TGS announces Q3 results earnings per share up 78%

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Oslo-listed marine seismic data providers TGS has posted a net income of $16,8 million for the third quarter of 2018, compared to 9 million in the third quarter of 2017, with net operating revenues of $140.7 million showing a decrease of 1% compared to $141.7 million in Q3 2017.

TGS said while it had grown net revenues by 29% in the first nine months of 2018, E&P companies “have for the most part maintained a cautious approach to exploration spending and a large part of the increased revenues is related to acreage turnover, either through M&A between E&P companies or asset swaps and purchases.

“With the market fundamentals continuing to improve, E&P companies are likely to come under increasing pressure to replenish reserves and secure growing production in the longer-term. Furthermore, many smaller E&P companies which paused spending during the downcycle, will ultimately return to exploration as they move back to a growth agenda. As a result, exploration budgets are likely to increase from the current unsustainably low levels,” the company said.

TGS CEO Kristian Johansen added: “TGS is well positioned to benefit from improved market conditions going into 2019, supporting further investment growth. TGS’ counter-cyclical investment during the downturn, with high volumes of data acquired at record-low cost, bodes well for continued industry-leading return on capital going forward.”

TGS said with a strong cash balance of US$322 million, it had maintained its quarterly dividend at US$0.20 per share from the third quarter of 2017

The company reported:
• Consolidated net revenues were US$141 million, down 1% from US$142 million in Q3 2017
• Net late sales totalled US$106 million, up 35% from US$79 million in Q3 2017
• Net pre-funding revenues were US$33 million, funding 33% of TGS’ operational multi-client investments for the quarter
• Operational multi-client investments were US$100 million in addition to US$7 million non-operational investments
• Operating profit (EBIT) was US$24 million (17% of net revenues), compared to US$26 million (18% of net revenues) in Q3 2017
• Net income was US$17 million, up 78% from US$9 million in Q3 2017
• Cash flow from operations was US$96 million, up from US$86 million in Q3 2017
• Free cash flow (after multi-client investments) was US$10 million, up from US$(19) million in Q3 2017
• Cash balance at 30 September 2018 was US$322 million
• Earnings per share (fully diluted) were US$0.16, up 78% from US$ 0.09 in Q3 2017
• Quarterly dividend is maintained at US$0.20 per share, up 33% from Q3 2017

TGS said financial guidance for 2018 included new multi-client investments of approximately US$260 million and “additional multi-client investments (were) expected from sales of existing surveys with risk sharing arrangements.”

Pre-funding of new multi-client investments was expected to be approximately 40% compared to previous expectation of 45-50%.

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