TGS (Buy, TP: NOK125.00) - Self-help in motion
While we struggle to see a near-term recovery in seismic fundamentals, we do not expect things to get much worse either. Helped by cost synergies following the PGS merger, TGS is set to expand its FCF significantly to ~USD250m for 2025–2026e. This should pave the way for higher dividends from 2026e as net debt moves below its targeted level. We forecast flattish vessel utilisation and late sales growth from 2024 levels, leaving upside risk to our estimates if the seismic market improves faster than we expect. We have upgraded TGS to BUY (HOLD) and reiterate our NOK125 target price.TGS Nopec Geophysical provides geoscience data to oil and gas exploration and production companies worldwide. In addition to global geophysical and geological data libraries that include seismic data, magnetic and gravity data, digital well logs, production data and directional surveys, Co. also provides advanced processing and imaging services, interpretation products, permanent reservoir monitoring and data integration solutions.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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