TGS (TGS) CMD 2024 summary

Strategic Direction, Integration, and Priorities

• Completed the acquisition of PGS and other companies, establishing a leading position in energy data with expanded services, technology, and global reach.

• Integration of acquired companies is ahead of schedule, with office and staff rationalization to be completed within six months and synergy targets raised to $110–$130 million by end-2025.

• Focus on value, resilience, and knowledge, including diversification into new energy markets such as wind, solar, and CCS, and accelerated technology and AI development.

• Shifted from an asset-light model to owning significant assets, including a modern seismic vessel fleet, to ensure value chain control and competitive access.

• Emphasis on maintaining a robust balance sheet, targeting net debt of $250–$350 million, to enable counter-cyclical investments and shareholder returns.

Business Development and Market Outlook

• Diversified into New Energy, growing NES pro-forma revenues from $7 million in 2021 to ~$70 million expected in 2024, with double-digit growth and strong margins (EBITDA margin >20% in 2024).

• Maintains the world’s largest and most modern multi-client seismic data library, with significant investments and a strong position in key basins globally.

• OBN business is a market leader, with Magseis acquisition delivering strong returns, 40% deepwater market share, and 2023 EBITDA of $132 million.

• Seismic vessel market is highly consolidated, with TGS and Shearwater controlling most capacity; no new vessel builds expected, supporting favorable pricing.

• Market outlook is improving gradually, with OBN and imaging segments showing strong demand, while streamer utilization is weaker but pricing remains high.

Financial Guidance and Capital Allocation

• Multi-client investments for 2024 guided at $450–$500 million, with higher investments in H2 and guidance consistent with previous outlook.

• Targeting a sales-to-investment ratio of around 2 for Multi-Client, maintaining disciplined investment and internal pricing to avoid value leakage.

• CapEx (excluding Multi-Client) expected at $120–$150 million annually for the next few years, with higher spend in 2024 due to growth and technology investments.

• Shareholder distributions to grow over time, with stable quarterly dividends and share buybacks managed to maintain net debt within target range.

• Cash flow potential estimated at $300–$400 million under current market conditions, with significant upside if market improves.