Tgs Asa S/Adr

Good morning and welcome to you TDS Q2 2025 results presentation. My name is Art Stenberg, Vice President of Western Relations and Business Intelligence in TDS. Today's presentation will be given by CEO Christian Johansen and CFO Sven-Bertur Larsen. I would also like to draw your attention to the cautionary statement showing on the screen and also available in today's presentation and earnings release. You can start typing in questions during the presentation and we will address your questions after management's concluding remarks. So with that, I give the floor to you, Christian.

Thank you, Board, and welcome everyone to TDS's Q2 2025 earnings release. I'm going to hit the highlights right away and I'm going to start with two bullet points that probably are in the categories of explanations rather than excuses for what we would consider a relatively weak quarter. So the first one is we had multi-client revenues below expectations due to low library sales. And if you remember back to the end of Q2 of 2025, we had a rather weak and volatile macro environment where the oil price dropped from about 76 to 66 during the last 10 days of the quarter. That may have had an impact on our end of quarter sales. Again, it shouldn't be used as an excuse, but we definitely had lower than expected library sales. And as you all know, we typically make a lot of our library data licensing over the past or last seven to 10 days of any given quarter. In addition to that, we had contract revenues negatively impacted by operational challenges of one of our projects in Asia. And then we also had lower contribution from JV partners on multi-client projects where we typically have a 50-50 split between our JV partners. So altogether, we had total revenues of $308 million that compared to $381 million in Q2 of last year. We had an EBITDA of 153 million compared to 175 in the same quarter of last year. And that we actually had an improved EBITDA margin in Q2 this year compared to last year. It improves from 46 in Q2 of 2024 to 50% this quarter. We also had a positive free cash flow, free cash flow of $11 million before dividend. And we're also continuing to do business optimization, which means that we see lower costs. So we have cost-cutting initiatives on top of our synergy plan that we launched last year. And in addition to that, we're announcing today that we're also adjusting the vessel capacity to how we see the market right now, which means that we go down from seven to six vessels. And in addition to that, we're selling two of the stacked vessels. I will come back to that later in the presentation. Last but not least, we're maintaining a dividend of 0.155 per share, as you've seen in previous quarters as well. If we go to the business update and start with the data acquisition activity that we had in Q2, I'm not going to touch on every project here. I'm just going to conclude that we continue to have a diversified activity level in terms of both new energy operations, OBN contracts and multi-client and the same on the streamer side. It ranges from California and West and all the way to India in East. And you see a lot of activity this quarter, particularly in Norway and Northern Europe. And then you see activity in Brazil, Argentina and Gulf of America. If I touch on some of these projects and start with the financials and start with multi-client, we had multi-client sales of $137 million. That compares to 191 in Q2 of last year. And again, not a great quarter for multi-client. And I think both we and the market were surprised by the low activity level that we saw in the last 10 days of the quarter. Again, some of that could be explained by lower or more volatility in the market overall with an old price that dropped by 15%, 20%. But again, shouldn't be used as an excuse. We're clearly disappointed about our library sales in Q2. Multi-client investments were 114 versus 92 last year, came in slightly higher than we expected. And again, this is due to partners and JV partners who elected not to take their 50% ownership. So as a result, TGS took advantage of that and we get a higher equity in some of these JV partners. And then we had some partner projects where typically we would have 50%. Now in the projects that we're doing in Q2, we have between 70 and 100%, which again may bode well for future earnings, but it hits our investments in Q2. So investments are higher and then contract revenues are obviously lower because typically we record these revenues from partners as contract revenues or contribution to contract revenues. As you see, sales to investment last 12 months is still very healthy. We're at 2.0, which is in line with our historical average, actually slightly better. And you see that it's also an improvement from Q2 of 2024. So what that tells you is that, yes, this quarter was not great, but if you look at the last four quarters combined, we have strong performance on the multi-client side. And again, I think we've beaten our own expectations and market expectations on multi-client for the past three quarters, but this quarter we clearly didn't. In terms of key projects and announcements in Q2, we completed the amendment 4 OBN project in the Gulf of America. This is an ultra long offset over legacy streamer data and this is a 100% TGS project. In the past, you've seen a lot of projects together with Western G-Core SLB where we each have 50%, but this again is a 100% TGS project. Then we commenced a project also in the Gulf of America called Laconia Phase 3. This is in collaboration with Viridian. Normally that would also be a 50-50 joint venture. In this particular case, it's 70% TGS and 30% Viridian. So again, TGS taking advantage of a rather strong balance sheet and ability to take a higher equity in some of these projects in basins where we have proven success such as Gulf of America and Brazil. And then we moved to Argentina and Malvinas where we had a Phase 3 of the Malvinas campaign that completed. We have now 25,000 square kilometers of data coverage in the Malvinas Basin of Argentina. And Argentina is a country where I'm actually quite optimistic for the future. We've seen high above-surface risk in the past or political risk. That has come down and the geology is very promising and obviously our clients are quite excited about our database in Argentina going forward. We're expanding Equatorial Margin Campaign Offshore Brazil. This is another area where we have had a successful licensing round happening in the quarter. We saw great interest. We even saw some of the big super majors from the US now paying big fees to get into the Equatorial Margin together with Petrobras. So this is an area where TGS has jump-started and where we already have built a significant database. And this is one of the last big frontier basins of the world and both we and our clients are very excited about what we're doing there right now. And again, this is an area that TGS has permits to do more and we will continue to be rather busy in the Equatorial Margin for the next 12 to 18 months. We also had a licensing round in Gulf of America announced this quarter. So a lot of people have been waiting for that and obviously it's a great testament to the current government that they want to get back to oil and gas and they want to increase domestic production of oil and gas. And that obviously starts with onshore lower 48s but also with Gulf of America. If we move on and look at the historical multi-client performance, so you see that it's been quite steady in terms of sales to investments. And yes, it was slightly lower in Q2 this year but again there's nothing in the market where we see that this shouldn't continue to be relatively strong over time. We continue to set a target of 2x on our multi-client projects and I think as you see for the last four quarters we're just in line with our targets. We also look at the, I talked about the oil price development in the latter part of Q2 and you clearly see here that the oil price is dropping from a level of 76 to 78 and all the way down to the mid 60s during the past or last 10 days of the quarter which is not a great background for doing big data purchases. Again, we were caught by surprise that we had lower sales than we expected but we don't think this is a permanent issue. We think it's more of a temporary issue and obviously I'm not going to stand here promising that it's going to come back next quarter or the quarter after that but again we don't see any long-term permanent changes in appetite for data rather than rather the opposite. If we move on to contract again we had OBN contract revenues of about 88 million dollars in Q2 and that compares to 93 so pretty much flat from last year. Streamr contract revenues dropped from 128 to 115 and again the utilization of the Streamr fleet was quite good this quarter but we had relatively low revenues which means that we had operational issues and low productivity on one of our projects in Asia which I have already talked about and which I will come back to. Overall gross revenues of 203 versus 221 in the same quarter of last year and an EBITDA margin of about 25 percent and that's slightly up from Q2 of 2024. We've been awarded a shallow water OBN contract in Trinidad that commenced acquisition in Q2 and then we have several 40 contracts offshore Norway that has commenced during the quarter and we've also been awarded and commenced a 40 contract offshore Egypt. So again we have encountered challenging operational conditions and high standby time on a Streamr contract in Asia. As a result of that we have decided to take that vessel out of the area and the bad weather and it will probably be out for between two and three months and then we'll come back and finish that survey. So again some of the backlog which I will come back to will move from or shift from Q3 to Q4 as a result of that but it's not going to change. The overall project is going to have the same size but hopefully and likely much stronger productivity when we get back there. On the new energy solution side relatively flat numbers so contract revenues 16 last quarter and then of last year and then 15 in Q2 of 2025. We had slightly better multi-client revenues up from three to four which is driven by our one of our acquired companies where revenues are recognized as multi-client. Total revenue is flat at 18 and a quite significant improvement of the EBITDA margin from 20 to 31 percent due to very good cost control and taking some actions on the cost space based on the weakness that we've seen in the market particularly in the US. We've been awarded an ultra high resolution contract in offshore Norway that commenced acquisition in July. Successful completion of a similar project in the UK in the quarter and then we've also entered into a collaboration with a big client to drive digital transformation in CCS operations so quite exciting collaboration with Equinor in that regard. If we move to probably the most positive this quarter in terms of the business unit performance our imaging and technology division had a very strong quarter. We have gross imaging revenues now of 32 which is up from 25 in the same quarter of last year and we've almost doubled our external imaging revenues from 10 to 19. I think I said that last quarter that our goal is to get somewhere north of 75 on annual revenues for our imaging business and as you see we have a run rate now that more than takes us to 75 and goal is to continue to grow this business quite significantly going forward and we're going to grow that business with strong margins. We had 40 percent EBITDA margin in Q2 of 25 and that compares to minus 7 in Q2 of last year. So a lot of positives now on the imaging and technology side partly because we've seen very positive market reactions to the introduction of our EFWI and we've seen a significant reduction at the same time of HPC cost from added scale and renegotiation with some of our big suppliers in that area. Our EBITDA again 12.7 million dollars so it starts to to really pay off also in terms of profitability on the imaging side. I'll hand it over to Sven now he's going to cover the financials and then I will be back talking about the outlook after Sven has completed his part. Thank you very much.

Thank you for that Christian and good morning to everyone. I'll go through the revenue first on the top left hand chart on this page as Christian has gone through all the categories of revenue already. I'll do that rather quickly we had 308 million dollars of total produced revenue in Q2 of 2025. That is significantly down obviously both compared to Q1 25 and also 19 percent down compared to the same quarter of last year on a pro forma basis which was at 381 million dollars. Then looking at the operating expenses we had net operating expenses of 155 million dollars booked in this quarter. This consisted of 236 million dollars of gross operating expenses and then we capitalized 81 of that to our multi-client library mostly which led to this net operating expenses of 155 million dollars. In the same quarter of last year the pro forma gross operating expenses were up at 268 million dollars and we capitalized 62 which led to 206 in net operating expenses in the same quarter of last year. So we're significantly down on both gross operating expenses and also net operating expenses compared to the same quarter of last year. If you're done looking at our depreciation and amortization chart on the bottom left hand side you see that we had amortization of 109 million dollars in this quarter compared to 115 in the same quarter of last year. This consisted of straight line amortization of 63 and the remaining balance was accelerated amortization. We then had net depreciation of 65 million dollars. This consisted of gross depreciation of 75 and then we capitalized 10 million dollars of depreciation on our vessels to the multi-client library. So that gave us this 65 million dollars of net depreciation in the quarter. All in all this gave us a negative EBIT of 22 million dollars in the quarter compared to 8 million positive in the same quarter of last year on a pro forma basis. This shows the produced P&L already gone through most of the details. 308 million dollars of revenues cost of sales 76 million dollars personnel cost 57 million dollars and other operational cost 22 on a net basis which gave us an EBITDA of 153 million dollars subtracting amortization and depreciation gave us this EBIT of negative 22 million dollars in this quarter. Then to the cash flow showing here the cash flow on a produced basis. The produced EBIT was as I've said 153 million dollars and then we subtract paid taxes of 23 million dollars. Paid taxes was relatively high in Q2 and was also relatively high in Q3 which means that we are up at 50 million dollars on a -to-date basis. The paid taxes is quite difficult to estimate from quarter to quarter and period to period because it depends heavily on our revenue mix. We do not pay any corporate taxes in Norway due to the tax losses or the losses carried forward but we do still pay withholding taxes and certain local taxes in some of the countries where we operate. So when we generate revenue in these countries we will typically pay more and when we generate revenues in certain other countries we will typically pay less in tax. So we do expect to pay less tax in the second half of the year but as I said it's a somewhat uncertain number. So this led to after adjusting for changes in sheet items this led to cash flow from operations of 179 million dollars. We invested 114 million dollars in our multi-client library this quarter adjusting for the non-cash capitalization of multi-client investments which is related to the depreciation of the vessels and also adjusting for the multi-client investments that were paid in other periods. We ended up with paid multi-client investments of 104 million dollars. We had capex of 24 million dollars and then we received a bit of interest leading to total cash flow from investment activities of 126 million dollars. We had a net change in interest bearing debt and leasing of of 10 million dollars negative in the quarter. We paid interest of 7 million and dividend payments of 30 million which gave us cash flow from financing activities of 48 million dollars negative. So all in all this led to a fairly neutral net cash flow while also adjusting for currency movements and we had a cash balance of 167 million dollars at the end of the quarter which was more or less unchanged from the situation at 31st of March. We're showing here some expectations for our cash flow excluding networking capital and excluding dividends at the current run rate or for 2025 essentially. So we've guided for gross opex of 950 which we reduced this quarter from previously approximately 1 billion and then we've said that we're going to invest 425 to 475 into our multi-client library. So the midpoint of that is 450 and then we've said that the internal portion of this should be approximately 70 percent. So if you take 315 then 70 percent of 450 as capitalization of gross opex and depreciation and then add on capex of 135 which is in line with what we have guided for and then we have expected total lease payments of 120 million dollars. This means that it will be lower in the second half than it was in the first halves given the current plans that we have for renewals of leases. Then we have interest payments of roughly 45 million dollars and then tax payments which here is listed at 65 million dollars but as I alluded to it's a quite uncertain number and dependent on the revenue mix. So this means that we have a total cash outflow before any networking capital movements and also before dividends of roughly or less than 1.5 billion, 1.45 billion dollars. So then of course the net cash flow will depend on where we end up with revenues which as you know can be quite volatile and somewhat unpredictable. The balance sheet remains strong. We had as I said cash of 167 million dollars at the end of the quarter and we had net debt which was just below 480 million dollars. This means that we continue to pay a dividend of 15.5 cents per share in the quarter. The x date is a week from now on the 24th of July and the payment date will be three weeks from now on the 7th of August. This means that we have now returned more than 1.6 billion dollars to our shareholders through dividends and buybacks since we started to pay dividend back in 2010. By that I'll leave the word back to you Christian.

Thank you Sven and my first outlook slide is quite familiar to all of you. It shows the declining reserve life and low historical reserve replacement ratios. So again as you see here the reserve life for oil is gradually coming down for the past 10 years. Actually coming down from a level of north of 13 and we're just sitting at around 9 right now. But if you go behind the numbers several IOCs have reserve life of about seven years and at the same time the average three-year rolling reserve replacement ratio is only 40 percent. So that means that with the current exploration success these guys have had you only have 12 years until you run out of oil and gas unless you either spend more or you have more success on your exploration campaigns. And when you look at the valuation of some of these players I mean the DCF model obviously goes for much further than 2037. And I also think that most of us will now finally agree that there will still be a significant need for oil and gas in 2037. But at current some of the IOCs with the current level of reserve replacement and the current level of production they will run out of oil in about 12 to 13 years. So exploration will have to increase to secure sufficient energy reserves for the future and we strongly believe frontier and deep water are proven to offer the highest exploration upside and as we all know success in deep water exploration require high quality seismic and TGS fortunately has around 60 percent or north of 60 percent of all that seismic in measured by our library size. If we move on to the 3D streamer contract tender statistics it doesn't look great. You see a quite sharp decline from what we saw last quarter but the trend line is still slightly positive and we expect the trend line to continue to be positive. We think Q2 normally marks some kind of a low point in terms of contract tender activity. We saw that last year a lot of you were concerned when we presented the merger with PGS and the fact that PGS had very low order inflow in Q2 of last year. We see the same this year and then if you remember last year we saw a sharp increase in Q3 and early Q4 and without promising that that's going to happen this year what I can say is that we have a lot of discussions with clients. It's a combination of new contracts, converted contracts, long-term contracts and a mix of all three. So overall we think that this will gradually improve and the dotted line you see here which is a trend line going all the way back to January 2019. We continue to believe that that will be increasing or show a positive outlook going forward. What is important in a market like that is obviously price discipline. What we see is relatively stable streamer margins for the last 24 months and we obviously believe that the integrated business model that we have is going to enable us to be very competitive in terms of winning new work and winning some of that work and where we combine both OBN capacity, streamer capacity with obviously multi-clients. If we move on to the OBN market, say again 2025 is probably going to be and this is the overall market size. We think 2025 is going to be more similar to 2023. It's going to be down from 2024. It's too early to say how 2026 is going to play out but obviously the OBN market is driven by a rather fragmented supply side. So where we see the biggest difference on streamer and OBN is that on the OBN side it's a very fragmented supply. On the streamer side we only have two players and on the OBN market we see a very variable degree of discipline. We obviously see some work that has been won in Brazil at very low pricing. Some of that work hasn't even started yet. In the meantime you may have had some inflationary pressure too. So again we're following some of that very closely and in the meantime TGS is doing whatever it takes in terms of staying competitive, reducing our cost base and making sure that we can be competitive with the four crews that we have. And I will come back to some of the actions that we're taking in that regard as well. So we're reducing vessel capacity and we're addressing the market conditions and we're doing this pretty much as we speak. So number one we have reached an agreement for selling the Ramform Explorer and the Valiant. These are two vessels that have been stacked for quite some time but obviously there is stacking cost related to this and obviously we don't give them away. So there is a purchase price behind this although it's relatively low. And more importantly the sales contract prohibits a buyer to use this vessel for the seismic market. So they will be out of competition for the future. In addition to that we're stacking the Ramform Vanguard. This is a vessel that has been used for a combination of oil and gas and streamers but also for the offshore wind markets. We see a weakness in both markets and as a result we take out or we stack the Vanguard and then if there is a need we will serve that need from one of the other vessels. So TGS will now go down and reduce capacity from seven to six vessels sending a message to the overall market that we are going to be disciplined. If clients are not willing to commit to our seismic vessels we don't see a purpose of just keeping this and keeping that cost space just while we're waiting for commitments. So we'll take out that capacity and obviously are very clear and sending a very clear message to the market that our intention is to be disciplined going forward in both the seismic market for oil and gas but also for offshore wind. On the OBN side all the OBN vessels are charted but these are charted as a combination of long term and short term and with a current outlook for the OBN market we are going to let some of these charters expire and there's quite a few charters coming up over the next six to twelve months and you can probably expect that TGS will let these charters go and reduce the leasing cost going forward, reduce a number of chartered vessels and then we will be in the spot market because we think that spot market is going to improve quite significantly because we see weakness in that market going forward as well. At the same time we're working intensively with new technologies on the OBN side. It's not necessarily technologies on the OBN itself but there are different ways to be more efficient both on the source side and the ROV side. So we're looking at electrical ROVs, we're looking at new source technologies that can be far more efficient than we've done in the past and we're looking at far fewer people on the vessels than what you've seen in the past and we're looking at different types of vessels that we're going to use in the OBN market going forward compared to what we've done in the past. So it may not be great news for the suppliers of source and ROV vessels but again for our cosplays going forward and our competitiveness in the OBN market you will see TGS take the necessary actions to be profitable going forward. So a summary of the market segment development. So if you look at all the five different segments and we start with multi-client again Q2 was not great. I'm the first one to admit that but we actually continue to see a positive trend in terms of frontier interest and again that was behind my comment initially that we were surprised because we had quite a few deals in the making. We had very interesting and good discussions with some of our clients towards the end of Q2 which didn't play out in terms of getting deals signed but we still have very positive discussions with clients who wants to get back to frontier and wants to spend more now on frontier because they see the macro slides that I've just been referring to in terms of reserve life and lack of exploration success in the past. There is encouraging news flow in terms of licensing rounds both in the Gulf of America and Brazil. Short-term licensing activities of course vulnerable to oil price volatility. I think we got a sharp reminder of that in Q2 and again it's just the fact that we have fewer and larger clients versus 10 years ago and that may play out in bigger deals. So fewer and bigger deals with fewer and bigger companies. It's quite obvious and what happens then is that you get some volatility in the quarterly results but overall you should continue to see strong profitability and our target remains 2x on our multi-client projects. On the streamer contract market again very consolidated supply side. Pricing remains stable. We're being disciplined. We're stacking vessels that are not being fully utilized and we're capitalizing on the integrated model to build strategic relationships, win long-term contracts and obviously bid very selectively on work. On the OBN contract side again a more fragmented supply side variable degree of discipline is probably fair to say. We see a volume decline in the market from 2024 to 2025. Again I touched on some of the initiatives that we will obviously have to come back to the market with in terms of making a shift in terms of technology, making sure that our source efforts and the OBN or the ROV efforts can be more efficient in the future, testing out new concepts in that regard and of course that also means that we're going to reduce the current leasing costs and let some of these long-term agreements go when they expire. On the imaging side very competitive market for low-end imaging solutions but fortunately we don't really compete in that market. We're actually talking to clients who are seeking a more competition in the high-end segments where there are fewer players and TGS has now finally established itself in that market proven by significant growth in the proprietary market and combined with strong margins. On the new energy solution side again revenues were flat year on year. We see a continued positive development of the acquired businesses and then we see some lumpiness in terms of ultra-high resolution work which is mainly sea-snel and it's mainly around the North Sea rather than Western Hemisphere where we see lower activity. If we move to 2025 guidance so our multi-client investment is still going to be around 425 to 475. It's unchanged from last quarter and approximately 70% of the investment is expected to be acquired with TGS's own capacity. On the capex side we're guiding about 135 million dollars. It's unchanged and in addition to that there's an approximately 10 million dollars of integration related capex. What I can say is that we turn every stone in terms of how where we can see efficiency gains and where we can see savings whether it's capex or opex. We're not ready to change our guidance on capex but I can guarantee you that we're looking very carefully at every single cost item in terms of capex. On the gross operating costs on the opex side we're actually announcing a further reduction on the operating costs. Our target is now 950 million dollars of gross cost for the year which is down from about a billion in the previous guidance so that continues to come down and I'm extremely pleased about the team in terms of what we've done in terms of getting more efficient getting cost out of the system and making sure that our margins are safeguarded in that regard. On the utilization side we expect improved utilization of 3D streamer fleets. Q2 wasn't or Q2 was good in terms of utilization. Q3 doesn't look as good and then we're still hopeful that Q4 will come back at a higher level than Q3 such that the full year we expect improved utilization for our 3D streamer fleets. On the OBN side we expect lower acquisition activity compared to 2024 both for the entire market but also for TGS specifically and again we don't have any intention to be undisciplined and fight for work with negative margins or extremely low margins that's not the recipe for success in the seismic market. So on the order backlog and inflow if we start with the inflow you see the inflow is sharply down it's at $133 million for the quarter and you see how that compares to previous Q2s. You also see that Q2 is usually a seasonal low so although I'm not very pleased with $133 million for Q2 what you've seen through history is that we have a tendency to have higher inflow both in Q3 and Q4 than what we have in Q2. You hope to see the same this year and if you look at the overall backlog it's reduced from $600 to $425 million. Again some of you may be a bit nervous about that number and you may even expect that to be coming further down. Again I think some of that is seasonality I think I've touched on that in terms of we were also a bit concerned at the same moment last year and then we had a very nice build of backlog during the fall season. In terms of what we have in the where we have line of sight right now there are some big multi-client projects some projects that we have even started and where we expect obviously pre-funding to be signed quite imminent and where we expect that obviously to have a quite significant impact on total backlog. In addition to that we see long-term contracts I heard one of our competitors were talking about quite a few long-term contracts that are out in the market. Of course we are invited to compete for that and we're looking very carefully at that in terms of securing some of that stuff that goes over many calendar years both on the OBN side but also on the on the streamer side and and that's obviously where TGS is very competitive. If you look at the expected timing of the contract backlog you see that on the right hand side on the pie charts but I think the next slide will probably give you an even better picture of that. This shows the booked streamer work and the booked OBN work respectively and given the sales cycles that we have where streamer work typically has a sales cycle of two and a half to four months and OBN work probably probably twice that four to seven months of a sales cycle you wouldn't expect to see a significant change to Q3 so Q3 is pretty much what it is it's not great on the streamer side and neither on the on the OBN side and then Q4 we expect it to be quite significantly better when we get three months into the future. Obviously this is where sales cycles we still have time to sign up work for Q4 and obviously we have a long list of opportunities that we are pursuing as we speak. So at current we expect the streamer work to be you know in line with or probably higher we expect it to be higher in Q4 than we than we show in Q3 and on the OBN work there's not a whole lot of upside to what we're showing here but again there may be some multi-client work that we will see in the Q3 streamer markets we see contract work in Norway and Egypt we've taken a two to three months pause in the acquisition activity on a project in Asia so again that backlog is moved from Q3 to Q4 and then we're doing multi-client in Brazil. On the OBN side contract work in Gulf of America, Norway and Trinidad and then multi-client work in the Gulf of America. We expect multi-client investments for Q3 to come slightly down from Q2 where we had 114 in Q3 is probably going to be around 90 million dollars as it looks right now and then the utilization expectation 65 percent ish for vessels in Q3 and then a normalized OBN crew count of about two and a half for Q3. If we move on to the summary so again we had total revenues so 308 million dollars again we're not pleased about the revenues this quarter and I think I have addressed the key reasons for that and obviously some initiatives that we are taking in terms of turning that negative trend. EBITDA is actually pretty good it's 153 million dollars and it's an EBITDA margin that has improved from Q2 of 2024 and this has improved because of sharp cost cutting and an organization who's been extremely cost-conscious since early April when we had the combination of tariffs hitting the demand side and obviously the OPEC plus decision to increase production hitting the supply side. Cash flow of about 11 million dollars so positive cash flow despite the very disappointing quarter on the revenue side. We're continuing to do business optimization I think the key highlight of this quarter is that we're adjusting vessel capacity to the market we're staying disciplined we're sending a signal to the market that we remain disciplined that we want to make sure that we stack capacity that no one is using. Short-term market development is sensitive to all price the long-term market outlook remains positive and nothing has changed in our belief in the long-term outlook for the market despite a dip in in Q2. And last but not least we're maintaining the dividend of 0.155 per share. So with that I'm going to ask Sven to come up and help me with responding to questions and then Bård is going to read the questions to us which we will address simultaneously. Thank you very much.

Yes we have a couple of questions from the people on the webcast. First one is from Jørgen Lande in Danske Bank. Good morning can you elaborate on one on the timing of the vessel sale and also the stacking of the Vanguard?

Yeah I mean the the sale of the vessels will happen pretty much over the next couple of weeks I mean the contracts are are pretty much agreed on and and there may be some final signatures to be done but that's going to happen over the next few weeks and in terms of Vanguard she's working as we speak but only for two weeks so we'll take her out as soon as the summer season is over in Europe.

Very good. Next question is from Lucas Dahl in Arctic Securities and that's for you Sven Börö. You are above your net interest-bearing debt target. How does that stack against your dividend strategy?

Yeah what we what we said is that our intention is to to maintain the current dividend level stable until we are down at that level. Of course with the with with the weak Q2 it will it will it will obviously push the time when we potentially get down there a bit out in time but our our goal remain intact.

Then Lucas Dahl has another question that's more for you Christian. What's driving the demand decline in the OBN market and he assumes that the OBN market should be tied to production in the oil and gas industry?

Yeah I mean the the overall weakness we see right now is probably more timing than than it is a a permanent weakness in the market. I think that Lucas rightly pointed out I mean this is very much related to production and it's related to production optimization and that market is relatively stable. So some of that work has been pushed into 2026. There are big projects in Brazil for example that has been delayed and we we're not overly concerned about demand in the OBN market. We also think there is some hidden demand out there is that overall you will see that OBN costs will continue to come down and we will be more competitive also on exploration projects so that's going to be a key driver for the future driving growth in that market. Personally I'm probably more concerned about supply in that market. There is probably over supply given the current level of demand and even if you see growth in demand going forward which we expect to see I think I think there's the supply is probably there's there's too much fragmentation in that market and too low discipline. But overall we think the long-term trend for OBN continues to be positive and probably driven by a relatively stable 40 market and then driven by production and then increase in the exploration part of that market going forward as cost is coming down.

Then we have a series of questions from John Olyson in ABG. Who are you selling the Ramform Valiant and Ramform Explorer to and can you indicate the price you get for the vessels?

Yeah we can't disclose who the who the buyer is. What we can say is that the vessels are going to be used outside the seismic market so there is a restriction in that regard in terms of the purchase price. I mean we're talking low single digit millions. So we're not doing this to strengthen our balance sheet we're doing this to strengthen the overall market and making sure that we get the right balance between supply and demand in the market. Yeah

and then in terms of synergies he is wondering if he can provide an update on the synergy effects of the 110 to 120 30 million dollars that we have indicated. What's the status?

Yeah the status is that we're pretty close to being there. We still have some work to do in terms of particularly there are some integration tasks that take longer time typically related to systems and software alignment. So we're pretty close to that range as we speak and the last bit will take a bit of time until we are full alignment on things like ERP systems and HPC in the cloud and stuff like that.

The next question is for you Christian in terms of multi-client. Is it natural to expect a jump in Q3 late sales as a result of the US Gulf licensing round and also in terms of transfer fees in the second half of the year what do you expect?

Yeah I'm not going to be standing here and predicting or promising higher late sales because I was wrong as we were all in Q2. We thought Q2 was going to be far better than it was and then we got a painful reminder that this market has low visibility and it's very vulnerable to changes in the overall market environment. So I think when you look into I would rather say second half rather than quarterly specific in the second half yeah there's a couple of transfer fees out there. One of them is probably quite sizable and it's related obviously to the Chevron Hess transaction which we still know whether it's going to happen. If it's going to happen it may actually happen in the second half of this year rather than next year. Other than that there's a couple of transfer fees in the category of probably zero to ten million dollars for TGS which is also probably going to trigger some sales in Q3 and or Q4. Overall I mean typically when we have a bad late sales quarter we have a tendency to come back. If this is driven by the old price and driven by macro obviously we need to cross fingers and hope that the overall environment will improve in Q3 and Q4. Again as I've said multiple times our long-term view of the market hasn't changed. There's significant opportunities out there both on the contract side and on the multi-client side but of course Q2 was a big disappointment in terms of getting that closed towards the end of the quarter for multiple reasons.

Then continuing on Mr. Leisens' list of questions on the OBN side you mentioned that you will let some capacity go. Does that mean that you will reduce the number of crews which currently stands at four?

Not necessarily but when we look into the amount of work that we have right now and what we're planning to do for 2026 it will probably be more of a shift in trying to get more efficient, trying to use source and ROV vessels across multiple projects rather than getting two for every single project and following the projects. We're looking at efficiency gains. We see that a lot of these kind of long-term contracts we may not need them for the future. We may see different types of vessels in the future. We may see vessels that are not necessarily unmanned but they're definitely more light in terms of what needs to be or the human resources that you need on the vessels. Obviously looking at ways to get more efficient and particularly to drive that innovation in the exploration market so to add growth on top of the 4D market. We need to get more efficient and the way to get more efficient is probably not the node in itself it's more about the way you do it and the way you perform your operations and that's where we see some benefits. So again we'll come back and talk about this when we've run some of these pilots that we are working on right now.

Next question comes from Ole Martin Rødland in Pareto Securities. Partners withdrawing from the Motoclient JB projects. Was it your decision to continue as you still expected these to be good projects or had costs already incurred so effects postponing was limited?

No it's an interesting point you're bringing up. So number one I mean TGS has a history of investing counter-cyclically and taking risk when no one else is willing to take that risk and share that with us. I think that's part of the reason to our success. So that continues to be part of our DNA. When you add the fact that we're becoming more asset heavy to that which means that you know sometimes it may make a lot of sense to continue a project in Brazil despite the fact that your partner doesn't want to be part of it or that despite the fact that you may not have the final signature in place in terms of pre-funding. We're still happy to do that kind of stuff and to capitalize on that situation rather than showing weakness and pausing stuff like that. So I think this is a great example of TGS kind of combining our DNA from the multi-client side over 40 years of successful operations with being more asset heavy and making sure that we can utilize assets at the same time and taking advantage of a strong balance sheet to be able to do that when no one else has a willingness or a capacity to do it.

And following up on that in terms of the expected returns on these surveys do we expect similar sales to investment target of two times at these surveys and also will you rethink the collaboration with the partners in the future in terms of the experience from Q2?

In terms of the overall return yeah absolutely I mean we're talking about we wouldn't do this in areas where we don't have a proven success but the areas we're talking about here and projects that we were impacted by the fact that partners said we don't want to be part of this right now is there are two regions number one is Brazil the equatorial margin where we are very happy to continue to acquire seismic where the licensing round that was announced quite recently or held quite recently were a great success where Chevron and Exxon paid big fees to to get into some of that acreage where we have been operating now for about a year. So again we have no hesitations to carry on a higher with a higher equity in those projects because of the proven success that we have in Brazil. Go for America same thing you know we're happy to be 100% we're happy to do 50% JVs and our goal is to be in the Go for America for the long term and this is what has built the TGS you see today and we're going to continue to invest there whether it's 50% or 100% equity.

Okay we are coming to an end on the questions on the web so unless there's any last minute questions from anyone I'll leave the word to you Christian for your concluding remarks.

Thank you Bård and thank you Sven and thank you for everyone who followed our earnings release on the web overall again we're not pleased about Q2 and it came in lower than we expected but the good thing here is that we're taking actions we're taking actions pretty much immediately in terms of getting our cost base down getting control of vessel capacity showing a very disciplined approach in terms of stacking and selling vessels also new strategies on the OBN side in terms of reducing the leasing costs going forward and making sure that we can introduce even more efficient ways to to do that for the future. I want to wish you all a great summer thing for the first time in many years here Norway has a temperature that is quite similar to Houston so great to be here and I wish you all a great summer vacation and hope to see you back when we report our Q3 presentation later this fall so thank you very much.