TGS Secures Major OBN 3D Contract in Trinidad

In a significant move that underscores its leadership in the energy data sector, TGS has been awarded a substantial 3D baseline Ocean Bottom Node (OBN) acquisition contract in Trinidad. This contract, scheduled to commence in early Q3 2025, marks a pivotal moment for the company as it continues to expand its footprint in the energy sector. The 80-day survey is not just a testament to TGS's technological prowess but also a strategic maneuver that aligns with its broader vision of supporting both traditional and new energy sources.



Strategic Alignment with TGS's Broader Vision

The award of this contract in Trinidad is a strategic move that aligns with TGS's broader strategy in the energy sector. The company's recent merger with PGS has positioned it as a full-service geophysical data provider, offering a comprehensive range of services from Multi-Client data to new energy solutions. The OBN technology, which is at the heart of this contract, is a preferred choice in the industry due to its ability to provide high-quality data and insights. As Kristian Johansen, CEO of TGS, noted, "Our OBN technology continues to be the preferred choice of the industry and exposes TGS to clients’ production budgets and asset optimization initiatives."

The contract in Trinidad is part of TGS's efforts to build a robust position in all verticals of the energy value chain. The merger with PGS has enabled TGS to offer a global seismic library with data from all active basins in both the western and eastern hemispheres. This, coupled with a strong operational track record in data acquisition, positions TGS as a leader in the industry. The combined company will benefit from around 30,000 mid and deepwater nodes for OBN acquisition, enhancing their ability to deliver high-quality data and insights.

Potential Risks and Challenges

While the contract presents a significant opportunity, it also comes with its share of risks and challenges. The 80-day survey involves the use of complex OBN technology, which requires precise execution. Any operational issues, such as equipment malfunctions or delays in data acquisition, could lead to increased costs and extended timelines. As Kristian Johansen mentioned, "Our OBN technology continues to be the preferred choice of the industry and exposes TGS to clients’ production budgets and asset optimization initiatives." This highlights the importance of successful execution to maintain client satisfaction and operational efficiency.

Market conditions, client dependence, supply chain and logistical issues, and technological and environmental factors are other potential risks that could impact TGS's financial performance and operational efficiency in the coming quarters. The energy industry is cyclical and subject to volatile market conditions. Fluctuations in oil and gas prices, changes in regulatory environments, or shifts in demand could affect the demand for seismic data services. TGS's forward-looking statements acknowledge these risks, stating, "These factors include volatile market conditions, investment opportunities in new and existing markets, demand for licensing of data within the energy industry, operational challenges, and reliance on a cyclical industry and principal customers."

Financial Performance and Operational Efficiency

The successful execution of this contract could have a positive impact on TGS's financial performance. The company reported strong contract sales with high OBN activity and an overweight of active streamer vessel capacity allocated to contract work in Q4 2024. The order inflow of USD 489 million during Q4 2024 resulted in a total produced order backlog of USD 749 million, positioning the company for sustained operational momentum into the next fiscal year. The successful refinancing of the legacy PGS debt, reducing the interest rate on its Senior Secured Notes from 13.5% to 8.5%, is expected to create synergies approximating USD 35 million, enhancing the company's financial stability.



Conclusion

The award of the OBN 3D contract in Trinidad is a strategic move that aligns with TGS's broader vision of supporting both traditional and new energy sources. While the contract presents significant opportunities, it also comes with its share of risks and challenges. TGS's ability to navigate these challenges will be crucial in maintaining its financial performance and operational efficiency in the coming quarters. As the company continues to expand its footprint in the energy sector, it remains well-positioned to support the exploration and production of energy resources worldwide.