1
3M
ay-1
3Ju
l-13
Sep
-13
Nov
-13
Jan-
14M
ar-1
4M
ay-1
4Ju
l-14
Sep
-14
Nov
-14
Jan-
15M
ar-1
5M
ay-1
5Ju
l-15
Sep
-15
Nov
-15
Jan-
16M
ar-1
6M
ay-1
6Ju
l-16
Sep
-16
Nov
-16
Jan-
17M
ar-1
7M
ay-1
7Ju
l-17
Sep
-17
Source: EIA, October 2017
Early indications of modest E&P spending growth in 2018
22©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Annual % change in upstream E&P spending
• Most market analysts expect E&P spending growth of 0 to 10% in 2018• Flattish development in offshore spending expected – but substantial variation (i.e. uncertainty) in estimates
714
36
1116 16
-33
-9
-20-24
8 73
106
0
20 19
7
1623
3
-25
8
16
6
2127
2326
1922
-8
1519
1411
2
-27
-36
5 7
-40
-30
-20
-10
0
10
20
30
40
% A
nnua
l Cha
nge
Source: SEB Equity Research, Annual E&P spending survey, 2017
Current exploration activity not sustainable
23
Average reserve life large integrated oil companies*
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Organic replacement ratio
Source: SEB Equity Research
* Exxon, Shell, BP, Chevron, Total, ENI, ConocoPhillips, Repsol, Statoil
Source: Carnegie
8
9
10
11
12
13
14
Year
s
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
Upstream cost is coming down
24
Oil companies’ cash flow break-even price versus Brent
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Deepwater F&D cost back to 2008 level
Source: Goldman Sachs
0
2
4
6
8
10
12
14
16
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
F&D
Cos
t (in
cl. i
nfra
stru
ctur
e)
USD
/bbl
0
20
40
60
80
100
120
2014 2017
USD
per
bbl
Average break-even price (1) Average Brent (2)
Source: WoodMac
1. Base-case estimate of Brent price required to remain cash flow neutral (accumulate no additional debt) between 2017 and 2019 for more than 50 of the world’s leading oil companies, as estimated by Wood Mackenzie. Includes upstream costs and pro-rated shareholder distributions. Excludes downstream cash flow
2. Year-to-date for 2017
25
Backlog down following busy quarter
281
213 224
293
193242
145 125 10351
121 127178
260
182
71 630
50
100
150
200
250
300
350
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Historical Backlog (MUSD) 2013 - 2017
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
2017 Projects Schedule*Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Dong Fang Kan Tan 1
Atlantic Explorer
Atlantic Guardian CSEM
Fugro Multibeam x2
TDI Brooks Coring
NWAAM JV
U.S. GOM (Otos)
2D &
Oth
erEUR AMEAP
U.S. GOM (Otos)
Barents Sea JV
WesternGeco Coil Crew
Polarcus Asima
Polarcus Alima
Polar Duchess
Polar Empress
Polar Marquis
Ramform Tethys
Ramform Titan
Ramform Sterling
East Canada JV
Permian Crew
Permian Crew II
SCOOP / STACK Crew
West Kermit
U.S. GOM (Revolution) JV
3DLa
ndNSA
*Acquisition schedule excludes Fusion M-WAZ Reprocessing, other processing projects and GPS investments
Norwegian Sea (Atlantic Margin)
Norwegian Sea (Atlantic Margin)
Norwegian Sea (Atlantic Margin)
©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Atlantic Margin Barents Sea (Carlsen)
Atlantic Margin Ireland (Crean)
East Canada JV
East Canada JV
East Canada JV
West Lindsey
26
Geary
License Round Activity and TGS Positioning
27©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Europe / Russia• Norway APA – early 2018 (awards due)• Norway 24th Round – Nov 2017 (bids due)• UK 30th Round – Nov 2017 (bids due)• Greenland – Dec 2017 & 2018 (bids due)
Africa, Middle East, Asia Pacific• Ongoing uncertainty on timing of African licensing rounds• Australia – Feb & Mar 2018 (bids due)• New Zealand – May 2018 (nominations due)• Indonesia – Nov 2017 (bids due)
North & South America • Central & Western GOM – Mar & Aug (2017-22 Plan)• Newfoundland Labrador – 2017 round delayed; call for 2018 nominations open• Nova Scotia – Dec 2017 (3-Year Rolling Plan)• Canada Onshore – at least monthly• Brazil Pre-salt rounds - Oct 2017; 15th Round - H1 2018• Mexico Round 2.4 (deep water)- Jan 2018; Round 3.1 (shallow) – Mar 2018
Summary
• Q3 net revenues of 142 MUSD • Q3 EBIT of 26 MUSD• Cash balance of 205 MUSD in addition to undrawn 75 MUSD Revolving Credit Facility• Quarterly dividend maintained at USD 0.15 per share
• Oil market uncertainty to persist in short-term• Long-term future of asset-light, focused multi-client business remains strong
• Cost control, disciplined counter-cyclical investment and balance sheet strength positions TGS to enhance its leading position
• 2017 guidance (as updated 23 May 2017):• New multi-client investments of approximately USD 260 million
• Additional multi-client investments expected from sales of existing surveys with risk sharing arrangements
• Pre-funding of new multi-client investments expected to be approximately 40%-45%
28©2017 TGS-NOPEC Geophysical Company ASA. All rights reserved
Thank you
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