TGS has reported interim financial results for Q4 2022.
The results reflected the significant market improvement seen during 2022, driven mainly by strong late sales growth of 159% y/y. Furthermore, the quarter showed solid order inflow, and the total contract backlog (IFRS) was USD 567 million (including Magseis Fairfield) at year-end.
The balance sheet remained robust despite continued dividend payments and significant M&A activity. The cash balance at year-end was USD 189 million, with a strong working capital position from end-of-year sales. The solid financial position allows TGS to maintain the quarterly dividend at USD 0.14 (NOK 1.46) per share in Q4 2022, still allowing for a significant increase in investments for 2023.
Through the acquisition of Magseis conducted in the quarter, TGS has gained a leading position in the Ocean Bottom Node (OBN) industry. In combination with the vast coverage of multi-client data in key mature basins, TGS is well set to capitalize on the growth in near-field exploration and production seismic.
During the second half of 2022, TGS secured more than USD 140 million of pre-funding for new investments, and more than USD 200 million of multi-client investments are committed currently. Adding a growing pipeline of further project opportunities, organic investments in new surveys are expected to be in the range of USD 320 - 350 million in 2023 (USD 224 million in 2022), with a PoC early sales rate (measured according to the percentage of completion of the relevant projects divided by the associated investments) of more than 70% (61% in 2022).
“This quarter saw a further acceleration of the strong sales seen earlier in 2022. In Q4 2022, we achieved our highest fourth-quarter late sales since 2014. In addition, we have seen solid growth in order inflow related to new investments lately, meaning that the multi-client backlog increased significantly in the quarter. I’m excited to welcome Magseis into the TGS Group. With the combined portfolio of TGS and Magseis, we are well positioned to capitalize on the strong growth in exploration activity, both in mature and frontier areas,” says Kristian Johansen, CEO of TGS.
Financial results
Percentage-of-completion (PoC) revenue (1) amounted to USD 227 million in Q4 2022, a 90% increase from USD 120 million in Q4 2021. The late sales portion of revenues was USD 137 million, representing a substantial increase compared to the USD 53 million reported for Q4 2021.
Total IFRS revenue amounted to USD 219 million in Q4 2022 versus USD 105 million in Q4 2021.
Magseis was consolidated with effect from 11 October 2022 and contributed USD 54 million to revenues after eliminating revenues related to work conducted on behalf of TGS.
EBITDA was USD 144 million, and the operating result was USD 65 million, compared to USD 69 million and USD -101 million, respectively, in Q4 2021.
Source: TGS
