Norwegian seismic giant TGS has easily beaten average consensus earnings estimates in the third quarter of this year after the merger with compatriot PGS delivered more synergies to the joint business than originally anticipated.
The company said in its financial report released on Thursday that its revenues exceeded $500 million in the period between July and September this year, against $293 million in the third quarter of 2023.Earnings before interest, taxes, depreciation, and amortisation (EBITDA) came out at $280 million against $170 million a year earlier.
On average, analysts expected TGS to announce revenues of $440 million and EBITDA of $249 million in the reporting period.The company measures revenues by recognizing income related to multi-client projects in progress, according to the percentage of completion (POC) method.
TGS’ multi-client business unit was a top performer, generating revenues of $277 million at a cost of about $19 million, driven by strong sales of completed data, supported by material transfer fees, and by high pre-funding of investments in new data, TGS said.
This unit owns and manages the multi-client data library and develops and invests in new multi-client surveys.
This unit conducts streamer and OBN seismic data acquisition services on behalf of external customers and other TGS business units.
In the bottom line calculated according to the International Financial Reporting Standards (IFRS), TGS reported net income of just over $37 million in the third quarter against $17 million in the third quarter of 2023.
The order inflow remained high, coming in at $423 million in the third quarter with a total backlog of $750 million at the end of the reporting period.The TGS directors have resolved to maintain the dividend at $0.14 per share in the fourth quarter, unchanged from the third quarter of this year.
“We have completed the merger reorganisation process, and we are ahead of schedule in realising annual synergies of between $110 million and $130 million”, TGS chief executive Kristian Johansen said.The third quarter earnings were the first to incorporate geophysical company PGS following completion of the merger between the two in July.
Following completion of the post-merger reorganisation process, in the third quarter, TGS realised approximately $55 million of synergies at the annual run-rate, which is $10 million higher than previously guided, the company said.
“I am pleased to see that our solid balance sheet and sound financial policy has prompted substantial upgrades to the credit ratings by Moody’s and S&P which puts us in good position to refinance the debt structure at attractive terms”, he added.
On Wednesday, international ratings agency S&P issues a BB- rating with a stable outlook, moving it up two notches up from previous B-, to TGS after reviewing the impact of its acquisition of PGS.
At the end of September, international credit agency Moody’s assigned an upgraded Ba3 rating to TGS. The upgrade applies to the $450 million senior secured notes which were initially issued by PGS before it was merged into TGS.
Source:https://www.upstreamonline.com