DNB Markets Oil, Offshore & Shipping Conference - TGS Reports... · NSA BOEM five-year plan (2017-2022) proposal includes 10 lease sales in GOM and one Atlantic lease sale TGS positioning

Kristian Johansen

DNB Markets

Oil, Offshore & Shipping Conference

COO / Acting CFO

Oslo 4-5 March 2015

©2015 TGS-NOPEC Geophysical Company ASA. All rights reserved.

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.

Forward-Looking Statements

2


Main offices:

Houston and Oslo

Regional offices: London, Perth,

Calgary, Singapore and Rio de Janeiro

Fundamental values:

Unmatched Quality and Service, Growth

for Stakeholders

Approximately 900 employees

Traded on Oslo Stock Exchange,

part of OBX Index

(25 most liquid shares at the OSE)

Market Cap:

~$2.5 billion

This is TGS

Leading and global provider of multi-client seismic and geoscience data

Calgary

Rio de Janeiro

Singapore

Perth

Houston

London

Oslo

3


Well positioned in the seismic value chain

2D Seismic

3D Seismic

Wide Azimuth (WAZ) Seismic

M-WAZ Seismic

Full Azimuth Nodal Seismic

Electromagnetics (CSEM)

Aeromagnetics

Gravity

Multi-beam

Seismic processing

Complex depth imaging

Proprietary technology

Ongoing R&D investment

Contract business model

Geophysical Data

Digital well data

Directional Surveys

Production data

Seabed / Seep studies

Regional geologic

interpretation

Facies Map Browser

Interpretive services

Geological Data Imaging Services

S E R V I C E S M U L T I - C L I E N T

4


Flexibility

Investment decisions not

driven by vessel utilization

Vendor neutral philosophy

allows access to capacity and

technology as needed

Balance sheet

People and culture

Data processing

Geoscience

Geographically diverse

data library

Leadership in mature

basins

Leadership in frontier

basins

Asset light

business model Global Quality

5

TGS competitive advantage


Return targets

Prefunding

requirements

Project

characteristics

Illustrative IRR /

cash profile

Characteristics

+ 1.7X 2.0X – 2.5X + 2.5X

70 – 120% 40 – 60% 20 – 40%

• Awarded acreage

• Onshore areas

• Fewer clients

• Farm-ins / relinquishments

• Low downside risk

IRR: High

TGS multi-client project portfolio

0 1 2 3 4

Cash Sales

0 1 2 3 4

Cash Sales

0 1 2 3 4

Cash Sales

IRR: High / Medium IRR: Medium

• Mainly open acreage

• Regular license rounds

• Established multi-client areas

• Many clients

• Medium risk

• Open acreage

• Early stage

• Geo knowledge

• Many potential clients

• Medium / high risk

Diversified Portfolio With Different Characteristics

6


0%

10%

20%

30%

40%

50%

60%

70%

80%

ROCE WACC

Average EBIT margin above 40% - stable EBIT – performance through the cycles

ROCE significantly above WACC – substantial value creation in any industry cycle

-1 00%

-8 0%

-6 0%

-4 0%

-2 0%

0%

20%

40%

60%

80%

TGS Peer Range Peer Average

*Peer group includes CGG, Geokinetics, ION Geophysical, PGS, Western Geco, Dolphin, Polarcus

EBIT margin vs. Seismic peers Return on Capital Employed

TGS Performs in all Cycles

7


8


8

Financials


Q4 revenues were 298 MUSD, up 10%

from Q4 2013 – record high quarterly

revenues for TGS

2014 full year revenues of 915 MUSD,

up 4% from 2013

Q4 operational multi-client investments

of 126 MUSD to reach full year

investments of 462 MUSD

Full year Guidance achieved

2014 – Delivering on expectations

0

200

400

600

800

1000

2009 2010 2011 2012 2013 2014

9

TGS Revenues 2009 – 2014 (MUSD)


179

34

118

215 223

66

184

131

0

50

100

150

200

250

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Cash Flow from Operations

56 43 43 44 74 60 51 62

127 155 138

218 137 137 130

226

29 12 9

10

11 8 9

9

0

50

100

150

200

250

300

350

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Net Revenues

Prefunding Late sales Proprietary

211 210 191 271 222 205 190 298

89 98 80

120 94

82 71

111

0%

10%

20%

30%

40%

50%

0

20

40

60

80

100

120

140

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

EBIT before non-recurring items

EBIT EBIT Margin

126 110 111

92

129 114

93

126

0

100

200

300

400

500

600

700

800

900

0

25

50

75

100

125

150

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Clo

sin

g N

BV

Inv

estm

en

t

Multi-client NBV and Investments (operational)

Investment NBV

Key Financials

10


Cash balance per Q4 2014 represents 256 MUSD

Strong balance sheet provides excellent opportunities to continue growth

M&A

Strong credit quality attracts prefunding

Flexibility

Solid balance sheet backing TGS strategy

818

1339

521

36

256

393 67 104

Assets Equity and Liability

Multi-client

Library

Receivables

Cash

Other

Goodwill

Equity

Non-current

liabilities

Current liabilities

11

No interest bearing debt and strong cash balance


299

153

270

381

609

419

0

100

200

300

400

500

600

700

2010 2011 2012 2013 2014 WIP

Original investments Maximum allowed NBV (year-end) Net Book Value

100%

40%

4%

100%

20% 8%

60%

63%

52%

32%

0%

Investments per Vintage – ahead of schedule

12


63%

8%

11%

1%

7% 8%

23%

41%

0% 0% 1%

3%

17%

43%

36%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

pre-2010 2010 2011 2012 2013 2014 WIP

Net revenues Net book value

Net Revenues vs. Net Book Value per Vintage

13


Strong Cash Generation Delivers Shareholder Value

The Board proposes a dividend of NOK 8.5 per share to the AGM in May 2015

In addition to a dividend, the Board authorized in 2014 a share buy back program of

USD 30 million of which approximately USD 26 million has been implemented to date.

The remaining USD 4 million will be purchased under the current authorization.

* 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

14

Dividend per Share (NOK) and Dividend Yield* 2015 Dividend Yield vs OSX Index*

18.2%

10.1%

5.2% 4.4%

3.3% 3.0% 2.1% 2.0% 1.9% 1.9% 1.8% 1.7%

1.2%

n/a n/a n/a

4

5

6

8 8.5 8.5

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

0

1

2

3

4

5

6

7

8

9

2009 2010 2011 2012 2013 2014

Dividend NOK Dividend yield


15


15

Outlook


Macro Outlook Recent oil price development to result in decreased exploration spend from

customers

EUR Norwegian 23rd Licensing Round bids due 2 December 2015

Further CSEM investment in partnership with EMGS

2015 season of Greenland 13,500 km multi-year program to commence in Q3

NSA 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

Continued strong interest in Newfoundland Labrador’s scheduled land tender

system

Vessels secured for entry into Mexico (subject to permit)

Three onshore projects announced for 2015

AMEAP 13,000 km2 Nerites Season 2 expected to complete in Q2 2015

17,500 km 2D multi-client survey in Northwest New Zealand to complete in Q2

2015

Awaiting further Africa license round announcements

Outlook

16


2015 Announced Projects

Europe / Russia

• NE Greenland 2D, 13,500 km (multi-year)

• Barents Sea CSEM, 10 blocks (with EMGS)

Africa, Middle East, Asia Pacific

• Nerites Season 2 3D, 13,000 km2

• New Zealand 2D, 17,500 km

North & South America Marine

• Panfilo 3D, 11,500 km2

• Declaration M-WAZ, >8,000 km2

• Snipe Phase 52 2D, 12,000 km

• Nessie & Ogo FAB, 180 blocks (with Fairfield Nodal)

North America Land

• Kaybob-Bigstone 3D, 722 km2

• Freeport 3D, 1,777 km2

• Blanchard 3D, 1,100 km2


East Canada Newfoundland Labrador 2015 (provisional, to be

confirmed) - 30,000 km multi-client 2D survey in

partnership with PGS

Continuation of a multi-year program targeting Sectors

announced for Newfoundland Labrador’s new Scheduled

Land Tender system

Complements TGS’ existing 84,500 km of 2D in this

region

Data to be acquired utilizing PGS’ Geostreamer®

technology with data processing performed by TGS

Central Gulf of Mexico Snipe Phase 52 – 12,000 km multi-client 2D survey

Long offset, high resolution data in ultra deep water,

extending to the U.S. – Mexico boundary

Supplements TGS’ existing library in the region and

provides critical well ties to a number of recent discoveries

2015 Activity - North America

* In partnership with

18


Central Gulf of Mexico Panfilo - 11,500 km2 multi-client 3D survey

commenced in Q4 2014

Deep water Lund and Henderson protraction areas of

Central Gulf of Mexico

Survey covers mainly open acreage and targets

future lease rounds

Declaration - >8,000 km2 multi-client M-WAZ

survey commenced in Q4 2014

Extension announced in Q1 2015

Mississippi Canyon and Viosca Knoll protraction

areas of the Central Gulf of Mexico

Data being acquired orthogonal to TGS' underlying

Justice WAZ 3D survey

Long offsets to 16 km with single pass vessel

configuration derived from CGG’s StagSeisTM

technology

Nessie & Ogo FANTM - multi-client ocean bottom

seismic surveys

Surveys cover a number of existing fields and

exploratory acreage on the Central Gulf of Mexico

shelf

Part of multi-year collaboration agreement with

FairfieldNodal

2015 Activity – North America

19


New Zealand NWF14 - 17,500 km 2D multi-client survey

Within the Reinga, Northland and Taranaki basins,

offshore Northwest New Zealand

Nine offshore permits granted to oil companies in

Reinga-Northland, Taranaki, and the Pegasus

basins as part of its 2014 block offer

Consultation process for 2015 block offer underway

Australia Nerites Season 2 – 13,000 km2 multi-client 3D

survey

Second season of the Nerites 3D seismic survey to

fulfill work program commitment over EPP44 and

EPP45 awarded November 2013

Prospective frontier acreage with block

relinquishment expected in 2019

Solid prefunding but high amortization due to timing

of relinquishments

2015 Activity – Asia Pacific

20


Greenland

NE Greenland 2015 – continuation of 13,500

km multi-client 2D survey

Multi-year program

Data being processed utilizing TGS’ proprietary

Clari-Fi™ broadband technology

Upon completion of the program TGS’ 2D multi-

client library in the region will total more than

36,000 km

Barents Sea

Barents CSEM 2015 – Approximately 10 new

blocks in the Nordkapp and Tiddly areas

Further expansion of cooperation with EMGS

Will provide clients with high quality, integrated

CSEM and seismic data for the 23rd Round

2015 Activity – Europe

21


Onshore projects

22

U.S. Onshore Freeport - 1,777 km2 3D multi-client survey

Utica play, central Ohio

Acquisition will complete in the second half of

2015

Blanchard – 1,100 km2 3D multi-client survey

South Central Oklahoma Oil Play (SCOOP),

Oklahoma

Acquisition will completed in mid 2015

Canada Onshore Kaybob-Bigstone - 722 km2 3D-3C multi-

client survey

Duvernay fairway, West Central Alberta

Acquisition will complete in Q1 2015


License Round Activity and TGS Positioning

23

Europe / Russia

• Norway APA – 2014 Round awards

announced in Q1 2015

• Norway 23rd Round – 2H 2015 (bids due)

• United Kingdom – 2016 (expected)

• Greenland – three rounds planned 2016-18

Africa, Middle East, Asia Pacific

• Madagascar – 2015 (expected)

• Sierra Leone – 2015 (expected)

• Liberia Harper Basin - 2015 (expected)

• Australia – Feb 2015 & Apr 2015 (bids due)

• Indonesia – 2015 (expected)

• New Zealand – Sept 2015 (bids due)

North & South America

• Central GOM – Mar 2015 (5-Year Plan)

• Western GOM – Aug 2015 (5-Year Plan)

• Alaska Offshore - 2016 & 2017 (5-Year Plan)

• Newfoundland & Labrador – Scheduled Land Tenure system

• Nova Scotia – 2015, 2016 & 2017 (3-Year Plan)

• Canada Onshore – at least monthly

• Brazil - 2015 / 2016 (expected)

• Mexico – 2015 (Round 1 phased across 2015)


TGS applies appropriate technologies to address imaging challenges

associated with specific geologies and operating environments

TGS acquires complementary data products to expand and enhance its

geoscience data library

Enhancing Value through Technology

Clari-FiTM Data Processing (Images courtesy of TGS)

CSEM (Images courtesy of EMGS / TGS)

Basin Interpretation (formation tops, temperature

volume, pressure volume, etc.)

Ocean Bottom Nodes (Images courtesy of Fairfield)


TGS owns and manages a global well log database

Strong synergies with multi-client seismic data business

Global Well Data Coverage

25


Backlog

110 124 134

242

188 153 146

185 178 213 224

260

211

143

281 293

0

50

100

150

200

250

300

350

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Historical Backlog (MUSD) 2011 - 2014

26


Letter of Award with Seabird Exploration provides access to up to six seismic vessels over a period of approximately 36 months in

Mexico and US Atlantic waters (subject to issuance of seismic acquisition permits from relevant authorities)

2015 Projects Schedule

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sanco Swift

Sanco Sword

Polarcus Adira

CGG StagSeisTM Crew

Australia

Akademik Shatskiy

Atlantic Guardian (CSEM)

Aquila Explorer

Osprey Explorer

PGS JV

Canada Crew

Ohio Crews (2)

Oklahoma Crew

Australia

Freeport

NW Eur EMGS JV

Greenland

New Zealand

Gulf of Mexico

Ogo FAN

Nessie FAN

Gulf of Mexico JV

Gulf of Mexico 3D

& W

AZ

O

BN

2

D &

Oth

er

La

nd

Cre

w

Kaybob-Bigstone

Gulf of Mexico

Blanchard

Gulf of Mexico

Canada (provisional, to be confirmed)

EUR

AMEAP

NSA

27


Summary

Record Q4 net revenues of 298 MUSD with highest ever net late sales of 226

MUSD

Full year 2014 Guidance achieved with net revenues of 915 MUSD

Full year 2014 investment of 462 MUSD

Recent oil price development to result in decreased exploration spend from

customers

However, long-term future of asset-light, focused multi-client business remains

strong and TGS has record high backlog entering into 2015

Guidance for 2015

TGS expects multi-client investments of approximately 420 MUSD and additional Capex of 15 MUSD

TGS targets revenues of approximately 750 MUSD

TGS targets an EBIT of approximately 260 MUSD

The Board will propose to the AGM in May a dividend of NOK 8.5 per share

28

Thank you


Thank you


www.tgs.com

Documents

DNB Markets Oil, Offshore & Shipping Conference - TGS Reports... · NSA BOEM five-year plan (2017-2022) proposal includes 10 lease sales in GOM and one Atlantic lease sale TGS positioning