ASKER, NORWAY (8 July 2010) - TGS announced today the early termination of a 2D vessel charter for the M/V Northern Genesis.  This five year charter began in March 2007 and was previously due to expire in March 2012.  Under current market conditions it is possible to charter more suitable 2D vessel capacity resulting in increased flexibility and significantly lower operating costs per unit of seismic data acquired.  Conditions for the early termination have been agreed with the vessel owner and will result in a one-time operating expense charge of USD 5.2 million in Q2, of which USD 1.5 million is a cash settlement and the remaining USD 3.7 million is a non-cash write-down of TGS owned equipment onboard the vessel.  

In addition, based on preliminary reporting from operating units, TGS management now expects net revenues for the 2nd quarter of 2010 to be approximately USD 111 million, about 10% lower than revenues reported for Q2-2009.  For the first half of 2010, management expects net revenues of USD 259 million, 33% above 1H-2009 net revenues.

A delay in the announcement of Norway's 21st licensing round to 23 June did not allow for TGS to take full advantage of expected sales activity on its modern 2D and 3D Norwegian Continental Shelf data library in Q2.  Since announcement of the round, sales activity has been as expected.  In addition, the uncertain regulatory environment surrounding activity in the deepwater Gulf of Mexico caused some sales decisions on several large data quotes at the end of Q2 to be delayed.  In contrast, activity is increasing in the West Africa market as E&P companies look for expansion opportunities in frontier and established plays.

Based on current and forecasted activity levels, TGS still expects to achieve annual net revenues of USD 560-600 million for 2010 as originally communicated in February.
As a result of the lower level of late sales in Q2, the blended multi-client amortization rate for Q2 is likely to be slightly higher than the forecasted range for the full year. This amortization rate does fluctuate from quarter to quarter, depending on the sales mix of projects, and TGS still expects that its full year amortization rate will be in the range of 37-43% of net revenues. 

The full 2nd quarter earnings release is scheduled for 5 August 2010.  

CEO Robert Hobbs and CFO Kristian Johansen will host a conference call on Thursday, 8 July 2010 at 16:00 CET (10:00 AM NY).  Norwegian attendees are invited to call +47 2100 2609 or 800 19641, UK attendees are invited to call +44 (0)20 7138 0843 or 0800 032 3808 and US attendees are invited to call +1 212 444 0896 or 866 602 0258.  Attendees may want to call 5-10 minutes before 16:00 CET (10:00 AM NY) to ensure registration and access. 

Participants will be required to quote the following confirmation code when dialing into the conference: 7185524

A Q&A session will follow a short introduction. To pose a question, please press *1. 

A replay of the conference call will be available shortly after. To access replay of TGS conference call, follow the instructions below or click here.

A replay of the conference call will be available shortly after. To access replay of TGS conference call,
• dial +44 (0)20 7111 1244 (Norway) or +1 347 366 9565 (International) 
• replay access code: 7185524 followed by # (pound-sign)