TGS ASA (TGS) Earnings Call Transcript & Summary

Good morning and welcome to TGS Q3 2026 Results 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 Borre Larsen. Before we start, I would like to draw your attention to the cautionary statement showing on the screen and available in today's earnings release and presentation. You can start typing in questions on the webcast platform during the presentation and we will address those after management's concluding remarks. So with that, I give the word to you, Kristian.

Thank you, Bard. So I'll start with the highlights of Q3 of 2026. So we had revenues of about $397 million. That's up 2% compared to the same quarter of last year. And we had a Q3 EBITDA of $222 million reported. That includes, however, a $41 million gain from the sale of our well data business that we did early in the quarter. That also impacts our EBIT so reported EBIT this quarter is $86 million. And as you see on bullet point #4, we had operating costs in the quarter impacted by operational challenges or accidents, if you like, and that impacts our profitability this quarter. We had a strong order inflow of $356 million (sic) [ $357 million ] and that means that our overall total backlog stays at $679 million at Q3 of 2026. Last, but not least, we're maintaining our quarterly dividend of USD 0.155 per share. I'll touch on the business update as well before I move it -- give the word over to our CFO to cover the financials. So in terms of data acquisition activity, again a very active quarter for TGS. If you start on the Western side of the Western Hemisphere, we had an OBN contract in the U.S. Gulf of America in Q3. We also had 2 vessels in the Pelotas space in Brazil and then we had 1 vessel in Angola as you see from the map. We had 2 vessels actively acquiring data in Norway and we also had an OBN crew in Norway during the quarter. We had a site characterization survey in the Irish Sea as you can see. Another vessel working in the Mediterranean and then we had one in Indonesia this quarter. Let me start by multi-client. And in multi-client, we had a good quarter. External revenues of $195 million. That's down from $219 million in the same quarter of last year; but keep in mind that in Q3 of 2025, we had a quite substantial transfer fee, which we didn't have this quarter. So in that regard, I think the numbers stack up really well compared to last year. So very pleased about the multi-client results in Q3. You see we had much lower investments and very much in line with our plans to be forward or investing more in the first half of the year than we do in the second half. And you see we invested $64 million versus $86 million in the same quarter of last year. Our last 12 months sales to investment ratio is about 1.7x. But if you just look at this quarter itself, it's more than 3x. So very strong sales to investment in Q3 and again driven by strong multi-client activity, strong late sales from existing library and overall, a good quarter. In terms of activity, we had 2 projects completed in Brazil, we completed the Pelotas Sul Phase 1 and also Pelotas Norte in offshore Brazil. This is a highly prospective area, undrilled and very frontier, but very exciting in terms of client interest these days. We also commenced the Asta Graben multi-client 3D streamer survey in the North Sea during Q3 and this is 1 of 2 programs where we had significant operational issues and things that happen every once in a while and fortunately it doesn't happen very often, but this time it happened on 2 different surveys. So we had operational challenges that hit our numbers quite poorly in terms of profitability. So this survey, for example, was halted due to operational challenges, which means that we will come back in 2027 and complete that. In terms of new announcements, we're going back to Sarawak. We have announced a Phase 4 of our survey offshore Malaysia. And we're also doing reprocessing of a big data set in Newfoundland and Labrador. This is an area where we've seen significant pickup of interest particularly related to Equinor's Bay du Nord development. So very exciting that Canada is finally back on the agenda and we see significant interest for data there, which is great of course given that both TGS and PGS had a lot of data acquired in Canada in the period of 2013 to 2020. And we're also doing a reprocessing of an Atlantic Margin South data set in the Norwegian Sea. So again another area where we see higher interest now and higher interest from mainly Norwegian companies. Going to Marine Data acquisition. So external revenues are $180 million. That's significantly up from the $135 million that we had in Q3 of 2025. You see we had lower internal production so lower multi-client investments, higher contract activity and this is very much in line with how we plan the year, but also in terms of how we see the market develop. So a much better demand for contracts now and as I will talk about later in the presentation, we're basically sold out of vessels for the next 5 months now. So that's a situation that we haven't been in since the acquisition of PGS. You see we had total revenues on the Marine Data acquisition side that are in line with what we had in Q3 of 2025. And then again, you see the EBITDA margin being about half of what it was in Q3 last year and again quite substantially impacted by 2 incidents that we had in Q3 and obviously both incidents that we hopefully can put behind us and move on to Q4 and 2027. Activity summary: on the streamer side, we had 2 4D contracts in the North Sea. We also had a 3D contract in Angola, Indonesia and Mediterranean. On the OBN side, we completed a large contract in the Gulf of America and we also completed a node-on-a-rope contract in the North Sea during the quarter. We've announced contract awards in Australia, this is a 4D streamer contract. Another streamer contract in the Mediterranean. And then we also announced a 1-month extension to a contract in Indonesia as well as an OBN contract in AMME. Moving on to imaging and technology. You see external revenues pretty much in line with the same quarter of last year and then you see a substantial increase in internal production. So on the imaging side; we did more internal work, more multi-client processing and reprocessing and slightly less external. But what you see here is that we're running at full capacity in our imaging centers with total revenues of $41 million in Q3 of '26 versus $32 million in the same quarter of last year. So significant growth in terms of the total activity level for imaging at TGS. EBITDA margin slightly down. But I mean if you adjust for the fact that we have 0 margin on the internal production, then the external margin is actually quite good in Q3 and it stacks up well with what we had in Q3 of last year. In terms of technology developments, we have announced a multiyear contract for development and delivery of our AI-powered seismic foundation model. This is probably the first commercialization of an AI model that we've seen in our industry and very, very pleased to work closely with one of the big super majors on developing the next generation of AI being used for big seismic data sets. In addition to that, we also launched something called Gemini X. This is an operational combination of our Gemini source that we acquired from or we got from the acquisition of ION a few years back and the newly acquired Apparition technology. And by merging these 2 technologies, we can increase efficiency and reduce cost, particularly on the OBN project. So lots of exciting stuff happening also on the technology side. So before I come back and talk about the outlook, I will hand it over to Sven, who's going to go through our financial summary for the quarter. Thank you very much.

Thank you for that, Kristian, and good morning to you all. I'll first go through our revenues in the quarter. So this slide here shows the revenue by nature. On the left-hand side, we have our multi-client revenues and how that has been built up by the contribution from each of our business units. So as always, multi-client revenue stands for -- or the Multi-client division stands for almost all the multi-client revenues, $184 million in this quarter. Then we got multi-client revenues from other businesses of $2 million, which gave us $185 million in total in multi-client revenues in the quarter. If we then look at our contract revenues on the right-hand side, we see that we had $11 million in the Multi-client business unit. This is related to joint venture projects that multi-client is doing together with partners where we are behind the data acquisition. So $11 million related to that. And then our Marine Data acquisition business unit had $180 million; imaging, $18 million; and other businesses, $3 million, which gave us $211 million in net contract revenues in the quarter in total. Then looking at the different segments in more detail starting with multi-client on the top of this page. We had, as I said, $184 million in the Multi-client business of multi-client licensing or licensing of multi-client data and $11 million of joint venture-related contract revenue, which gave us $195 million in revenue in total compared to $226 million in the same quarter of last year. The EBITDA margin continues obviously to be really, really strong in multi-client, $175 million of EBITDA in multi-client compared to $203 million in the same quarter of last year. As Kristian alluded to, in line with our plans, multi-client investments were much lower in Q3 compared to what we had in the run rate in the first half of the year, $64 million. We expect it to be somewhat higher in Q4, but considerably lower than the run rate that we had in Q1 and Q2. Kristian will come back and talk a bit more about the guidance for Q4 later in the presentation. Looking at Marine Data acquisitions on the bottom left, we see that we had $180 million of external revenue in this quarter, which is significantly up from the $135 million we had in the same quarter of last year. Due to lower multi-client activity, we had less internal production, $39 million in this quarter compared to $96 million in the same quarter of last year. The EBITDA margin remains fairly low here, $40 million of EBITDA in MDA in this quarter and the low margin is obviously a result of some cost challenges that we have had, operational challenges that we have had in the quarter, combined with continued pressure on contract pricing in this segment. Then imaging, $18 million of external revenue in this quarter. And as you see, we continue to do a lot of imaging on behalf of our own multi-client department, $23 million of internal production in the quarter and this obviously has to do with the fact that we have invested much more earlier in the year in multi-client. So really high utilization of our imaging people and our imaging assets during this quarter. This gave an EBITDA of $10 million for the Imaging segment compared to $9 million in the same quarter of last year. Then looking at the total group financials. You see the revenue $397 million in total in the quarter split in $185 million of multi-client revenue and $211 million of contract revenue. This is 2% up compared to the same quarter of last year, which had $388 million of total revenue. Then looking at operating expenses. As I already partly alluded to, pretty high in the quarter for different reasons that I will come back to in a later slide, but it's roughly or close to $30 million higher than what it should have been in the quarter mainly due to operational challenges. But I'll give some more details on that on the next page. And also you see that the elimination is lower in this quarter. So we capitalized less of our gross cost and that of course is linked to the lower multi-client investments. Looking at depreciation and amortization, you see depreciation of $49 million in the quarter. It's significantly lower than we had in the same quarter of last year and that has mainly to do with capitalization. Straight-line amortization amounted to $48 million in this quarter and accelerated amortization amounted to $39 million in this quarter. All in all, this gave us EBIT of $86 million in this quarter. Included in that EBIT is an extraordinary gain related to the sale of the well data business of $49 million. So adjusted for that, the EBIT was $46 million compared to $94 million in the same quarter of last year. And then bit more details on the operating cost development. So in the very beginning of the year, we expected gross operating cost to be roughly $950 million for the year. This is obviously a fairly complex exercise to estimate or forecast the gross cost exactly because the mix of different projects and different things that we do with the asset will change during the year compared with the expectations we had in the beginning of the year. But nevertheless, we expected around $950 million of gross cost for the full year when we guided to the market in February. And then since then and as you have noted also on our utilization numbers, we have had significantly higher activity than what we anticipated. So that has added roughly $50 million to the cost base in 2026. This is obviously cost that's associated with higher revenue as well so this is covered by higher revenue. And then we have had project cost increases of another $50 million and this is related to fuel prices and also to some challenges we have had -- operational challenges we have had on certain projects. And a lot of this of course, a significant part of this came in or hit our accounts in Q3. So all in all, it means that we now expect the gross cost to end up at around $1.05 billion for the full year, which means that we will expect to be at roughly $250 million in Q4. All right. Let's go through the produced P&L for the quarter. I've covered revenue already, $396.5 million in this quarter. Then we had other income and this is the profit from the sale of the well data business for $40.6 million. Subtracting the different cost categories, we ended up at an EBITDA of $222 million. And then subtracting depreciation and amortization, we had an operating profit of $86.1 million for the quarter. Financial income amounted to $6.9 million. Financial expenses or interest expenses amounted to $17.4 million. And then we had a small gain related to exchange rates of $1.4 million, which gave us a result before taxes of $77.2 million for this quarter compared to $75.3 million in the same quarter of last year. Then to cash flow. The cash flow was reasonably weak in the quarter. We had cash flow from operation of $124.8 million in this quarter. And if you note that line called change in balance sheet items, this is essentially working capital movements, it's negative by $40 million in this quarter. And if you recall Q2, it was negative by $78 million and then it was positive by $80 million in Q1. So year-to-date, we are negative in terms of working capital contribution of roughly $40 million. Working capital over time of course is a sum-zero game and it means that you have some quarters with negative contribution and they typically will be followed by some quarters with positive contribution. So we do expect a positive contribution from working capital both in Q4 and Q1, which should substantially improve our cash flow from operations in the coming quarters. Then we had capitalized multi-client investment of $64 million and we removed the noncash elements of this of $8.1 million and then some periodization impacts of negative of $8.5 million. We had paid multi-client investment of $64.3 million in the quarter. And as you know also in the first half we invested significantly more than we did in Q3. So of course on a year-to-date basis, the higher multi-client investments has also had a negative impact on our cash flow. But although multi-client investments in Q4 will be higher than it was in Q3, we will see significantly lower investments in the second half compared to the first half, which also should be quite helpful for the total second half net cash flow. So subtracting CapEx of $27.6 million and then adding on the net proceeds from the sale of the well data products business of $96.3 million and interest of $2.6 million, we had total cash flow from investment activities of $6.9 million. And then we paid down some net interest-bearing debt in the quarter or interest-bearing debt in the quarter, $51.9 million. We paid interest of $28 million. We pay interest on our bond loan semiannually so we pay it in Q1 and Q3 during the year so $28 million in Q3. And then we had our regular dividend payments of $30.5 million, which gave us a cash flow from financing activities of $110.4 million, which all in all gave us a net change in cash and cash equivalents of $21.4 million positive in the quarter. But as I said, we expect -- adjusting obviously for the sale of the well data business, we expect significantly better cash flow in Q4 and Q1. All right. Then to the balance sheet and here you should note that we have done a restatement of historical accounts. This relates to the dialog we have had with Finanstilsynet, the Norwegian SSA, related to their periodic review of our 2024 accounts. And as you may recall, we acquired PGS in 2024. So we have had some discussions with them with respect to the PPA and the numbers that went into the PPA. So what this has resulted in is that we have moved the value of multi-client data from PGS that had 0 book value at the time of the acquisition, which obviously would have some sort of fair value, we took that value at $81 million when we did the transaction. This has been moved from goodwill to multi-client library. So you'll see that all other things equal, goodwill has been reduced by $81 million. In addition to that, obviously the opening balance of Q3 so the 30th of June 2026 balance also included a reduction related to the sale of well data of $23 million. So as I said, goodwill has been reduced by $61 million related to the restatement. Multi-client library has gone up by $81 million. And then we have had a $20 million increase of deferred taxes related to this restatement. In terms of the P&L impact, it does not impact our Q3 accounts whatsoever and will neither affect our P&L going forward. So it's a pure change to historical numbers. But if you look at our historical quarters from Q3 2024 to Q2 2026, you will see that amortization has been increased by $10.1 million per quarter and then the tax cost has been reduced by $2.5 million. So it's been a net impact on those accounts of $7.6 million per quarter. You'll find more details about this in the Note 12 in the quarterly statement. All right. And this brings me to my last page and that is about dividends. So we continue to pay a dividend of $0.155 per share. The ex date is set to 29 October 2026 so a week from now and the payment date will be 3 weeks from now on the 12th of November 2026. As you know, our capital allocation strategy is to get our net debt down to below $350 million. And as I indicated, we expect much better cash flow in Q4 and Q1. So we expect to be within that range in the relatively near term and at that stage, we will revisit our shareholder distribution amounts with an upside potential in dividends or buybacks once we reach that target. All right. By that, I'll hand the word back to you, Kristian.

Thank you, Sven. So let's have a look at the outlook and we'll start with a slide that is quite similar to what I've shown in the past, but it's a different source. So this is from Exxon's Energy outlook that was published quite recently and previous slides like this, we've been showing numbers from IEA. The number one observation here is that the numbers are quite similar and number two, and I want everyone to know that Exxon has been very consistently correct in their estimates for the world energy demand in the past. And they've been consistently saying that in 2050, oil demand will be higher than what it is in 2025. They're saying now that it's going to be 2% higher. So for anyone who thought that we've reached peak oil and you're going to see a decline in the demand for oil, that's incorrect according to Exxon, who is very positive to future demand for oil and gas, which is going to be 2% higher for oil in 2050 compared to today and 19% higher in terms of gas demand in 2050 relative to 2025. So very, very positive numbers in terms of the outlook for our industry. And that means that the mix of oil and gas as a percentage of total energy demand is going to be 55%, which is pretty much the same as it is today. And if you look at that in the context of oil and gas offshore discoveries and exploration success, what you see from this one on the upper side on the left-hand side of the slide, you'll see that the number of total recoverable million of barrels per day is dropping and you also see that the number of discoveries are dropping year-over-year since a relatively strong 2022. At the same time when you look at who's finding the oil and gas, you see that NOCs actually account for about 60% of all the discoveries in 2026. So the majority of new discoveries are done by NOCs rather than IOCs. And you see IOCs actually with a remarkable low percentage of new discoveries, which again puts a lot of pressure on the systems in terms of having to invest more in oil and gas exploration for the future. Next slide is showing E&P spending forecasts and we've started to collect forecast for 2027 and so far that looks fairly good. So the analysts that we have collected data from indicate that oil and gas or E&P spending will increase by about 6% on average in 2027. And as you see from the slide here, this is the first time since 2024 that we expect to see increase in E&P spending. And 2024, as you remember, was a pretty good year for the combination of the pro forma numbers of TGS and PGS. And then we've had 2 relatively rough years in '25 and '26 where exploration has probably been hit harder than overall E&P spending. So our numbers or the numbers that we are mainly exposed to have probably been even lower than negative 0.4% and negative 1%. For '27, again we expect to see growth and that will be the first time since 2024. And what really backs to the numbers I showed on the previous slide is that cash flow generation is obviously record high now among our clients. So if you look at the line here on the graph on the left-hand side, you see that the line is higher than the combination of the 3 bars, which means that there is excess cash in the system. And that hasn't been the case since 2023. So basically in '24 and '25, our clients have spent more than their overall cash flow, which is not a sustainable situation going forward. As a result of that, the discretionary spending has been cut quite sharply in both -- well, certainly in '25, but it may also be cut as you saw in '26. But we think that this lays the foundation for higher spending in the future because as long as your cash flow is higher than your overall CapEx, dividend and share buybacks; there is excess cash in the system, which I think we will benefit from in 2027 and onwards. So again, high oil price drives cash flow generation. The oil price now is for the second half of 2026 year-to-date, it's about 45% higher than it was last year at the same time. And we know and we've done a lot of studies on this and obviously analysts have done that as well, there is a strong correlation between where the oil price is during the budget season and where next year's exploration and production budget is going to be. So in that regard, we're quite optimistic that we will see growth and an even tighter market in 2027 than what we see in '26. This is also backed by a couple of statements that you see in the lower right-hand corner of the slide where you see people like Magda from Petrobras and Michael Wirth from Chevron talking very, very highly about the need for more exploration in the future. And that's also reflected in our backlog and our bookings for Q4, but also for Q1 of 2027. And I said in one of my introductory slides that we're sold out and you can see here that we are sold out. We have full bookings for all our vessels. All our 6 vessels are fully booked throughout Q1 of '27 or at least through the end of February and then there is still some room to book up March and the summer season for next year. Titan is going to work in a big multi-client project in South America, more specifically Brazil. Atlas is heading to West Africa for a multi-client campaign and West Africa is really heating up right now where we see great demand for our services. And Africa is also going to be the destination for Tethys working contracts in AMME. And then Hyperion is doing a multi-client project in West Africa. Sovereign is in Asia Pacific region and it's going to stay there and do a combination of contracts and multi-clients. And then last, but not least, the Victory is going to work on a long contract in West Africa in Q4, but also in Q1. So this has really changed over the, I would say, past few weeks and it's actually developed very positively since the end of the quarter as well. Part of the reason for that is that it's budget season of course, our clients are making plans for 2027. I think the second reason is that the rumor starts to spread that seismic vessels are harder to get right now and people are sold out. I think over the past 10 days, we've said no to 2 clients who needed capacity in late Q4 or early Q1. And that's probably the best reason and the best rationale for starting to see higher prices too is that demand starts to exceed supply, which is a new situation for us. We haven't seen that since the acquisition of PGS. I think PGS had some pockets back in 2024 when they were sold out. But as you see from this slide, we are basically fully booked now until end of February. And I think for our clients, if you need a vessel for the summer season of 2027, you really need to move fast because we already started to book up that too and we still have 8 months to go. So again, very positive signs on the streamer market and on the OBN side, we also see growth. We see more activity going into 2027. So the pipeline is good as we speak. You see the dark blue here on 2027 forecast for the market. We see that not all of it is booked or the dark blue is booked, but then you see the tender activity and the leads that we have right now should actually indicate that the market would get back to close to the 2024 level, which was a very good year for the OBN industry in total. Again, these are not numbers specifically for TGS. These are numbers for the industry and then obviously our goal is to take a fair share of that market going forward. If you look at order backlog and inflow and Sven touched on this in his presentation. I'm not going to go through the numbers in detail, but there is some seasonality in this. Typically, Q4 is pretty good in terms of order inflow. And I think I already indicated that we've had a few requests over the past few weeks that have turned into LOIs and eventually that will turn into new contracts. I'm quite optimistic that you will see strong order inflow also in Q4 and going into Q1 of next year, which means that our strong backlog around $700 million will probably stay at a high level going forward as well. So that obviously is a great foundation for further growth in our business and you see how that compares to 2025 where the numbers were ranging from the high 300s to the low 500s. Now we've been relatively stable around $700 million for quite some time. And you can see that from the booked positions as well. So again in Q4 of '26, we are fully booked. And then Q1 of 2027, you see that there is some capacity in March, but I expect to fill that capacity over the next weeks if not months. On the OBN side, we see the booked work is slightly lower. We had about close to 1.5 crews booked for Q4 and then slightly lower than that in Q1. The sales cycles on the OBN side are slightly higher than or longer than on the streamer side. But again, we see growth in the OBN market in 2027. We see TGS obviously being behind a quite substantial part of that growth. On the expected utilization for Q4 being more specific, we believe that we're going to be above 80%, which in our business is a very strong utilization and very much in line with what we've had in the first 3 quarters of the year as an average. Normalized OBN crew count of 1.3. As Sven said, we expect multi-client investments to be around $100 million. There is some variation in that and part of that is discussions with partners where we sometimes do some trading of projects where we get into some of our partners' projects in return for offering up a partnership in our projects as well. But overall, we expect it to be around $100 million. Gross operating costs, Sven walked through that in his presentation so I don't think I need to repeat that. But just repeating that we had operational issues in Q3 this year and I would call them accidents rather than operational issues, but that's certainly something that you shouldn't expect to see every quarter. But unfortunately, we had more than one in Q3 of this year. CapEx, we keep CapEx at approximately $30 million and that would be our indications for Q4 of this year in terms of helping analysts develop your forecasting. So in summary, higher year-on-year revenue so we're quite pleased about that. I touched on multi-clients obviously having a smaller portion of transfer fees compared to last year, which was somewhat extraordinary in Q3. We have a robust order backlog, strong booked positions, which we think is going to continue in the future given a slightly improving market going forward. Strengthening acquisition technology portfolio. We have completed the sale of our North American well data business and you see that from the numbers as well and obviously the balance sheet numbers. We see early signs of a continued recovery in the energy data market and we maintain our quarterly dividend of USD 0.155 per share. So with that, I want to thank you for your attention. I want to ask our CFO, Sven, to come up and join me here on the stage and then we'll take questions from the audience. Thank you very much.

Thank you, Kristian. We have a number of questions from the audience here. So first one is from John Olaisen in ABG. You say that the vessels are sold out for the next 5 months. Could you comment on the day rates versus realized day rates year-to-date?

Yes. I think what we have sold out now for the next 5 months are the day rates. Obviously these are contracts that we've signed in the past so over the past couple of months. And I think day rates on what we have sold now pretty much in line with what you've seen for the past couple of years I would say, which is a great question, John, because these rates are not sustainable going forward, but you need higher utilization and you don't only need higher utilization from TGS. You need higher industry utilization in terms of being able to push rates up. And now we see overall in the industry that it's not only TGS that is sold out, we see limited capacity across the board. And given that situation, we think this is the time to start pushing higher rates and we will definitely try to do that given the supply and demand picture right now.

Then another question from John Olaisen. Could you give us an update on the cost side? Are all the synergies from the PGS merger taken out? Given your generally optimistic view, are you now looking to expand the headcount or are you still in a cost-cutting mode?

Yes. On the synergies, I mean most of it is taken out. We still have a few million dollars remaining in relation to implementation of systems, which takes quite a bit of time to get like ERP systems and imaging software systems and stuff like that in place. But largely, it's been taken out by now. And in terms of headcount, I mean our plan is to be very cost focused still and keep costs as low as we can. But of course in a market which is growing, we cannot rule out that we may hire some more people, particularly in relation to imaging and our technology department.

Next question is from Anastasia Shalaeva in Goldman Sachs. Can you please advise which operational challenges you faced in Q3 and should we expect any impact of the challenges also in Q4?

Yes. I think there are 2 main issues we had in Q3. We had one on the Asta Graben project in Norway, which I would probably characterize more as an accident where you have a propulsory issue and you have a vessel that is kind of sailing into the streamer set and creating a lot of issues and downtime and obviously ending up in halting the survey overall. So obviously that's something that doesn't happen every quarter and it doesn't happen on every survey, but every once in a while, things like that happen. Second issue is on an OBN survey where we go back and pick up nodes and it's less efficiency than we would expect and we have to extend the charter for a node handler, et cetera, et cetera. So these issues happen from time to time and we're doing outdoor sports, right? So I mean we're exposed to weather, we're exposed to lot of factors that are sort of external factors outside our control and then our job is obviously to limit the impact of those external factors. And yes, I don't expect this to happen every quarter and it's quite extraordinary what we experienced in the quarter. So in that regard, this is not something that we're going to carry forward.

The projects we're talking about where we've had issues have been completed by now. So you may see some impact in the very beginning of Q4, but it should be history by now.

Next question is somewhat related to the first question from John Olaisen. With the streamer fleet fully booked for Q4, a strong backlog and improving pricing; how much of 2027 capacity is already secured and at what rates compared to what you have achieved in '26?

Yes. We're not showing specific numbers in that regard. I mean we're going 2 quarters out in terms of showing backlog and how much is booked on a more specific basis. I can say that we still have a lot to book for the summer season. I think given how we see the world today, I think rates in general will be higher for the summer season than they were last summer and I think the supply-demand picture kind of supports that going forward. So we're certainly usually, and John obviously knows this as good as anyone, but usually the winter season is a tough part of the year in terms of demand for seismic vessels. This year, I'm extremely pleased to see that Q4 and Q1 are booked. And in a normal market, you will see the seasonality kind of pick up for the summer season when the Northern Hemisphere is open too. So in that regard, you would probably estimate an even tighter market in the summer season than what you see now for example in Q1. And there's been questions and there will be questions about what has happened and what is the reason for this. And obviously there's a big program in India where one of our competitors are sort of booked up with at least 2 vessels for the time being. Africa, as you see from our vessel schedule, is really hot right now. TGS has a somewhat unique position in Africa where we have government agreements with more than 30 governments. So you're probably going to see continued very high activity in West Africa. Brazil, obviously I need to mention that as well. We've had 2 vessels in Brazil during Q3. You should probably expect to see between 1 and at least 3 vessels in Brazil for years to come. So I think, as I alluded to, if people need a vessel for the summer season, they need to hurry up. And last week we said no to 2 clients who were sitting on the fence and waiting and waiting for government approvals or waiting for internal processes to finalize the contract with TGS and we had to disappoint them and say we're actually fully booked. And I think that came as a big, big surprise, but that's sort of what you need in terms of building more urgency in the systems and make sure that we can make our returns.

Very good. Next question to you, Sven Borre. This is from John Olaisen again. You said that you expect a positive working capital development in Q4. However, I guess that depends on the Q4 multi-client late sales. If late sales are strong, is it reasonable to assume that there will also be a working capital build in Q4?

Obviously if you see very high late sales at the very end of the quarter, you may see a net working capital. That would be a good problem to have, right?

Next question is from Magnus Andersen in Fearnley Securities. You have previously referenced higher competition within the OBN market and aggressive bidding from some of your competitors. How is the situation now and how do you think this will develop into 2027?

I mean if you look at the OBN market, it's more fragmented than the streamer market. So you have a higher number -- by definition, a higher number of competitors. And I think some of these companies have burned their fingers in a very, very competitive market. And you see that TGS has actually lost some market share in 2026 in the OBN market, which was part of our plan is that we're going to compete on margins and return on capital rather than competing on market share. I would say the market is probably slightly more disciplined today than it was about half a year ago or a year ago. And I think with increased demand in 2027 overall, which we expect to see, I think you will see a more healthy market for all the OBN players not only TGS.

We have a question from an investor. Given the strengthening backlog and improving market outlook, does TGS expect earnings and free cash flow growth to support an increase in quarterly dividends during 2027 or 2028?