OSLO, Norway (8 October 2021) - Based on preliminary reporting from operating units, TGS management expects net IFRS revenues* for the third quarter of 2021 to be approximately USD 200 million, compared to USD 58 million in Q3 2020. Net segment revenues* are expected to be approximately USD 61 million, compared to USD 81 million in Q3 2020.
Kristian Johansen, CEO at TGS, commented: "The market conditions for multi-client seismic data continues to be very challenging. E&P companies’ 2021 budgets do not allow for much spending beyond what was committed at the start of the year, meaning that the recent oil price increases so far have had little impact on spending levels. However, with the current oil price, the value proposition of exploration for new oil and gas resources is very attractive. As such, we remain optimistic that spending on exploration related data and services will improve as E&P companies are entering a new budget cycle with lower levels of legacy commitments. Meanwhile, the financial position stays healthy with approximately USD 200 million of cash and no interest-bearing debt on the balance sheet.”
TGS will report the Q3 2021 financial results on 28 October 2021.
* Following notification from The Financial Supervisory Authority of Norway (Finanstilsynet) TGS will from 2021 increase emphasis on IFRS in its financial reporting to the market. The Company will continue to provide segment information for historic comparison and as alternative performance measures of the business as such measures are commonly used throughout the industry, and TGS' management believes they better reflect the ongoing activity in projects-in-progress. The main difference between IFRS and Segment reporting relates to revenue recognition. Under IFRS revenue recognition generally is deferred until project completion and delivery to the customer when performance obligations are met. Under Segment reporting, net revenue from projects-in-progress is recognized based on Percentage of Completion (POC). Revenue recognition has subsequent effects on the recognition of amortization of the multi-client library. Please see the annual report for a complete description of the Company's accounting principles.
Adjustments between preliminary IFRS and Segment revenue numbers for Q3 2021:
Preliminary IFRS reported revenue: USD 200 million
- Revenue recognized from performance obligations met during Q3 for completed projects: USD 163 million
+ Revenue recognized under POC during Q1: USD 24 million
= Preliminary net segment reported revenue: USD 61 million
TGS provides scientific data and intelligence to companies active in the energy sector. In addition to a global, extensive and diverse energy data library, TGS offers specialized services such as advanced processing and analytics alongside cloud-based data applications and solutions.
Forward Looking Statement
All statements in this press release other than statements of historical fact are forward-looking statements, which are subject to a number of risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. These factors include TGS' reliance on a cyclical industry and principal customers, TGS' ability to continue to expand markets for licensing of data, and TGS' ability to acquire and process data product at costs commensurate with profitability, as well as volatile market conditions, which have been exacerbated by the COVID-19 pandemic and the severe drop in oil prices. Actual results may differ materially from those expected or projected in the forward-looking statements. TGS undertakes no responsibility or obligation to update or alter forward-looking statements for any reason.
For further information, please contact:
Sven Børre Larsen
Chief Financial Officer
Tel: +47 90 94 36 73