Based on preliminary reporting from operating units, TGS management expects net IFRS revenues* for the second quarter of 2021 to be approximately USD 65 million, compared to USD 66 million in Q2 2020. Net segment revenues* are expected to be approximately USD 54 million, compared to USD 96 million in Q2 2020.
Kristian Johansen, CEO at TGS, commented: “As described in the Q1 2021 report, the market conditions for multi-client seismic data continues to be very challenging, and there are no signs of substantial improvements in the near-term. However, based on dialogue with our largest customers we remain confident that we will ultimately see a recovery of the market. Meanwhile, our asset-light business model, robust balance sheet and strong cash flow enable us to take advantage of strategic opportunities, both in the subsurface data area and in the New Energy Solutions segment.”
TGS will report the Q2 2021 financial results on 22 July 2021.
* Following recent notification from The Financial Supervisory Authority of Norway (Finanstilsynet) TGS will from 2021 increase emphasis on IFRS in its financial reporting to the market. The Company will continue to provide segment information for historic comparison and as alternative performance measures of the business as such measures are commonly used throughout the industry, and TGS' management believes they better reflect the ongoing activity in projects- in-progress. The main difference between IFRS and Segment reporting relates to revenue recognition. Under IFRS revenue recognition generally is deferred until project completion and delivery to the customer when performance obligations are met. Under Segment reporting, net revenue from projects-in-progress is recognized based on Percentage of Completion (POC). Revenue recognition has subsequent effects on the recognition of amortization of the multi-client library. Please see annual report for a complete description of the Company's accounting principles.
Adjustments between preliminary IFRS and Segment revenue numbers for Q2 2021:
Preliminary IFRS reported revenue: USD 65 million
- Revenue recognized from performance obligations met during Q2 for completed projects: USD 36 million
+ Revenue recognized under POC during Q1: USD 25 million
= Preliminary net segment reported revenue: USD 54 million