Tgs Asa S/Adr

Good morning and welcome to the presentation of TGS presentation of Q1 2026 results. My name is Bart Sandberg, Vice President Investor Relations and Business Intelligence in TGS. Today's presentation will be given by CEO Christian Johansen and CFO Svendberg Larsen. Before we start, I would like to draw your attention to the forward-looking statements showing on the screen and available in today's presentation and earnings release. After management's concluding remarks, we will open up for questions from the audience on the webcast. So with that, I give the word to you, Christian.

Thanks, Bård. Before we kick off with the highlights of Q1, please allow me to provide a quick backdrop to recent market developments impacting our business going forward. Just a few months ago, the market expected 2026 to be defined by oversupply and continued capital discipline. Today, the picture has changed dramatically. The conflict in the Middle East has disrupted supply, effectively trapping significant volumes of oil, tightening the market and driving higher prices. More importantly, it has fundamentally shifted how our clients think about exploration. Energy security is once again a top priority. Strategic reserves are being drawn down and reserve replacement has moved back to the forefront after years of underinvestment. Activity is beginning to pick up, particularly outside the Middle East, as operators look to secure new, diversified sources of supply. That said, this will not happen overnight. Industry budgets for 2026 were set in late 2025, and it will take some time for this shift in sentiment to fully translate into increased spending. However, the direction is clear. What was expected to be a gradual recovery is now shaping into a more urgent and potentially stronger cycle for exploration. And we have good reasons to be increasingly optimistic about the outlook for 2027 and beyond. In this environment, TGS's data and insights are more relevant than ever, helping our clients move faster with greater confidence as they respond to a rapidly changing energy landscape. So if I move on to the highlights for Q1 of 2026, we had revenues of $321 million driven by high multi-client activity on the investment side. And as a result of that, we had a utilization of 91% in the quarter. Our Q1 EBITDA was about $200 million. That corresponds to a 62% margin, which is up from last year and pretty much in line with Q4 of 2025. Our Q1 EBIT was $64 million, and that corresponds to a 20% margin. We had a net cash flow of $29 million, and we have successfully continued to reduce the net debt now to a new level of $424 million. Our order inflow was strong in Q1. We had order inflow of $392 million, and that means that our total order backlog is now $779 million, which is the strongest order backlog TGS has had since 2019. And last but not least, we're maintaining a quarterly dividend of US dollar 0.155 per share. Moving on to the business update for the quarter, the first slide is showing our data acquisition activity for Q1. And you can clearly see from this map that we have the majority of activity in multi-clients. So the light blue here showing the multi-client activity for our streamer vessels in the South Atlantic area shows that we had five vessels operating in Q1. We had three in Brazil, one in the Northern Equatorial margin, two in the Pelotas play, and then you see two vessels on the other side of the margin, one in Nigeria and one in Angola, and I will come back to that. Then we had only one contract for our vessel operations, and that was in Indonesia, as you see in the lower right-hand corner of the map. Moving on to starting with multi-clients. So we had external revenues of $240 million for multi-clients. And we had investments of $178 million and a sales to investment for the last 12 months of $1.7 million. $1.7 million is down from the $2.2 million that we had about a year ago. And this is partly driven, as we have announced previously, with a delay in pre-funding of one of the active projects in the South Atlantic area. To summarize the activity for the quarter, we had the APEX-1 ocean bottom node project in the Gulf of America. This is a dense node grid, and thanks to new technology developments developed between acquisition and imaging of TGS, we can actually acquire that data without reliance on underlying streamer data, which is a huge advantage and opens up a new opportunity for us in terms of using OBN for exploration elsewhere in the world. We had a multi-client campaign in West Africa consisting of two projects. We commenced a big project in Nigeria. It's called LIDAR. It's a multi-client 3D survey. And then we also had a project in Angola, which is the ultra-profundo multi-client 2D survey that we did in the quarter. We have, as mentioned previously, high multi-client activity in Brazil's exploration basins. Three Ramform Titan-class vessels. Again, as I said, one in the equatorial margin and two in the Pelotas basin. And we also see a pickup in terms of frontier activity. And you see that the evidence of that with two agreements with governments in the quarter. And we see a pickup in interest from governments in terms of signing new MOUs and exclusivity agreements with TGS. So we have one signed in Republic of Equatorial Guinea. And then we have an LOI with a subsidiary of the Libya National Oil Corporation that was also signed this quarter. And again, these are two of the most prospective frontier areas, further showing evidence that frontier is gradually coming back on the agenda for our clients. On the marine data acquisition, we had external revenues of $58 million, internal production of $137 million. And if you compare that to Q1 of last year, you see that the activity level overall is about the same, but you see a complete shift in terms of how we allocate the vessels. So far more vessel activity on internal projects, so multi-clients, and then you see less contracts. And this is very much in line with the strategy that we lined up and we talked about after Q4. So we said 2026, you will see more multi-client activity. You will see in a relatively weak vessel market, we allocate more of our vessels to multi-clients. And this plays out in terms of Q1 exactly as we planned, where utilization is as high as 91%, so sharply up from the average of last year, because we have the flexibility and the ability to move our vessels between contracts and multi-client as where we see the highest revenue potential and profitability potential. And you see that from the EBITDA margin as well. We have 19% EBITDA margin in the quarter. But keep in mind that $137 million of internal production has a zero margin, which means that all the margin is coming from the external revenues of $58 million. So a strong quarter in terms of profitability as well. In terms of the activity summary, we were awarded an extension to a multi-year OBN contract in the Gulf of America. This is an agreement that we've had for the past three years. Now we've extended that further with one of our key clients who's very active in the Gulf of America, particularly in terms of OBN usage. This is a frame agreement, and again, it goes over the next three years. In addition to that, we reintroduced and I'm very pleased to see Ramform Vanguard back in business again and out of stacking. So we have a solid backlog now for the Ramform Vanguard in Europe for the summer season. And we will run a long campaign now funded by multiple parties for offshore wind and site surveying using Vanguard. We also saw contract streamer activity in both West Africa and Indonesia in the quarter, and then we recently signed an OBN contract in the Gulf of America. Moving on to imaging and technology, sort of a similar picture there with a little bit of a shift from external to internal. You see the majority of our production is internal, so $17 million in internal production versus 10 in Q1 of last year. And then $15 million in external revenue. So you see we're able to even grow our external revenues in a quarter where we use most of our capacity on internal production as a result of higher acquisition activity on our vessels for multi-client. Also strong margin there, 19% margin. And again, internal production, we don't charge any margin. So strong margin on external projects. In terms of activities, we announced a multi-year strategic agreement with AWS, so Amazon Web Services. I'm extremely excited about this because not only does it provide us the compute that we need and flexibility and scalability in terms of compute, but probably more important and more interesting is the fact that we're working now very closely in a partnership with AWS on GenAI and what you can do with AI on seismic data. We've already developed very promising models called seismic foundation models where you're able to get increasingly more efficient in terms of interpretation of data. So you can do things in days now that you spend weeks or even months in the past. And I'm super excited that together with AWS, we can continue to break new barriers in terms of AI for seismic and seismic data. So again, as we say here, the collaboration is designed to create a foundational shift in geoscience. And again, very excited to follow the outlook of that going forward. New imaging center in KL this quarter, and this builds on a very similar model to what we do in Brazil. Strong utilization at all imaging centers. You see the total of internal production and external revenues is significantly up from last year. And we expect to see that continued activity growth throughout 2026. So I hand it over to go through our financials and then I will be back talking about the outlook for the rest of the year and the future. Thank you very much.

Thank you for that, Christian. I'll start by going through the revenues for Q1. You see here the revenues by nature listed on this page. On the left-hand side, we show a waterfall of our multi-client revenues in the quarter. Of course, the multi-client business unit It's behind most of the multi-client revenues, 207 in this quarter. And then we also have a component of $5 million coming from the other category, and that is mostly related to offshore wind measurement and metocean measurement campaigns. In total, multi-client revenues amounted to $213 million. On the contract revenue side, you see that multi-client business unit contributes by $33 million in the quarter, and that is related to revenues from JV partners on ongoing multi-client projects. The MDA, the marine data acquisition business, amounted to $58 million in the quarter. We had $15 million of external revenue from our imaging business, and the other category accounted for $3 million, resulting in total net contract revenues of $108 million for the quarter. If you look at the results by business unit, you see the multi-client business unit on the top left-hand side with with split by the multi-client revenue and the JV revenue. In total, $240 million. You have multi-client investments of 176. As you can see, a sharp uptick in multi-client investments, as Christian talked about. On the MDA side, data acquisition side, you see that we have $58 million of investments external revenue, but you also see the internal production on top. And as Christian said, we charge a zero EBIT margin on the internal production. So as you can see, the activity level is pretty high in the quarter and sharply up from Q4 when you also include the internal production. Imaging revenue is a bit down on the external revenue part, $15 million, whereas the internal part related to our own multi-client projects also is up here related to the higher multi-client activity. So as you can see, the overall activity level is more or less flat and we feel quite confident that we will grow the total amount of activity in our imaging business this year. versus last year. So if you look at the consolidated numbers, $321 million of revenues that have been well covered by now, so I won't go into more detail there. You see our operating expenses, $122 million net operating expenses in the quarter. This excludes one of, or an extraordinary item, non-cash of $8 million. And then we had $262 million of gross operating expenses in the quarter. As you can see, that is a bit higher than what we have seen in some of the preceding quarters. And this, of course, is partially related to the to the higher activity level and the high investment activity and partially related to geographical uplifts when you work in regions where you have more geographical related costs that are also reflected in the revenue line. you see that the gross cost will go up. And also, you should also see gross cost to some extent in a longer-term perspective because there are also some periodization effects between the different quarters. Then looking at depreciation and amortization, we had $36 million of net depreciation in the quarter after capitalizing some of it to multi-client projects. We had straight line amortization or multi-client library of $56 million. reasonably stable from the preceding quarters. And we had accelerated amortization of $43 million in the quarter. All in all, this gave us an EBIT of $64 million, excluding this $1 million one-off cost. This corresponds to an EBIT margin of $20 million, which is actually significantly up from the EBIT margin that we saw one year ago. Looking at the P&L, total revenues $321 million. We had an EBITDA, including this $8 million extraordinary cost of $191 million and $56 million of EBIT, including this cost. Adding on financial income and financial expenses and impacts from currency movements, we ended up with a result before tax in our produced P&L of $44 million in this quarter, which is slightly down compared to the $47 million that we had in the corresponding quarter of last year. Looking at cash flow, cash flow was quite strong in the quarter, supported by by working capital movements, which is normal, of course, in a Q1. So there are, as you know, some seasonal impacts or seasonal effects in our cash flow and working capital movement. We had cash flow from operations of $249 million. We had cash flow from investment activities of $168 million in the quarter. Then we paid down approximately or a little bit more than $30 million of debt in the quarter. And in addition, of course, we have some costs relating to IFRS leases. Interest paid were $29 million in the quarter. We pay interest on the bond loan bi-annually. So Q1, Q3, Q1, Q3, and so on. So we pay that in Q1. And we had normal dividend payments of just about $30 million in the quarter. So all in all, this gave us a net cash position at the end of the quarter of $184 million. As I said, after paying down a bit more than $30 million of debt and after paying $30 million of dividends as well. As I said, we tend to have some seasonal patterns in our working capital development. So Q1 is typically quite strong from a working capital viewpoint and Q2 tend to be weak. So you should expect to see weaker cash flow in Q2 as a result of the seasonal fluctuations. The balance sheet, and note that this is on an IFRS basis, I won't go into details on any of these items other than once again noting that the balance sheet remains very strong and net interest-bearing debt is now down to $424 million as per the end of Q1. And then we This gave us the confidence to continue to sanction a dividend of 15.5 US cents per share. The exit date is set to 8th of May, and the payment date will be on the 27th of May. By that, I'll leave the word back to you, Christian.