TGS sees record-high OBN contract activity following merger with PGS

Norway-based energy data and intelligence company TGS has reported record-high ocean bottom node (OBN) contract activity in the third quarter of 2024, the first quarter including PGS, with the utilization of its streamer fleet improving on high bid activity.

In Q3 2024, TGS said that the activity level within OBN acquisition was historically high, generating revenues of $126.9 million, whereof almost all came from external customers, compared to $126.4 million in Q3 2023 which included $8.8 million of equipment sales.

After accounting for shared services and elimination of internal transactions, produced revenues amounted to $500.9 million, up from $292.5 million in Q3 2023, while produced EBITDA was $280 million versus $169.6 million in the third quarter of last year and produced operating profit (EBIT) $104.4 million compared to $67.9 million.

“Q3 2024 was the first quarter after completion of the TGS-PGS merger, and I am pleased to report revenues of half a billion dollars. We have completed the merger reorganization process, and we are ahead of schedule in realizing annual synergies of between USD 110 and 130 million,” said TGS CEO Kristian Johansen.

Order inflow was $423 million in Q3 2024 compared to $355 million in Q3 2023. The order backlog increased to $750 million at the end of the quarter from $612 million at the end of Q2 2024. The order backlog at the end of the quarter was $475 million.

Organic multi-client investments amounted to $129.4 million in the quarter compared to $113.1 million in Q3 2023. The largest multi-client projects ongoing in Q3 2024 were the Pama project in Brazil, the NWS projects in Norway, Penyu Basin in Malaysia and a joint venture OBN project in the Gulf of Mexico.

According to TGS, OBN activity was at a record high, with two active operations in the U.S. Gulf of Mexico, one in the North Sea and one in West Africa. The two reservoir monitoring operations in the North Sea carried on as normal, while the Gemini source was idle, after being active during the first half of the year. New Energy Solution offshore wind site characterization activities utilized approximately one acquisition vessel in Q3 2024, with total revenues at $19.4 million, compared to $5.8 million in Q3 2023.

“Strong multi-client revenues in the quarter were driven by a combination of robust pre-commitments to ongoing programs and strong library sales supported by material transfer fees. Further, we achieved record high utilization of our OBN crews, and the business continues its strong performance among a production-oriented client base. Although the utilization of the 3D streamer fleet has been lower than expected so far this year, we are on a positive trend based on ongoing negotiations and tenders.” Johansen said.

TGS noted that almost all of OBN and the majority of streamer acquisition contracts relate to the enhancement of current production (4D) or the potential tie-backs from adjacent areas, with the New Energy Solutions business offering attractive exposure towards strongly growing industries such as solar energy, offshore wind and carbon capture and storage (CCS).

Following the completion of the reorganization process in Q3 2024 after the post-merger integration of PGS, the company said it had realized approximately $55 million of synergies (annual run-rate), which is $10 million higher than previously guided.

Furthermore, the Norwegian firm said it remains on track to deliver total annual run rate synergies by the end of 2025 within the guided range of $110–130 million. As certain planned multi-client projects have been deferred into 2025, 2024 organic multi-client investments are expected to be approximately $425-450 million pro-forma, corresponding to approximately $345-370 million reported, i.e. excluding the PGS contribution prior to July 1, compared to previous guidance of $450-500 million.

“During the third quarter, the geopolitical tension in the Middle East caused significant oil price volatility and short-term outlook uncertainty in the oil and gas markets. However, it is our view that energy companies tend not to change investment plans based on short-term oil price fluctuations. The current oil price is significantly above the larger energy companies’ average cash breakeven levels, supporting cash flows and growth opportunities,” TGS reported.

“High-quality subsurface data is a prerequisite for enhanced production from existing fields and successful exploration campaigns in mature and unexplored areas. The combination of the increasing demand for oil and gas, strong cash flow generation by energy companies even at volatile prices and the need for subsurface data for both production and exploration supports our view of continued long-term growth opportunities for the seismic industry.”