Tgs Asa S/Adr

Good morning and welcome to TGS Q4 2025 presentation. My name is Barns Lemberg, Vice President of Investor Relations and Business Intelligence in TGS. Today's presentation will be given by CEO Christian Johansen and CFO Sven-Better Larsen. Before we start, I would like to give some practical information. For those of you present in the room with us today, please use the microphones provided when asking questions. For those of you on the webcast, you can type in the questions on the platform and we will address those. after management's concluding remarks i would also also like to draw your attention to the cautionary statement showing on the screen and available in today's presentation and earnings release so that is my pleasure to give the work to you christian thank you board and welcome everyone so i will start with the highlights for q4 of 2025 so we had um

Revenues of $363 million. Our revenues in Q4 were driven by strong multi-client performance, which is quite common for any given Q4. But I think we were particularly pleased about this year because it was a quite volatile market in terms of it sliding all price during the quarter. But we still managed a very strong multi-client performance, which I will come back to. We had an EBITDA of $227 million. That corresponds to a 63% margin. And again, this is thanks to a very strong focus on cost, which again has preserved our margins in the quarter. Our Q4 EBIT was $72 million. That corresponds to a 20% EBIT margin. I'm particularly pleased about our order inflow for the quarter. So we have $598 million of new orders signed. And this is the strongest order inflow since pre-COVID. And that means that we have a total order backlog of about $706 million entering into 2026. We had a net cash flow of $206 million, and that means that we managed to reduce our net debt to about $427 million. And as you all know, we have guided a range of between $250 and $350 million as a comfort zone in terms of net debt. And we've also said that when we get to that range or within that range, we're going to increase shareholder allocation, whether that's going to be in terms of dividends or share buybacks remains to be seen. But for now, we maintain our dividend of about 0.155 US dollars per share. So 2025 has clearly been a transitional year for TGS. We got off to a good start. We had a better than expected Q1 results. strong asset utilization and multi-client sales. And then Liberation Day hit us in early April, and obviously with a resulting macro and geopolitical uncertainty, which had an impact on old prices. So we showed old price weakness and volatility, which caused pressure on client spending. As a result of that, we saw a challenging contract streamer and OBN market through the course of 2025. However, we've been preserving margins by reducing costs and capex. I'm impressed about the way we have reduced our gross operating costs and capex by about $156 million of reduction in terms of operating costs and $48 million of the reduction in capex versus the original plans for the year. As a result, we've increased our shareholder return and we have reduced debt at the same time. So we had a net cash flow, as I said, of more than $200 million. We have reduced debt to a level or net debt to a level of $427 million. And we have increased our dividends in 2025 of 11%. So we're clearly benefiting from a unique business model. In fact, the only company in our space who has a business model where we are strong in all verticals of the seismic industry. We have signed our first strategic partnership with one of the super majors, and we're capitalizing on opportunities in all geoscience markets. We clearly feel that we're strongly positioned for 2026. We have a strong order inflow and backlog. We have a robust balance sheet and we're continuously optimizing costs and capex to be ready for the next upcycle of our industry. I'll give you a quick business update for Q4 as well. And the first slide here shows the global map. And I want to draw your attention first and foremost to the blue color on the slide. And this shows the massive multi-client data library of TGS. So you see data in pretty much all the basins in the world. And in fact, since 2018, we or TGS makes up about 60% of all the multi-client data collected in the world. So a significant market share within the multi-client space, which again gives us a unique opportunity to also utilize our high-quality assets. I'm not going to touch on all the different basins where we have been active, but you see the usual basins such as U.S. Gulf of America. You see we have three vessels in Brazil. We're strong in West Africa with two vessels in Gabon during the quarter, and those vessels have now moved to Nigeria and Angola. We had a vessel in India, and then you see there's also some new energy operations both in California, the US, and Germany and Australia during Q4 of 2025. Next, a quick update on the different business units. So we'll start with multi-client, and we start with the financials. So we have multi-client sales of $270 million in Q4. That corresponds to $259 million in Q4 of 2024. We had investments of 117, and most importantly, we had sales to investment over the past last 12 months of 2.0, meaning that whenever we invest $100 million, we expect to see $200 million of sales, which is a very strong metric and where TGS has been unique in terms of the industry, in terms of being able to manage such returns over time. In terms of awards and key projects, we were awarded a project in Pelotas Norte. This is a phase one of a big project that we're doing offshore Brazil. It's a streamer survey mainly targeting open acreage, but where we also have solid pre-funding before we started the survey. Number two is a project called Apex One. This is an ocean bottom node multi-client project in Gulf of America. This is actually a dense node grid, so compared to previous surveys, which are more sparse and take advantage of underlying data, this is a denser survey without reliance on underlying streamer data. And the reason why we can do that is that we've had technology breakthroughs in terms of how we acquire ocean bottom nodes with new source technologies combined with new ROV technologies that we have applied on this survey. Then we completed a big survey in Brazil called Megabar Extension Phase 1. This is a joint venture streamer survey in the equatorial margin area offshore Brazil. And this is the area where Petrobras is drilling as we speak. I touched on the multi-client performance and this one gives you more details about that. So this shows our quarterly multi-client performance all the way back to Q1 of 2023. And what you see there, if you follow the line, is that it's quite consistent around 2x. Yes, it may drop in certain quarters down to a level of 1.7, but then you also see peaks that goes all the way up to 2.2 and 2.3. But the important thing here is that over time, we managed an average sale to investment of somewhere between 1.9 and 2.0. And in that regard, I'm extremely pleased that we managed to a sales investment of 2.0 in a challenging market in 2025. In Q4, we had multi-client sales that increased year on year, despite a 15% lower oil price quarter by quarter. On the marine data acquisition, we had a negative development of sales and activity. We had OBN contract revenues dropping from 132 in Q4 of 2024, which was extraordinarily strong. But still, they dropped to a level of 47 million in Q4 of this year, or 2025. We saw a drop also in streamer contract revenues, down from 131 to 110 this year. which means that the gross revenues came down from 263 last year to 157. And this is obviously reflecting a very challenging market for both Streamr and OBN, particularly in the last three quarters of 2025. So that means that net revenues were 68 for the quarter. But I'm happy to say that our EBIT margins are actually better than last year. And it's a combination of things. Number one, we had no operational hiccups in Q4, so very strong operational performance. And number two, we planned very well for the drop of activity in the OBN market. which means that we had no short-term leases during the quarter, so we managed to get rid of them when we planned for Q4, which obviously had a huge impact on our margins during the quarter. In terms of awards in Q4, we had a three-year capacity agreement with Chevron signed in Q4. This is for Streamr and OBN Acquisition Services. And as part of that collaboration, we also worked together very closely on technology developments and acquisitions. One example would be what we're doing on the OBN side now in terms of being able to have a more flexible model where we are more efficient in terms of acquisition and we don't have the same reliance on underlying data when we acquire these surveys, particularly in the US Gulf. We have three OBN contracts signed in Europe during the quarter. These are for acquisition campaigns for Q2 and Q3, which means that we're filling up the backlog in Europe pretty well. In addition to that, we had a Streamr4D contract in Norway. This is going to commence in Q2 of 26, and it has a duration of 65 days. And last but not least, we also signed up a Streamr4D contract offshore Brazil. And this has a second half 2026 startup. And again, this one has a 75 days duration. On the imaging and technology, we had a strong quarter, and it's been a really good year for our imaging team. Gross imaging revenues growing from 30 to 32, but more importantly, the external imaging revenues grew from 15 to 18. But for the full year, we had a year-on-year growth of 65% for imaging. As you see, on top of that, we had a margin improvement from 20% to 30% on the EBITDA level. Again, we have signed a multi-year agreement with a super major for licensing of our software, which is called Imaging Anywhere. And this is a second super major who signed up with TGS in a short period of time. And we now have multiple companies using our software when they do imaging, which again creates a stronger link between TGS and some of our biggest customers. I touched on the year-on-year growth of 65%, and we expect further growth in imaging in 2026. It's not going to be the same magnitude as we saw in 2025, because obviously we're starting from a much higher base. But overall, we will continue to see growth. Growth is probably going to be higher in the second half than the first half, based on the backlog that we have right now. But again, the positive development in imaging is expected to continue also for 2026. And then last but not least, the new energy solutions. Numbers are still fairly small. You see contract revenues dropping from seven to two. And the reason for that is that we didn't have any site characterization surveys in Q4 of 2025. As you know, we stacked Vanguard after the summer season, partly because we didn't have the backlog that was needed during the winter to justify that result. Then we have multi-client revenues growing from 3 to 4, total revenues down from 9 to 6. But again, as we saw with imaging and acquisition, we've had a positive EBITDA margin development despite lower activity level. Some key awards. We have the first wind and metocean campaign in Australia. This is a one-year deployment, and this is in the Gippsland region of Victoria. And then secondly, we're in collaboration with a company called Evolos. We offer wind and metocean campaigns offshore Brazil. So with that, I want to hand it over to Sven, who's going to go through our financials, and then I will come back and talk more about the outlook for 26. Thank you.

Good morning, Christian. Good morning. Okay. I'll start by going through the revenues. We had... Our segment revenues came in at $363 million in the fourth quarter, which is down from the same quarter of last year when we had 492. We saw strong performance in our multi-client business, $263 million of multi-client revenues, which is actually a little bit above what we had at the same period of last year. And then of course we had significantly lower external revenues in our data acquisition business, $100 million compared to $231 million in the same quarter of last year. On the operating expenses side, you see here on the top right-hand side, you see the dark blue bar shows the net operating expenses, and then we show the capitalization, and then we show the gross operating expenses. So gross operating expenses was down to 189. in the quarter, so you can see that we continue to reduce our gross operating expenses quarter by quarter. However, you should also note that there is approximately 15 million dollars of release of accruals in Q4, so this is cost that we have charged to our P&L earlier in the year. based on conservative assumptions on product performance. And now that these projects are coming to an end, we can release some of these accruals, which has a positive impact of roughly $15 million on the gross operating cost in this quarter. But it doesn't really affect the full year. In terms of depreciation, on the bottom left-hand chart here, you see that we had low net depreciation of $36 million in Q4. And that has to do with high capitalization of gross depreciation. we had approximately 42 million dollars of capitalization of depreciation in the quarter. And that is roughly 20 million more than it otherwise would have been. And the reason for that is that we have reclassified some capitalization from cost of sales that were done earlier in the year to depreciation. So you have the opposite effect on the capitalization for operating expenses and then you see that we have straight line amortization of 58 million dollars more or less in line with the run rate we have had over the over the past few few quarters and we had a somewhat higher accelerated amortization of 62 million dollars and that of course relates to the higher multi client sales there is a certain correlation between accelerated amortization and multi client sales This gave us an EBIT of 72 million dollars in our segment accounts, which corresponds to a margin of roughly 20% in the quarter. This is down from 92 million dollars in the same quarter of last year. Here I'm not going to dwell too much with this table, but as you know, we report our revenues two ways. We report the revenues by nature and we report the revenues by business unit. So we compile this table here to avoid any confusions on what numbers we are looking at. And as you see here on the multi-client business unit, we do actually have some contract revenues related to JV projects that we do. So when our multi-client department engage in a JV project and we use our own vessel capacity or our own OBM capacity for these purposes, This JV partner will pay our multi-client department, say, 50% of the cost, and that is booked as contract revenues in the multi-client business. And then you also see that in the new energy solutions business, we have a little bit of multi-client revenues related to subscriptions of software that we provide to customers. As you saw from the chart earlier, we're very focused on cost and optimizing our cost base. We have constantly been working on this since the murder with PGS that took effect from 1st of July 2024. So initially, of course, we saw a reduction related to murder synergies. But also beyond that, we have continued to work on quite a few different efficiency measures. We are using technology in a clever manner to reduce costs. We have implemented AI solutions in a number of our functions, and we're constantly challenging ourselves in order to reduce our cost base. And you see the result here. that 2024 compared to 2025. So 2025 is significantly down compared to what we had in 2024 and also the years before. And this effort will continue. It's a continuous effort, of course, that is never complete. And for 2026, we guide for a gross operating expense of roughly 950 million dollars, which is in line with the guidance we ended up with, or the last guidance we gave for 2025. But it depends of course on the activity level. We could come in below this if activity is lower than stipulated and we could come in a little bit above if we see higher activity level. But the expectation as of now is for 950 million dollars of gross operating expenses. This brings us to the P&L. 363 million dollars of revenues. We had a cost of sales of 48 million dollars. We had personnel expenses of 60 million dollars and we had other operating costs of 28 million dollars which gave us an EBITDA of 227 million dollars. If you look at the net effect of the release of these accruals and the reclassification of capitalization of cost The adjusted EBITDA, I don't like using that word, but I'll do it anyway, would have been roughly $5 million higher than the 227, right? The deduct amortization, some impairments, and depreciation gave us an operating profit of $72 million. Then we had financial income of $2 million, interest cost of... 20 and some exchange rate related losses gave us a pre-tax profit of 52 million dollars. So this is the produced account or segment accounts based on percentage of completion. You'll find the IFRS accounts in the appendix or in the quarterly statement. If you look at cash flow, we're really happy with the cash flow development, both for Q4 and for the year as a whole. We've delivered actually quite well above our own expectation in that area. That, of course, partially has to do with with what I talked about earlier related to looking after the cost base and reducing costs quite significantly in the quarter. We have been working on our CapEx plans and we have been reducing CapEx quite significantly compared to the original plan. That is partially obviously based on looking at the needs and being more efficient in that area, but also, of course, stretching the CAPEX plan a little bit compared to the original plan. So all in all, after paying total dividend of $122 million for 2025 we ended up with a positive net cash flow of 96 million dollars for the quarter. This of course led to a significant drop in our net debt. Of course initially when we did the concluded the murder with PGS and also the subsequent refinancing, we were obviously planning to and hoping for an even more rapid reduction on that debt. But the market has gone a bit against us compared to those original assumptions. So we're actually quite happy that we are still able to deliver a significant reduction in net debt despite these difficult market conditions and despite paying a dividend, as I said, of $122 million. So net debt is down from $500 million from a year ago. to 427 at the end of 2025. So that's something we're really, really happy about given the circumstances. Our target is for 250 to 350 and that remains firm. As I said, we need a bit more time than we originally envisaged. But we are clear that we want to get down to that level. And at that stage, we will look at increasing shareholder distribution, either through dividends or buybacks. Balance sheet. Not too much to comment on this. Our balance sheet, of course, with... limited or fairly low net debt levels remain very strong. You see that our multi-client library is a little bit up over the past three months compared to what we had at the end of Q3, but it's actually slightly down compared to what we had a year ago. You should also note that the right of use assets are down over the past three months from 200 million at the end of Q3 284 million dollars at the end of Q4 and this of course relates to these IFRS 16 leases that we have and it also means that the lease cost that you'll see in our cash flow will be lower in 2026 than in 2025 So at this stage, again, it depends a little bit on the activity level. If we see that activity in OBN is picking up, we may enter into some longer-term leases again. But that's not the plan right now. So you should expect to call it quarterly or the annual run rate of lease expenses to be around $80 to $90 million in 2026. And then, finally, to dividend, given the strong balance sheet that we have and the quite good cash flow, we, of course, continue to pay the quarterly dividend of 15.5 US cent in this quarter. That corresponded to 1.47 Norwegian krones per share. The X date will be a week from now, on Thursday next week. That's the 19th. And it will be paid two weeks after that on the 5th of March. And by that, I'll leave the word back to you, Christian.