TGS-NOPEC Geophysical Company ASA (the Parent Company and, together with its subsidiaries, TGS or the Company) is a leading resource for global geoscientific data products and services in the oil and gas industry. TGS specializes in the design, acquisition and processing of multi-client seismic surveys worldwide. In addition to extensive global geophysical and geological data libraries - including multi-client seismic data, magnetic and gravity data, digital well logs, production data and directional surveys - we offer advanced processing and imaging services, interpretation products, and data integration solutions. TGS operates globally and is presently active in North and South America, Europe, Russia, Africa, Asia and Australia.

The corporate headquarters of the Parent Company and TGS is in Asker, Norway. Its primary subsidiary, TGS-NOPEC Geophysical Company, is based in Houston, Texas, U.S.A. TGS also has regional offices in the United Kingdom, Canada, Australia, Brazil, Mexico, Singapore and elsewhere in the U.S. All financial statements in this report are presented on a going concern basis in accordance with the Norwegian Accounting Act section 3-3a, and the Board of Directors confirms that it believes that the prerequisites for a going concern assumption are indeed present.

Changes to accounting principles

TGS implemented the IFRS 15 accounting standard for Revenue from Contracts from 1 January 2018. This has changed the way revenues related to projects in the work-in-progress (WIP) phase are recognized. While revenues related to WIP projects were previously recognized according to percentage of completion (POC), IFRS 15 dictates that revenue must now be recognized when customers take delivery of data. Results prior to 2018 have not been restated. Please refer to Note 1 and Note 4 of the consolidated financial statements for more details.

For internal management purposes, TGS continues to use the revenue recognition principles applied historically. The numbers used for management reporting are referred to as “Segment reporting”. See Note 5 for a description of the basis for preparation.

The IFRS 9 accounting standard for Financial Instruments was also implemented from 1 January 2018 but had no practical impact on accounting policies.

From 1 January 2019, TGS has implemented the IFRS 16 accounting standard for Leases. Please refer to Note 1 of the consolidated financial statements for more details on both IFRS 9 and IFRS 16.

Financial results, financial position and capitalization – IFRS

Net revenues in 2018 amounted to USD 614.2 million, up 25% compared to the USD 492.2 million recognized in 2017. The increase is mainly a result of strong growth in sales of completed data from our multi-client library.

Operating profit for 2018 was USD 230.0 million, corresponding to a margin of 37%, compared to USD 97.4 million (20% margin) in 2017. In addition to the described increase in net revenues, the higher operating profit is a result of a reduction in amortization of our multi-client library. In 2018, amortization was USD 270.8 million versus USD 302.3 million in 2017. The reduction is due to the changes in accounting principles described above.

Net financial items amounted to USD 6.7 million in 2018 (USD 2.2 million in 2017), giving profit before taxes of USD 236.8 million (USD 99.6 million). Taxes increased to USD 58.0 million from USD 24.0 million. This resulted in a net profit of USD 178.8 million, a growth of 137% from USD 75.6 million in 2017.

At year-end 2018 cash and cash equivalents amounted to USD 273.5 million, up from USD 249.9 million at the end of 2017. TGS held current assets of USD 653.7 million and had current liabilities of USD 338.4 million.

As of 31 December 2018, total equity amounted to USD 1.25 billion, corresponding to an equity ratio of 77% (84% in 2017). The reduction in equity ratio was mainly caused by the implementation of IFRS 15 which, in addition to affecting revenue recognition, also led to changes to the amortization of our multi-client library.

TGS is listed on the Oslo Stock Exchange. It had a market capitalization of USD 2.5 billion on 31 December 2018. As of year-end, TGS was the 16th largest company on the Oslo Stock Exchange and is part of the OBX index consisting of the 25 most liquid stocks in Norway. TGS did not issue any new equity during 2018, other than shares issued as part of employee long-term incentive programs. The Board does not anticipate issuing any new shares in 2019 other than shares issued as part of employee long-term incentive programs or unless necessary to finance the acquisition of a company or a major business opportunity.

Cash flow from operations, investments, financing and dividends

TGS’ operating cash flow was USD 388.9 million in 2018 compared to USD 461.3 million in 2017. Operating cash flow is significantly higher than the operating profit as non-cash expenses, in the form of amortization and impairments of our multi-client library, are the Company’s largest expense item.

Cash flow from investing activities amounted to USD 289.0 million in 2018 versus USD 352.7 million in 2017. This included cash investments in our multi-client library of USD 273.1 million, compared to USD 338.0 million in 2018.

TGS has paid quarterly dividends since 2016. The Annual General Meeting held on 8 May 2018 resolved to renew the Board of Directors’ authorization to distribute quarterly dividends.

In 2018, TGS paid dividends totaling USD 81.4 million (equal to USD 0.80 per share), up from USD 62.8 million (equal to USD 0.60 per share) paid in 2017. On 6 February 2019, the Board of Directors resolved to pay a quarterly dividend equal to the NOK equivalent of USD 0.27 per share (NOK 2.30).

Including dividends and other cash flows from financing activities, TGS’s net cash flow amounted to USD 23.6 million in 2018, down from USD 58.7 million in 2017.


Shareholders Value Metrics IFRS



Net Revenues (MUSD)



Operating Profit (MUSD)



Operating Margin



Earnings Per Share Fully Diluted (EPS) (USD)



Net Multi-client Revenues / Avg. Net Book Value of Multi-client Library



Return on Average Capital Employed (ROACE)



Cash Flow From Operations After Multi-client Investments (MUSD)



Shareholders Equity / Total Assets




The review of operations is based on “Segment reporting”.

The global market for multi-client seismic data improved during 2018. In addition, TGS benefitted from a favorable position related to the transfer of assets between oil companies, (through M&A, asset purchases or farm-ins), which in many situations may create future sales opportunities. As a result, TGS’ late sales grew by 43% to USD 508.2 million (USD 355.6 million).

Obtaining pre-funding from customers remained challenging in 2018 and pre- 2% funding revenues declined by 9% to USD 105.1 million (USD 115.8 million). Multi- client investments (excluding non-operational investments and investments contingent on sales) were USD 249.6 million (USD 260.3), implying a pre-funding rate of 42% (44%).

Including proprietary revenues of USD 8.4 million (USD 7.0 million), total net revenues amounted to USD 621.7 million, up 26% compared to the USD 492.2 million recognized in 2017.


Multi-client Data Library

TGS’ geoscientific data library is one of the industry’s most comprehensive multi- client resources, encompassing a wide range of geophysical, geological, gravity, magnetic and bathymetry data. The following table summarizes our data inventory at year-end.


The following review of the multi-client library is based on “Segment reporting”

With a net book value of USD 726.1 million (USD 799.0 million in 2017) TGS’library of multi-client seismic data, geological data and integrated products represented 49% (56% in 2017) of total assets as of 31 December 2018. Seismic data, representing 88% of the library’s net book value at year-end, is amortized on a project-by-project basis as follows:

  • ƒ  During the work in progress (WIP) phase, amortization is based on total cost versus forecasted total revenues of the project

  • ƒ  After a project is completed, it is amortized on a straight-line basis. The straight-line amortization is assigned over the remaining useful life, which for most offshore projects is considered to be four years. For most onshore projects, the useful life after completion is considered to be seven years

In 2018, TGS booked total investments in our multi-client library of USD 263.4 million (USD 283.1 million). Of this, USD 7.3 million (USD 18.1 million) was for investments contingent on sales and USD 6.5 million (USD 4.6 million) was to acquire completed surveys from other companies.

Our well data library is amortized on a straight-line basis over seven years, while data purchased from third-parties follows a straight-line amortization profile over the remaining useful life.

Segment Net Book Value of Seismic Library by Year as a Percentage of Total


Segment Net Revenues 2018 by Year of Completion


Segment Net Book Value as of 31 December 2018 vs. Investments per Year of Completion


Revenue Split - Segment Reporting


Due to the growth in net revenues, our operating margin improved to 28% from 20%, despite increased amortization of the multi-client library. Operating profit totaled USD 171.9 million in 2018, compared to USD 97.4 million in 2017.


TGS continues to generate multi-client revenues from a well-balanced mix of products. Comparing 2018 to 2017, our multi-client 2D seismic revenues increased 22%, multi-client 3D seismic revenues increased 27% and multi-client revenues from geological products increased 28%.


TGS generates revenues from a geographically diversified portfolio. In 2018, revenues from North and South America (NSA) increased by 49% over 2017. Revenues from Europe and Russia (EUR) decreased 8%, while revenues from Africa, Middle East and Asia Pacific (AMEAP) increased by 19%.

Commitments to Seismic Acquisition Capacity

TGS secures all seismic acquisition capacity from external suppliers for both offshore and onshore projects. At year-end 2018, the Company had entered into commitments for two 3D vessels, four OBN / source vessels, two multi- beam vessels and one coring vessel, in addition to two land crews. All these commitments will expire in 2019 and the amount committed, including contractual lease agreements, totaled USD 57 million for marine capacity and USD 18 million for land capacity. (2017: USD 37 million).

At 31 December 2018, the deferred part of contingent rent agreements, which is contingent on future sales, totaled USD 18 million (2017: USD 13 million).

Mergers and Acquisitions

In August 2018 TGS completed the acquisition of the Capreolus 3D multi-client survey from Polarcus. The survey covers 22,130 km2 of the Beagle and Bedout sub-basins offshore north-west Australia. The purchase price was USD 6.5 million.

Risk Management and Internal Control

TGS’ activities are heavily dependent on the spending budgets of our clients, who are exploration and production (E&P) companies in the oil and gas industry. These budgets are, in turn, largely a function of actual and/or expected shifts in oil and gas prices. Consequently, TGS’ activities, opportunities and profitability are linked to the fluctuations in these prices. Under TGS’ business model, discretionary investments in new multi-client projects are by far the largest use of cash. As TGS does not itself own seismic vessels or onshore seismic crews, but rather outsources these acquisition services on short-term contracts to vendors, the Company can quickly adjust cash outflow in accordance with market changes, thereby mitigating part of the risk represented by movements in oil and gas prices.

TGS is exposed to financial risks such as currency, liquidity and credit risk. Our operational exposure to currency risk is low as significant portions of our revenues earned and costs incurred are in USD. However, as significant parts of our taxes are calculated and paid in NOK, fluctuations between the NOK and the USD result in currency exchange gains or losses. From 2016 the quarterly dividend payments have been linked to USD, which has reduced NOK exposure significantly.

Liquidity risk arises from a lack of correlation between free cash flow and financial commitments. As of 31 December 2018, TGS held current assets of USD 653.7 million, of which cash and cash equivalents represented USD 273.5 million and current liabilities were USD 338.4 million. In addition, a USD 100 million, Revolving Credit Facility, which remains undrawn at the date of this report, was established in January 2019. The Board considers the liquidity risk of the Company to be low.

TGS is exposed to credit risk through sales and receivables and uses its best efforts to manage this risk by monitoring receivables and implementing credit checks and other actions as deemed appropriate. In addition, excess cash is placed in either bank deposits or financial instruments that have a minimum rating of “investment grade”. Our maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets, such as accounts receivables, other short-term receivables, and other non-current assets. TGS considers the concentration of risk with respect to trade receivables as low due to the Company’s credit rating policies and because our clients are mainly large energy companies, considered to be financially sound.

TGS is highly focused on maintaining adequate internal controls. The Company’s primary business activity is building its multi-client geoscientific data library, which represents its largest financial asset, through multiple investments in new data for licensing to clients. We utilize bespoke investment proposal models and reporting tools to assess and monitor the status and performance of our multi-client projects. Reference is made to Note 15 in the consolidated financial statements and to the more detailed information on risk management and internal control in the Corporate Governance section of the Annual Report.

Organization, Working Environment and Equal Opportunity

TGS’ global workforce was reduced by 8% from 2017 to 2018, mainly as a result of some outsourcing of projects. With the improving market conditions, the Board expects the number of employees to increase slightly in 2019.

The Board emphasizes the importance of employee engagement and has set relevant measures for our Management. In 2018, particular focus has been on communication, training & development, and compensation / rewards. The results from our annual employee engagement survey showed that Overall Engagement Capital (measured by an independent third party, CEB) remained flat at 61% in 2018, which is on a par with the cross-industry benchmark comprising 400 similar-sized companies from more than 20 industries. Furthermore, TGS continued to maintain a very low level of staff turnover at only 6% (on par with 2017) and was successful in attracting high performing individuals. The Board recognizes the importance of maintaining good employee engagement to ensure high levels of discretionary effort and employee retention. Therefore, employee engagement activities will continue to be a high priority for us.

The Parent Company had 42 employees as of 31 December 2018. At year-end, TGS had a total of 547 employees in the following locations: 346 employees in the United States, 42 employees in Norway, 93 employees in the United Kingdom, 50 employees in Canada, 11 employees in Australia and 5 employees in other countries. The number of employees at the end of 2017 was 597.

The Board considers the working environment in the Company to be good. The Board and Management believe that employees of diversified gender, ethnicity and nationality are provided with equal opportunity and treated fairly within the Company.

At the end of 2018, women comprised 37% of the total workforce in the Company (41% in 2017). The corresponding figure for managers is 29% at the end of 2018, which is unchanged from 2017.

Health, Safety and Environmental Issues

TGS’ interaction with the external environment relates to utilizing vessels, land crews and aircraft rigged with specialized equipment to collect seismic, gravity, magnetic, coring and/or multi-beam data. As a supporter of environmental sustainability, TGS is fully committed to safeguarding and maintaining the environment in which we operate, whilst also providing a safe and healthy workplace for employees and contractors. TGS manages these activities through the active implementation of a comprehensive HSE Management System that includes and enforces appropriate policies and procedures.

TGS understands the importance of working with local governments, regulatory authorities, and non-government organizations. Therefore, we maintain positive communication with regulatory authorities and other governmental and non-governmental organizations to help identify, understand and mitigate environmental risks associated with geophysical activities. TGS complies with mandated legislation and local regulations, while also working closely with industry associations to investigate and implement ways to mitigate the impact of seismic operations on the environment. Prior to initiating seismic data acquisition, TGS typically conducts environmental impact assessments as part of the permitting process. We monitor our environmental performance against comprehensive plans and we are dedicated to the continuous improvement of our environmental programs and standards across all of our operations. Additionally, through the Contractor Management System, TGS works with vessel owners and seismic contractors to ensure compliance with the TGS Sustainability Program.

In 2018, TGS employees worked 937,044 man-hours and there were no recordable employee injuries. The injury frequency rate for 2018 was 0.00 (2017: 0.00) per million man-hours. The sickness absence frequency for TGS employees in 2018 was 0.97 %, as compared to 1.15 % in 2017. As part of its continuous improvement strategy, TGS Management participated in audits of office locations. Furthermore, all TGS employees were required to complete two HSE training modules and were assessed on their active HSE commitment during their annual performance review and development process. Towards the end of 2018, TGS Management identified and selected a group of employees from various TGS offices and formed an internal Environmental Sustainability Committee (ESG Committee). Reporting directly to TGS’ CEO, the ESG Committee has been tasked with addressing various challenges related to sustainability, including identifying key areas for us to implement environmentally sustainable practices in our operations. The ESG Committee also focused on the UN’s Global Compact Sustainable Goals (SDGs) and identified several goals for TGS to develop and implement: (1) Industry, Innovation & Infrastructure; (2) Climate Action; and (3) Life Below Water.

In 2018, every member of the TGS Executive Team conducted at least one HSE facility inspection, and all TGS Executives and Area Managers visited at least one seismic vessel or land crew with a goal of promoting the importance of HSE and a strong HSE culture. All office locations undertook at least two HSE-related “lunch and learn” activities.

More detailed information on TGS’ HSE initiatives may be found in the Corporate Social Responsibility Report, included as a separate section of the Annual Report and on TGS’ website.

Corporate Social Responsibility Report

TGS has prepared a Corporate Social Responsibility Report in accordance with the Norwegian Accounting Act, section 3-3c. The Board of Directors believes that the Company complies with the reporting requirements. The report, TGS’ Corporate Social Responsibility Policy, is included as a separate section of this Annual Report and on TGS’ website at

Board Structure and Corporate Governance

The Board of Directors consists of eight directors, each serving a one-year term. The Boards’ Audit and Compensation Committees are composed exclusively of independent directors. No material transactions other than the remuneration disclosed in Note 9 have occurred in 2018 between the Company and its Management, Directors or shareholders.

The independent Nomination Committee, elected by the shareholders, consists of the following members: Tor Himberg-Larsen (Chairman), Christina Stray and Herman Kleeven.

Himberg-Larsen and Stray were elected for a two-year term at the Annual General Meeting on 9 May 2017, while Kleeven was elected for a two-year term on 8 May 2018.

TGS emphasizes independence and integrity in all matters relating to the Board, Management and its shareholders.

TGS conducts an active compliance program designed to continually inform and educate employees on ethical and legal issues. The Company employs a full-time Board-appointed compliance officer who reports quarterly on TGS’ compliance activities and objectives.

TGS bases its corporate governance policies and practices on the Norwegian Code of Practice for Corporate Governance published on 17 October 2018. The Board of Directors believes that the Company complies in all areas relating to the Code of Practice and any subsequent amendments. A more detailed description of how TGS complies with the Code of Practice and the Norwegian Accounting Act’s requirements for reporting on corporate governance is included in the Report on Corporate Governance included in this Annual Report and on TGS’ website at

Salary and Other Compensation

TGS compensates its employees according to market conditions that are reviewed on an annual basis by the Compensation Committee. Compensation includes base salary, insurance and retirement benefits programs, a profit-sharing bonus plan based on the Company’s performance and, in certain cases, stock option plans or other long-term incentive programs. For further details, please refer to section 12 of the Report on Corporate Governance and the Declaration on Executive Remuneration in this Annual Report.

The members of the Board of Directors do not participate in any bonus plan, profit-sharing plan or stock option plan. In recent years, the directors’ compensation has been composed of both a fixed fee and a number of restricted TGS shares. The remuneration is not related to the Company’s financial result. Refer to Note 9 to the Consolidated Financial Statements for details on the remuneration for 2018.

Significant Litigation

The Board is regularly updated on significant litigation matters. As a result, at each board meeting the Board receives an update on any criminal charges and investigations, as well as related civil claims. See Note 23 to the Consolidated Financial Statements for further details.



In response to the sharp drops in the oil price experienced in 2014 and 2015, E&P companies cut spending substantially, driving global reserve replacement ratios down to historical low levels. This reduced spending also caused a severe cyclical downturn in all segments of the oil service industry, including the seismic sector.

However, over the past couple of years, a higher oil price, combined with the efficiency gains realized during the downturn, have improved E&P companies’ cash flow substantially. With the market fundamentals continuing to improve, these companies are likely to come under increasing pressure to replenish reserves and secure growing production in the longer-term, which in turn should lead to increasing demand for seismic data.

In accordance with its counter-cyclical investment strategy, TGS has added substantial amounts of data to its multi-client library at an attractive unit cost through both organic and inorganic investments during the downturn. This, in combination with an efficient cost base, strong balance sheet and flexible business model, should put us in a unique position to benefit from improving market conditions in the future.

These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks, uncertainties and assumptions that are difficult to predict because they relate to events and depend on circumstances that will occur in the future.

Events after the Balance Sheet Date

On 6 February 2019, the Board of Directors resolved to pay a quarterly dividend of the NOK equivalent of USD 0.27 per share (NOK 2.30) to shareholders. The dividend payments of USD 27.4 million were made on 28 February 2019.

In October 2018, TGS entered into a Revolving Credit Facility of USD 100 million. The facility, which closed on 25 January 2019, has a three-year maturity with a non-amortizing profile. It remains undrawn as of the date of this report.

Annual result of the Parent Company and Allocation of Profit

In 2018, net revenues of the Parent Company increased by 11% to USD 344.1 million from USD 309.9 million in 2017. The increase was a result of higher sales from our multi-client library. 2018 operating profit amounted to USD 57.5 million compared to USD 42.1 million. This increase is driven by the growth in net revenues, partly offset by higher operating expenses.

Net income for 2018 was USD 38.5 million, an increase of 160% compared to USD 14.8 million in 2017.

The Board proposes that the Parent Company’s net profit of USD 38.5 million shall be allocated as follows:

Allocated to Other Equity                               USD 38.5 million

The Board of Directors resolved on 6 February 2019 to pay a quarterly dividend of USD 27.4 million (NOK equivalent of 2.30 per share) from the 2017 financial statements, which is covered by other equity.

Confirmation from the Board of Directors and CEO

We confirm, to the best of our knowledge that the financial statements for the period 1 January to 31 December 2018 have been prepared in accordance with current applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole. We also confirm that this report of the Board of Directors with references to the notes to the accounts and the Corporate Governance section of the Annual Report includes a true and fair review of the development and performance of the business and the position of TGS, together with a description of the principal risks and uncertainties facing the Company. 

The Board of Directors would like to thank all employees for their good efforts throughout the year.



Confirmation from the Board of Directors and CEO

We confirm, to the best of our knowledge that the financial statements for the period 1 January to 31 December 2018 have been prepared in accordance with current applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole. We also confirm that this report of the Board of Directors with references to the notes to the accounts and the Corporate Governance section of the Annual Report includes a true and fair review of the development and performance of the business and the position of TGS, together with a description of the principal risks and uncertainties facing the Company.