TGS (TGS) CMD 2024 summary

Strategic Direction and Integration

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

• Integration of acquired companies (ION, Magseis, PGS) is ahead of schedule, with office and staff rationalization to be completed within six months, targeting $110–$130 million in annual synergies by end-2025.

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

• Merger integration focuses on creating one common culture, co-location, tech/IT integration, and new organization structure.

• 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 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 (ocean-bottom node) business is a market leader, with Magseis acquisition delivering strong returns and 40% deepwater market share.

• 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.

• 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.