TGS chief executive Kristian Johansen tells Upstream he believes sector can break out of boom-and-bust cycle
Have we reached a point where the marine seismic business can finally escape the drama of decades of boom and bust, optimism followed by another round of consolidations?
Kristian Johansen is hopeful. He is chief executive of Norwegian company TGS, now the largest player in the field and the only remaining company with integrated capabilities covering the whole marine geophysical sector.
Johansen is responsible for delivering on the company’s controversial decision last year to buy PGS, the deeply indebted operator of one of the two remaining towed-streamer seismic fleets. If things work out, the move could be the key to ushering in the stability the marine seismic market craves.
He told Upstream: “It was a strategic decision supported by our board. I was convinced at the time and still think it was the right thing to do.”
What surprised the market was the willingness of TGS to let go of its “asset light” multi-client seismic acquisition business model — owning no vessels — that had made it the only consistently profitable company for more than two decades.
“The multi-client model has been changing, and we felt we would have been vulnerable without a more diverse range of services,” Johansen says.
“TGS was the pre-eminent frontier exploration multi-client company, but now the market is significantly smaller with less risk involved. Multi-client is becoming more like contract work with surveys close to existing reservoirs, driven by pre-commitments from licence block holders and therefore generating lower late sales.”
Multi-client continues to be the best generator of cash for TGS. Sales in the last quarter of 2024 yielded a ratio of 2.2x on investment, earning $258 million compared with contract revenues of $209 million. Since 2018 TGS has been responsible for 60% of multi-client projects carried out worldwide; apart from PGS, its main competitors have been SLB, Spectrum and Viridien (previously CGG).
“Going forward we need to be in the position to meet demand for multi-client or contract surveys, whether towed streamer or ocean bottom (OBN) seismic, with or without processing,” Johansen explains. “The PGS fleet will give us that opportunity and also enable us to benefit from demand for offshore wind site surveys and, in due course, services required for carbon capture and storage.”
TGS signalled a change of course from asset light to an integrated service company in 2023. It became a contractor operating its own equipment with its $231 million acquisition of Norway’s Magseis-Fairfield, the leading company in OBN seismic in a market now more valuable than towed streamer surveys.
The backstory to the PGS acquisition originates from 2020 when TGS made an opportunistic $600 million bid to buy the highly desirable PGS multi-client library. The plan was to fill many gaps in the company’s worldwide seismic data inventory. The offer was rejected.
Three years later a heavily indebted PGS sold the entire company in an all-share deal valued at $864 million. For the money, TGS ended up with seven modern towed-streamer seismic vessels, including the four huge capacity Titan class Ramforms, additional processing capacity plus the data library to which PGS had added substantial value since 2020.
Thanks to a strong balance sheet, TGS was able to refinance the PGS legacy debt structure of around $800 million at very favourable terms. At the end of 2024 the company reported a net interest-bearing debt of $500 million which it is confident of servicing. The post-merger integration of PGS has produced the promised synergies — calculated on an annual run rate basis — so far worth around $100 million with more to come.
Johansen knows it is not all going to be plain sailing from here. TGS has to prove it can manage a fleet of seismic vessels with all the operating and maintenance costs involved, a task that has defeated so many companies in the past.
Most predictions suggest that the 2025 market for seismic services is going to be flat based on oil company E&P spending estimates. That means finding consistent work through the year for towed streamer vessels will be challenging. TGS had five of its fleet operating in March but expects to have more working in the traditionally busy summer months offshore Europe.
In the same boat, so to speak, is TGS’ only major competitor, Shearwater GeoServices, the privately-held company founded in 2016 and owner of the largest fleet. Its 20 or so vessels —comprising towed streamer, source and multi-purpose — were mainly bought from SLB and Viridien when they exited the market, and also from the now disbanded Polarcus. It also took on SLB’s ocean bottom seismic business. The principal stakeholder is the Norwegian Rasmussen shipping group, which recently increased its stake in the company to 88%.
Reporting on the company’s fourth quarter earnings in February, Irene Basili, Shearwater chief exercutive, said: “Marine seismic acquisition activity was muted towards year-end extending the weaker-than-expected 2024 market.”
The fourth quarter financial performance underlined the tough conditions for marine geophysical contractors. Shearwater operated an average of 9.9 active vessels in the quarter, compared to 11.1 active vessels in the third quarter of 2024 and 9.2 in the fourth quarter of 2023. The decline from the previous quarter reflected project delays and lower activity in key regions such as India and Brazil.
Utilisation of the active fleet was therefore 50% compared to 61% in the previous quarter and 68% in the fourth quarter of 2023. Weighing on company performance is its continued borrowings, a net interest-bearing debt of $553.8 million at the end of December.
The upside, according to Basili, was the encouraging pace of contract awards with three OBN and six streamer-contracts, supporting visibility into the first quarter of 2025.
Several contracts delayed in 2024 are understood be moving ahead. The company must also have been buoyed by a new three-year deal announced in March with TotalEnergies guaranteeing a minimum of 18 vessel months of activity, possibly a model for other agreements in the future for oil companies wanting to guarantee available capacity should the market tighten.
However, Basili warned: “While these signs are positive, our outlook remains influenced by our client’s continued cautiousness and capital discipline.”
Johansen follows the same logic, the tell being his reference to focusing on profitability rather than growth in the short term and, like Basili, staying prepared for much better things to come later.
“Five years from now, I believe the industry will realise that it should have invested earlier in new reserves in the light of a 7% to15% annual decline rate, rather than focusing on dividends and share buy backs," he says.
"Also, it should have been more generally acknowledged that green investment to reduce the need for hydrocarbons was always going to take longer than often stated. I am not sure how long we will have to wait. In the meantime, we have to buckle up and meet the challenge of a volatile market.”
Ironically the towed streamer market may prove less formidable than OBN seismic.
“The problem in the past with towed streamer was too many vessels, 65 to 70. Now after significant consolidation we have 15 to17 basically operated by two companies”, says Johansen. “In addition, newbuilding or entry of new companies into this market are extremely unlikely. That all brings some welcome stability and predictability.”
Cheaper, faster, better and cleaner — competition for OBN market heats up
The OBN seismic picture is very different and, in many ways, reminiscent of the business model which for so long proved unsustainable for towed streamer operators.
In a nutshell: too many competitors with similar offerings, lack of price discipline and clients unhappy at the cost of the technology despite its benefits.
“The key here, is to be cheaper, faster, better and cleaner. That is a big ask,” says Johansen.
The spectacular growth in OBN seismic in recent years, overtaking towed streamer in market value, is down to the vastly superior imaging possible from recording nodes placed on the ocean bed.
This meets oil companies' main, but not exclusive, focus of the past 10 years on infrastructure-led exploration (ilex), essentially aiming to maximise production from existing and near field reserves rather than so-called frontier exploration requiring towed streamers to identify potential new reservoirs over a wide area. OBN is also the first choice for 4D seismic reservoir monitoring.
Currently, no single OBN technology has emerged as a clear leader.
Three contractors operate their own node technology. TGS offers two long established technologies — the MASS and ‘Z’ node solutions — obtained with the acquisition of Magseis-Fairfield.
In February three crews were active in the US Gulf for Shell, BP and Viridien. Shearwater had a crew offshore Angola with its inherited SLB equipment, and last year introduced its latest Pearl node in a deployment offshore India.
Finally, PXGEO was busy with two crews in the US Gulf and one offshore Brazil relying on Manta, a well-developed technology bought from Fugro.
Further competition comes from two companies, BGP and SAExploration. In the past they have been technology agnostic when tendering for OBN contracts.
The main source of independently manufactured nodes comes from Houston-based Geospace, with its OBX product, and Viridien’s GPR manufactured by its Sercel unit.
Chinese contractor BGP may soon be responsible for stirring up the market not just on the OBN front.
The company has dominated the mainly shallow water OBN survey operations in the Middle East with a long line of contracts worth billions of dollars over the last decade or so.
Most recently in December it added a $490 million contract with Adnoc to expand the world’s largest 3D seismic survey off Abu Dhabi , where one OBN crew is operating. In February it also had three crews offshore Saudi Arabia and one off Qatar.
The word is that BGP will have to expand its market focus as Middle East work is likely to tail off. It contracted TGS to carry out four OBN contracts offshore Nigeria and can be expected to start competing for more deepwater work.
Moreover, it has in the making its own shallow water node, Oseis 300, and a deepwater version, Oseis 3000, to add to the competition.
New OBN technology may also be looming. PXGEO has been promising the MantaRay next generation OBN system in collaboration with Saab, and supported by a strategic partnership with Aker BP.
It features a still-to-be-proven handling system that uses hovering autonomous underwater vehicles (HAUV) designed to deploy and recover nodes significantly faster and with better precision than traditional methods.
PXGEO has had some distractions. It had to withdraw its bid for an OBN contract for ExxonMobil offshore Guyana which eventually went to Shearwater; chief executive Tony Bowman has taken early retirement after less than a year in post; and the company is believed to be selling its only vessel, the 14-streamer PXGEO 2, to BGP.
Meanwhile in the North Sea this summer, SAExploration will be deploying an OBN technology developed in conjunction with inApril — the Norwegian node technology company it acquired in January — and Ocean Infinity, developer of robotics for marine operations, best known for its involvement in the ocean search for the lost Malaysia Airlines Flight 370.
Introduction of the all-electric workclass ROV (eWROV) in development with Saab is a further efficiency innovation in the new setup.
The premise, according to the company, is that the new class of Ocean Infinity lean-crewed vessels, the first of its kind in the world, can significantly reduce the number of personnel offshore with many operations controlled from data centres onshore, such as viewing live data to remotely control node deployment and recovery, piloting seabed vehicles, and overseeing aspects of data processing and management.
This translates into significantly reduced costs in personnel offshore; commensurate health, safety and environment (HSE) exposure; and much faster data acquisition rates, SAExploration claims.
'Good enough is not enough' — Viridien sees tech advances as key to OBN development
Every development in the OBN seismic sector is especially welcome to Viridien, one of the big three in the geophysical services business worldwide, reporting revenue of $1.117 billion in 2024, second only to TGS ($1.32 billion).
Viridien — which changed its corporate name from CGG in 2024 — went “asset light”, selling off its towed streamer fleet in 2020, but still depends on offshore and onshore E&P for 90% of its business.
Chief executive Sophie Zurquiyah, who has been steering Viridien’s new strategy since 2018, sees more advanced technology as the major requirement for OBN.
“Good enough is not enough. We need to be able to offer better methods for de-risking offshore projects such as higher density imaging, use of sparse node surveys, and so on, plus more advanced data processing, which we continue to develop.”
The company commands a very high market share of the data imaging required globally for OBN seismic data acquisition. Among other things, it continues to build unrivalled data-driven subsurface models based on its pioneering application of the full-waveform inversion (FWI) method.
Operations are facilitated by Viridien’s high performance computing capacity and long-established leadership in seismic data processing with around 40% of the market. This hard-to-replicate position has allowed the company to maintain premium pricing for its services.
Viridien also generates multi-client OBN surveys around the world to add to its substantial library. Most recently completed has been the Laconia 3D OBN multi-client seismic programme in the US Gulf with TGS providing the vessels and nodes.
The “sparse node” extra-long-offset full-azimuth OBN data used Tuned Pulsed Source (TPS) technology. This environmentally friendly, low-frequency marine seismic source was developed by Sercel, Viridien’s marine and land seismic equipment manufacturing unit which also supplies the GPR series of nodes for shallow and deepwater applications.
Like her main competitors, Zurquiyah believes that the combination of fewer players in the marine seismic field, and the longer-term view being taken by oil companies regarding the need for oil and gas during the energy transition, are creating “relatively stable” conditions.
She is also looking to strong growth from the company’s investment in new businesses which in 2024 began to show a profit. These include carbon sequestration projects — where the company has just announced an alliance with Baker Hughes — and work in minerals and mining as well as high performance computing and infrastructure monitoring.
It is all helping the company to deleverage its legacy debt of approximately $950 million, with cashflow and a new refinancing package earning upgraded ratings from Moody’s, S&P, and Fitch.
The original article was published on Upstream Online on April 17, 2025.