1st Quarter 2000 Results

Revenue Breakdown
Net Late Sales of NOK 110,6 million increased 10% from Q1 1999 and accounted for 72% of Net Consolidated Revenues. Early Participant and other project related Revenues totaled NOK 42 million, funding 50% of the Company’s total investment into the Multi-client Library during the first quarter and 70% of the investments excluding the purchase of a controlling interest in the Northern Brazil survey from Laboratory of Regional Geodynamics (LARGE).

Operational Costs
The amortization charge associated with Net Multi-Client revenues was 32% of Net Revenues, close to the average rate of 31% for the full year of 1999. The corresponding amortization rate for Q1 1999 was 22%. This rate will fluctuate from quarter to quarter, depending on the sales mix of projects. Management expects the amortization rate to remain between 30% and 40% of Net Revenues for 2000. Total operational costs payable for the quarter, including materials, declined to NOK 33,4 million from NOK 43,5 million in Q1 1999 primarily as a result of the stacking of the Odin Explorer in Q1 1999.

Profit
Operating Profit for the quarter was NOK 66,4 million, 43% of Net Revenues, and a 23% increase over Q1 1999 (NOK 54,0 million before unusual items). The Pre-tax Profit of NOK 55,7 million was 37% higher than the NOK 40,6 million reported in Q1 1999, and 16% higher than Q1 1999 figures adjusted for unusual items.

EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) for the three months ended March 31st, was NOK 119,2 million, 78% of Net Revenues.

Financial Items
The rate of exchange between the USD and the NOK changed from 8,03 on December 31st, 1999 to 8,47 on March 31st, 2000. The Company changed banks in February and repaid a long-term USD loan from the prior bank stated in December at an exchange rate of 8,03 NOK/USD. In accordance with NGAAP, a non-cash exchange loss of NOK 2,8 million was recorded in the accounts. In recording the new USD loan and other currency items to the Balance Sheet at the exchange rate of March 31st, an unrealized loss of NOK 5,9 million has been charged to the Net Income statement during Q1 2000. Should the exchange rate on June 30th 2000 stay at its current level of 9,07 NOK/USD, an additional unrealized exchange loss of NOK 12,6 million will be recorded in Q2 2000. Should the exchange rate move below 8,47 on June 30th, an unrealized exchange gain will be recorded in Q2 2000.

Tax
The Company estimates a tax rate for the year of no more than 35%. During 1999, the Company earned profits largely in the USA with a 36% tax rate, while the Company’s Norwegian operations suffered a tax loss (tax rate 28%) due to write-downs of vessels. Accordingly, the tax rate for 1999 was 38% for the year.

Net Income and Earnings per Share (EPS)
Net Income for Q1 2000 was NOK 36,2 million, NOK 1,50 per share, 35% higher than reported in Q1 1999; NOK 26,8 mill and EPS NOK 1,12 per share.

Business Segments and Investments
TGS-NOPEC’s main business is developing, managing, conducting, and selling non-exclusive seismic surveys. This activity accounted for virtually all of the Company’s business during Q1 2000. The Company increased its investments in its data library by 48% from Q4 1999 levels to NOK 83,5 million. Compared to Q1 1999, the investments in the data library increased by 88%. The Company recognized NOK 42,0 million in Early Participant revenues during the quarter. Total pre-funding recognized represents 50% of total investments in Q1 2000. The lower percentage levels of pre-funding in Q1 are a direct result of the Company’s decision to purchase a controlling interest in the Northern Brazil survey. Excluding this investment, average effective pre-funding for the quarter was approximately 70%.

Balance Sheet
As of March 31, 2000, the Company’s total cash holdings amounted to NOK 199,3 million, up from NOK 118,2 million on December 31st, 1999. Total interest bearing debt increased from NOK 202,8 million per December 31st, 1999 to NOK 239,2 per March 31st, 2000 as a result of the opening of a new long-term loan facility in February.

Operational Highlights
The Company added 48,000 kms of 2D and 7,200 square kms of 3D to its library of marketed surveys during the first quarter. The majority of this activity was concentrated in Brazil, the Gulf of Mexico, and Morocco. A total of eight different seismic vessels contributed to this effort. In Northern Brazil, TGS-NOPEC bought a controlling interest in a 26,000-kilometer 2D survey currently in progress, and in the North Sea acquired 100% ownership of a 1,640 square kilometer 3D survey from another seismic company in exchange for abandoning marketing rights of other surveys owned by that company.

Outlook
The Company plans to increase activity on new surveys during the second quarter to take advantage of summer weather conditions in the Northern Hemisphere. The Company has secured additional 2D vessel capacity for projects in Europe and Canada and is actively developing a number of 3D projects in several geographic areas. As previously stated, TGS-NOPEC intends to increase its equity participation in the Multi-client 3D market during 2000.

While there are signals that the seismic sector is slowly strengthening, significant improvements in the market continue to lag the increased activity levels in other oilfield sectors. We expect a steadily growing share of oil-company spending to flow into seismic purchases throughout the remainder of 2000 as our customers gain confidence in a more stable commodity price outlook.

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