TGS ASA (TGS) Earnings Call Transcript & Summary

[Audio Gap] TGS Capital Markets Day 2021. My name is Jaclyn Townsend, Director of Corporate Marketing at TGS and your moderator for today's event. This live event is a full presentation covering our Capital Markets Day agenda. A condensed version and an on-demand version [Audio Gap] Before we move on, I would like to draw your attention to review our forward-looking statement and which you can also review on our website. Next slide, please. During today's agenda, we'll begin with an introduction and presentation of our Q4 2020 results and 2021 guidance. Following that, we'll cover the market outlook and strategic priorities. Then we will introduce new energy solutions, followed by an explanation of our sustainability strategy. Finally, we'll summarize today's topics, followed by a live Q&A session. Next slide, please. With us today is Kristian Johansen, who joined TGS in 2010 as the CFO and became COO in early 2015 before being appointed to CEO in March 2016. Also with us is CFO, Fredrik Amundsen, who joined TGS over 18 years ago as a Financial Controller and has since served TGS in a variety of capacities before assuming the role of CFO in 2020. Next is Jan Schoolmeesters, who joined TGS with the acquisition of Spectrum, where he was the COO since 2011 and who now serves as the EVP of operations at TGS. Finally, I'd like to introduce Tanya Herwanger, who joined TGS in 2014 as Corporate Counsel and has since served TGS in a variety of capacities before assuming the role of EVP of Support and Staff in 2019. Next slide, please. During today's event, there is an opportunity to ask questions. You can ask questions at any time during the presentation by clicking the orange button, Ask a Question, in your display, and we will address as many as possible during the Q&A session. Next slide, please. Without further ado, it is my pleasure to introduce TGS' CEO, Kristian Johansen.

Thanks, Jaclyn, and thanks to everyone who's listening in to the Capital Markets Day. After a regular Q4 financial reporting, we'll share an exciting story about how we're leveraging core strengths to help the future of energy. This future of energy will remain centered around oil and gas for the most part. In fact, even 2 decades from now, in 2040, oil and gas will represent almost 50% of the energy mix. Through new exploration in areas of lower carbon emissions as well as big investments in carbon capture and storage, this part of the energy mix will be significantly cleaner than what it is today. A significant growth will take place in renewables, and we've only seen the start of this journey. TGS will capitalize on this growth by pursuing asset-light opportunities within data, very similar to what we've done in the subsurface data business for the last 40 years. A team at TGS has been looking at this opportunity for the past 6 months, and we're pleased to present the plans here today. Over the next months, you will see several announcements of new partnerships, organic growth initiatives and possibly M&A. Last, but not least, we have a separate section today around ESG and how TGS takes responsibility to help our customers, shareholders and communities to shape a sustainable future. Next slide, please. As illustrated by this slide, the 2 years since our last Capital Markets Day have been a volatile ride, both for TGS and for the entire industry. The graph shows how the oil price is about $60 and $70 per barrel for about 12 months in 2019. And during these 12 months, TGS delivered one of the best years in history with revenues of close to $900 million, 19% return on capital and sales to investments well above our target of 2x. Then we were all hit by the worst pandemic in history. Since mid-March 2020, pretty much the entire organization has been working remotely, and we've taken serious actions to reduce the cost base by more than 50%. And that, Fredrik will touch on in his presentation of the Q4 financials. The good news is that in line with positive updates on people getting vaccines and the world slowly getting back to normal, the oil price has started a rally that we haven't seen since 2016. Let's hope this is the beginning of a new normal. Next slide, please. While our strategic plan has communicated at the Capital Markets Day in 2019 has obviously been impacted by the extreme market volatility, most of the priorities communicated back then remain firm. I just going -- want to want to take you through the priorities from 2019 and give you a brief status on where we're at on the different strategic pillars. If we start on the top, new technologies in mature basins. This remains very critical for TGS. And the industry has moved in that direction of a technology race, and we're doing more of the exploration closer to existing infrastructure, which, again, puts more pressure on new and better technologies. As an example, since 2019, February 2019, TGS has acquired 11,000 square kilometers of modern OBN acquired in the Gulf of Mexico and the Norwegian continental shelf. This is far more than any other player had done in terms of multiclient OBN. Number two was to strengthen our position in South Atlantic, and we definitely feel like we've delivered on that strategic priority as well. It started with the acquisition of Spectrum that we closed in August 2019. And since then, we've actually acquired 60,000 square kilometers of new 3D in Latin America. And we're still going on acquiring data both in Argentina and in Brazil. Further growth onshore was the third strategic priority, and this is the one that -- where we probably feel like we had to adjust our plan slightly. So the good thing is that it started out really well. So we had an all-time high onshore late sales in 2019 before the market collapsed. But obviously, given the current situation, especially in U.S. onshore, we're pulling back a little bit, and we're obviously willing to take less risk going forward in that part of the business. It doesn't mean that we're not going to invest in onshore. It just means that we set the bar for prefunding -- or the hurdle for prefunding slightly higher. Then we had 2 technology priorities, and we're doing well in that regard as well. So the first one is to expand the value chain through data and analytics. We have launched several applications where we combine machine learning, artificial intelligence with big amounts of data from our own data library. One of the applications that we have launched is called ARLAS, Analytical Ready LAS, and we have more than 1 million ARLAS that we are actively licensing to the market players as we speak. In addition to that, we've been instrumental in the development of a unique marketplace for seismic [ in 2020 ]. I think you've all seen the press release of the collaboration with TGS, CGG and PGS [indiscernible] on a new marketplace for seismic that was introduced last year and where there will be more news coming out in 2021 as we move further in terms of building that marketplace. And then last, but not least, imaging quality and reputation. So we've done a lot there, too. We have a new management in place for our imaging team. We have been high-grading our technologies for quite some time, just in line with the first bullet there on new technologies in mature basins. All this stuff that we have acquired in OBM, we also need to process. And we made huge improvements in terms of our high grading of technologies, especially in the area of OBN. And then, last but not least, we're also doing much more of our imaging closer to infrastructure, in line with the overall trends that you see in the market of exploration -- or more of exploration taking place closer to existing infrastructure. So with that quick wrap-up from the previous Capital Markets Day, I'm pleased to hand it over to our CFO, Fredrik Amundsen, who will cover our Q4 financials [indiscernible] for the future. Next slide, please.

Yes, I will present the Q4 results and also touch on the 2021 guidance. Next slide, please. As always, we point out that the implementation of IFRS 15 and the changed revenue recognition principles have led TGS to focus on segment reporting in our presentations. Segment reporting forms the basis of the internal report in TGS. And as such, we think it provides the best picture of the performance and value creation of the company. With the increasing reporting requirements under IFRS and the forthcoming implementation of the European single electronic format, we may see a need to shift this forward. We have started a process developing alternative performance measures to accompany the IFRS report to portray our financials as an alternative to full segment reporting. We will revert to this in the future. But for Q4 2020, we continue to report as we have done in the preceding quarters. This meaning, in our earnings release published on the Oslo Stock Exchange this morning, we provide a full set of IFRS figures. We also include a reconciliation to the segment reported figures, which we also have in this presentation in the appendix. But in the presentation itself, we focus on segment reporting. Next slide, please. Today, we announce Q4 revenues of $120.3 million. This is $2.3 million higher than the preannounced numbers from January 11. Our prefunding came in at $13.3 million, with investments of $28.2 million. Our late sale grew 70% sequentially from the third quarter of 2020, and it finished up at $103.2 million. We are pleased to report personnel and other operating costs 58% below Q4 of 2019. This comes as a result of the company's recent cost-cutting and that this takes full effect in the fourth quarter. The free cash flow after investments in multiclient library totaled $28.4 million. And the company's ending cash balance was USD 196 million. Cash flow is further improving as we enter the new year, and the Board has resolved to increase our quarterly dividend to $0.14 per share, up 12% from Q3. Furthermore, the Board has authorized management to initiate a $20 million share buyback program. For financial guidance for the next year, we expect 2021 investment to be between $200 million and $230 million and our industry-leading returns and distribution to shareholders to continue. Before getting into the outlook, I turn your attention to the next slide, and I'll take you through the Q4 results in more detail. This slide shows the customary breakdown of our revenue development quarter-by-quarter. With relatively low investment activity in the fourth quarter, prefunding came in at $13 million versus $26 million in Q4 2019. A delayed start of planned activity in Brazil was -- highly influenced the prefunding in the quarter. The prefunding revenue recognized was largely driving from the Malvinas project in Argentina, which started in November. This will continue throughout Q1. The delayed project in Espirito Santos in Brazil was announced on January 13 and will continue in Q1 as well. We saw sequential growth in late sale of 70% in the fourth quarter, ending at $103 million. The late sales came from a diversified set of clients and regions, where U.S. GOM and Brazil was more dominant than the rest of the world. We were particularly pleased with the performance of the wide azimuth data sets in the Mississippi Canyon. Proprietary revenue grew to $3.8 million and was largely focused on our proprietary processing business. All in all, we reported $120 million. Next slide, please. The top-left graph shows the development of our operating cost. We're pleased to show flexibility and reducing our cost base in line with the market situation, and we report a cost saving of 58% when you compare to Q4 2019. We do expect the cost level to come slightly up as activity is increased when COVID restrictions change. And we do expect the forward run rate to be -- well, prior to potential bonuses to be 40% to 45% below 2019. The significant cost-cutting demonstrates the company's ability to rapidly adapt to market changes. Amortization is coming in at $80 million, about level with the last quarter if you adjust for impairments. As communicated on January 11, the company saw the need to impair certain assets in Q4. The market situation have delayed and changed the expected sales of selected areas. Geopolitical change has further cemented in Mexico. Current spend in Arctic regions is impacted, and the regional exploration focus is changing. With this backdrop, the company made impairments of the multiclient library in the amount of $87.8 million in the fourth quarter. The impairments generally affected the Arctic projects in Europe and onshore, the Mexican project and the regional exploration project in the Gulf of Mexico. Consequently, the earnings before interest -- before tax and interest is coming to a negative $66 million despite the EBITDA of $106 million. Operational investment for the quarter was $28.2 million with prefunding levels in relation to total investment of 47%. As previously mentioned, the second season of Malvinas project in Argentina was the main vessel operation in the quarter. But as always, the company is -- has a portfolio of processing projects as well as adds value to its data library -- well-dated library throughout the quarter. The income statement on the next slide summarizes the presented highlights. Revenues of $120.3 million, EBITDA of $106 million, while impairments of the library provide a result before taxes of negative $67.9 million. The quarterly tax rate is influenced by impairments, certain tax reliefs given in the U.S. and currency fluctuations. The quarterly tax rate is 44%, while the full year tax rate is 30%. The net income is negative $37.9 million, and fully earnings -- fully diluted earnings per share is negative $0.28. Moving to the balance sheet on the next slide. We observe an asset side at -- on the asset side that the multiclient library is coming down by 25% from $831 million to $624 million in Q4 2020. Cash is ending at $195.6 million, returning -- after returning $95 million in dividends and share buybacks throughout the year. Net working capital contributed only to $14 million in the cash flow, decreasing from $215 million to $201 million during the year. We note that invoicing and collection, which played into this, was back-end loaded, and we allowed some customers to push payments into the new year. We currently have increased our cash balance to approximately $250 million through January. The cash flow laid out on the next slide shows cash flow from operations of $58.7 million for the quarter despite the $22 million cash tax payment. The operating cash flow further funded $30.3 million in cash multiclient investment and $2.1 million in investment in tangible assets. It also funded the $14.7 million in dividend payments that we did in November, ending the cash -- the change in cash balance at $15.9 million for the quarter. The company holds no interest-bearing debt as previously, but we have renewed our revolving credit facility for $100 million in order to have a reserve to address the market opportunities. Next slide, please. Before looking forward to 2021 guidance, I point your attention to last year's investment profile, which was highly influenced by the extraordinary backlog that we entered the year with in Q1 2020. During Q1 2020, we invested $153 million, including inorganic investments of $15 million, and recognized $83 million in prefunding. As the pandemic hit our market, we quickly scaled back our activity and reduced our annual investment guidance from $450 million to $325 million and then subsequently, $300 million in Q4. As mentioned, we also launched immediate restructuring plan and reduced operating costs through a series of global initiatives. This provides a flexible model to address the market uncertainties. In this uncertain market, we did continue to complete selected investments with appropriate funding level and ended the annual investments in the multiclient library at $298 million or $319 million, if you include inorganic additions to the library. The total prefunding reported for 2021 was $152 million, funding 51% of the organic investments. In the map, you can see a final distribution of the investments reported. Next slide, please. 2021 market outlook is impacted by further uncertainty. The E&P companies guide a flattish aggregate spending for 2021, but we see a larger distribution of estimates than before among our clients. There is an increased geopolitical risk as seen from Biden's pause of the U.S. lease sales. We see a growing momentum for renewables, but acknowledge that oil and gas is going to remain an important part of the energy mix going forward irrespective of the scenario that you're looking at. The oil price improves, and we see indications of an energy supply shortage in the making. COVID continues to slow down activity and demand near term. But vaccines are showing results, and we acknowledge a recent report from JPMorgan that expects U.S. to see herd immunity by as early as end of June. These are some of the observations that guide us in our near-term plan and investment guidance. Kristian will go into more details on our reflections on the market outlook in the following section. Turning to the next slide. We observed a backlog ending 2020 of USD 89 million, of which the majority relates to recognition of revenue for our 2021 projects. This backlog is significantly below the $181 million backlog of Q4 2019. But we point your attention to the historic fourth quarter backlog and note that the current backlog is 41% and 9% above the Q4 backlog of 2018 and 2017, respectively. Next slide. For 2021 operational guidance, we observe a more even distribution of investment regionally than 2020 ended up with. Our activity in Latin America has already been ongoing, and we complete the announced Malvinas and Espirito Santos 3Ds during Q3 -- Q1. As customary, we will announce further project as we firm up commitments and we approach start-up. The quarterly distribution of the investments are expected to follow a more traditional pattern, with seasonal activity in the Northern Hemisphere influencing Q2 and Q3. After completing our annual budget process, we guide organic multiclient investments between $200 million and $230 million. That compares to $300 million for 2020, where 50% was recognized in the first quarter prior to the COVID impact. As a direct consequence of the impairments recognized in 2020, straight-line quarterly amortization for 2021 is coming down to -- from roughly $60 million per quarter in 2020 to $40 million to $50 million in 2021. This will start off the year in the high end of the range and then gradually go down. In addition to this, we will see amortization of projects based on sales and investments. It's hard to predict the level of these sales amortization, but we anticipate roughly $300 million in amortization for 2021. Our operational cost base in Q4 came down below the guided $25 million per quarter, and this provides flexibility to address the expected increase in activity as travel restrictions lift and new strategic initiatives take form. Next slide, please. Next slide. There. With our lean and adjustable cost base, limited capital commitments and strong balance sheet, we remain flexible in the current uncertain market. This flexibility defines some of our core strengths that will fuel opportunities within new strategic initiatives. As illustrated in the graph, our cash outflow has been reduced to record low levels, and this will provide flexibility and allow for continued and even increased dividend payments. We do not guide on revenue. But if sales stay flat with 2020 as current consensus among analysts dictate, free cash flow would be in the range of $130 million to $150 million, excluding movements in working capital. Our financial guidance for 2021 is multiclient investments of between $200 million and $230 million, continued outperformance on cash flow and return on average capital employed, being industry leader in distribution of capital to our shareholders. This brings me to the next slide. We're pleased to announce that based on the company's strong balance sheet and cash flow generation, the Board has resolved to increase the quarterly dividend to $0.14. The share will trade ex dividend on February 18, and payments will be made on March 4. In addition to this, the Board has authorized a $20 million share buyback program to be initiated. The program will be completed by May '22 subject to the renewal of the authority given by the AGM. Combining the dividend and the share buyback, the yield is approximately 5%. Next slide, please. In summary, Q4 revenues comes in at $120.3 million, with $2.3 million higher than higher late sale than the preliminary earnings update, January 11. Personnel and other operating costs are 58% lower than Q4, demonstrating the company's ability to adapt rapidly. The free cash flow after investments of the -- in the multiclient library totaled $28.4 million, and the company's ending cash balance was $196 million. The 2021 investment guidance is between $200 million and $230 million, and we continue to provide industry-leading distribution to shareholders, as shown with our increased dividend and share buyback. By turning to the next slide, I hand it over to the CEO, Kristian Johansen, to address the market outlook in more detail.

Thank you very much, Fredrik. Please go to the next slide. As I said in my intro, we had a volatile ride, both in terms of oil price, share prices and earnings over the past few years. While it's too early to conclude that the oil price will continue up as it did in the last downturn, I would like to remind you how quickly things can turn. Q1 2016 was one of the worst quarters in history for TGS. We had $64 million of revenues and only $38 million in late sales. There were hardly any positive indications from clients. And we saw early signs of a positive momentum in the oil price, as you see from the graph here. 2.5 years later, in 2019, TGS delivered probably the best financial result in the history of the company, almost $900 million of revenues, close to 20% return on capital, strong cash flow and a sales to investment well below 2x. As COVID vaccines are being rolled out across the world, people are eventually getting back to normal, and that will have a huge impact on demand for energy and spending in general. According to New York Times, we've already reached an average of 1.5 million shots per day here in the U.S. As Fredrik said, JPMorgan actually expect us to reach herd immunity by the end of June. If you go to the next slide, please. So let's talk about supply. This slide is based on TGS' own well performance data combined with Baker Hughes' use official rig count data. It shows that U.S. oil production reached an all-time high of 12.8 million barrels per day at the peak in January 2020. You see that on the bar to the left. At the time, we had 790 rigs operating U.S. onshore, which is an all-time high. 12 months later, we're down to 380 rigs, up from 250 this summer. And the total production is 11.1 million barrels per day. If no new rigs are added to the market, total production by the end of the year, based on TGS' own production data, will drop to 10 million barrels per day. This shows how significant the decline rate is on the unconventional rate -- wells in the U.S. Another way to look at the analysis is to say that even if you go back to 790 rigs, which means that you will have to add 42 rigs per month, by the way, you will only produce 11.5 million barrels per day versus 12.8 million pre-COVID. And it's, of course, highly unrealistic that the market will go back to that level given the increased focus on returns among the U.S. onshore players today and, obviously, the CapEx guidance that we already know. So the conclusion is that a supply shortage is in the making, which again could drive up oil price and E&P CapEx further. Next slide, please. All right. The U.S. and the country's important role in the global supply of energy, I wanted to make a few comments related to the new administration's executive order to pause new oil and gas leases on public lands or in offshore waters. It is expected that the administration will provide more information about the duration of the pause and to what extent it will impact future leases and permits. This slide is therefore just a reminder how important oil and gas is for U.S. and some of the consequences of a permanent action. According to the U.S. Department of Energy, and you can see that on the right-hand side of the slide, oil, gas and coal provide 80% of American energy today. The oil and gas industry is responsible for more than 12 million jobs. And last, but not least, between 2012 and 2025, the oil and gas industry is projected to provide $1.6 trillion in federal and state tax revenue to a country that is heavily leveraged. It's an understatement to say that oil and gas have high importance for the U.S. economy and labor market. As you see on the bar chart at the lower left from Wood Mackenzie, U.S. offshore basins also compare very favorably versus all the global offshore basins in terms of emission intensity. In fact, the GOM deepwater, which is the second bar to the right, ranked as the second cleanest offshore basin in the world, only beaten by Norway. Next slide, please. So a few comments to the impact this pause that I mentioned may have on TGS. Our exposure to U.S. federal lands, both onshore and offshore, is approximately 17% of the multiclient library and 19% of the 2020 net revenues. Over the past 2 to 3 years, there's been a gradual shift from frontier to infrastructure-led exploration in the Gulf of Mexico and actually elsewhere, and our recent OBN projects in the U.S. GOM have been primarily targeted at health acreage rather than future licensing rounds. In a scenario where permitting and leasing practices are permanently suspended, our exposure is therefore far less than what these percentages would imply as there would still be licensing of data. Also keep in mind -- and I think a lot of people have forgotten this or tend to not focus on this. But a permanent suspension would have other consequences, consequences such as a more active asset transfer market. If you don't have any new leases or no new permits, then you would have an extremely active asset market. You will have a reallocation of funds from U.S. to other basins. You see that quote from Chevron in their earnings conference call in Q4 of 2020, where they say, "If conditions in the U.S. becomes so onerous that it really disincentivize investments, we've got other places where we can take those dollars." And last, but not least, it will obviously have positive oil price implications if the U.S. should put further restrictions on production of oil and gas and the award of new leases and permits. Next slide, please. Longer term, we're convinced that oil and gas will remain an important part of the energy mix. According to the International Energy Agency, IEA, and their long-term outlook, oil and gas will represent 46% of the energy mix in 2040, if you assume that we will reach a goal of the Paris agreement. In the stated policy scenario, which suggests that the energy transition will take longer than Paris, Oil and gas will represent 54% 2 decades from now. Assuming a continued growth in the demand for energy, you can therefore assume that we will need a supply similar to or higher than what we are supplying today. However, both scenarios require strong growth in renewables. No question about that. Technological breakthroughs and a substantial market share growth of renewables from 14% today to somewhere between 22% and 36% in 20 years for renewables. So the conclusion of this slide is that oil and gas will remain critical, but the renewables will see the highest growth rates, and TGS has a plan to take part of that. Next slide, please. So where will this oil and gas be sourced? And how do we cover the gap between supply from onstream fields and future demand? So according to Wood Mackenzie, and you can see it from this chart, less than 20% of the supply needed in 20 years is already found and put in production. In the more aggressive 2-degree scenario, that number corresponds to about 30%. So 30% has been found and put in production. That still means that somewhere between 70% and 80% of the oil needed in 20 years will have to come from either fields currently under development, discoveries in the pre-FID stage or exploration. On the next slide, you will see that exploration is actually very competitive to the alternatives as well. The bar chart shows an example for oil and gas, or actually from gas in this particular example, and how competitive new exploration of gas is compared to undeveloped resources that have already been found. It actually ranks as the second cheapest. So there is a reason why some of these existing discoveries have never been put in production and never will. So again, I'll just read the statement from Wood Mac saying, "Exploration's costs are competitive because alternatives have higher development costs. Explorers, on average, tend to find better resources through exploration than the legacy assets that still await development." And there is obviously a very important ESG story as part of this as well. A lot of the oil that has already been found will never go into production because it simply doesn't cope with the requirements of ESG regulations. So while we remain optimistic about our core business and, in fact, see positive momentum in the oil price -- and again, that has always, with no exception, been a strong driver for increased exploration spending over time. But we also see great opportunities to capitalize on our data, competence and resources in the rapidly growing market for renewables and CCS, and that's really what we're here to talk about for the next few minutes. Next slide, please. As mentioned previously, strong growth in renewable energy is needed to replace energy sources with higher emissions, such as oil and gas, but primarily coal. And if you look at the average annual investments in renewables, it must actually be 20x higher in the coming 20-year period compared to the past 5-year period to meet the 2-degree scenario. So no matter what scenario you look at, you have the SDS and you have the STEPS from IEA on the graph here. No matter how you look at this graph, it's extremely positive in terms of the growth that is expected within renewables. This will clearly be an attractive business to be part of and a great opportunity for a data company such as TGS. And that's why we kicked off this project 6 months ago and are pleased to present some of our ideas, plans and strategies here today. If we go to the next slide. Renewables won't be enough. We will also see strong growth in carbon capture and storage, CCS, which is a prerequisite for meeting the goals of the Paris agreement. The bar chart shows several projects in advanced planning stage and a long pipeline of potential additional projects around the world. This is an area where we have already seen clients requesting subsurface data. And we, particularly in Norway and U.K., represent attractive opportunities for the future. And so do our clients. And as I said, we've seen the increase in activity in terms of clients contacting TGS and the other way around, where they are actually looking at seismic data, well log data and other types of data from our data library for other purposes than exploring oil and gas. Next slide, please. So to summarize the key trends we're seeing. International oil companies are concentrating their exploration efforts on fewer basins. This has been going on for at least since the last down cycle in 2016. At the same time, we've seen NOCs becoming more important in international exploration. And I think for the first time, in Q4 of 2020, we saw activity from NOCs probably being even higher than the activity we were seeing from IOCs. And this is a trend that will continue into 2021 and further on. We're seeing continued focus on infrastructure-led exploration. We're seeing digitization driving efficiency improvements in exploration and production. And last, but not least, we see a strong growth in energy transition enablers, and that growth we want to take part of. Next slide, please. Next section talks about our strategic priorities and what you can expect from TGS in terms of our core business within subsurface data and the new initiatives announced this morning. And after that, I will hand it over to Jan Schoolmeesters, who's going to talk more about the specific initiatives within NES. Next slide, please. So let's have a look at the strategic priorities for the next 2-year period and how they have changed since 2019. You will recognize the first 5 pillars on this strategic priority agenda. And I have already gone through that today so I'm just going to repeat that very quickly. With the exception of pursuing onshore growth, we will roll over the other 4 and remain focused on new technologies in mature basins. Strengthening our position in the South Atlantic, in particular, Latin America. We have a very strong team in place as well and database. Expand the value chain in data analytics remain a key priority as well. And then last, but not least, we continue to pursue ways to improve imaging quality and reputation. And we're launching 2 new strategic priorities under the slogan, leveraging core strengths to help the future of energy. And again, the key word here is leveraging. It's really leveraging what we already have built for 40 years rather than moving into something completely new that we don't know anything about. We're leveraging our core strengths. And whatever we're going to do in renewables or CCS is going to fit very well with the core competencies of TGS, the successful business we've been building up over 40 years. That will be the foundation for building a new business within renewables. If you look at the last 2 boxes or the new initiatives, I'm just going to go through that very quickly. But we are -- as number one, we're going to capitalize on our data library to create exploration upside. None of you are probably aware that TGS has ownership in about 80 exploration and production blocks in the U.S. Gulf of Mexico. These are blocks providing steady income today and possible upside in terms of exploration success in the future. First and foremost, it represents a recurring revenue that we're seeking to grow in the future. For the future, we're actively seeking more exposure like this either in terms of ores in the U.S. GOM, minor equity stakes in E&P companies in trade for data or even developing our own exploration prospects in areas where we have extensive data coverage but limited client interest right now given the circumstances. We will, of course, seek to farm out prior to any drilling phase. That's not going to be a -- you won't see any change to our asset-light business model and the way we're handling risk. But I think this is a rather exciting business proposal that we are building gradually. And again, we've been doing the ores in the U.S. Gulf of Mexico for many years now. We've built up this 80 exploration and production blocks over more than a decade, but it's been a good business for us in the past, and it will be in the future. And you can only speculate what the value of existing leases are going to be, an existing exploration of production blocks if, for some reason, the U.S. administration should shut down or permanently suspend any future leasing or permitting activity. The second box here is related to the tremendous growth opportunities we see in renewables and CCS. We're establishing a new business unit that will develop and commercialize these opportunities. The business unit will be headed by Jan Schoolmeesters, who will talk more about our plans in a few minutes. Next slide, please. So the next 2 slides, I will go through quickly since we're repeating my message from the strategy overview. But this slide is showing leveraging library to create exploration upside. It shows the ownership in the U.S. Gulf of Mexico. And I just want to highlight once again that any efforts within this exploration initiative will be based on leveraging our existing data library rather than spending cash. It will, therefore, be limited use of cash and only in combination with larger amounts of data and/or services such that we sell that as a package. Next slide, please. Jan is going to talk more about our renewables initiative, where we've already generated revenues and where a lot of products and partnerships are ready to be launched. We're establishing a separate business unit, as I said, New Energy Solutions. And the purpose of this is to capitalize on the energy transition trends through data and insights. It doesn't mean that we're not going to do what we're doing today. Our core business of subsurface data is going to remain the same. And as I've shown you now in the outlook section, we're still very optimistic about the future of oil and gas because it is, whether you like it or not, going to represent about 50% of the energy mix even in 2 decades from now. But in addition to that, we see great opportunities to be part of the energy transition, where there is higher growth, of course, and where we actually see a great fit with the products that we already have and the data that we already have and the business model that we have developed over 40 years. So that can be applied to a rapidly growing renewables industry, and that we want to be part of. So the strategy is, once again, to leverage existing data and core competencies to build a broad offering to support decision-making processes of our clients. That may be in carbon capture and storage; that may be deep sea mineral exploration; and it may be renewable energy sources, such as geothermal, wind and solar. And Jan will show you a few examples of what we've already done in this area. And over the next few months, you will see several new announcements of partnerships, organic growth initiatives and M&A. Next slide, please. So this slide is showing how we are organizing TGS to deliver on this strategy, and I'll start on the top. So the only change you're going to see to the parent company is that we're changing our name, but we are changing our name to allow for more flexibility in our business model. Today, we're called TGS-NOPEC Geophysical Company. Obviously, Geophysical Company won't survive the change in strategy that we're announcing today. The NOPEC part will also be history from now. And our company is going to be called TGS ASA. TGS is what we've called ourselves over the past 10 years, at least, and now we want the outside world and external parties to also call us TGS. On the left-hand side, you have our traditional business within seismic. Other data types such as well logs, production data, multi-beam and you name it because TGS is far more than seismic. We call it Oil and Gas Insights. And you've seen from one of my slides that I presented today that we're actually starting to provide insight based on the largest database in the world. There's a lot of other companies who do extremely well by providing insight only, but they don't have data. We have data, and we're also going to build more insight. And you will see more and more insight coming out of the analysts from TGS in the future. So follow us on LinkedIn, and you will see a lot of postings on -- based on our proprietary data. Some of the strategic priorities within Oil and Gas Insight is new technologies in mature basins. We'll continue to pursue that. Strengthening our position in South Atlantic, that will continue. And then last, but not least, as I talked about today, we want to capitalize on our data library to create exploration upside. In areas where the clients are not particularly keen to explore and we have the data, and our people believe in the data, we may actually take positions and build up that data and take that value proposition one step further and then farm out before we get to any drilling decision. On the right-hand side, you have the New Energy Solutions that Jan Schoolmeesters is going to talk more about today. So this is a data offering that we have towards other energy-related industries, and Jan will obviously cover that in more detail. What is important is that we already have the foundation and the support systems to support these new initiatives. We had a data imaging side, which is obviously going to spend most of the time and efforts on the Oil and Gas Insight business, but some of that will also be related to New Energy Solutions. A lot of what we have developed in terms of technology there can be applied for New Energy Solutions, in particular, in the area of carbon capture and storage, of course. Then we have data and analytics, and data analytics can actually be used across the value chain. So as an example, we're using a lot of data analytics now in terms of looking at opportunities within wind. We're looking at opportunities to build big data lakes for renewable data. And everything here is very much related to how fast and how fast we can advance in terms of data analytics. We're working with well-known partners in this regard as well, and there will probably be some new announcements of partnership going forward as well. And then we have the staff and support. And not only is it staff and support in terms of HR and finance and IT and you name it. But these people and these offices have been international for 40 years. We've been working all over the world for 40 years. If you're a small Norwegian start-up and you want to establish yourself in Houston, we've already done it. We've done it for 40 years. If you're looking at wind opportunities in Africa, we're talking to the same people because, guess what, a lot of the energy people in Africa are the same, whether you're talking about oil and gas or you're talking about wind or solar. So we have this experience. We have this knowledge. And obviously, we have the relationships that can help smaller start-ups to succeed as well. So we have the right setup. And what we're announcing today is obviously a new strategy and how we're going to take that going forward. Next slide, please. And we're doing that under the slogan or tagline, leveraging core strengths to help shape the future of energy. And again, I just want to emphasize once again, we're leveraging what we already have rather than getting into something that we don't know anything about. We're leveraging our core strengths that we have been building up over 40 years in the seismic and subsurface data business. Now we're applying those core strengths outside our business as well, which we think we can do very successfully. Next slide, please. With that, I want to hand it over to Jan Schoolmeesters, our EVP of Operations and NES, and he's pointed out. So he head up this business unit, has already started with that, been in that position for a few months already and obviously, will spend more and more of his time to build new businesses outside oil and gas. So thank you very much. And Jan, you're next up.

Thank you, Kristian. It's really exciting to be able to announce the business unit and give you some more of the rationale and the background of why we do this, how we came to the conclusion that we need to stand up this new business unit, the kind of products and services that we have in mind as well as some examples of how we go from data to insights, how we create relative insights for wind developers and others. How we interact with our clients is going to be key. It's going to be part of the digital transformation. So we see the cloud as our main tool to work on and to deliver data on. And we are going to talk a bit about the growth strategy of this group. So on the next slide, we mentioned a couple of times about the growth that is expected in renewables, and that takes massive types of investments. And these investments are going to be quite severe. And we see that, for instance, in the U.K. fourth round, that wind licensing round where awards have been given for $1.2 billion per year payment before FID. So it's massive capital going in. And then on top of that, you have long payback periods. It's 60 years for the lease term. So you really need to make sure you make the right decisions. For that, you need data. For that, you need as much insight as you can get. And that's why we believe that we are perfectly positioned to help out and make sure that the right investment decisions are being made because that's what we're doing in the oil and gas industry for 40 years now. So we've mentioned a couple of times that we're going to lever our core skill sets to help shape the future of energy. And let me take you to the next slide and go a little bit more into detail. So fundamental to this is 2 aspects. It's data and it's people. So we have the world's largest data library. As Kristian already mentioned, it's not only seismic. It's a lot more than that. But it's very much subsurface-oriented for now, and that's going to be expanded. Geoscience skills are there. And if you combine the 2, there isn't many problems in the subsurface that we don't understand or that we cannot resolve. We do a lot of data capturing. And starting already 40 years ago, we started doing the seismic type of data acquisitions, and that has grown and grown over time. So if you now look at the volumes of data that we're capturing either by acquiring or by processing, it's clear that we are on the forefront of the digital transformation and have been working with big data for many decades. So we have now a lot of the data processing that was already mentioned. We have high-graded this. We have a lot of expertise in the group, but we also have expanded into high performance compute. We have already had that on the premises for quite some time, but now we also made a deal with Google, and we use their Google Cloud Platform to do processing in the cloud. And having that access means that you can scale up as you need it and you have a lot better control over your time lines. In addition, the data analytics group has been very active in creating AI-type solutions and also making sure that all the data that we get in is standardized, is contextualized and is AI-ready. Those are fundamental aspects that we see are necessary to make sure that the cost and the efficiencies in the renewable space is also being addressed. Lastly, we have a global presence. So we are in many different countries in the world, and those connections are very important in terms of project development, and I'll come back further to that. So with these core strengths, we stood up a team of -- a multidisciplinary team to really start diving into what does it mean in the new energy space, what is needed in terms of solutions, what kind of synergies do we see with the products we already have. And we already had a good idea on CCS and some other aspects where subsurface data is essential. But then on the next slide, after talking to over 50 clients and stakeholders in the industry of New Energy Solutions, we kind of summarize it on this slide. And this slide doesn't do justice to all the conclusions that we've drawn and the opportunities that we've seen, but it's a start. Starting on the top, you see the product and service development, and it's a shaded bar. So meaning on the left-hand side, we already have a lot of products, and there's not that much development needed to be already very useful for the industry. Going further to the right, you see it lighten up. And that means that for wind and solar, particularly, we still have a bit of a way to go, and we see lots of opportunities to develop more products there. So starting with carbon storage. The imaging technology is, of course, key. You're trying to understand the subsurface. You're trying to find the best place for a carbon storage reservoir. But there's also infrastructure to take into account. So that's part of the site screening. Being able to understand the overburden is important. Being able to understand the integrity of the reservoir is important. And being able to monitor the reservoir is important. You need to make sure that the CO2 that you inject is going to stay there, or if it has some migration, you need to know it. So typically, that has been for the seismic solutions that are being used in a more conventional way. We see that fiber optic is going to make its entrance there more and more. And we believe that there can be a step change in the cost levels of monitoring going forward. On geothermal, we lean heavily on our digital online well library. We have done a lot of work to make sure that it's all conditioned, that all the missing curves have been predicted with the help of AI. We've scanned all the well documents. So we have a wealth of information around our wells. And that gives us a good opportunity for geothermal to understand the heat assessment in a basin, to understand how it is projected away from the well, and we can come to geothermal heat capacity calculations. Deep sea minerals, the next one, maybe the odd one out in this context, but it's essential with the continued electrification of society that you have more grid lines, you have more batteries, the turbines need metals. So that cannot be only be supplied with the quantities that are being mined at the moment. In addition to that, you also have a strategic element that, for instance, cobalt is coming from one country only, and it's good to diversify the supply. The Norwegian government is very active in exploring the possibilities of deep sea minerals. And we are in continuous dialogue, and we're helping understand -- help make them understand the possibilities of the mineral buildups, how to see them with our imaging technologies. And we can do more also in terms of integrated seabed solutions since we have a lot of experience with multi-beam. We have a lot of experience with coring. We have done SeaSeep studies. So we feel in a good position to help more with data to come to better insights on deep sea minerals. Then going to the wind and solar. There, we see it slightly different. Still, the subsurface data is important. You need to make sure that you have a good geotechnical survey, that you understand the geo-hazards, that you make sure that any turbines you put on the ground have a solid foundation on offshore as well. So what we see there in wind and solar, though, is that there's a lot of unstructured data, a lot of different data sources. And we feel that what we have done in the oil and gas space with seismic data and other types of data, we can do also for the wind and the solar. That means that you start structuring the data, organizing it, creating standards so that this data can more easily be interrogated. And that will help with the site assessments, and we can even enrich the data further with remote sensing technologies, like for instance, LiDAR measurements and multi-beam type measurements. So we want to become in a position where we can help with the energy output forecasting, and that's really what our focus will be on. On solar, project development is listed. That's also relevant for wind and the other areas. But what we see there is that in continents like Africa, Latin America and Asia Pacific, the relations with the government is really important to have a full understanding of their requirements, of their legislation, of the permitting, of working with the local stakeholders. And those are all elements that are crucial to make sure that you can start building solar parks and wind parks that are sustainable. So we feel that, that is one of the elements where we can assist our clients in the project development. Further, the remote sensing is an important one, too, for the operation of the plant and also for the preparation for the investment decision, making sure you have a full knowledge of the cloud cover that can be expected and also to make sure that the plant is operated in the best efficient manner. So then all this is underpinned by what we call the New Energy Solutions ecosystem, and that is really our delivery platform. So that's where we have the data coming in, where we have the condition data, where we have applications and where we interact with our customers in a cloud format and make sure that they can get their news, their insights and their analysis delivered. So I'll show you some examples now of some of the applications that we've already developed, and I'll start with the geothermal application on the next slide, please. So what we've used here is our analytics ready well data. It's a vast amount of data that we have. And with modeling techniques and the forecasting of the production, we've been able to get to a full picture of certain basins, how the temperature is behaving. And you can see that in the map where you see shades of red, and that shows how for one constant depth, 2,000 meters in this case, how there's variations in temperature. You can see a red hotspot on the left-hand side, and that would be worthwhile exploring further to see if that's a geothermal opportunity there. But more importantly, what we've really focused on is to work with those wells and the intelligence that we have, understanding the infrastructure from the public data and to work up an area and see, okay, we have the Permian, we have a lot of production going on, but these wells are coming to the end of their life. Would it make sense to convert some of these wells into geothermal producers rather than abandon them altogether? So that's a study that we've done, and we've come to good results, and this app helps identify these opportunities. It shows what wells, what lifetime they have left. And you can see on that inlet that there's a bright red spot there or a trend, which shows hot areas in producing wells. So clearly, we have some targets there. And with the information that we have from the wells, we can then also do the calculations of the geothermal capacity and how much can be turned into electricity. Add to that, that we know where the grid lines are and the intake points, and then you really have a full picture for site screening and investment decision support. So we have, for this, also worked closely with experts in the field, both from academia, like from SMU in Dallas as well as for companies like Eavor. And Eavor is -- they have technology that is helping to apply geothermal energy to make sure that it becomes a fundamental part of our energy mix going forward. So on the next slide, I'll focus on the carbon capture and storage. And of course, for us, storage is the main element. But it's also important to know where the emitters are and what the infrastructure looks like to transport CO2 to the necessary CCS apps. So we start with the global map, where we show our wells, which are the blue dots. In yellow, you see the emitters. And you can zoom in on those, and you can see details of what these are. Focusing on the North Sea on the next level, then you can see the planned CCS hubs. And here, we have portrayed that together with multi-beam data to understand the water depth and the infrastructure to get there. Zooming in further, using our 3D data, you can then understand the overburden better. You get a more regional picture. You start zooming in at the reservoir level. We have the interpreted products. We have the Facies Map Browser. So we have a lot of these tools that are easily available to get an understanding what would be good CCS hubs and what type of capacities are we looking at. And then ultimately, you can do a full de-risking of such a reservoir by analyzing the seal, the consistency, the faults, the pressure systems to make sure that you understand the CO2 that we inject there is not going to migrate out of it. It's not going to escape. So this app shows -- gives an understanding of the storage opportunities and the economics that surround it. The last example is on the next slide, and that's about the wind pathfinder. So what we have done there, again, we start with a global map. And you can see the blue dots. Those are wind parks. There's a lot around the world. And the color variations indicate the strength of the wind and therefore the energy that is produced from it. On the next level in, you can see that that's the U.K., where we have offshore licenses, onshore wind farms. And the color variation indicate the mean power density at 100-meter above ground. Zooming in one level further, we zoom in on the area of the U.K. fourth licensing award. In purple, those are the areas that have been awarded now. And around it, you can already see that there were wind farms active. And you can zoom into individual wind turbines, both offshore and onshore. So the last picture is from an onshore status in the U.S., where we can also then superimpose the grid lines. So you can see what we're doing with these applications. We're trying to geospatially represent a lot of information. We already have quite a few key attributes in this database, and we keep growing it over time and make sure that all the relevant information is there to understand the energy output potential of different areas and different forms. We will also connect this to our news service. So we're starting a news service whereby people can subscribe. We have crawlers already active that look at all the public news that is out there, select what is relevant for the New Energy Solutions, and then that is then distributed to clients. There will be links in those news elements that can be clicked so that you land in the right geospatial representation of the news, so the right type of areas. So we have a lot of information. How are we going to present that to our clients? For that, we're going to talk about on the next slide on the NES ecosystem, which is essentially our delivery platform. It is a platform that's centered around the data lake, and that data lake is consisting of lots of data, both from TGS, its public data. It can be from our partners, from customers. It's already quite sizable because all the subsurface data is already in there. So that's been fully contextualized and structured, standardized. And it's ready for data analytics, so for AI-type applications. And we believe that is the way to go going forward. There's easy access for our clients to interrogate data, to have apps that they can use. Or they can bring their own apps or they can work with partner apps in order to come to useful insights from that data. So we really want to make sure that this has a relatively low hurdle. We strive that this becomes the industry portal of choice for a comprehensive new energy data with the strong data lake that we already have there and with the added data that we started to populate the data lake with. We feel we are well on our way. And this will be a way of working with our clients or helping them with their digital transformation at the same time because everything is done in the cloud. And then lastly, due to a low hurdle, quite a bit of the data will be public data. That will be for free. But then any value-add actions, applications or data for which we have to do a lot of investment will be behind the payment wall. So then let me tell you on the next slide a bit about the plan to grow. So organic growth is obvious. We have a solid base. We have a lot of data. We have the people to expand in many of the New Energy Solutions spaces, but we also need to do some targeted recruitment to make sure that we also -- for the newer components like wind and solar, that we have the right subject matter experts in place. So that's happening. But then on top of that, we value the partnerships. We value the input from our clients, working with our clients to understand the problems they're trying to solve, optimizing the offering and making sure that we get the best out of our data. So that is another aspect where we have a lot of discussions ongoing. We have a couple of partnerships already that have started, and there will be some announcement in the weeks to come on that. These partnerships include the development and maintenance of that platform. That's essential for us as a tool to work with our clients. So there will also be some announcements coming. Then in terms of growing rapidly and make sure that we reach critical mass quickly, it makes sense to look at the inorganic growth as well like targeted acquisitions. So we are identifying value-add companies that have a certain technology or skill sets or solutions that really complement what we're trying to do. Certainly, again, for wind and solar, that can be very nice vehicles for growth. But we're also looking into the other segments. Now I realize that probably one of the key questions around this presentation and this unit is, what is it going to mean for TGS? What is it going to mean for the revenues for how we can make this grow in a similar fashion as the renewables industries are growing? So it's very early days to be very firm about it. But what our ambition is and what we believe is very well possible is to deliver similarly as to well data products. So the well data products have delivered around 5% to 10% of the overall revenues, and we believe we can do the same with this new energy solutions business unit within the first 2 to 3 years. Of course, if we do any material acquisition, then that will be significantly different. Looking at investments. Our target is to be investing in the order of 5 million to 15 million in the first years. This is really to do with the fact that it's not as capital-intensive as complete seismic surveys, for instance, those type of products. So it is a little bit lighter on the investments, but we do feel that we can do a lot with those type of -- those level of investments. So that's a realistic portrait. Again, any material acquisitions would be excluded from that type of investment profile for the 5 million to 15 million. And then on the operating margins, what we see typically for this type of business would be in the order of 20% to 30% is our expectations. Now a lot of the revenues will be generated from our subsurface library. We have already made sales in the past as well for CCS purposes for wind, et cetera. So therefore, I'm fairly confident that certainly, the 5% to 10% is within reach in the first 2 to 3 years. On the next slide, I'll summarize quickly. It really is centered around a very strong library that we have now formed this group together with the skill sets. We are focused a lot on digitalization. We have a strong data and analytics team, and they've developed really good apps already. And we feel that we're right on track to make sure that we grow quickly, initially with organic growth and partnerships but likely to be complemented with acquisitions. On the next slide. We have Tanya Herwanger, and she will talk to us about the sustainable strategy in TGS. Thank you.

Thank you, Jan. Next slide, please. Next slide, please. One slide forward. So whether you think about our core subsurface business with its multi-client model that promotes a sharing economy for data or our New Energy Solutions business launched today, which will be delivering data and intelligence for carbon storage and for renewable energy, sustainability is an integral part of how TGS operates. We believe it is our responsibility to help our customers, shareholders and communities in which we live and work to shape a sustainable energy future. And this belief is rooted in our core values. We have a strong track record of incorporating sustainable practices into our business through our focus on health and safety and through our dedication of conducting our business in a transparent manner. Next slide, please. In 2019, we built on the strong foundation, and we adopted a set of Board approved sustainability goals. These goals target measuring, reporting and reducing carbon emissions, improving gender diversity, maintaining employee engagement, incorporating human rights considerations into our business practices, strengthening our supplier management and integrating ESG into our investment decisions. Despite the challenges from COVID-19, in 2020, we established an ESG department reporting into the executive team with dedicated resources and defined responsibility for implementing our strategy. In 2021, we will be growing that team. In addition to these steps, we took concrete actions. We have consistently improved reporting and transparency. Although CSR reporting has been part of the TGS annual report since 2012, in 2019, we began reporting in accordance with internationally recognized standards such as the Task Force on Climate-related Financial Disclosures, CDP and the UN Sustainable Development Goals. We're now working on obtaining external third-party assurances of our sustainability report. In 2019, we also expanded our emissions reporting to include reporting emissions from field operations. As you know, emissions from field operations represent the bulk of our Scope 3 emissions. And in order for us to target reductions, we must work with our contractors to understand fully the carbon impact of each project and then to identify and target areas for improvement. In 2020, we began to contractually require our vessel providers to report their emissions to us. We will expand this reporting requirement to all of our geophysical contractors in 2021. We also took action with respect to emissions from our data centers. Emissions from our data centers represent the bulk of our Scope 2 emissions. In 2020, we took steps to reduce emissions from our data centers by consolidating centers, retiring less efficient equipment and partnering with Google Cloud. Through our partnership with Google, we have been able to move a portion of our workload to Google's carbon-neutral data centers. For example, in 2020, TGS performed approximately 25% of our compute workload on Google's carbon-neutral data center. We also strengthened our supplier management practices and published their commitment to human rights. In 2020, we published a supplier code of conduct and a human rights policy to sit alongside our existing health and safety, environmental and anticorruption policies, all of which apply to our supply chain. We then contractually required our suppliers and vendors to comply with and adopt practices in line with TGS policies throughout their own supply chains. Our contracts include provisions that provide us the right to audit a supplier's practice and to terminate for noncompliance. Finally, we ramped up collaboration and advocacy. Because if we are truly going to make a difference to the amount of carbon per unit of seismic data acquired, then the geophysical industry must work together to define and agree standards for measuring and reporting emissions to set targets for reduction and then to work together on the solutions to deliver those reductions. As one of the largest buyers of seismic acquisition capacity, we have a role to play here. We joined the IAGC working group on emissions reporting, and we're working closely with our peers and our customers toward defining industry-wide emission standards. This is the first step. Now on to what lies ahead. Next slide, please. Looking ahead, we plan to remain focused on the climate-related elements of our strategy. We will continue to find ways to ensure that our data processing and high-performance compute are energy-efficient and sustainable. We will continue to move a portion of our workload to carbon-neutral data centers such as Google, and we will continue to reduce emissions from our on-premises centers. These efforts are part of our strategy of becoming carbon neutral in Scope 1 and 2 by 2030. We will achieve this through using more energy-efficient equipment, using clean energy and offsetting. We also plan to incorporate emissions analysis into project investment decisions so that we fully understand the carbon cost of each project up-front and so that we can define ways of mitigating and offsetting those costs. We will look to our vendors and to our customers to share in the cost of carbon-neutral projects. And we will continue to push for industry standards on emissions recording and reporting, and from there, to a common road map for reducing emissions from seismic field operations. Now moving from the E to the S. We also plan to focus on diversity and inclusion, starting with gender diversity. We're pleased to share that we have submitted our application to become signatories to the UN's Women Empowerment Principles. Alongside this public commitment, we will be reviewing and strengthening our policies and practices to deliver on our commitment to ensure a gender-equal workplace and to empower women not just in the workplace but in the communities where we live and work. These are some of the things we have planned for the future. They are part of our strategy to use our position as one of the largest buyers of seismic data to drive the advancement of ESG standards and practices in the industry. Next slide, please. Now we couldn't end today without sharing with you some of the recognition we have received for the work we have done. We are pleased to present you our 2020 ESG report card. I'm not going to take you through all of the results, but let me tell you that we are especially pleased by being included in the Bloomberg gender diversity index. It was our first year of participating in this reporting framework, and the results set a good starting point for the work we have planned ahead in gender diversity. We're also equally pleased with the results from the straight -- State Street Global advisory rating. Our score of 58 puts us in the top 10 to 30 percentile as an Outperformer and well above the global industry average for oil and gas services. Lastly, TGS' A- from The Governance Group makes us the only oil services company in the top quartile. As you may know, The Governance Group rates to sustainability filings of the top 100 companies on the Oslo Børs. We're very proud of the work we have done so far and very excited about the work ahead and about the role we have chosen to play in helping to shape a sustainable energy future. Thank you for listening. I will now hand over to Kristian for the closing summary.

Thank you very much. And I have the pleasure to do a brief summary, and then we're going to open up for questions after that. But if you move to the next slide. I think a good way to illustrate today's story and what we have been through and what we're planning to go through is to look back on our history. And this history goes back to 2003. I don't know why we picked 2003 in particular, but 2003 was actually the year when Fredrik had his first day as a Corporate Controller of the company. And as you see, the first 6 years were relatively easy. Things were going extremely well. We had a significant growth in all company CapEx. You see the compounded annual growth rate there. And then we moved into a period in 2009 to early 2011 where things started to get a bit more difficult and particularly because of the moratorium in the U.S. Gulf of Mexico, where we, at the time, had a significant part of the database. What we did at the time is that we became more diversified. So we decided to change our strategy slightly and become less vulnerable and invest outside the U.S. GOM and Norway, and we had some successful projects in both AME and Asia Pacific. And that kind of carried us through a very difficult time in 2010 and 2011. And then you see a new upcycle. So TGS grew our business significantly. At the time, the focus was on market share, and we succeeded in building a significant market share in the period after 2011 and basically riding on that kind of boom that the industry were going from 2011 to about mid-2015. And then we have a significant downcycle again. Things started to look rough in 2015. As I said, the first quarter of '16 is probably the worst quarter in history for TGS. And it took a bit of time because -- before things started to pick up again. But then we had a decent 2017. We had a very good 2018. And again, as I said previously, 2019 was the best year in the history of TGS. You see the combination of high investments. You see a good strong sales-to-investment ratio and overall very strong cash flow. And then we had COVID. 2020 has obviously been brutal, but I'm extremely proud of what we've done and what our employees have done through 2020. So the cost numbers that we're presenting today is extremely impressive if you compare it to anyone and compare it to any industry and see what we've done during the COVID crisis. We are very, very proud of that. And now we're entering into a period of uncertainty. 2021 will be uncertain. As Fredrik said, there's very mixed signals from our clients in terms of how much money they're going to spend on exploration. But hopefully, we have convinced you [ about ] oil and gas. We think you will see significant upcycles again. Yes, the industry will continue to be cyclical, but cyclical also means that there are some positive signs there. And we've seen a very strong oil price momentum recently. We've seen early signs of that, some kind of a supply crunch, which again should support a continued healthy outlook in terms of the oil price. Over time, that will have an impact on exploration spending. Again, there is no exception from that rule. No exception from that rule. And if you look on this bar chart and you look at how our industry has moved up and down for many, many years, and even if we added the '80s and the '90s to this picture, you would see even more extreme volatility. And that, again, we're going to continue to see that, but that also means that we're going to have upcycles in our industry. Not only that, but we're also diversifying. We're diversifying outside the core oil and gas business. And as you see, back in 2010 and '11, we did a similar thing. But that was within the core business, where we started to enter into new geographical areas. We did that successfully. And that countercyclical investment really helped us grow the business in the following years from 2012 to 2015. Now we do it again but actually outside the core oil and gas business. Of course, we see fantastic growth, and we see opportunities to capitalize on the existing data library within those industries. If you move to the next slide, please. So this is really showing how we plan to be when we grow up. This is showing the energy mix today, where you see that oil and gas is representing slightly more than 50% of the total energy mix. And then you see in 20 years from now, how that energy mix will look like. And it's obviously going to be slightly less oil and gas but not much, actually. It's going to be somewhere between 46% and 54% of the energy mix. But keep in mind that demand for energy is going to grow overall. So that means that the supply of oil and gas need to be pretty much at today's level in terms of being able to supply the world with energy that it needs in 20 years' time. But the key topic here and the key storyline here is that we're actually expanding our market. So rather than just being 100% dependent on oil and gas, we're now addressing a market that is bigger than that. So oil and gas, again, is still going to be significant in 2040, but we're also addressing the market of renewables. And within the next 2 decades, we are hopefully going to build up a significant business in that space as well. So TGS today, we're proud of being the world's leading subsurface data company. We're asset light, and we have a multi-client data business model. We have about 95% of our revenue, it's actually north of that, from oil and gas today. Emissions in terms of Scope 1 and 2 is about 23.4 kilotons, and then we're launching a new strategy here today. So what does that mean? And how are we going to look after 2030? Well, our long-term ambition is that we're going to be the world's leading energy data company, not only subsurface but energy data. Number two, we're going to continue to be asset light. We're going to continue to pursue a multi-client business model because we think that business model can also be pursued and capitalized on outside oil and gas. Revenues over time. I mean we're not giving a guidance here. Jan gave you some indications on what we're trying to achieve and what our ambition is. But I think over time, we want to reflect the overall energy mix. That's really our goal such that, obviously, renewables will be a much bigger part of the pie in 2040 or even 2030 than what it is today. And as you see in 2040, renewables is expected to be about 1/3 of the total of oil, gas and renewables. We're going to be carbon neutral, and we're going to have a high portion of recurring revenues. We're going to continue to pursue new business models. That means that we are going to increase the amount of recurring revenues that we're going to have. So I want to thank you very much for your attention. I want to pass it over to Jaclyn, who's going to lead the Q&A session. And again, thank you very much for your attention. Please, Jaclyn.

Thank you, Kristian. During this segment of the program, we'll address questions from our audience. And we will get to as many as possible, being mindful of time. So the first question is to Fredrik from Jørgen Lande with Danske Bank. The question is, I understand 2021 investment guidance is not totally fixed, but how would you compare expected pre-funding rate in 2021 versus 2020?

I think that it's safe to say that we are going to be a little bit more selective in our investments. And as such, you should expect the pre-funding to be slightly higher than the reported 51% for 2020.

The next question is to Kristian from Andreas Backstrom. The question is, how much investment in multi-client library do you think you can average over time if oil price average is above USD 50?

Yes. I think if the oil price is above USD 50, and I think it's more about stability in the oil price rather than the absolute number, but I mean if our clients are confident that the oil price is above USD 50 and will remain above USD 50, I don't see any reason why our average investments will be any lower than what you've seen in the previous 5-year period. I mean they're extraordinarily low in 2021, of course, but it's because we're in a period where most of our clients are still sitting at home and have very restricted budget. So I think -- I don't see any reason why the investment should be any lower. You should also be aware that we've seen some consolidation of our industry both on the supply side but also on the multi-client side compared to the last 5-year period. You've seen obviously TGS picking up Spectrum. You've seen a company like WesternGeco, for example, as part of Schlumberger being far less aggressive in terms of pursuing new investments. So I think in that regard, I think it's really up to ourselves where we set the quality standard and the bar in terms of sales to investment. So I hope that answered your question. Thank you.

Thank you. The next question is for Jan. There are several questions coming in on the financial potential of the NES business. Can you please elaborate on what revenue potential might be and what type of investment levels you envision and what margins potentially could be?

Yes, sure. So what -- it is early stage. So we're doing our best to try and come up with a realistic prognosis that we can actually achieve. And I'm very confident that we can achieve the levels of revenue like we have in the well data products. That is 5% to 10% of the total revenue of the company. So that will be in the order of, let's say, 25 million and upwards. That can be achievable, but we need a little bit of a flight path to get there, meaning in the next 2 to 3 years. And that's based on organic growth with some smaller-type acquisitions. The investments that we see in projects and data will be in the order of 5 million to 15 million. So that's 1-5. And that is, yes, like I said, not that capital intensive, the projects that we see on the horizon, but that may grow over time. That's not including a significant or material type of acquisition. And then the margins would be in the order of 20% to 30%, the operating margins that we expect. So I hope that helps a bit to clarify that.

Thank you, Jan. The next question is for Kristian. This is from both [ Orf House and Dino ]. Will you list or otherwise spin off the new NES business?

I guess what I can say to that is that that's not really our plan. The reason why we do this is that we want to be a lasting company. We want TGS to be around in 2 decades and 4 decades and 5 decades. And we want to take advantage of investment opportunities that we see there is growth, and we don't have any short-term plans of just taking advantage of a strong market. I mean we're building block by block and really trying to build a sustainable business for the future. Thank you.

Thank you. The next question is for Jan. Will CSEM be a technology that TGS will use when it comes to CCS and deep sea mineral exploration? If no, why not?

Well, the answer is yes. It is a candidate to be used. The CSEM can really be useful to quantify the CO2. It gives a good resistivity. So that's one of the elements that can be used for CCS. For minerals, it's kind of a secondary type 2, meaning you first need to find the minerals and get an overall quantification, and that's been done with seismic. That's where we did a test with 10 sources seismic operation test, and that was very successful to find the minerals and to see the buildup. But if you then go into further detail, the next stage, then CSEM could be a good candidate to help out.

Thank you. The next question is for Kristian. Do you think TGS has done enough to adapt to the new seismic market where oil companies are focusing on better data like OBN?

You can never say that you've done enough. I think you will always have to look over your shareholder and say that you can do more and target more and aim higher. And I think that's the case in terms of our OBN strategy as well. But what I am very pleased about is that we've done more than anyone else, for sure. We have acquired 11,000 square kilometers of OBN data since we're standing here 2 years ago and launched our plan. So in that regard, I feel like we've definitely delivered. But there is so much more to be done, and I think there are tremendous opportunities going forward, utilizing that technology. So yes, you will see more, but we will always aim higher. So thank you very much for a good question.

Thank you. The next question is for Fredrik from Øystein Vaagen and Fearnley Securities. Should the U.S. lease ban be extended? Do you expect to make further impairments? Also, could you provide the dollar amount of impairments for the separate regions?

Okay. I can -- let me take the second question first. I can give an exact split of the impairment but would say that close to 50% of the impairment came from north of Arctic Circle surveys in specifically onshore and Europe. The -- about 30% or -- their routes came from Mexico, Mexican projects, and the remainder is dominated by regional projects in the Gulf of Mexico but also some other case-by-case projects. And that then leads me to the first part of the question. Do we expect further impairments based on the U.S.? We cannot make any guarantees, but the remaining book value in our Gulf of Mexico library is largely focused on infrastructure-led exploration with our recent OBN acquisition. And in addition to that, it is the wide-azimuth reprocess data over held acreage that did sell quite good in Q4. So we're optimistic about that.

Thank you, Fredrik. The next question is for Jan. Can you please elaborate about the digitalization of the library and the cooperation with TGS and CGG? How have the market -- how has the market responded to this? And do you see further cooperation on this matter?

Thank you. Good question. We have -- yes, the common platform that we're developing is still in development. So it's been well received by clients, but it's still in a stage of development to optimize it. So we have now some prototypes that we're discussing with the clients, and they're very enthusiastic about the idea of being able to work on a platform, have seamless access to multiple libraries and be able to work in the cloud. So it's the right choice. It's the right decision. Being able to offer about 70% of all the subsurface data that way is a very powerful tool, and it's recognized as such. But we still have some development steps to take.