2017 Annual Report
A Comprehensive Look at TGS' Activities and Financial PerformanceDownload 2017 Report
TGS employs approximately 600 employees and has its corporate headquarters in Asker, Norway and its operational headquarters in Houston, Texas, U.S.A. The company’s other main offices are in Calgary, London and Perth, with employees located in other cities around the globe. The company’s stock is traded on the Oslo Stock Exchange as part of OBX Index (25 most liquid shares at the OSE) with a market capitalization of approximately $2.4 billion (December 2017). TGS’ primary business is to provide geoscience data to energy companies worldwide. TGS offers extensive global libraries that include seismic data, magnetic and gravity data, multibeam and coring data, digital well logs and production data. Additionally, the company offers advanced processing and imaging services, interpretation products and data integration solutions.
Deepwater offshore wells can cost hundreds of millions of dollars to drill. Before taking on this risk, energy companies often look for assurance in the form of seismic and other geophysical data. These data types are becoming even more valuable as exploration moves into more geologically, environmentally and operationally challenging areas.
Typically, seismic data is delivered through either a proprietary or multi-client business model. For proprietary, the energy company contracts a seismic service company to acquire and process data on its behalf. By contrast, TGS works in the multi-client realm. We retain ownership and control of the data and can license it to multiple parties.
Energy companies often prefer multi-client over proprietary because the cost is substantially lower. Typically, one or more clients will commit to licensing the data before acquisition begins, which is called "pre-funding". Licenses sold after data acquisition has commenced are called "late sales".
TGS applies a firm definition to pre-funding, so our stakeholders can assess the level of risk in our business by seeing how much of our new project investments are covered by client commitments. TGS capitalizes its seismic investments to the balance sheet and amortizes each project during the work in progress (WIP) phase based on total cost versus forecasted total revenues. As from 2016, a straight-line amortization is applied after a project is completed. The straight-line amortization will be assigned over a remaining useful life, which for most marine projects is expected to be four years. Onshore and geological data investments are also booked to the balance sheet and amortized on a straight-line basis over seven years.
Last year, over 98% of our revenues came from multi-client data sales. This is our lifeblood, and our entire company is intensely focused on developing the best multi-client projects to maximize returns and achieve long-term profitable growth. Our culture drives achievement because all employees have common goals and share in our success through profit-related bonuses.
TGS does not own acquisition equipment. Nor do we have seismic crews on the payroll. All data acquisition is outsourced, which gives us flexibility to execute only those projects that meet our investment criteria and align with client goals. We are not influenced by vessel or crew utilization targets. Instead, we only access these resources when needed, and we're free to use the most appropriate vendors and technologies to tackle specific imaging challenges. TGS is asset-light, which means low overhead and high stability regardless of industry cycles.
While acquisition is outsourced, TGS processes the data in-house. This is how we ensure our customers are getting the highest quality. Energy companies often consider processing capabilities when assessing whether to commit pre-funding to a project. As one of the industry's leading processing companies, we give them confidence to move forward. We also maintain our competitive edge by continuously investing in new computer capacity and R&D. In addition, we use custom developed algorithms to reprocess old data sets at low cost to attract additional sales from our library.
TGS typically targets projects that will earn sales returns between 2 and 2.5 times the investment. On projects with lower targeted returns we require high levels of pre-funding to keep the investment attractive. An example of this is a project on acreage that has already been largely awarded to energy companies, meaning that late sales opportunities are later in the cycle when farm-ins, relinquishments and M&A create new activity. Conversely, we may accept lower pre-funding on projects where our confidence in rapid late sales is higher, such as when we make an investment in a region with frequent license rounds and high customer interest.
TGS has one of the largest and best performing multi-client data libraries in the world. This provides an ongoing revenue stream and re-processing opportunities. Exploring our own library also helps our project developers and interpretation teams to identify high-profile prospects for new surveys. In fact, most of our 3D seismic investments are in areas where we previously acquired 2D data or have an extensive well data library.
The multi-client business is a portfolio business. Some projects may underperform, and others exceed expectations. A 3D project is a significant financial undertaking, and TGS has the means to invest in a broad portfolio of projects to balance risks and rewards.
TGS has a truly global data library. We strive to build and maintain leadership positions in both mature and frontier basins around the world. Our library covers a wide variety of exploration plays including deep water, pre-salt geologies, the Arctic and North America onshore. This diversity gives us significant stability and business continuity in the face of shifting markets, regional economic strain and geopolitical challenges.
Our most important competitive advantage is our people. The outstanding work of our project developers, geologists, geoscientists, data processors, sales and support people has made TGS the leading multi-client player. They're the reason TGS delivers superior project quality and financial performance year after year.
While most of our growth has been organic, TGS has also expanded its business through acquisitions. These opportunities allow us to add data processing capabilities and new geoscience data types to our library. TGS will also purchase other multi-client libraries when the price is attractive, and we see strong potential returns.
For more than 36 years, TGS has provided multi-client seismic data to energy companies globally. Over that time we have built experience in exploration areas worldwide, established a vast global database, and become the leading multiclient
data provider. We offer the most current data, acquired and imaged with the latest technologies.
In addition to seismic data, our geophysical library includes gravity, magnetics, seep, geothermal, controlled-source electromagnetic and multi-beam data. This library generates over 91% of our revenues and is organized by region: North and South America, Europe and Russia, Africa - Middle East and
Our multi-client success begins with a professional, geoscience and commercial approach to project development. When planning new seismic surveys, our first priority is to gain thorough geological and geophysical understanding. Our experienced project developers evaluate all available seismic, gravity, magnetic and geological data to set the project objectives and optimize the survey design. We also work closely with energy companies, local governments and geoscience specialists to address each survey’s specific challenges. Our process ensures we acquire the right data to meet our clients’ needs.
TGS also offers well data products, interpretive studies and services to help energy companies find and develop hydrocarbons. We have the industry’s largest global collection of digital well logs, and our U.S. library has expanded to include nationwide production data, directional surveys and a custom well file database. Additionally, we offer clients robust data-application integration, with advanced platforms, interfaces and adapters.
In 2017, we added over 90,000 new Log ASCII Standard (LAS) wells, 420,000 validated well headers, 163,000 raster logs, 7,000 LAS+ wells, and 17,000 DS+ directional surveys. This solidifies our position as one of the largest providers of
TGS employs the latest processing technologies to deliver the imaging products demanded by energy companies. We invest substantially in developing new proprietary technologies and workflows, which we use to provide imaging solutions directly to clients and to process our own global multi-client database.
TGS has offerings for both 2D and 3D, including depth and time imaging, marine, land, ocean bottom cable and nodes, anisotropic imaging, transition zone, multicomponent, shear wave, 4D time-lapse, and wide-azimuth (WAZ) data processing. Our imaging teams have direct access to our
In 2017 we processed 330,000 km of 2D marine data, 60,000 km2 of 3D marine data and 33,000 km2 of WAZ/Node and onshore data from basins around the world. During 2017 TGS maintained its position as one of the largest (top 20) compute centers globally. TGS also continued to advance its seismic processing algorithms and imaging technologies.
Recent TGS imaging advances include:
A Comprehensive Look at TGS' Activities and Financial PerformanceDownload 2017 Report
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