TGS-NOPEC Geophysical Company ASA - 2nd Quarter 2003 Results

"Second quarter results were slightly below our expectations as a result of lower late sales from our library, but we are still on plan on a year-to-date basis", stated TGS-NOPEC's CEO Hank Hamilton. "On a positive note, pre-funding levels on our new programs have improved over last year and our backlog increased for the 3rd consecutive quarter. Based on scheduled delivery of new projects, upcoming license rounds, and strong oil company cash flows, our outlook for late sales is improving."

 

* Consolidated Net Revenues were USD 28,3 million, a decrease of 18% compared to Q2 2002.

* Net Pre-funding Revenues totaled USD 8,3 million, up 75% from Q2 2002 (USD 4,7 million).

* Total backlog increased 5% to USD 23,8 million.

* Operating Profit (EBIT) was USD 8,4 million, 30% of Net Revenues, down 46% from USD 15,6 million in Q2 2002.

* Total Equity ended June 30th, 2003 was USD 179,8, representing 82% of total assets.

 

* Consolidated Net Revenues were USD 58,9 million, down 13% compared to first six months of 2002.

* Investments in the Multi-Client library were USD 30,7 million with 52% Pre-funding coverage, compared to USD 17,9 million with 43% Pre-funding in the first six months of 2002.

* Total backlog increased 26% over the first six months of 2003.

* Operating Profit (EBIT) of USD 19,3 million was 33% of Net Revenues, down 39% compared to first six months of 2002.

* Free cash flow was a positive USD 12,9 million.

 

 

Consolidated Gross Late Sales of USD 21,9 million represented 70% of total revenues for the quarter. Unusually high Revenue Sharing with partners brought the Net Late Sales level down 36% compared to Q2 2002. Net Early Participant revenues totaled USD 8,3 million, funding approximately 50% of the Company's investments into new Multi-Client products during Q2 (USD 16,5 million). The Company earned proprietary contract revenues during the quarter of USD 0,9 million compared to USD 0,2 million in Q2 2002.

 

 

 

 

Operational Highlights

The Company added approximately 17,000 kilometers of new 2D and 1,900 square kilometers of new 3D data to its library of marketed seismic surveys during the 2nd quarter. A total of five different seismic vessels contributed to this effort. The most active area by far for new acquisition was the US Gulf of Mexico, followed by the North Sea. In June, the Company began acquisition on its 2003 Eastern Canada program. Activity on value-added reprocessing products remained at very high levels during the quarter, primarily in the US Gulf of Mexico with the 100,000-kilometer Phase 45 deepwater 2D (PSTM and PSDM) and the 34,000-kilometer Phase 48 Texas long-offset 2D PSTM. 

 

A2D added 65,000 logs from 30,000 wells to its LOG-LINE Plus! library, bringing the total inventory to nearly 1,6 million digital well log images from approximately 750,000 wells. A2D also secured substantial industry underwriting for several "Work-Station Ready" (WSR) well log programs in the Gulf of Mexico that complement TGS-NOPEC's newest and most active seismic projects in the area. The WSR product is A2D's highest value offering.  . 

 

Despite the fact that the Company recognized a high level of pre-funding revenues (USD 8,3 million) during Q2, its backlog for new seismic projects increased 10% to USD 14,4 million per June 30th, 2003 from USD 13,1 million at the end of the 1st quarter. A2D backlog remained stable at USD 9,4 million compared to USD 9,5 million per March 31st. Total backlog at the end of Q2 stands at USD 23,8 million.

 

At the end of July 2003 TGS-NOPEC elected to let its long-term charter agreement for the 2D vessel M/V Zephyr-1 expire after utilizing the vessel continuously for nearly seven years.  The Company continues to access 2D vessel capacity under its flexible charter agreement with SMNG as well as from other providers on a project-by-project basis.

 

TGS-NOPEC continues to expect its overall market in 2003 to remain flat compared to 2002 levels on an annualized basis. We now expect our annual multi-client investments to be towards the lower end of the USD 70 - 80 million range in our previously issued guidance for 2003. We plan to continue to concentrate these investments in the North American market in the near term. Based on upcoming licensing rounds, recent dialogue with our customers, and the scheduled delivery of several large projects during the second half of this year, we reiterate our expectation of approximately 10% net revenue growth for the full year 2003 over 2002.  

 

 

Contacts for additional information: 

 

John Adamick, VP Business Development 

tel +1-713-860-2114

 

Arne Helland, CFO 

tel +47-31-29-20-00/+47-91-88-78-29

 

Naersnes, August 6th, 2003

 

The Board of Directors of TGS-NOPEC Geophysical Company ASA