Transportadora de Gas del Sur SA TGS

presentation. My name is Bart Stamberg, vice president domestic relations in TGS. Today's presentation will be given by CEO Christian Johansen and CFO Sven-Better Larsson. Before we start, I would like to give some practical information. For those of you on the webcast, you can type in questions during the presentation and we will address those after management's concluding remarks. I would also like to draw your attention to the forward looking statement showing on the screen and available in today's earnings release and presentation.

So with that, I give the word to Christian.

Thank you, Bård, and welcome to the presentation. before I start on the first slide. So that TGS-PGS merger completed on July 1st last year. So all financial numbers in this presentation are based on pro forma numbers, unless stated otherwise. Financial numbers are also based on POC or percentage of completion for ongoing multi-client projects, unless otherwise stated. So with that, I'm going to hit the highlights of Q4. So we had total revenues of $492 million in the quarter. That's up by about 19% from $414 million in Q4 of 2023.

Presentation. My name is Bart Stamberg, Vice President of Master Relations in TGS. Today's presentation will be given by CEO Christian Johansen and CFO Sven-Better Larsson. Before we start, I would like to give some practical information. For those of you on the webcast, you can type in questions during the presentation and we will address those after management's concluding remarks. I would also like to draw your attention to the forward looking statement showing on the screen and available in today's earnings release and presentation.

So with that, I give the word to Christian.

Thank you, Bård, and welcome to the presentation. So before I start on the first slide, so that TGS-PGS merger completed on July 1st last year. So all financial numbers in this presentation are based on pro forma numbers unless stated otherwise. Financial numbers are also based on POC or percentage of completion for ongoing multi-client projects, unless otherwise stated. So with that, I'm going to hit the highlights of Q4. So we had total revenues of $492 million in the quarter. That's up by about 19% from $414 million in Q4 of 2023. Our EBITDA for the quarter was 267, and that compares to 243 in Q4 of 2023. We had an EBIT of $92 million. That compares to $47 million in Q4 of 2023. So pretty much a doubling of our EBIT and an EBIT margin of about 19%. We also successfully completed a balance sheet refinancing of the existing PGS debt at very attractive terms. And as you know, this is something we actually planned to do in March, 2025, but the window was open in November and we decided that we could just as well go ahead and utilize or take advantage of the attractive terms that we saw in the market at the time. And that also leads us to synergies. We have realized $100 million of merger synergies. That's significantly ahead of our plan, which was about 60 million at this time of the year. And that is obviously partly due to the balance sheet refinancing that we did a few months early compared to our initial plans. Last but not least, I'm happy to say that the board of directors have approved an increased dividend of 11% compared to 2024. So 2024 has clearly been a transformational year for TGS. And I think this slide kind of summarizes some of the key headlines of that. So number one, we completed the PGS acquisition that I talked about. As I said, the transaction closed on July 1st. And since then, we have successfully and very swiftly integrated TGS and PGS organizations. So we started with a people process that we finished in September and October. We got all the people globally moved into the same offices in all the major hubs by late October or early November. And again, as I said, the synergy targets are ahead of our initial plan. It's also important when you do something like that, because it takes a lot of focus on the organization. So really keeping the eye on the ball has been very, very important for management. And I'm proud to say that both Q3 and Q4 came in pretty much at or slightly above our own expectations. So that means that the year-on-year EBIT increased by 23% in 24 compared to 23. We had multi-client sales to investments of 2.2. And for those of you who follow TGS closely, you know that the average in our history is somewhere around 1.9. So 2024 was a very good year for And we're very pleased about a sales to investment of 2.2. And then last but not least, we had contract revenues with a growth or showing a growth of 12% in 2024 versus the previous year. I talked about the refinancing. So again, we have refinanced all the legacy PGS debt at attractive terms. And we have realized about $35 million of financial synergies or interest rate synergies, which also is slightly better than what we expected or planned for. We clearly have a unique business model with the only integrated or fully integrated energy data company. And we have leading positions in all segments, whether you talk about streamer seismic or streamer acquisition, ocean bottom node acquisition, multi-client business, of course, where we represent about 62%. of the global investments in multi-clients since 2018. On top of that, we have a fast growing new energy business, which we are very proud of the results, which I will come back to. And we have an imaging business that is also growing fast. So last but not least, increasing shareholder value. We're positioned to improve cash flow, which is obviously our key target and our key rationale for the acquisition of PGS. And we're showing confidence today by increasing the dividend by 11% versus last year. I'll give you a brief business update from the quarter. So this shows the data acquisition activity in Q4 of 2024. And I think more importantly, it shows that great diversification of our business that we have now compared to if you go back and look at 2023 and even before that. So if you look at the dots on the map and what they illustrate is OBN operations, new energy operations, multi-client OBN, onshore projects, multi-client vessel operations and contract vessel operations. So I'm obviously not going to go through every single activity that we had in Q4, but there's a few highlights here. Number one, I think it's the first time in my 15-year history with TGS where we see a survey outside California, and that has some obvious reasons. There hasn't been a lot of oil and gas activity there, but it's obviously related to our new energy business. So we're in California. We have a few onshore projects in the U.S. onshore in the lower 48th. We have three projects in the Gulf of America. We have two projects in Brazil and one in Argentina. We're active along the west coast of Africa with Namibia, Angola and Nigeria. We have new energy projects in Ireland and Northern Europe. We have a project in Egypt. We have one in Malaysia. And that kind of summarizes a very busy quarter in terms of acquisition activity of data, whether it is related to oil and gas or offshore wind or even CCS. Brief update on our multi-client performance in the quarter. So it was a strong quarter for multi-client. We had multi-client sales of $259 million. And on the pro forma basis, the two companies had $231 million in Q4 of 2023. We generated those revenues of 259 based on investments of $100 million. And as you see, last year, we had 106 million. And again, as I said, initially, we had a sales to investment of 2.2 for the full year. But if you do the math, you see that the sales to investment for the quarter was actually 2.6. So significantly above the historical average. And then you've seen 2023, we had 1.6 in sales to investment. So solid multi-client performance. It's driven by a seasonal Q4 uptick that we are quite used to see in our industry and strong pre-commitments for ongoing surveys, which obviously means that the risk we're taking on these new projects are very low. We invested about $427 million pro forma for the full year. And I'm just highlighting two projects that we were actively acquiring in Q4. So one is the Malvinas phase three offshore Argentina. This is about 7,500 square kilometers. And when we complete that survey, we will have about 25,000 square kilometers of data in the Malvinas basin of Argentina. This project was not acquired with a PGS vessel. They actually used a third party vessel. And you will see from time to time that TGS will continue to use third party vessels when we either don't have capacity ourselves or when we see that economics are better doing it this way. Then we also have commenced an integrated multi-client project. It's a converted contract offshore Angola. This is an 8,700 square kilometer 3D survey. And again, this is a survey where the pre-funder benefits from the fact that TGS already has a permit in the area. And this is an important competitive edge for TGS because having that huge multi-client data library also means that we have strong government relations, we have permits or existing permits, and we're in good positions to make sure that we do the next survey in that particular country. Going next to contract updates, so we had OBN contract revenues of about $132 million, so a very good quarter for our OBN business. You see we're up from $77 million in Q4 of 2023. And then for streamer contract revenues, we had $131 million, which is only slightly up from $127 million in Q4 of 2023. So we had relatively low utilization of our streamer fleet, as you know, and as we said at the Q3 presentation, And part of the reason for that is some of these yard stays that you need to do from time to time. EBITDA margin of 25% versus 29 last year. We had a normalized OBN crew utilization of about 3.5 out of four available crews in the quarter. And you see that significantly up from the 1.9 that we had in Q4 of last year. Active vessel time 66% versus 56 in the same quarter of last year. We're also, we have announced a couple of projects here. We have an OBN contract award in Europe, and then we have a 3D streamer contract award offshore India. And talking about Europe, as we get closer to the summer season, you will see quite a few new contracts being announced over the next few months in terms of filling up both the vessel schedule and the OBN crew schedule for work related to Europe. Next one is new energy solutions. Contract revenues of $7 million versus three in Q4 of 2023. And then you see the multi-client revenues are significantly down. And the reason for that is that we had low data acquisition activity. So this is going to be, this number is going to vary quite a bit between the different quarters, depending on whether we have new activity related to acquisition of data. But the good thing about our new energy solutions business is that we have these acquired companies, 4C and Predictor, they're both doing well. And we have a good base of revenues that is quite stable and it's growing. And then obviously you're going to have a bit of volatility in terms of the timing of some of these acquisition projects that are more kind of seismic related and subsurface related and mainly targeted at offshore wind and CCS. Talking about offshore wind, we successfully completed a UHR, which stands for Ultra High Resolution 3D Survey in the Irish Sea. And then we have been awarded two offshore wind site characterization contracts for the 2025 summer season. And typically, you would see that when we have these site characterization contracts, that would involve the use of a more traditional seismic vessels, and you would see that revenues would go up in that particular quarter. And then imaging and technology. So if you look at the financials first, we had gross imaging revenues, which obviously includes imaging and processing done for third party and for TGS. And you see the mix there is about 50-50. So we had external imaging revenues of about 15. That's up from 13 in the same quarter of last year. And then we have an EBITDA margin of 20%, which is significantly above what we had in Q4 of 2023. That is pretty close to the target margin that we have for the long term. So I wouldn't expect every quarter to be 20%. It's very good for Q4. Very pleased about that. But it's kind of where the long term target sits in terms of where we want to be over time. So again, it may vary a bit over the next few quarters. But our goal is that we're going to be profitable in imaging. And our long term target is to be around 20% of EBITDA. The picture there is from what we call a Gemini enhanced frequency source technology. And the reason why we show the picture is that we recently won ExxonMobil Supplier Innovation Award for 2024. So in competition with pretty much all the vendors to Exxon, we won that prize. And it shows that TGS is definitely in the forefront of acquisition technology competition. compared to pretty much any seismic company, but also other old service companies. So it's an award that we feel extremely pleased about. We've also launched an advanced imaging center for Petrobras in Brazil. And this center is dedicated to OBN and 4D imaging. And it means that TGS has their own people in Petrobras office and helping them doing a lot of the 4D and OBN imaging, working very closely in teams together with Petrobras people. So again, I talked about the merger synergies that are ahead of the plan. So we had an initial target of about $60 million for 2024. And again, we have realized a run rate by the end of the year. It doesn't mean that the cost is that much lower by the end of the year, but it means that we're down to that run rate that we're going to see continuing to go into 2025 and 2026. And that run rate is about $100 million lower than the comparable number for 2023. We completed the reorganization, as I said, we did that in Q3. We completed the refinancing in Q4. And again, very happy to see that everyone's now in the same office in all the major hubs. On track to deliver the total synergies of $110 to $130 million by year end 2025. And of course, we have additional synergies from deferred tax assets that are not included in that number. So that's all I had for the initial part, and Sven is going to come and talk about the financials, and then I will come back and talk about the outlook for 2025. Thank you very much.

Thank you, Christian. Good morning. So I'll start by going through some key numbers in the P&L. Christian has already talked about the different business units and some key numbers for those. So I'm not going to go into detail on the business unit level in my part of the presentation. So we had $492 million of net produced revenues in Q4 of 2024. As you can see, that is significantly better or 19% better than the same quarter of last year on a pro forma basis. Multi-client was up 14% year over year and the contract revenues were up 26% year over year. So 19% in total, which is quite a good development that we're pretty happy with. In terms of the net operating expenses, they came in at $225 million. This is after capitalizing $52 million of our gross cost to the balance sheet. So the gross cost was $277 million in the quarter, capitalizing 52, ending up with 225 in Q4 of 2024. Looking at depreciation and amortization, we had $113 million in total of amortization of our multi-client library. Of this straight line amortization of the vintage library, which consists of the completed surveys, where $60 million, that tend to be quite stable from quarter to quarter, And accelerated amortization, which is more related to the ongoing surveys that we had were $50 million in this quarter. And then we had a small impairment charge of $3 million included in that number as well. Depreciation was 63 million dollars and that tend to be reasonably stable although it has gone a little bit up lately as you can see and that also has a little bit to do with how much of depreciation that is being capitalized to the multi-client library on ongoing multi-client service so it may vary a little bit from quarter to quarter on a net basis. Looking at EBIT on the bottom right-hand chart, we had $92 million of EBIT in this quarter operating profit, which corresponds to an operating margin of 19%. So the margin is actually the same as we had in the corresponding quarter of 2023. But as the revenue is significantly higher, we have a significant improvement of the operating result, as you can see from the bar chart. Here is the profit and loss account for measured on a produced or POC basis. As I mentioned, total revenues 492. We had cost of sales 138, personnel cost 57 and other operating costs of $30 million in the quarter. This amounts to $225 million of net cost as I pointed out on the previous slide. which gave us an EBITDA of $267 million in the quarter, straight line amortization of 60, accelerated of 50, impairments of three, depreciation of 63. We ended up with this $92 million of operating profit in our produced accounts for the quarter. The cash flow statement, we had $181 million of cash flow from operations. Here you should note that we had a significant negative contribution from the working capital development in this quarter. In our business, as you know, the multi-client revenues are very back and loaded in the quarter. And also a lot of the contract revenues are collected in the quarter after they are earned. So you will experience when we have significant swings in our revenues, you will experience quite significant swings in the working capital development as well. Q4 was also, in addition to this kind of normal effect, Q4 was also a little bit special in the terms that in Q3, the previous quarter, we collected more than usual in quarter, which means that we started the quarter with an unusually low receivable balance. And then we ended the quarter with a significant increase in that balance. And we expect to collect a lot of the revenues that we generated in Q4 in Q1. So a quite negative contribution from working capital in this quarter. For the... Cash flow paid to our multi-client investments was $85 million. You can see the split between the different elements into that number outlined in the table. We had capex of $38 million and we received a little bit of interest, $4 million, and ended up with cash flow from investment activities negative by $120 million. And then we had net change in interest-bearing debt and leasing of close to $100 million. This includes the impact from the refinancing of our debt that we did in Q4. There are some... uh yeah roughly 65 million dollars of of that is related to the make whole premium accrued uh interest on on the loans that we accrued interest on the loans that we paid back in the quarter as well as transaction costs so you You should be aware and take note that this refinancing had a fairly significant negative impact on cash flow in this quarter. And then we, as usual, paid a dividend of $27.5 million, and we ended up with cash flow from financing activities negative by $145 million, which meant that we had a net cash flow negative by $84 million in the quarter. Our balance sheet, there are... A couple of things you should note on the balance sheet. First, on restricted cash, you can see that the long-term portion or non-current portion of restricted cash is now zero. However, there is still roughly $37 million of restricted cash included in other current assets. So we still have a bit of a current balance on restricted cash that is related to the export credit facility that we still have. It was refinanced. But the settlement of that ECF refinancing will take place now in February. So we expect to get rid of that restricted cash now in Q1, which is included in other current assets in this area. in this overview. And also, as I pointed out, accounts receivable, as you can see here, it's increased quite significantly during the quarter. If you look at our net debt balance, it stood at $500 million at the end of the quarter, and that's an increase from the end of Q3 related partially to the negative contribution obviously from working capital in the quarter and partially to the impact from the refinancing that I talked about earlier. And some more details on the refinancing. You can see on the chart on the left-hand side here, you can see the debt stack that pgs had at air and 2023 that we took over basically when when when the transaction closed in mid 2024 and you can see what the structure of our current how the structure of our current debt stack look looks like after we have repaid the ecf now in in in february So what we did essentially during the quarter, we refinanced the $450 million senior notes that PJS had. We put in place a new bond loan of $550 million. at 8.5% interest rate compared to 13.5% interest rate on the previous PGS bond loan. We also put in place or refinanced the RCF that TGS already had in place. So we have an RCF of $150 million. We have drawn $25 million of that at the end of the quarter. And then we're putting in place a term loan A of $45 million, which is used to repay the export credit facility, as I mentioned. So all in all, we have a very solid financing structure in place that gives us a lot of flexibility going forward. And also, as I mentioned, there are some, call it one-off cash outflows related to the transaction. We had to pay the make-hold premium on the existing PGS bond loan or the previous PGS bond loan. And we also had to pay accrued interest on these loans that we repaid. And there is also, of course, a little bit of transaction costs in that number. And then I'm happy to say that the board has approved an increase in the dividend of 11%. As Christian already talked about, we are ahead of plan in realizing our synergies. We realized $100 million of synergies. So although our net debt is still not down to the target range of $250 million, to $350 million, the board felt it was prudent to increase the dividend and give the shareholders a little bit of the synergies that we have realized to date. However, I think if everything goes according to plan and the way we see the future, there should be plenty of room for further dividend increases in the longer term.

that i hand the word back to you christian to go through the business outlook thank you sven and uh as i said i'll i'll give you a brief update on how we see 2025 so i'll start with some uh analyst estimates for for 24 and 25 so you start on the left hand side and you look at 2024 and Offshore E&P spending was up about 11%, according to our sources, for 24 versus 23. And then total spending was up 3% and due to lower spending in onshore. As you know, TGS has less exposure to onshore. It's less than 10%, so more than 90% of our business is offshore exposed. Looking at 2025 and what the market estimates for that is 3% on offshore spending and pretty much flat on total E&P spending. So again, the growth is going to be lower than 2024. I'm happy to say that we grew more than the market in 2024. So we had 19% revenue growth versus the offshore market that was 11. So in that regard, we're pleased with that. And obviously our goal is to make sure that we continue to do that in 2025. Obviously, a lot of uncertainty right now, mainly related to geopolitics, and we just kind of see how things play out. I noticed that both Halliburton, SLB and Baker guided for a flat 2025, where Q2 is probably going to be slightly better than Q1 in terms of year on year numbers. But again, this is what we planned for in terms of overall EMP spending for 2025. If you look into our business more specifically, and you look at the 3D streamer contract tenders, and this is a graph that we showed last time we met, and we had a sharp increase in active tenders towards the third quarter of 2024. And you see it come down slightly towards the end of the year. And the reason for that is obviously that we have A lot of these tenders have been awarded. So as you see, we have four tenders here that we won and that we have announced to the market. And what I can say is that if you look at the graph, you clearly see that we're at the much higher activity level overall, despite the fact that you see a little bit of a dip towards the end of the year. so overall we think that the contract market will be better in 25 than it was in 24 and we expect utilization of course of our fleet to be better than it was in the previous year in the obn market we've seen a significant growth since 2020 and although this spot chart starts at 2023 you saw healthy growth in the market from 23 to 24 And then when you look into 25, it seems like it's going to be flattish or perhaps slightly up. And if you look at the third bar here, you see what has been secured in terms of work already by the industry. And then you see the kind of dotted box on the fourth box from the left. That includes the pending work. So that includes tenders that are out as we speak and that obviously we and other companies are competing for. So I guess the key message here is that growth is probably going to be lower than what you've seen in previous years, but we've seen fantastic growth in this market now ever since 2020. We have secured, as I said, about 70% of the 2024 revenues as an industry, and we're If you look at TGS more specifically, we have the same number of crews than we've had for the past two years. We have four crews. And in order to grow that business significantly, we would have to add a fifth crew. We're not going to do that because we still don't see the profitability in our OBN business that you should see in a business that is growing at, you know, has been growing at double digit for the past few years. This is partly due to pricing discipline. It's partly due to smaller players trying to break into this market. And I guess the key message from TGS is that we focus on profitability and not on market share. And we're not willing to take jobs at a loss. We move on to the market outlook for TGS, more specifically for 2025, and we try to split that into the different buckets where we have business. So if you start on the left-hand side for multi-clients, we expect, as Sven said, higher multi-client investments for 2024 relative to 2024. 25 relative to 24. And we expect continued high pre funding level. In terms of sales to investment, we obviously don't guide on that because we don't have much visibility on it. But I'm very proud of the 2.2 that we achieved in 2024. And I don't see any reason why we should should set the bar lower than the two that we have in average over the past, you know, 40 years since we've been in business. In terms of streamer contract, we are going to benefit from improved vessel utilization in 2025. Some of the work that we announced or that we felt pretty good about at the Q3 presentation has been pushed out slightly. And this is outside our control in terms of this is related to permits, it's related to environmental permits, it's related to fisheries, and you name it. So some of that stuff has been slightly moved out of Q1 and into Q2 and later. But overall, we feel like utilization for the year is clearly going to be better than it was in 2024. On the OBN contract side, we expect 2025 with a normalized crew count in line with 2024. So again, we have four crews and we had good utilization of those crews both in 2024 and 2023. And again, if we can keep that same utilization, we expect some kind of a flattish OBN market for 2025. We expect to use some of the TGS OBM capacity for multi-client projects, so something for you to be aware of. We haven't done that much in 23 and 24 because we've basically been sold out with external or third-party clients. You could probably sell that in 2025 as well, but we have multi-client programs where we need that capacity and we plan to use some of that capacity for 2025. In terms of imaging, we expect strong growth in 2025. We have a very strong backlog in our processing and imaging department right now. And again, we're benefiting then from scale and a more diverse product portfolio. And again, you will see improved profitability in imaging in 2025 relative to 2024. And last but not least, the new energy solutions. We expect continued growth. Well, it seems like there is someone trying to get all those. Expect the growth in NES to continue in line with previous years. So that means that double digit is where we set the target in terms of our new energy business. Guidance for 2025. We're guiding on multi-client investments. They're going to be somewhere between $425 to $475 million for the year. So higher than in 2024. and we expect approximately 70% of the investment to be acquired with TGS-owned capacity. That number may, of course, vary a little bit, but somewhere between 60 and 75 is probably our best estimate as we speak. CapEx, approximately $150 million, and that excludes approximately $10 million of integration-related CapEx that you will continue to see in 2025. On the gross operating cost, we target approximately 1.050, so slightly above a billion dollars in gross operating cost. This obviously includes SG&A, where we have very good visibility on the cost and we have very good visibility on the synergy takeouts. But it also includes cost of goods sold, which will vary with the activity level. But based on the activity level we see right now and the mix of multi-client versus proprietary, this is where we see the gross operating cost for the year. And last but not least on the utilization, we have guided improving utilization of 3D streaming fleet. And we're repeating today that flat-dish OBM data acquisition activity relative to 24, both in terms of the overall industry, but also in terms of TGS based on the capacity that we have right now. And if I go to order backlog and inflow, very strong order inflow in the quarter. So you see 489. So it's the highest order inflow we have in any given quarter. So very pleased about that. And this is obviously driven by four of the announcements that I referred to on a previous slide and what has been announced to the market already. Expect that to continue. We're building up for the summer season now. And again, you should expect to see some contract awards over the next weeks rather than months. Total backlog, you see it's stable at around 750. And the fact that we have a strong order inflow but very strong revenues obviously means that we eat a lot from that backlog. But again, we're very pleased that we're able to keep the backlog at the 750 million level heading into 2025. And then on the right hand side, you see the expected timing of the contract backlog. And that helps you to tune your models in terms of how much of this will be used in Q1, Q2 and going forward. So again, expectations for Q1, we expect a normalized OBN crew count of between two and a half and three. Q1 is always the toughest quarter for our OBM business, but we expect that to be pretty good year on year. On the streamer 3D fleet utilization, we expect about 70%. And again, if you asked me three months ago, I would expect that number to be higher. But for obvious reasons related to permit delays and environmental issues, some of that has been pushed slightly out. multi-client investments of about 110 to 120 million expected for q1 so that leads me to the summary again very pleased about the 2024 results also very pleased about the result for the full year and as i said i'm extremely thankful to the whole organization who's managed to keep their their eye on the ball in a very, very difficult time in terms of integration efforts. And we have accelerated a lot of the actions taken after July 1st and over-delivered on some of the cost synergies. But over-delivering on cost synergies means that there has been more work for the people. But again, very, very pleased that our people have managed to deliver two strong quarters after the merger announced on or closed on July 1st. We have successfully refinanced all debt facilities at very attractive terms. Our synergies are ahead of target. As we've said three times already, very pleased about the board who decided to increase our dividend by 11% based on the current outlook. And then we expect to improve streamer utilization in 2025. So that's all I had. I'm going to have Sven come up here and we're going to have the board manage the questions and then obviously open up for all of you to ask the questions you may have. Thank you very much.

We have an audience in Oslo, so I suggest we start with those of you present in the auditorium. So, yes, John.

Wait for microphone.

You can just speak up. We have the microphone in the room.

ask on the outlook for 2025 you refer to consensus and which seems to be indicating three four percent or two three four percent offshore spending growth um is that your view on the seismic market as well or do you expect the seismic market to to to to grow stronger or weaker than that or any particular reasons why potentially could grow better or worse than that

I think in our current plans, we probably base it on what we see in the overall EMP spending. And I think over time, they tend to correlate. And then your second question in terms of what could make it higher than the 2% or 3%, I think that mainly goes back to how much of your exploration budget you allocate to drilling versus data. And we've seen that change quite a lot from year to year. So in 2023, for example, there was a significant increase the number of wells drilled then you saw that more of the exploration budgets went to drilling and there was less left for for seismic in 24 it evened out a little bit and then obviously it's anybody's guess what's what's going to happen in 2025 but um i think i think overall we base our plans on a two or three percent and then if it's higher than that then obviously that's a positive surprise

May I ask maybe a little bit on the geographical areas? Do you see any geographical areas improving better than others and maybe in particular in Gulf of Mexico where you have a lot of multi-client data both new and older and with the Trump in the driving seat, would that improve the fundamentals for the Gulf of America activities significantly?

I think, uh, you know, to answer your first part of the question, I think the majority of activity now is probably centered around the South Atlantic. So both sides of the region, Brazil is, is very hot. Um, you see lots of activity, um, in Latin America, South America in general. So I think that's healthy and that's good. Definitely see an improved activity level in West Africa. So, you know, I talked about Namibia, Nigeria, Angola, where we had activities in Q4. Africa is looking pretty good. And then Norway is good. Norway is a good market and I'm happy with that. support we're getting from the Norwegian government in terms of licensing rounds and continued high activity on the Norwegian continental shelf and UK is the complete opposite and I hope Norway look to UK when they're going to make decisions for the future because that's not been good. Back to Gulf of America I think it's clearly positive to our industry what's happening now around the the politics of removing some regulations, obviously being very positive to increasing the domestic production in the US. If you speak to any, whether it's a super major or a small independent about, you know, what do you think about the changes in the politics now related to energy? I mean, they're clearly very, very positive. I wouldn't be standing here and say that we're going to see the impact of that immediately because there's a lot of signatures that you still need and there's still some bureaucracy to go through. So it starts with a drill, baby drill, but it's still going to take some time from that until you see licensing rounds, new areas opening up, et cetera, et cetera. So what would that mean in terms of 25? Well, hopefully we get a lease sale. And I think chances are probably better now with a new administration that you get some kind of an acceleration of that. But I cannot promise that. And based on industry people that I talk to, I guess I would say if you were challenging me on a number, I would say it's probably a 50-50. I don't think that matters too much because the more important thing is that you will see increased activity and you will see increased activity both onshore and offshore. And you may see new areas opening up in the US.

50-50 for at least around in the second half?

Probably. Probably slightly higher than that in terms of the chances. But again, now I'm just referring to, you know, talking to industry people and talking to our clients in terms of what they expect.

Have you seen, it's been like almost a couple of months now with the, Well, actually, a few weeks since it took its new seat, but I guess a few months since the election took place. Have you seen an increase? Did you see better sales in Q4 in Gulf of America? Have you seen improving leads, etc.?

It's hard to say. We had good sales in Q4 related to the Gulf of America and whether that's related to the new uh government or whether it's just related to a q4 effect that we always have it's hard to say but i think what i what i can definitely confirm is that people we talk to whether it's super majors or small independents are far more positive in terms of the outlook for us uh oil and gas production for sure i think so there are more questions but i think i'll let the words over to all this first and maybe i could go back yeah yeah from eric

Yes, I want to talk about the streamer fleet. You said 70% of the investments are going to be done internally. I'm just wondering if you could give us some more indications on, for example, how you're going to split the streamer fleet capacity like PGS used to do in terms of percentage stream, contract versus multi-client or give an indication are you doing

more internally on the streaming fleet for multi-client this year versus last year or less or sort of similar level it's probably worth a one-on-one discussion with with sven and the team but i think you know in in in the big scheme of things i um this is highly uncertain and there is a very fine balance now between multi-client and contract and you will see some of the contracts we have announced over the past few months, they may actually be recognized as multi-client because we're using our permits. Yes, there is one block holder and we get significant pre-funding, some cases more than 100%. But it's kind of whether we call it a contract or a multi-client, it doesn't really matter a whole lot except for the accounting of it. But I think that's something you can follow up one on one.

I will. And on day rates or margins pricing for the stream market based on my numbers at least it was really strong pricing there it's in 2024 and i'm just wondering how you see that developing into 25 yeah we don't we don't plan for any significant changes in that regard i think pricing is now i wouldn't say it's strong because then our clients would come back and complain but i think it's it's healthy

And you need a healthy industry. And of course, with two major players in that industry, you're depending on some kind of discipline and you're dependent on companies measuring their performance in return on capital rather than revenues. And I think we see that. Finally, after 15 years in seismic, you see some discipline in terms of the fact that you need to consider return on capital when you price some of these jobs. So I think we don't plan for an increased pricing, but we plan for pretty much what you saw in 2024, which is quite reasonable and healthy.

One quick last one to Sven Børre on the gross cost guidance that you give. How much should we kind of assume for lease payments? that figure?

It depends a little bit on the strategy we choose in terms of going on slightly longer term leases which would require us to do IFRS 16 accounting or slightly shorter leases. But I wouldn't expect it to change massively going forward from what you've seen over the past few quarters. With a little bit of disclaimer to that, depending on what you choose to do.

I understand that. Thank you.

Yes, we have a question from Christopher.

Yeah, Christopher in Sparabank One. I know we don't disclose this any longer, but could you give an indication on the current pre-funding levels? Is it fair to assume around 100%? Yeah, ish.

And that could vary from 80 and above 100. But I think overall, the trend is that our servers are significantly higher funded than they were two or three years ago. And the reason for that is obviously that the project mix is very different in terms of having more of these converted contracts.

Wow. In terms of the multi-client sales in fourth quarter, were there any regions standing out or any sales you would highlight? And is it also fair to assume that there were no significant transfer fees in fourth quarter?

Yeah, it was a good quarter overall. I think we had a very good distribution of sales in terms of there was no one particular geography that stood out. I think if you look at our data library right now, of course, we have a big library in the in the gulf of america we get a really big library in brazil we're quite excited about the new blocks that have been announced in brazil um so so overall i think yeah more probably more on the on the western hemisphere than the eastern hemisphere but overall it was it was good across the board

On the guidance you give on gross costs for 2025, does that include also that when you charter capacity to do multi-client, that's part of those?

No, that's our internal cost. So whatever we charter externally will be booked directly to the balance sheet.

And final question. It's not been a typical multi-client market, but it's been a strong contract market for some years now. Could you share your outlook on India going forward?

Yeah, India is very interesting. We have already announced a contract in India, and I think there will be more work in India after this first phase that we're doing now. And it is definitely one of those countries where we're going to be, hopefully going to be for the long term.

Okay, we have some questions from the people on the webcast. Many new campaigns already announced for the North Sea season and more to come. How many streamer vessels do you expect to have working in the North Sea this summer season?

Yeah, we haven't decided yet how many will be, but it will definitely be more than two and less than five. But we still are in the planning phase in terms of how many vessels we're going to be using there and also the split of multi-client and contract.

He also has the questions regarding pricing. If we can say something regarding pricing for the 25 season versus the 24 season. We kind of touched upon it already. Yeah. Then we have Jørgen Lande in Danske Bank. Report gross debt of approximately 650 million dollars. Is it fair to expect the remaining 30 million dollars of ECF to be paid in 2025?

Yes, we are settling that now in February.

We kind of touched upon the pre-funding aspect. Yeah, there's any additional questions from the web beyond those we have addressed already from the audience. Yes, we have a follow-up from John.

May I follow up on the cost? You say that the run rate for the synergies are now 100 million US dollars. Does that include financial synergies?

Yeah.

And so I guess it includes all the financial synergies. So the remaining would be non-malar, you know, OPEX costs. So in the gross operating cost guidance of 1050, 125, how much synergies have you included in that?

Yeah, we have included, we have included all, basically all, we have a little bit to still be... But it's that we've used that 100 we have realized for now as a starting point and then assume that we will get to that. We will realize the rest during the year.

It's 100 minus the 35.

Yeah, and then you have a lot of synergies that's not part of the gross cost number necessarily.

The financial synergies are 35. So you've got 65 realized and others now and another 30 plus to go.

Yeah, and some of those synergies are utilization synergies and it's a bit uncertain exactly how that will materialize in the P&L, of course.

A little question on the vessel capacity, on the stream of vessel capacity. As commented already, you report a lot of contracts and you seem to have fairly good visibility on the multi-client investments that you're planning to do. May I ask, how much more capacity do you have available for the first three quarters of 2025 right now? Right now.

Yeah, for a while we were sold out for Q1 and then we've had some delays and obviously that creates a lot of, you need to move vessels elsewhere and find other work for that. So that is impacting our utilization for Q1. Q2 and Q3, there's not much capacity. Most of it is already booked and you will probably see some announcements over the next few weeks or so where basically we feel very good about utilization for those two quarters.

Pretty much sold out for the first three quarters.

Yeah, that's part of the challenge with our industry is that if something is pushed from Q1 to Q2, you may not have that capacity in Q2. So you may actually push it from Q1 to Q4. So we have some of those issues that we're dealing with. But overall, obviously, having a big multi-client business is great in that regard. You know, in the ideal world, we would do 100% contracts in Q2 and Q3. And then we would do all the multi-client in Q1 and Q4. It's not that easy, of course, but that's kind of what we're aiming for too. to balance our portfolio and make sure that we optimize the utilization.

And all these issues with utilization for Q1, this is like what we heard continuously from PGS and the vessel owners over the years. Now that there are only two players and you're more disciplined and the visibility on what your vessel is going to do is improving, Is it possible to get rid of this? So tell the oil companies, if you haven't got a permit, you won't get a contract or you have to pay us to stand there waiting for a permit or something like that. Are you still too weak? Do the oil companies still have the upper hand to get rid of these short-term surprises with weak utilization due to issues out of your hands?

Yeah, I wish so. They're definitely strong. I mean, there is still pricing power on the old company's hands. But I think over time, you're getting there. And I see that in both the OBN business and the streamer business, that there is an acceptance that you cannot put all the risk on the supplier. So again, we're working on it. And again, you're still going to have surprises. This is a tough business to manage utilization because the contracts are so short and there's so much uncertainty about permits, for example. So again, I cannot promise you that... that we're going to fix it overnight, but what I can promise you is that we're working really hard to maximize utilization by using multi-client and using those existing permits that we have pretty much all over the world.

My final question is on dividends. You're guiding on dividends. Just Technically, is it a Q4 dividend paid in Q1 or is it a Q1 dividend?

No, this is in IFRS, you pay the dividend when you charge, you book the dividend when you pay it. So it's a Q1.

And the number you guided, that's for Q1 or should we take it as the guided dividend? dividend for all the quarters.

So what we normally do is that we set a new dividend level in Q1 and although we don't make a 100% firm promise, you should expect the same dividend level throughout the year.

Any chance, because you mentioned that you hope you have, you think you get more capacity over time for longer terms. But the longer term, could that be six months? Any chance we could have a high dividend during 2025?

It depends on a number of factors, the market and other things. So I won't rule it out. So we'll have to see. Thank you.

Very good.