TGS (TGS) Barclays CEO Energy-Power Conference summary

Industry trends and outlook

• Oil and gas demand is projected to remain strong through 2050, with Exxon forecasting a 2% increase in oil and 21% in gas demand compared to today.

• Reserve life for major oil companies is declining, dropping from 13 to 9 years in eight years, due to insufficient exploration and increased production.

• M&A activity in the E&P sector reached $200 billion last year, the highest in a decade, as companies seek to address reserve shortfalls.

• Seismic industry activity has shifted from frontier to mature basins, with 70% now focused on mature areas.

• New energy sectors, such as offshore wind and geothermal, are experiencing rapid growth, though from a small base.

Strategic transformation and acquisitions

• Over the past four years, five to six companies have been acquired, consolidating the seismic market into a duopoly.

• Key acquisitions include 4C Offshore (offshore wind data), Prediktor (solar asset management software), ION Geophysical (multi-client data and software), Magseis Fairfield (ocean bottom node market), and PGS (3D streamer market).

• The PGS merger, completed July 2024, positions the company as a fully integrated leader across all seismic and energy data segments.

• The multi-client data library now represents over 60% of industry data acquired in the last 8-10 years, with $4 billion invested since 2016.

• The company controls 40% of the global ocean bottom node market and operates eight modern seismic vessels.

Financial performance and synergy realization

• Annual synergy estimates from the PGS merger have been raised to $110–130 million.

• Plans to refinance PGS's $800 million debt, expecting significant interest savings due to a stronger balance sheet.

• Combined data library book value is close to $1.2 billion, with historical sales-to-investment ratios of 2x.

• Magseis Fairfield acquisition achieved an EBITDA multiple of 1.8x and is expected to pay back within four years.

• New energy business revenue grew from $7 million in 2021 to an expected $75 million in 2024, with strong EBITDA margins.