Q4 2016 Earnings Release€¢ Q4 net revenues of 165 MUSD compared to 132 MUSD in Q4 2015 • Net...

Kristian Johansen Sven Brre LarsenCEO CFO2 February 2017

Q4 2016 Earnings Release

Forward-Looking Statements

2

All statements in this presentation 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 products at costs commensurate with profitability. 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.

2017 TGS-NOPEC Geophysical Company ASA. All rights reserved

Q4 2016 Highlights Q4 net revenues of 165 MUSD compared to 132 MUSD in Q4 2015

Net late sales of 145 MUSD, up 60% from 90 MUSD in Q4 2015

Net pre-funding revenues of 17 MUSD were down 53% from Q4 2015, funding 19% (37% excl. risk-sharing investments) of TGS operational multi-client investments for the quarter (88 MUSD including 42 MUSD from risk sharing arrangements)

Operating profit for the quarter was 42 MUSD compared to -140 MUSD in Q4 2015

Cash flow from operations was 79 MUSD compared to 99 MUSD in Q4 2015 Cash balance of 191 MUSD at 31 December 2016 in addition to undrawn 75 MUSD

Revolving Credit Facility

Quarterly dividend maintained at USD 0.15 per share

Full Year 2016 net revenues of 456 MUSD compared to 612 MUSD in 2015

Full Year 2016 operational investments of 271 MUSD including 51 MUSD from risk sharing arrangements (39% pre-funded, 48% excl. risk-sharing investments)

Full Year 2016 operating profit of 53 MUSD compared to -21 MUSD in 2015


Operational Highlights

Q4 2016 Operations

5

Sanco Spirit 2D JV

Fugro Multibeam

Northern Explorer 2D

TDI Brooks Coring x2

Atlantic Explorer 2D JV

Dong Fang Kan Tan 1 2D JVWesternGeco Coil Crew


Q4 Activity Gulf of Mexico

Revolution XII and XIII ~7,150 km2 (306 blocks) multi-client full-azimuth survey in

collaboration with WesternGeco

Survey utilizes WesternGecos proprietary Q-Marine* point-receiver marine seismic system combined with the proprietary multi-vessel, Dual Coil Shooting acquisition technique

Located in Green Canyon, Atwater Valley and Ewing Bank protraction areas of the Central Gulf of Mexico - This part of the Gulf of Mexico continues to see the highest activity level and benefits from significant near-term lease turnover

Gigante 2D Seismic and Multibeam, Coring, and Geochemical Surveys ~186,000 km multi-client 2D regional survey completed

during Q4 2016 with fast track data made available for December 2016 licensing round

Data processing will continue throughout 2017

~600,000 km2 multibeam survey completed in Q4 2016 with geochemical analysis of the acquired cores continuing in 2017

Interpretation of the data will integrate with the 2D seismic survey and enhance the value proposition to clients

6

*Mark of Schlumberger


Q4 Activity East Canada & NW AfricaNewfoundland Labrador 2016 Season 41,800 km multi-client 2D survey in partnership with

PGS sixth consecutive season of data acquisition completed in Q4 2016 with 2,300 km2 of 3D data added earlier in the year

TGS-PGS JV library in this region now exceeds 153,000 km of modern 2D data and 11,200 km2 of 3D data in addition to 83,700 km of TGS vintage data, an expansive well log library and advanced multi-client interpretation products

Successful licensing rounds in 2015 and 2016 and new Call for Bids issued over approximately 2.3 million hectares in Labrador South region (bids due 8 November 2017)

North West African Atlantic Margin NWAAM 2017 Over 11,500 km of multi-client 2D seismic in

partnership with PGS completed in Q4 2016

Designed to infill, extend and complement the TGS NWAAM 2012 2D survey which helped with recent commercial discoveries in the MSGBC basin

Confirms TGS commitment to the leading frontier basin in Africa, where TGS now has approximately 40,000 km of 2D data and 8,000 km2 of 3D data


Financials

6 5 5 53 3

7

3

0

2

4

6

8

10

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Proprietary revenues

72 82 90 90

38

84 67

145

020406080

100120140160

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Late sales revenues

60% Y/Y

94

5374

3723 26

3917

0

20

40

60

80

100

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Prefunding revenues

172 140 169 13264

114 113165

0

50

100

150

200

250

300

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Total revenues

9

Net Revenues

-53% Y/Y

-37% Y/Y

25% Y/Y


NSA60%Europe

22%

AMEAP4%

Other14%

Q4 2015

NSA66%

Europe21%

AMEAP5%

Other9%

Q4 2016

2D25%

3D68%

GPS7%

Q4 2016

10

Net Revenue Breakdown

2D45%

3D43%

GPS12%

Q4 2015


25 24 2228

18 17 2024

0

5

10

15

20

25

30

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Operating expenses *

-12% Y/Y

* Include personnel costs and other operating expenses. Adjusted for restructuring costs and larger impairments of operating items

10574 99

230

62 69 7492

0

50

100

150

200

250

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Amortization and impairment *

110

-76

49-20

63

-3529 33

-100

-50

0

50

100

150

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Free cash flow *

11

Operating Expenses, EBIT, Free Cash Flow

57% - rate

37 38 46 31

-19

2411

45

-40%

-20%

0%

20%

40%

-30-20-10

01020304050

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

EBIT *

EBIT EBIT Margin

* Q1-Q4 2016 reflects the new amortization policy effective from 1 January 2016

* Earnings before interest and taxes and excluding larger impairments and restructuring costs

* Defined as cash flow from operational activities minus operational cash investments in multi-client projects


876 919 976 839 830 823 816 812

0

200

400

600

800

1,000

1,200

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Multi-client library - NBV

163116 135

8853 62 68

88

0%10%20%30%40%50%60%70%80%90%100%

0

50

100

150

200

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Pref

undi

ng ra

tio

Ope

ratio

nal i

nves

tmen

ts

Operational investments and prefunding ratio

Operational investments Prefunding ratio

12

Multi-Client Library

13%

1%

10% 10%17%

48%

0%5%

14%17% 19%

44%

0%

10%

20%

30%

40%

50%

60%

Fullyamortized

2013 2014 2015 2016 WIP

Net revenues Net book value

Net revenues vs net book value year of completion

270

381

609

427

250

467

0

100

200

300

400

500

600

700

2012 2013 2014 2015 2016 WIP

Original investments Net Book Value

20 %

29% 54%16%

0%10%

68%

Investments year of completion


*Q4 2016 prefunding rate excluding risk-sharing arrangements

13

Q4 2016 Income Statement

USD million, except EPS Q4 2016 Q4 2015 Change in %Net revenues 165 132 25%Cost of goods sold proprietary and other 0.1 0.4 -77%

Amortization of multi-client library 57% 92 230 -60%

Gross margin 72 -99 173%Personnel costs 16 15 5%

Other operating expenses 11 22 -49%

Cost of stock options 0.1 0.2 -45%

Depreciation 3 3 -8%

Operating profit 25% 42 -140 130%Net financial items -3 -2 -96%Profit before taxes 23% 39 -142 127%Taxes 15 -20 174%

Net Income 15% 24 -122 120%EPS, Undiluted 0.24 -1.20 120%

EPS, Fully Diluted 0.23 -1.19 120%


Sheet1

USD million, except EPSQ4 2016Q4 2015Change in %

Net revenues16513225%

Cost of goods sold proprietary and other0.10.4-77%

Amortization of multi-client library57%92230-60%

Gross margin72-99173%

Personnel costs16155%

Other operating expenses1122-49%

Cost of stock options0.10.2-45%

Depreciation33-8%

Operating profit25%42-140130%

Net financial items-3-2-96%

Profit before taxes23%39-142127%

Taxes15-20174%

Net Income15%24-122120%

EPS, Undiluted0.24-1.20120%

EPS, Fully Diluted0.23-1.19120%

Sheet2

Sheet3

14

Q4 2016 Cash Flow Statement

USD million Q4 2016 Q4 2015 Change in %

Received payments from customers 111 140 -21%

Payments for operational expenses (27) (24) -15%

Paid taxes (5) (17) 72%

Operational cash flow 79 99 -21%

Investments in tangible and intangible assets (2) (1) -105%

Investments in multi-client library (45) (119) 62%

Investments through mergers and acquisitions - (8) 100%

Interest received 0.2 0.8 -75%

Interest paid (0.05) (0.09) 46%

Dividend payments (14) - N/A

Proceeds from share issuances - 0.8 -100%

Change in cash balance 18 -27 165%


Sheet1

USD millionQ4 2016Q4 2015Change in %

Received payments from customers111140-21%

Payments for operational expenses(27)(24)-15%

Paid taxes(5)(17)72%

Operational cash flow7999-21%

Investments in tangible and intangible assets(2)(1)-105%

Investments in multi-client library(45)(119)62%

Investments through mergers and acquisitions- 0(8)100%

Interest received0.20.8-75%

Interest paid(0.05)(0.09)46%

Dividend payments(14)- 0N/A

Proceeds from share issuances- 00.8-100%

Change in cash balance18-27165%

Sheet2

Sheet3

15

Balance Sheet

The Company holds no interest-bearing debt

USD million Q4 2016 Q3 2016 Change in % Q4 2015AssetsCash and cash equivalents 191 173 10% 163Other current assets 353 275 28% 308Total current assets 544 449 21% 471Intangible assets and deferred tax asset 83 88 -6% 90Other non-current assets 11 21 -49% 25Multi-client library 812 816 0% 839Fixed assets 23 23 -2% 30Total Assets 1,473 1,397 5% 1,455LiabilitiesCurrent liabilities 262 198 32% 218Non-current liabilities 6 7 -13% 6Deferred tax liability 41 37 12% 33Total Liabilities 309 242 28% 257Equity 1,164 1,155 1% 1,198Total Liabilities and Equity 1,473 1,397 5% 1,455


Sheet1

USD millionQ4 2016Q3 2016Change in %Q4 2014Q4 2015

Assets

Cash and cash equivalents19117310%256163

Other current assets35327528%521308

Total current assets54444921%778471

Intangible assets and deferred tax asset8388-6%8590

Other non-current assets1121-49%4425

Multi-client library812816-0%818839

Fixed assets2323-2%4330

Total Assets1,4731,3975%1,7681,455

Liabilities

Current liabilities26219832%393218

Non-current liabilities67-13%76

Deferred tax liability413712%2933

Total Liabilities30924228%428257

Equity1,1641,1551%1,3391,198

Total Liabilities and Equity1,4731,3975%1,7681,455

Sheet2

Sheet3

Dividend stable at USD 0.15 per share

Shareholder authorization to distribute quarterly dividend payments from Q1 2016 Aim to keep a stable quarterly dividend through the year Actual quarterly dividend level paid will be subject to continuous evaluation of market

outlook, cash flow expectations and balance sheet development

Q1 2016: USD 0.15 per share dividend paid on 23 February 2016 Q2 2016: USD 0.15 per share dividend paid on 1 June 2016 Q3 2016: USD 0.15 per share dividend paid on 25 August 2016 Q4 2016: USD 0.15 per share dividend paid on 18 November 2016 Q1 2017: USD 0.15 per share dividend to be paid on 23 February 2017 (shares will trade ex-

dividend on 9 February 2017)


5 NOK6 NOK

8 NOK 8.5 NOK

8.5 NOK

USD 0.15per Quarter

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2011 2012 2013 2014 2015 2016 2017*

USD

per

sha

re

Year of Payment*Quarterly Dividends, defined in USD from 2016Historical NOK dividends converted to USD using FX rate on ex-dividend date

Q1

Q2

Q3

Q4Q4

Q1

3.7% 3.6%4.0% 3.9%

4.9%5.2%

3.6%

2.5%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2010 2011 2012 2013 2014 2015 2016* 2017*

Yiel

d (o

n da

y of

ann

ounc

emen

t)

Year of Payment

Dividend Paid* (2010 2017) Dividend Yield (2010 2017)

*2016 and 2017 Dividend Yield annualized based on the weighted yield at the time of announcement of quarterly dividends

Outlook

Different Cycles Different Priorities


Sources: Barclays; TGS

478 568 609

932 883 915

612

456

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Recovery phase

Growth and market share Cash flow and risk mitigationCapital efficiency and

profitable growth

Strategic Priorities

Strategy Pays Off - Market Cap Peak vs. Current


TGS has once again proven its resilient business model

Source: S&P Capital IQ

2014 Current

2,3622,955

2,378

256510

360217 30 19

TGS CGG PGS SPU ION PLCS EMGS MCG SBX

2,506

238

1,198

243 7128 30 15 7

TGS CGG PGS SPU ION PLCS EMGS MCG SBX

Exploration Spending Likely to Recover Long-term

Two factors point to increased activity in the longer-term

1. Current exploration efforts are unsustainable

2. Cost levels should eventually come down to levels that justify higher spending at current oil prices

2017 TGS-NOPEC Geophysical Company ASA. All rights reserved 20

1. Current Exploration Efforts are Unsustainable

Substantial reduction in oil companies exploration spending - Seismic spending down more than 60% since peak in 2013

This has resulted in historically low exploration success Only 2.7bn barrels of new conventional oil supply was discovered in 2015, the lowest since 1947

(Wood Mackenzie) Global reserve replacement ratio well below 1 in 2015-16

21

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Organic Reserve Replacement Ratio

Source: SEB Research

6

7

8

9

10

11

12

13

14

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Year

s

Integrated Oil Companies Avg. Oil Reserve Life

Source: Nordea


2. Costs are Coming Down

Substantial cost reductions in E&P and service industries break-even prices have fallen almost 50% from peak

Historically the largest oil companies have been able to produce decent return on capital at real oil prices of around USD 50 per barrel

22

Source: Nordea, EIA, TGS

0

20

40

60

80

100

120

0%

5%

10%

15%

20%

25%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Bre

nt U

SD

/bl

RO

CE

ROCE Brent (RHS)

Avg. ROCE 1990-2015: 12%Avg. real Brent: USD 53 per bbl

0

20

40

60

80

100

120

140

160

USD/bbl

Brent oil priceBreak-even after CAPEX (USD/bbl)Break-even after CAPEX and div. (USD/bbl)


Integrated oil companies break-even oil price ROCE 10 largest integrated oil companies vs. Real Brent oil price

TGS MC Library Managing Risk & Return

Low beta

23

Medium beta High Beta

Lower returns but high IRR Prefunding in excess of 70% - low or

no net investment Project characteristics

Awarded acreage Onshore areas Farm-ins / relinquishments Low downside risk

Return targets >2x investment Prefunding of 30-50% Open acreage and regular license

rounds Established multi-client areas Many clients

Return targets >2.5x investment Low or no prefunding Risk sharing with suppliers G&G knowledge driven projects Higher risk and volatility


License Round Activity and TGS Positioning

24

Europe / Russia Norway APA H1 2017 (Round Launch) Norway 24th Round H1 2017 (Round Launch) UK Supplementary Round 7 Mar 2017 (bids due) Greenland Dec 2017 & 2018 (bids due)

Africa, Middle East, Asia Pacific Ongoing uncertainty on timing of African

licensing rounds Australia Feb & Mar 2017 (bids due) New Zealand 2017 (consultation underway) Indonesia H2 2017 (Round announcements)

North & South America Central GOM Mar 2017 (2012-17 Plan) Central & Western GOM Aug 2017 (2017-22 Plan) Newfoundland & Labrador Nov 2017 (Scheduled Land Tenure) Nova Scotia Oct 2017 (3-Year Rolling Plan) Canada Onshore at least monthly Brazil 14th Offshore and Pre-Salt Rounds in 2017 Mexico Round 2.1 & 2.2 in H1 2017, further rounds into 2019


25

Backlog

146185 178

213 224260

193242

182125 103

71

281 293

145

510

50

100

150

200

250

300

350

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Historical Backlog (MUSD) 2012 - 2016


2017 Projects Schedule*Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Dong Fang Kan Tan 1

Atlantic Explorer

Atlantic Guardian CSEM

Fugro Multibeam

TDI Brooks Coring

NWAAM JV

U.S. GOM

2D &

Oth

er

EUR AMEAP

U.S. GOM

Barents Sea JV

WesternGeco Coil Crew

Polarcus Amani

Polarcus Asima

Polar Duchess

East Canada JV

West Kermit West Kermit

U.S. GOM JV

3DLa

nd

NSA

*Acquisition schedule excludes Fusion M-WAZ Reprocessing, other processing projects and GPS investments

Atlantic Margin

Atlantic Margin

Atlantic Margin


Guidance

Based on the current investment plan, TGS provides the following guidance for 2017:

New multi-client investments* at approximately the same level as in 2016

Additional multi-client investments expected from sales of existing surveys with risk sharing arrangements

Pre-funding of new multi-client investments* expected to be approximately 40-45%

*New multi-client investments excluding investments related to surveys with risk sharing arrangements


Multi-client investments and pre-funding

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

100

200

300

400

500

600

2011 2012 2013 2014 2015 2016 2017guidance

MU

SD

MC investments related to risk shareNew multi-client investments*

Summary

Q4 net revenues of 165 MUSD Positive cash flow further strengthens balance sheet Cash balance of 191 MUSD in addition to undrawn 75 MUSD Revolving Credit Facility Quarterly dividend maintained at USD 0.15 per share

Although some improvement seen over the past year, market conditions are expected to remain challenging in 2017

Long-term future of asset-light, focused multi-client business remains strong Cost control, disciplined counter-cyclical investment and balance sheet strength positions TGS

to enhance its leading position

2017 guidance: New multi-client investments at approximately the same level as in 2016

Additional multi-client investments expected from sales of existing surveys with risk sharing arrangements

Pre-funding of new multi-client investments expected to be approximately 40%-45%


Thank you

www.tgs.com

Q4 2016 Earnings ReleaseForward-Looking StatementsQ4 2016 HighlightsOperational HighlightsQ4 2016 OperationsQ4 Activity Gulf of MexicoQ4 Activity East Canada & NW AfricaFinancialsNet RevenuesNet Revenue BreakdownOperating Expenses, EBIT, Free Cash FlowMulti-Client Library Q4 2016 Income StatementQ4 2016 Cash Flow StatementBalance SheetDividend stable at USD 0.15 per shareOutlookDifferent Cycles Different PrioritiesStrategy Pays Off - Market Cap Peak vs. CurrentExploration Spending Likely to Recover Long-term1. Current Exploration Efforts are Unsustainable2. Costs are Coming DownTGS MC Library Managing Risk & ReturnLicense Round Activity and TGS PositioningBacklog2017 Projects Schedule*GuidanceSummarySlide Number 29

Q4 2016 Earnings Release€¢ Q4 net revenues of 165 MUSD compared to 132 MUSD in Q4 2015 • Net...

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