Barclays CEO Energy Power Confernce – TGS

TGS · Sep 6, 2016 · 30 slides

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Barclays CEO Energy-Power Conference Kristian Johansen CEO 6th September, 2016
Agenda Introduction Market Overview TGS Strategy Organic Investment Activity Q2 2016 Financial Highlights Appendix (financial information) 2016 TGS-NOPEC Geophysical Company ASA. All rights reserved. 3
This is TGS The Worlds largest geoscience data company Traded on Oslo Stock Exchange, part of OBX Index (25 most liquid shares) Headquarters in Oslo and Houston (Operational) Regional offices in London, Perth, Calgary, Mexico City…
Agenda Introduction Market Overview TGS Strategy Organic Investment Activity Q2 2016 Financial Highlights Appendix (financial information) 2016 TGS-NOPEC Geophysical Company ASA. All rights reserved. 5
Challenging Market for Exploration Year on Year decline in spending Change in Global E&P Spending Second consecutive 20%+ decline in E&P spending 30 27 26 expected this year 23 23 22 21 19 19 20 16 16 Impact on exploration…
Volatility Expected to Continue Volatility within a Band likely to Continue Brent oil has remained volatile though within a 60 relatively tight band 55 Oil prices in a 40-50 band since March, following the 50 rebound from January…
Long-Term Outlook Positive Global Oversupply Moderating Global Production / Consumption (mn b/d) Global oversupply is anticipated to continue to moderate 2.4 2.0 through 2017 from a Q4 2015 high 1.9 1.7 1.4 Market balance from Q3…
Key Trends in the Seismic Industry Seismic sector has underperformed financially 25% Seismic* Return on Average Capital Employed ROCE below cost of capital 20% Capital intensive and low entry barriers 15% Critical product for…
Areas with Faster Payback will Likely Recover First Chart highlights areas that are likely to see incremental seismic activity first as market conditions improve First movers will be areas with the best economics, or a…
Agenda Introduction Market Overview TGS Strategy Organic Investment Activity Q2 2016 Financial Highlights Appendix (financial information) 2016 TGS-NOPEC Geophysical Company ASA. All rights reserved. 11
TGS Strategy: Cost Efficient, Focused and Quickly Reacting Fast and flexible business model & Reward structure Consolidate and React quickly to right track record, reacting drives strong size the company focus on core alignment…
Fast & Flexible Business Model Personnel and Other Operating Costs* -40 Reacting quickly to right size the company Operating costs down 30% year-on-year -30 Operating costs down 51% since 2014 -20 MUSD Variable pay drives…
Solid Balance Sheet Backing TGS strategy Other 66 Current Goodwill 68 171 liabilities Cash 162 37 Non-current liabilities Receivables 255 Balance sheet remains healthy through down-cycle 1167 Equity Cash balance per Q2 2016 of…
Solid Value Creation Over Time Share price development* Long-term value creation track-record 1,100 Avg. annual return since TGS IPO in 1997 1,000 Annual total return of 11% since IPO in 1997 900 TGS 11.4% 800 Well above both the…
Agenda Introduction Market Overview TGS Strategy Organic Investment Activity Q2 2016 Financial Highlights Appendix (financial information) 2016 TGS-NOPEC Geophysical Company ASA. All rights reserved. 16
Q3 Investment Focus 2016 TGS-NOPEC Geophysical Company ASA. All rights reserved. 17
TGS Launches New Digital Information Products R360 eCommerce tool enables simpler integration of geologic data with customer systems Data reconnaissance, identification and selection through a map-based interface with online…
2016 Key Objectives Free cash flow generation Consistency in delivering product quality Significant cost efficiencies Intense client focus 2016 TGS-NOPEC Geophysical Company ASA. All rights reserved. 19
Agenda Introduction Market Overview TGS Strategy Organic Investment Activity Q2 2016 Financial Highlights Appendix (financial information) 2016 TGS-NOPEC Geophysical Company ASA. All rights reserved. 20
Q2 2016 Financial Highlights Total Revenues Q2 2016 Revenue Distribution 300 Other 12% 250 AMEAP 200 9% 150 3% 298 Y/Y 100 190 172 169 NSA 140 132 114 52% 50 64 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Europe 2014 2014 2015 2015 2015…
Summary Signs of improvement in oil companies willingness to invest in seismic data during Q2 2016, however, the market is expected to remain challenging and volatile in the near term Long term fundamentals continues to be positive…
Thank you Kristian Johansen CEO 2016 TGS-NOPEC Geophysical Company ASA. All rights reserved.
Agenda Introduction Market Overview TGS Strategy Organic Investment Activity Q2 2016 Financial Highlights Appendix (financial information) 2016 TGS-NOPEC Geophysical Company ASA. All rights reserved. 24
Net Revenues Late sales revenues Prefunding revenues 250 100 200 80 150 60 226 94 100 3% Y/Y 40 74 -50% Y/Y 62 130 51 53 50 82 90 90 84 20 37 72 26 38 23 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2014 2015 2015…
Net Revenue Breakdown Q2 2016 Q2 2015 GPS GPS 10% 10% 2D 15% 2D 48% 3D 42% 3D 75% Q2 2016 Q2 2015 Other Other 12% 14% AMEAP 9% AMEAP 16% NSA NSA 52% 51% Europe 27% Europe 19% 2016 TGS-NOPEC Geophysical…
Operating Expenses, EBIT, Free Cash Flow Operating expenses * Amortization and impairment * 40 250 35 200 30 25 150 -30% Y/Y 20 37 230 15 32 100 62% - rate 25 28 143 24 22 10 18 50 105 99 17 81 69 5 74 62 0 0 Q3 Q4 Q1 Q2 Q3 Q4…
Multi-Client Library Operational investments and prefunding ratio Multi-client library - NBV 200 100% 1,000 Operational investments 90% 950 Prefunding ratio 80% 150 70% 900 60% 100 50% 850 976 163 40% 919 126 135 30%…
Q2 2016 Income Statement USD million, except EPS Q2 2016 Q2 2015 Change in % Net revenues 114 140 -18% Cost of goods sold proprietary and other 0.8 0.1 1435% Amortization of multi-client library 62% 69 74 -6% Gross margin 44 66…
Q2 2016 Cash Flow Statement USD million Q2 2016 Q2 2015 Change in % Received payments from customers 28 141 -80% Payments for operational expenses (19) (25) 25% Paid taxes - (29) 100% Operational cash flow 9 86 -89% Investments in…
Balance Sheet USD million Q2 2016 Q1 2016 Change in % Q4 2015 Assets Cash and cash equivalents 162 210 -23% 163 Other current assets 255 189 35% 308 Total current assets 417 399 5% 471 Intangible assets and deferred tax asset 92 92…

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