TGS.OLTGS.OLOSL
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Bard Stenberg: Good morning, and welcome to TGS Q4 2025 presentation. My name is Bard Stenberg, Vice President, Investor Relations and Business Intelligence in TGS. Today's presentation will be given by CEO, Kristian Johansen; and CFO, Sven Peter Larsen. Before we start, I would like to give some practical information. For those of you present in the room with us today, please use the microphones provided when asking questions. For those of you on the webcast, you can type in the questions on the platform and we will address those after management's concluding remarks. I would also like to draw your attention to the cautionary statement showing on the screen and available in today's presentation and earnings release. So with that, it's my pleasure to give the word to you, Kristian.
Kristian Johansen: Thank you, Bard, and welcome, everyone. So we'll start with the highlights for Q4 of 2025. So we had revenues of $363 million. Our revenues in Q4 were driven by strong multi-client performance, which is quite common for any given Q4, but I think we were particularly pleased about this year because it was a quite volatile market in terms of an sliding oil price during the quarter, but we still managed a very strong multi-client performance, which I will come back to. We had a EBITDA of $227 million. That corresponds to a 63% margin. And again, this is thanks to a very strong focus on cost, which again has preserved our margins in the quarter. Our Q4 EBIT was $72 million. That corresponds to a 20% EBIT margin. I'm particularly pleased about our order inflow for the quarter. So we had $598 million of new orders signed and this is the strongest order inflow since pre-COVID. And that means that we have a total order backlog of about $706 million entering into 2026. We had a net cash flow of $206 million and that means that we managed to reduce our net debt to about $427 million. And as you all know, we have guided a range of between $250 million and $350 million as a comfort zone in terms of net debt. And we've also said that when we get to that range or within that range, we're going to increase shareholder allocation. Whether that's going to be in terms of dividend or share buybacks remains to be seen. But for now, we maintain our dividend of about USD 0.155 per share. So 2025 has clearly been a transitional year for TGS. We got off to a good start. We had a better-than-expected Q1 results, strong asset utilization and multi-client sales. And then Liberation Day hit us in early April and obviously, with a resulting macro and geopolitical uncertainty, which had an impact on oil prices. So we showed oil price weakness and volatility, which caused pressure on client spending. We -- as a result of that, we saw a challenging contract streamer and OBN market through the course of 2025. However, we've been preserving margins by reducing costs and CapEx. I'm impressed about the way we have reduced our gross operating costs and CapEx by about $156 million of reduction in terms of operating costs and $48 million of a reduction in CapEx versus the original plans for the year. As a result, we've increased our shareholder return and we have reduced debt at the same time. So we had a net cash flow, as I said, of more than $200 million. We have reduced debt to a level -- or net debt to a level of $427 million and we have increased our dividend in 2025 of 11%. So we're clearly benefiting from a unique business model. In fact, the only company in our space who has a business model where we are strong in all verticals of the seismic industry. We have signed our first strategic partnership with one of the super majors and we're capitalizing on opportunities in all geoscience markets. We clearly feel that we're strongly positioned for 2026. We have a strong order inflow and backlog. We have a robust balance sheet and we're continuously optimizing cost and CapEx to be ready for the next up cycle of our industry. I'll give you a quick business update for Q4 as well. And the first slide here shows the global map. And I want to draw your attention, first and foremost, to the blue color on the slide and this shows the massive multi-client data library of TGS. So you see data in pretty much all the basins in the world. And in fact, since 2018, we or TGS makes up about 60% of all the multi-client data collected in the world. So a significant market share within the multi-client space, which again gives us a unique opportunity to also utilize our high-quality assets. I'm not going to touch on all the different basins where we have been active, but you see the usual basins such as U.S. Gulf of America. You see we have 3 vessels in Brazil. We're strong in West Africa with 2 vessels in Gabon during the quarter and those vessels have now moved to Nigeria and Angola. We had a vessel in India and then you see there's also some new energy operations, both in California, the U.S. and Germany and Australia during Q4 of 2025. Next, a quick update on the different business units. So we'll start with multi-client and we start with the financials. So we have multi-client sales of $270 million in Q4. That corresponds to $259 million in Q4 of 2024. We had investments of $117 million. And most importantly, we had sales to investment over the past -- last 12 months of 2.0, meaning that whenever we invest $100 million, we expect to see $200 million of sales, which is a very strong metric and where TGS has been unique in terms of the industry in terms of being able to manage such returns over time. In terms of awards and key projects, we were awarded a project in Pelotas Norte. This is a Phase 1 of a big project that we're doing offshore Brazil. It's a streamer survey mainly targeting open acreage, but where we also have solid prefunding before we started the survey. Number two is a project called APEX 1. This is an ocean bottom node multi-client project in Gulf of America. This is actually a dense node grid. So compared to previous surveys, which are more sparse and take advantage of underlying data, this is a denser survey without reliance on underlying streamer data. And the reason why we can do that is that we've had technology breakthroughs in terms of how we acquire ocean bottom nodes with new source technologies combined with new ROV technologies that we have applied on this survey. Then we completed a big survey in Brazil called Megabar Extension Phase 1. This is a joint venture streamer survey in the Equatorial margin area offshore Brazil and this is the area where Petrobras is drilling as we speak. I touched on the multi-client performance and this one gives you more details about that. So this shows our quarterly multi-client performance all the way back to Q1 of 2023. And what you see there, if you follow the line is that it's quite consistent around 2x. Yes, it may drop in certain quarters down to a level of 1.7, but then you also see peaks that goes all the way up to 2.2 and 2.3. But the important thing here is that over time, we managed an average sale to investment of somewhere between 1.9 and 2.0. And in that regard, I'm extremely pleased that we managed to a sales to investment of 2.0 in a challenging market in 2025. In Q4, we had multi-client sales that increased year-on-year despite a 15% lower oil price quarter-by-quarter. On the Marine Data acquisition, we had a negative development of sales and activity. We had OBN contract revenues dropping from $132 million in Q4 of 2024, which was extraordinarily strong, but still they dropped to a level of $47 million in Q4 of this year or 2025. And we saw a drop also in streamer contract revenues, down from $131 million to $110 million, which means that the gross revenues came down from $263 million last year to $157 million and this is obviously reflecting a very challenging market for both streamer and OBN, particularly in the last 3 quarters of 2025. So that means that net revenues were $68 million for the quarter, but I'm happy to say that our EBIT margins are actually better than last year. And it's a combination of things. Number one, we had no operational hiccups in Q4, so very strong operational performance. And number two, we planned very well for the drop of activity in the OBN market, which means that we had no short-term leases during the quarter. So we managed to get rid of them when we planned for Q4, which obviously had a huge impact on our margins during the quarter. In terms of awards in Q4, we had a 3-year capacity agreement with Chevron signed in Q4. This is for streamer and OBN acquisition services. And as part of that collaboration, we also work together very closely on technology developments and one example would be what we're doing on the OBN side now in terms of being able to have a more flexible model where we are more efficient in terms of acquisition and we don't have the same reliance on underlying data when we acquire these surveys, particularly in the U.S. Gulf. We have 3 OBN contracts signed in Europe during the quarter. These are for acquisition campaigns for Q2 and Q3, which means that we're filling up the backlog in Europe pretty well. In addition to that, we had a streamer 4D contract in Norway. This is going to commence in Q2 of '26 and it has a duration of 65 days. And last but not least, we also signed up a streamer 4D contract offshore Brazil. And this has a second half 2026 start-up. And again, this one has a 75 days duration. On the Imaging and Technology, we had a strong quarter and it's been a really good year for our Imaging team. Gross Imaging revenues growing from $30 million to $32 million, but more importantly, the external Imaging revenues grew from $15 million to $18 million. But for the full year, we had a year-on-year growth of 65% for Imaging. As you see, on top of that, we had a margin improvement from 20% to 30% on the EBITDA level. Again, we have signed a multiyear agreement with a super major for licensing of our software, which is called Imaging AnyWare. And this is the second super major who signed up with TGS in a short period of time. And we now have multiple companies using our software when they do imaging, which again creates a stronger link between TGS and some of our biggest customers. I touched on the year-on-year growth of 65% and we expect further growth in Imaging in 2026. It's not going to be the same magnitude as we saw in 2025 because obviously, we're starting from a much higher base. But overall, we will continue to see growth. Growth is probably going to be higher in the second half than the first half based on the backlog that we have right now. But again, the positive development in Imaging is expected to continue also for 2026. And then last but not least, the new Energy Solutions numbers are still fairly small. You see contract revenues dropping from $7 million to $2 million. And the reason for that is that we didn't have any site characterization surveys in Q4 of 2025. As you know, we stacked Vanguard after the summer season, partly because we didn't have the backlog that was needed during the winter to justify that vessel. Then we have multi-client revenues growing from $3 million to $4 million, total revenues down from $9 million to $6 million. But again, as we saw with Imaging and acquisition, we've had a positive EBITDA margin development despite lower activity level. Some key awards. We have the first wind and metocean campaign in Australia. This is a 1-year deployment and this is in the Gippsland region of Victoria. And then secondly, we're in collaboration with a company called EOLOS, we offer wind and metocean campaigns offshore Brazil. So with that, I want to hand it over to Sven, who's going to go through our financials and then I will come back and talk more about the outlook for '26. Thank you.
Sven Larsen: Thank you, Kristian. Good morning. Okay. I'll start by going through the revenues. We had -- our segment revenues came in at $363 million in the fourth quarter, which is down from the same quarter of last year when we had $492 million. We saw strong performance in our multi-client business, $263 million of multi-client revenues, which is actually a little bit above what we had at the same period of last year. And then, of course, we had significantly lower external revenues in our data acquisition business, $100 million compared to $231 million in the same quarter of last year. On the operating expenses side, we see here on the top right-hand side, you see the dark blue bar shows the net operating expenses and then we show the capitalization and then we show the gross operating expenses. So gross operating expenses was down to $189 million in the quarter. So you can see that we continue to reduce our gross operating expenses quarter-by-quarter. However, you should also note that there is approximately $15 million of release of accruals in Q4. So this is cost that we have charged to our P&L earlier in the year based on conservative assumptions on project performance. And now that these projects are coming to an end, we can release some of these accruals, which has a positive impact of roughly $15 million on the gross cost -- operating cost in this quarter. But it doesn't really affect the full year. In terms of depreciation on the bottom left-hand chart here, you see that we had low net depreciation of $36 million in Q4 and that has to do with high capitalization of gross depreciation. We had approximately $42 million of capitalization of depreciation in the quarter. And that is roughly $20 million more than it otherwise would have been. And the reason for that is that we have reclassified some capitalization from cost of sales that were done earlier in the year to depreciation. So we have the opposite effect on the capitalization for operating expenses. And then you see that we have straight-line amortization of $58 million, more or less in line with the run rate we have had over the past few quarters and we had a somewhat higher accelerated amortization of $62 million and that, of course, relates to the higher multi-client sales. There is a certain correlation between accelerated amortization and multi-client sales. This gave us an EBIT of $72 million in our segment accounts, which corresponds to a margin of roughly 20% in the quarter. This is down from $92 million in the same quarter of last year. Here, I'm not going to dwell too much with this table. But as you know, we report our revenues 2 ways. We report the revenues by nature and we report the revenues by business unit. So we compile this table here to avoid any confusions on what numbers we are looking at. And as you see here, on the multi-client business unit, we do actually have some contract revenues related to JV projects that we do. So when our multi-client department engage in a JV project and we use our own vessel capacity or our own OBN capacity for these purposes, this JV partner will pay our multi-client department, say, 50% of the cost and that is booked as contract revenues in the multi-client business. And then you also see that in the New Energy Solutions business, we have a little bit of multi-client revenues related to subscriptions of software that we provide to customers. As you saw from the chart earlier, we are very focused on cost and optimizing our cost base. We have constantly been working on this since the merger with PGS that took effect from 1st of July 2024. So initially, of course, we saw a reduction related to merger synergies. But also beyond that, we have continued to work on quite a few different efficiency measures. We are using technology in a clever manner to reduce costs. We have implemented AI solutions in a number of our functions and we're constantly challenging ourselves in order to reduce our cost base. And you see the result here that 2024 compared to 2025. So 2025 is significantly down compared to what we had in '24 and also the years before. So -- and this effort will continue. It's going a continuous effort, of course, that is never complete. And for 2026, we guide for a gross operating expense of roughly $950 million, which is in line with the guidance we ended up with or the last guidance we gave for 2025. But it depends, of course, on the activity level. We could come in below this if activity is lower than stipulated and we could come in a little bit above if we see higher activity level. But the expectation as of now is for $950 million of gross operating expenses. This brings us to the P&L, $363 million of revenues. We had cost of sales of $48 million. We had personnel expenses of $60 million and we had other operating costs of $28 million, which gave us an EBITDA of $227 million. If you look at the net effect of the release of these accruals and the reclassification of capitalization of cost, the adjusted EBITDA, I don't like using that word, but I'll do it anyway, would have been roughly $5 million higher than the $227 million, right? We deduct amortization, some impairments and depreciation gave us an operating profit of $72 million. Then we had financial income of $2 million, interest cost of $20 million and some exchange rate-related losses gave us a pretax profit of $52 million. So this is the produced account or segment accounts based on percentage of completion. You'll find the IFRS accounts in the appendix or in the quarterly statement. If you look at cash flow, we were -- we're really happy with the cash flow development, both for Q4 and for the year as a whole. We have delivered actually quite well above our own expectation in that area. That, of course, partially has to do with what I talked about earlier related to looking after the cost base and reducing costs quite significantly in the quarter. We have been working on our CapEx plans and we have been reducing CapEx quite significantly compared to the original plan. That is partially obviously based on looking at the needs and being more efficient in that area, but also, of course, stretching the CapEx plan a little bit compared to the original plan. So all in all, after paying total dividend of $122 million for 2025, we ended up with a positive net cash flow of $96 million for the quarter. This, of course, led to a significant drop in our net debt. Of course, initially, when we did the -- concluded the merger with PGS and also the subsequent refinancing, we were obviously planning to and hoping for an even more rapid reduction on net debt. But the market has gone a bit against us compared to those original assumptions. So we're actually quite happy that we are still able to deliver a significant reduction in net debt despite these difficult market conditions and despite paying a dividend, as I said, of $122 million. So net debt is down from $500 million from a year ago to $427 million at the end of 2025. So that's something we are really, really happy about given the circumstances. Our target is for $250 million to $350 million and that remains firm. As I said, we need a bit more time than we originally envisaged, but we are clear that we want to get down to that level. And at that stage, we will look at increasing shareholder distribution either through dividends or buybacks. Balance sheet, not too much to comment on this. Our balance sheet, of course, with limited or fairly low net debt levels remain very strong. You see that our multi-client library is a little bit up over the past 3 months compared to what we had at the end of Q3, but it's actually slightly down compared to what we had a year ago. You should also note that the right-of-use assets are down over the past 3 months from $200 million at the end of Q3 to $184 million at the end of Q4. And this, of course, relates to these IFRS 16 leases that we have. And it also means that the lease cost that you'll see in our cash flow will be lower in 2026 than in 2025. So we -- at this stage, again, it depends a little bit on the activity level. If we see that activity in OBN is picking up, we may enter into some longer-term leases again, but that's not the plan right now. So you should expect, call it, quarterly or the annual run rate of lease expenses to be around $80 million to $90 million in 2026. And then finally to dividend, given the strong balance sheet that we have and the quite good cash flow, we, of course, continue to pay the quarterly dividend of USD 0.155 in this quarter, that corresponded to NOK 1.47 per share. The ex date will be a week from now on Thursday next week, that's the 19th and it will be paid 2 weeks after that on the 5th of March. And by that, I'll leave the word back to you, Kristian.
Kristian Johansen: Thank you, Sven. I'm happy to present the outlook that we see right now. And I think the first slide is quite interesting. This is showing IEA's World Energy Outlook from 2025. And it refers to the energy outlook in '25 versus 1 year earlier, which is '24, of course. And what it shows is that the '25 outlook basically says that oil and demand is not going to peak until sometime after 2050. And if we compare that to statements that were made back in 2021, for example, where the same institute said that we would have peak oil sometime in 2025, so last year and where there was no need for more exploration, then it's remarkable to see what a change these guys have made over the years. And just in a matter of 12 months, they have changed the view where oil and natural gas will be up 25% compared to the previous estimate in 2050. The same situation for coal is that it's going to be up 47% compared to what they said 1 year ago. And what you see is that this is going to be compensated by the fact that renewables is going to show a much lower growth than first anticipated. So these numbers are changing, of course, every year, but it's obviously a quite significant change and it provides a very positive outlook for a company that is heavy on exploration and very focused on exploration. So as a result of this, obviously, our customers, the big energy companies, they're highlighting the exploration challenge. They're highlighting the fact that their reservoir life is getting shorter. We have super majors now who have reservoir lives of 6 to 7 years and they have a reserve replacement ratio of about 20% to 25%. So it means that within 10 or 12 years, they will run out of oil if they're not successful in replacing the reserves. So we've been talking about this for quite a number of years, but the fact now is that we're getting very close to a situation where our customers will have to ramp up their exploration efforts quite significantly compared to what they were discussing about a year or even 2 or 3 years ago. If we go to the next slide, we're concluding that exploration is definitely moving up on the priority list and we see that from earnings calls. We hear that from CEOs when they talk to the investor community, they're sort of preparing the investor community that we need to explore more and we need to invest more in -- or more -- allocate more CapEx to exploration in the future because they obviously see the same graphs as I showed on the previous slide. Just showing a couple of quotes here. One is from Shell who's saying, we're less pleased with the fact that we haven't found the bigger place that allow us to potentially create big new hubs and so that's a space we need to continue to work on to improve. Equinor said quite recently, now is a focus to deliver on that growth, finding more attractive exploration opportunities within those selected areas. And last but not least, from Chevron, who's one of our long-term partners and when we just signed a 3-year contract, we need to ramp up some of the exploration activity beyond just the focus on near infrastructure opportunities. So we'll move to a more balanced approach of mature areas that are well known and also early entry into high-impact frontier areas. So again, we're talking more about exploration, of course, but we're also talking about the need to do exploration in frontier areas. And this is a background or part of a background to our 3-year agreement with Chevron. We together are going to start exploring new areas where oil has not been found before rather than exploring more in areas where there is already oil. So again, all majors are becoming more positive on exploration. This is evidenced by improving interest in frontier areas. And then the big question is, why don't we see a sharper pickup of activity than we've seen so far? And the answer to that is on the right-hand side of the slide. And what you see there is that the orange line pretty much touches the top of the 3 bars for 2024 and 2025. And that means very simplified that oil companies today, they basically spend their entire cash flow on the combination of dividend, share buybacks and CapEx. So one has to give or you need to move the orange line, which means that the oil price has to come out. If you assume that the oil price is going to stay where it is today, then 1 of the 3 needs to be cut. And what I've been through on the previous couple of slides is that, that cannot be exploration, which is part of the CapEx. It will either have to be dividends, which we doubt is going to happen or it may be share buybacks, which we think is going to happen. And we've already seen a couple of companies who've announced lower purchases of shares than they've done in previous years because they need to free up capital to spend on future growth where exploration obviously fits in. So the impact on the seismic market of this challenge that these oil companies have is that you've seen a gradual decline of contract vessel months for the industry. So if you look back on this, that shows 2019 and it goes all the way to our expectations for 2026. What it shows is that in 2023, there was slight growth and some optimism in terms of the vessel market. This is coincidentally when we announced the acquisition of PGS, we saw that things are about to get better. That didn't happen for multiple reasons. So instead, we saw a gradual decline starting in '24, going into '25 and then we expect 2026 to be either flat or slightly up based on our estimates right now. If you look at the OBN market, it's quite a different picture. Actually we saw strong growth from 2020 to 2024. Obviously, some shift from the vessel market to the OBN market. But then we've actually seen now 2025 showing quite negative growth in that market. We expected that when we started 2025. So we have planned for that and back to our margin improvement on the -- in the OBN space is partly driven by the fact that we were ahead of the game in terms of managing our capacity and making sure that we didn't have too many leases related to short-term activity. In 2026, this shows a further decline of the OBN market. We still don't have a great visibility on that. So it could still be flat. And we are obviously pursuing multiple opportunities in terms of proving the estimates wrong and making sure that we can have pretty much the same activity level for '26 as we had in '25 and that's really what we're planning for as we speak today. So again, to summarize, streamer market decline of almost 50% since 2019. On the OBN market, we've seen rapid growth from '20 to '24, but then a rather disappointing picture since then. We think that's going to kind of flatten out going forward and potentially start growing again. So the question is how have we managed that challenging market. And I'm proud to show the cost development. If we start on the left-hand side, you see the gross operating cost, obviously, pro forma numbers for 2024. And what you see here is that we peaked in the overall cost level in Q4 of last year of 2024, so $1.1 billion. And then we gradually decreased or reduced our cost base every single quarter since then and Q4 stood out as being quite extraordinary, which means that the last 12 months from Q4 of 2025, our cost base was reduced to $894 million from a peak of $1.1 billion in Q4 of 2024. So very pleased about this and this is obviously a combination of a synergy realization from the acquisition of PGS, but we way exceeded the synergy expectations that we set because in line with a more challenging market, we had to cut more. And we're constantly working now on making sure that we have the most efficient operations, the most efficient support and staff systems to support this market we're in. If you look at the cash flow, which is a result, obviously, of lower revenues, but significantly lower costs, we've managed to deliver a cash flow today of $206 million and you see how that stacks up with the previous years and it shows that the capital discipline of TGS have been very impressive for 2025 and I can guarantee you that we're going to continue to focus very strongly on this for the future. And that means that TGS is extremely well positioned to benefit from a market recovery with a cost base that is now trimmed for any given market. So if it takes longer, we're still good. We're managing a cash flow or free cash flow of $200 million plus in 2025. If we see improvement in markets, a lot of that is going to go straight to the free cash flow line. The fact is that we are the exclusive supplier to the world's largest buyer of seismic activity. And sometimes we have to remind our people about that. When you look at the big super majors and you look at their seismic budgets, they tend to range from $150 million to slightly above $300 million per year. We're announcing today that we're going to spend between $500 million and $575 million in 2026. So it means that we're by far the largest user and by far the largest buyer of seismic activity. And what you see on the bar chart to the left-hand side here is that historically, we've been able to use far more than the 6 vessels of the 6 available vessels we have now. We've been using far more historically than those 6 vessels. And then 2024 and 2025 stands out in terms of we have not been able to move to the orange line, which is basically the vessel capacity we have. And the difference between there is called nonutilized capacity or white space. In 2026, I feel very confident that we're going to move towards and past the orange line, which means that we're going to optimize the utilization far better than we did in 2024 and 2025. So again, a very good illustration in terms of highlighting the challenge we've had in '24 and '25, also a good illustration in terms of guiding how you're going to see 2026, where our goal is that the dark blue is going to get higher because we're going to invest more in multi-client. The light blue, even if it stays at the low level that we've seen, we should be able to move to the orange line, which means that we should be as close as possible to a fully utilized vessel fleet. We have the luxury of deciding internally whether we're going to pursue opportunities in the contract market or whether we're going to do multi-client. Obviously, these have different characteristics. Multi-client, they tend to have a slightly longer payback, slightly higher risk, but again, a very strong return over time. And I think we've proven that in 2025. We've proven that through some of the slides that we showed you today that our returns in multi-client don't need to be questioned. On the contract work, of course, you have lower returns, but you have quicker payback and obviously lower risk. But being in a position as the largest buyer of seismic activity out there to always evaluate whether we should do a multi-client project or whether we should prioritize a contract opportunity is a great position to be in and it's a position that no other company obviously has. So that takes me to the guidance. So on multi-client investments, we expect to be in the range of $500 million to $575 million for the year. The upper end of that range is where we have actually good visibility today in terms of our backlog and our planned surveys. The lower end of that range would depend on whether we do partnerships on some of this. So it all depends on whether we want to go 100% solo or whether we're going to do 50-50 joint ventures to spread the risk. And that's why there is a relatively large range. And of course, if we're in the lower end of the range, it means that we're going to have higher contract revenues because someone else is going to pay for 50% of our vessel or OBN crew. If we're in the higher end of the range, it's going to be higher multi-client investments, of course, and lower contract revenues. Again, I feel very confident about the backlog as we stand here today. We announced a backlog at the end of 2025 that is pretty much on par with what we had in 2024. But what happened in '24 or into '25 is that we started to consume from that backlog very rapidly. What we've seen this year is that we've actually announced quite a few new programs in January, which means that the backlog continues to increase. I will come back to that. But on the CapEx, it's going to be at approximately the same level as it was in 2025. And again, it came down sharply during the year and I think we're at a point now where we feel quite comfortable going forward. Gross operating costs, similar to the latest estimate that we had or guidance for 2025, so around $950 million and we're constantly working to reduce that number. And then on utilization, we feel confident that we're going to see a significant increase in streamer vessel utilization. This is going to be driven by higher multi-client activity. And then the OBN activity is expected to be pretty much in line with 2025. Just want to reiterate some important points that Sven also touched on, the long-term net debt target range of $250 million to $350 million, which means that we are at $427 million today. As soon as we get to $350 million, we're going to call a meeting with the Board and we're going to say, okay, now we need to decide are we going to increase the dividend or are we going to start buying back shares. If we move on then to the order backlog and inflow, we have touched on this a few times already today. Very impressive order inflow during Q4 and some of that momentum has continued into Q1 of 2026. As a result, you see a backlog above $700 million at the end of the year. You see that it compares quite well to where we were in Q4 of 2024. But what you saw that time is that we started to consume very rapidly from that and we dropped down to $425 million in Q2 of '25. So our goal this time around is obviously we're going to continue to run a quite significant backlog during the course of the year and not see the same type of drop. The right-hand side, you see the expected timing of the Marine Data acquisition backlog and the revenue recognition of that. In terms of our booked position, I'm not going to touch on the details here, but you see Q1 and Q2 being relatively stable and they're both at a high level in terms of booked streamer work. On the OBN work, you see a normalized crew count that is quite -- pretty much around where we were in Q4, both for Q1 and Q2, so quite flat for the year is what we expect. Vessel utilization is expected to be around 85% in Q1. You know you can never get to 100% because there will always be some steaming between different jobs, but 85% is historically a very good number and that's really our goal to manage that very, very carefully in '26 and make sure that, that number is significantly higher than it was back in '25. Normalized OBN crew in Q1 of '26 is expected to be around 1.8. So I'm pleased to present the summary of Q4. So we had strong multi-client performance, evidenced by a sales to investment for the full year of 2.0. We managed to reduce our net debt to $427 million. We had record high order inflow, in fact, the highest order inflow since pre-COVID and that provides good visibility into 2026. The short-term market development is sensitive to oil price. And I think there's been a belief out there that the oil price would have significant downside in the first half of the year. We haven't seen that yet, but we're still planning for a relatively challenging market in the first half. And then hopefully, we'll see a pickup towards the second half of the year. But the long-term market outlook remains very positive. And I think especially the slide I showed you from IEA shows that there's been a complete shift in terms of how we look at the need for oil and gas and how we predict demand for oil and gas, not only for the next 5 or 10 years, but for the next 25 years. We're also maintaining our dividend of $0.155 per share. And again, very pleased about 2025, given the challenging market conditions and the volatile oil price development, partly driven by the Liberation Day in early April. And with that, very pleased to take your questions.
Bard Stenberg: Yes, we can start with the questions from the audience in Oslo. So Kim?
Kim Uggedal: Kim Uggedal, SEB. A few questions. Starting off with multi-client investments. How much of this $500 million, $575 million is external investments? Looking at your charts, you're probably at 4 vessels plus allocated to multi-client this year. Is that...
Kristian Johansen: You mean using external capacity or...
Kim Uggedal: Yes.
Kristian Johansen: It's -- the plan now is to use internal capacity for all of it. That's where we think we're going to be. And if we need to source external capacity, we will do so. But we haven't started any negotiations in that regard.
Sven Larsen: There will, of course, be some dollars not related to acquisition capacity, but on certain contracts that we do JV on, there will be another company doing the imaging, for instance. And then, of course, you have some permitting costs and stuff like that, that's characterized as external cost. So there will be a little bit of external cost, yes.
Kristian Johansen: Yes, there's an OBN survey where we have already entered into a JV where we're going to use a different, that's true. But on the 100% owned TGS projects, we are using our own fleet on that.
Kim Uggedal: Okay. Because last year, I think it was like 30% or so that came from external.
Kristian Johansen: Yes. That's right. That was sort of something that came from before the merger where we already had contracted an external party to do it.
Sven Larsen: In dollar terms, you can assume that, that will be somewhat below 20% this year.
Kristian Johansen: Yes.
Kim Uggedal: And then on the actual numbers, you're increasing 20%, 25% on multi-client investments. How big of a risk are you taking now given you're still not down at the $350 million in net debt? I assume you have pretty good, let's call it, pre-commitments in Brazil and Gulf of Mexico, et cetera. But should we still -- you have a charter showing that sales investment is dropping in '23 when you increase your investments. Right?
Kristian Johansen: Yes.
Kim Uggedal: That's natural, I guess. Should we still aim for 2x sales investment on the elevated investments in '26? Or how do you feel about that?
Kristian Johansen: Yes. We don't think about it on a year-on-year basis. As you saw from the slide, we've been touching down to 1.7. We've been touching up to 2.3 and it obviously because sometimes when you ramp investments up, it may have a year-on-year negative impact. Over time, we target 2. I think that's a question we've been getting since I joined TGS in 2010. How are you able to keep 2x return or 15 years later, we're still doing that. So I'm not questioning whether we should be able to do that, but I'm not going to guide you on calendar years because you're right. I mean, if you ramp them up, it has a tendency to potentially drop, but it hasn't dropped lower than 1.7-ish historically. I think touching on those investments, I would say a significant part is obviously Brazil. In Brazil, we have good funding on the projects. There's obviously one big client who is very keen to join us on these surveys. And then we have a couple of others who are now joining this big company. And we see increased interest overall and I feel very good about the risk profile of those projects. I would say a second significant basin is obviously U.S. Gulf of America, where we see a lot of OBN activity. While there is more streamer in Brazil, there is obviously more OBN in the Gulf of America. That's also relatively highly funded projects, very good historical track records. We feel very good about the risk level on that. And then the third part is where we now are moving further towards frontier and we take slightly more risk than we've done historically because we see that this is picking up. Some of this is in close collaboration with one of our long-term partners who as I showed one of the quotes from the CEO saying that we need to go frontier and we have identified certain areas where we want to be stronger. We're following that company in some of the frontier activity and that may have a slightly negative impact on the prefunding levels, but we're very pleased to do that because we see that this is a company that is probably -- there's going to be quite a few companies following that number one.
Kim Uggedal: And then just more overall picture. You have a comment in the press release saying you don't see any near-term improvements in the market. At the same time, I think I shared your comments on reducing buybacks and super majors, in particular, super majors, grabbing acreage in more frontier areas. Obviously, oil price dictates a little bit of this, but how -- what's the time line you see for oil companies stepping into more frontier areas, West of Africa, South America, et cetera, until you actually start to see seismic demand coming through? Have you entered into certain negotiations already? Or how is this playing out now?
Kristian Johansen: Yes. I mean it's moving in a positive direction. But I think the slide that we showed were basically concludes that oil companies spend their entire cash flow on the 3 buckets today and that's probably not going to change materially over the next months or year. There is a positive trend for sure. Our clients take a more positive view on frontier exploration. They're still not certain where to go and then they have this kind of limiting factor of budgets and where do we take that money from given the current oil price. So I think our kind of cautious statement on particularly the first half of the year is more related to uncertainty around the oil price and the fact that there may be some pressure on these budgets short term. Long term, I mean, I can't see that this is not going to get much better because, I mean, everyone we talk to have similar statements to what Chevron, Equinor and Shell had. So BP is another one, of course, complete U-turn in terms of the strategy. We've already seen the results of that.
Sven Larsen: Let me add that when you look at the overall spending trends of oil companies, that's easier to predict. But when you start to dig into the different spending categories, it becomes more complicated because they can reallocate between them. And we have examples of IOCs that in their 2027 guidance, they say cash flow flat or even a little bit down, but we are going to increase exploration, right? So it's not easy to get it completely right, but -- so that's kind of a cautionary statement we should add to that.
Bard Stenberg: Okay. We have a couple of questions from the people on the webcast. Jorgen Lande in Danske Bank. Good morning. Can you perhaps provide some input to what level of prefunding rate we should expect on the guided investment level for 2026?
Kristian Johansen: Yes. We're not guiding on the prefunding rate, but we've been making comments today about a high prefunding rate. It varies between the different regions, of course. I said Brazil is usually quite good. So is Gulf of America, although we're prepared to take slightly more risk on that because of our historical track record and the new regime, which is obviously very supportive to continued oil and gas activity. The question mark that we have is on the third bucket, which is a lot of West Africa, frontier areas in Asia, et cetera, where we're really going to -- it really depends on how we see the markets develop during the year. But I think overall, I think we feel pretty good at or slightly below the levels that we've seen last year, so...
Bard Stenberg: Very good. We have a couple of questions from Mick Pickup in Barclays. This one is for you, Sven Peter. Gross cost for 2025 ended at $894 million versus your guidance of approximately $950 million. What changed on plans? And would you have cut guidance if you expected the cost to come in below $900 million?
Sven Larsen: Yes, we probably would. I can say that when we released guidance in the $950 million guidance in July and we reiterated that in October, we were looking at cost that was closer to that guided level. But we've constantly been able to overdeliver or underdeliver depending on how you see it. The point is that the cost has been lower than expected constantly through the year. And also, we -- on the contract side, we've seen slightly less activity than we assumed earlier in the year. So it's a little bit related to that as well.
Bard Stenberg: Yes. Very good. Following up on Mick's questions. When you talk about a flat contract market, do you expect your contract months to stay flat? Is it probably more related to vessel allocation for '26?
Kristian Johansen: Yes, do you want to touch on that or...
Sven Larsen: Yes. I mean, overall, the mix between contract and multi-client we'll see. I mean, we certainly expect the total utilization to be higher in 2026, I'm talking now about the 3D vessels than in 2025. And then potentially, that will be more driven by multi-client than contract. So I would say contract is probably not up, maybe a bit down in terms of allocated vessel months.
Kristian Johansen: And again, this points to the fact that we have that optionality that no one else has. We have a record strong backlog. We always have the option whether we're going to do a multi-client project or whether we're going to do a contract. And if the margins are too low on the contract or the payment terms may not be great, then we see a multi-client project that competes and we are very likely to do that. So we cannot give you a precise answer to that. But what I can say is, like Sven said, it's probably going to be above 50, but whether it's going to be 65 or 57, we don't know.
Bard Stenberg: Last one from Mick Pickup in Barclays. Hearing a lot of impact on AI, especially on seismic from your clients. Can you explain the impact of AI to TGS? And is this then analyzing your process data better or rather than less work for you? And does it also mean more or less demand for data for TGS?
Kristian Johansen: Yes, it's a good question. And when we look at AI and our AI strategy, I mean, it basically stands on 2 legs. One is how can we get more efficient in terms of what we already do. And that ranges from staff and support to this all the way to obviously vessel utilization, vessel efficiency, OBN efficiency. I touched on some of the improvements we made on the OBN side as partly driven by AI or data science. On the -- probably what Mick is pointing at is more on the revenue side. Can you create new revenue streams? Can you license a product that you're not able to do today? Can you create or improve the efficiency on interpretation, for example. It's obvious that being the by far largest data company in the world, we're in a really, really good position. I think what we've done so far is that we've created something called seismic foundation models, where we train the model based on obviously huge amounts of data and then you can use that model, number one, to become much more efficient in terms of interpretation of data. And number two, you can increase the predictability and the quality of your estimates. So I think that's probably where the industry is going. Whether that's going to drive more data demand or less, it's a question we've had. We want to be very careful that we don't cannibalize the existing business model. What we've seen so far is that some of the biggest clients of TGS have laid off a massive number of geoscientists. And some of their excuses when they say that they don't buy more data is that we don't have the people to do it. So obviously, having a very strong and efficient foundation model is going to help in that. And hopefully, that means that they're going to buy more data because they're more efficient in the interpretation and the usage of the data.
Bard Stenberg: Next question is actually from a private investor. What's the plan for the Ramform Vanguard in 2026, which is our site characterization vessel?
Kristian Johansen: Yes, that plan is still under development. We're bidding for work and particularly work in the new energy space. And if we get contracts and if we get a good schedule for the summer and fall season, we may take her out of stacking. And if we don't have that, we're going to keep her stacked. We don't see a need to take her out unless we have a really good pipeline of opportunities. So that's what the team is working very hard on doing that right now. So we'll probably have more clarity on that by the end of March I guess.
Bard Stenberg: Very good. Next question is from Lukas Daul in Arctic Securities and that's for you, Sven Peter. Can you give an indication on the projected depreciation and amortization run rate for 2026?
Sven Larsen: Yes. I guess on depreciation, it shouldn't be much different from what we've had. We -- of course, the capitalization of depreciation will vary a little bit, but depending on how much of the vessel capacity we use for multi-client. So there is a clear link there. But on a gross basis, it shouldn't change that much. On the amortization side, I think on straight-line amortization, I would expect it to be more or less flat. And then obviously, the accelerated amortization should increase in line with the more investments and more revenue related to those ongoing investments, right? So there is obviously a clear correlation between multi-client revenues, particularly and multi-client investments and the accelerated amortization.
Bard Stenberg: And we have a follow-up in terms of the capacity allocation. It's actually Erik Fossa in SpareBank 1 Markets and Steffen Evjen in DNB Carnegie Markets, asking about the split between streamer and OBN on your 2025 multi-client investment guidance.
Kristian Johansen: Yes. We don't want to give any further guidance on that other than the overall investment number, which is $500 million to $575 million.
Bard Stenberg: Yes. Another one from Jorgen Lande in Danske Bank. You're currently utilizing 2 OBN crews. Should we expect that to hold for 2026 apart from adding the third crew for parts of '26, so around 2 to 2.5 OBN crews on average for 2026?
Kristian Johansen: It's probably a fair estimate. It's going to vary a bit and especially during the summer months where we have a node on a rope crew and we have the PRM activity in Norway. But overall, I think the estimate for the full year is pretty much decent. Our goal is to keep that number pretty much flat to what we had in 2025. But again, as we showed in Q4, being able to plan for a market with less activity is huge in terms of the margins of that, so.
Bard Stenberg: Last question is from Lukas Daul in Arctic Securities. Your 2026 gross cost guidance is up versus what you delivered in 2025. What's the driver for the year-over-year increase in costs?
Sven Larsen: Yes. It's -- the cost is partially, of course, activity-driven. We were -- as we said, we expect higher vessel utilization in 2026. So it's mostly related to activity.
Kristian Johansen: Mostly related to very conservative CFO and finance department, I guess.
Bard Stenberg: Okay. Very good. Thank you all for coming to...
Kristian Johansen: We have another question.
Unknown Analyst: I'm not sure if you will answer this, but give it a try. On the net debt target, when do you expect to reach the $350 million? And adding to that, you had a ramp-up on receivables in the quarter as normal for Q4. Should we expect cash flow release or capital release into Q4?
Sven Larsen: We -- yes, let me take the first one. Obviously, we won't give a precise, but what I can remind you about is that if we have the same cash flow in '26 as we had in '25, we'll be there towards the end of the year, right? But that's -- we'll see. In terms of the working capital question, yes, you should see some release of that, but also be mindful that we have a bit of investments in Q1. So right now, I would expect -- yes, you shouldn't expect net cash flow to be far from 0 in either direction after paying the dividend, of course. But we'll have to see. These things are -- the short-term cash flow is a bit unpredictable because of working capital movements and certain other things. But that's, call it, as precise as I can be at this stage.
Bard Stenberg: That concludes the Q&A session. So then I'll leave the concluding remarks to you, Kristian.
Kristian Johansen: Well, thank you very much for your attention today and we're happy to see you after we report our Q1 number later this spring. So thank you for your attention, and have a great day. Thank you.