TGS ASA (TGS) Earnings Call Transcript

Welcome to TGS Q2 2026 results. My name is Bård Stenberg, Vice President, Investor Relations and Business Intelligence in TGS. Today's presentation will be given by CEO, Kristian Johansen, and CFO, Sven Larsen. Before we start, I would like to draw your attention to the cautionary statement showing on the screen and available in today's presentation and earnings release. After management's concluding remarks, we will open up for questions from the audience. [Operator Instructions] So with that, I give the word to you, Kristian.

Thank you, Bård. So I'll start with the highlights for Q2. We had revenues, as announced on the sixth business day of $400 million. They're up 30% year-on-year, and it's driven by a very strong multi-client quarter. Our EBITDA came in at $244 million, that corresponds to a 61% EBITDA margin, well in line with the historical averages of TGS. Then we had a Q2 EBIT of $120 million, and that corresponds to a 30% EBIT margin. I'm particularly pleased about the streamer utilization came in at 94%, and it's a higher streamer utilization we've had since Q3 of 2013. And this is clear evidence of the fact that the model works, the integrated model, where we can shift capacity between multi-client and contract really seems to be working and this is up considerably from the same quarter of last year, as you remember. We also had a very strong order inflow. We had $377 million of new orders signed during the quarter, and that means that our total order backlog at the end of Q2 is about $756 million which is in line with what you saw at the end of Q1. So a very strong backlog, which tees up TGS for the future and future growth. We're also maintaining our quarterly dividend of USD 0.155 per share, so in line with what we've done for quite a few quarters now. And last but not least, after the quarter end, we managed to sell a North American well data business, which again further strengthens our balance sheet, and also positions TGS well to get into that guided comfort zone of $250 million to $350 million of net debt. which at the time we get there, we will obviously have a discussion with the Board on additional shareholder distribution. So overall, a strong quarter and a relatively positive outlook for TGS, which we will go through in the next couple of slides. So in terms of the business update and the data acquisition activity, as I said, we had a record strong utilization this quarter, and you can really see this by this slide where you see significant open activity in the U.S. Gulf of America, both multi-client and contract. You see the same picture in Norway, where we have a streamer vessel and an OBN crew, and you see 4 multi-client surveys in the South Atlantic margin on both sides, both Brazil and also West Africa. In addition to that, you see 1 vessel in Malaysia -- in Indonesia, which is on a long-term contract with a supermajor. In terms of our more client update, as I said, we had a strong multi-client quarter, and you see external revenues of $284 million in Q2 this year. That's more than twice what we had in Q2 of 2025. And as you remember, that was a rather weak quarter for multiclients. I'm particularly pleased to see that multi-client came back and managed significant growth in Q2 of '26. We had high investments in the quarter, $168 million versus $114 million in Q2 of 2025 and as you will see, we have guided $550 million of multi-client investments for the full year. And it means that you will see that investments will be lower in the second half of the year than they were in the first half of the year, very much in line with our strategy where we're going to shift some of the capacity back from multi-clients to contract based on the current vessel and OBN schedule. We had a sales to investment last 4 quarters, the last 12 months of about 1.7%. And you can notice that, that number is slightly down from what we had 4 quarters leading up to Q2 of 2025. This is obviously due to higher investments and the short-term impact of investing more. I think when you see investments taper off towards the second half of the year, you will see that number hopefully will come up as well. In terms of the activity summary, we had 2 multi-client projects, offshore Brazil. They're both in the Pelotas basin, both Sul and Norte and these are heavily prefunded projects in a very exciting basin. Number two, we had a multi-client campaign in West Africa with 2 vessels. So we had the Nigeria Laide multi-client 3D survey. And then we also had a 2D survey offshore Angola which is also a very important strategic basin for TGS to operate. We also completed the APEX-1 Ocean Bottom Nodes project in the Gulf of America. This is a dense node grid, where we don't have reliance on underlying streamer data thanks to newly developed technology between acquisition and data processing. Interesting thing with that is that it opens up new markets for TGS and also markets where you don't have a lot of underlying data, and you can still go out and acquire OBN for exploration purposes. We commenced the Asta Graben project in Norway. It's a multi-client 3D streamer in the North Sea also in Q2. In terms of new announcements for multiclients, we were awarded exclusive right for acquisition of multi-client data offshore Brunei. And in addition to that, we also announced an agreement with Equatorial Guinea to create an offshore mega survey, which for those of you who have followed TGS for a while, you know that we've done some of these mega surveys in West Africa, and they've turned out to be very successful. First phase of this project includes about 27,000 kilometers of 2D in addition to 35,000 square kilometers of 3D data. So a very good quarter for multi-client. Very excited about the outlook for multiclient as well. As I said, we're probably going to -- or we are going to invest less in the second half, which is hopefully going to have a positive impact on sales to investment and free cash flow but very much in line with the plans that we laid out before the year. On the Marine Data acquisition, we had external revenues of $98 million, and they're down from $145 million in the same quarter of last year. But then you see the internal production. So basically, the multiclient programs that we are acquiring with our own fleet and capacity, they're up from $70 million to $142 million. So overall, that means that our total revenues grew from $215 million to $240 million for the Marine Data Acquisition business. The EBITDA margin is slightly down but you should be aware that internal production, we don't apply in margins for internal works, it means that the entire EBITDA margin of 21% is on the external revenues of 98% -- profitability also in our Marine Data acquisition business. In terms of activities on the streamer side, we continued working on a large contract for a super major in Indonesia, as you saw on the previous slide. In addition to that, we commenced contracts both offshore Norway and Angola. On the OBN side, we commenced a large OBN contract in the Gulf of America in addition to having a node on a rope crew fully utilized on multi projects in the North Sea this quarter. Contract awards, we were awarded a large 4D streamer contract offshore Angola. That is 8 months duration contract. In addition to awarded an extension to a multiyear OBN contract in the Gulf of America with a supermajor that we have worked for a number of years in the Gulf of America, and now we have exclusivity to continue to acquire OBN data in that same basin for the same customer. So a great testimony to our technology, to our service quality, et cetera on the brand side, where we tend to have a very dominating position in the U.S. Gulf of America. The imaging and technology, starting with the financials in the lower left-hand corner, so we had external revenues of 14%. That's down from 19%, but very similar to the marine data acquisition business, we have higher internal production. So we're shifting capacity from external revenues to internal production. You see revenues growing from 12% to 18%, which means that total revenues pretty much stayed flat from last year. And as you remember, last year was a substantial growth from 2024. So we're pretty much running at full capacity on our imaging centers right now. Our EBITDA margin, same explanation as to the previous slide. They're dropping from 40% to 24%. But keep in mind that the majority of revenues of more than 50% of revenues came from internal production with 0 margin. So then the entire EBITDA is being generated by external revenues. Strong capacity utilization at all centers, as I said. We have an overweight of resources allocated to internal production this quarter. That may change in the future. And again, this goes back to the strategy of being able to shift capacity between multiclient and contract as we see demand and as we see the timing of projects. which is a great advantage that TGS has and very much in line with the strategy that we laid out with the acquisition of PGS a while ago. We expect continued activity growth for imaging in 2026 and also going into 2027. And in terms of technology developments, we have announced a strategic collaboration with a company called Allton to simplify deployment and recovery of ocean bottom nodes, yes, and in addition to that, we also announced an acquisition of a company called Apparition, which is a step-change improvement in operational efficiency on the seismic source side and also on subsurface image clarity. Which leads me to the next slide. This is Apparition, and this is the acquisition in highlights. So the acquisition of Apparition secured TGS access to proprietary simultaneous source acquisition and separation technology. What it basically means is that you can toll more sources and get away with fewer streamers. So it increases the productivity and operational efficiency by up to 30%. This is a technology that TGS has tested together with the Gemini source for the last 2 years and very pleased to close in on that acquisition, which means that we fulfill our ambition by having technology leading tools and gadgets from A to Z, both on the acquisition side but also on the data processing side. So it sort of fills the last hole in our technology suite for the acquisition side. Last but not least, we also announced the sale of the North American well data business. This is a business that is probably less known to most of you. But it's an acquisition that TGS made back in the early 2000s. It's been a tremendous success. We've had a good cash flow business for a number of years. So what we've seen is that it's been a lack of growth, and we've actually seen some declining growth over the past few years. Margin of the business are pretty good. We're very pleased about being able to sell this business for a good price at good multiples. Enverus paid about $100 million upfront for the well data business. And in addition to that, there's $15 million in earn-outs that are conditioned on certain milestones. This really goes back to the strategy, sharpening our focus on integrated offshore technology offering, probably going heavier offshore than onshore, given the current market balance. We think offshore offers greater growth opportunities versus onshore today. And it's really about executing on the portfolio optimization capital discipline and again, providing you as shareholders with an accelerated path to higher shareholder distribution for the future. So with that, I'm pleased about the quarter. It's been a very hectic quarter in terms of making 2 M&A transactions in Q2 growing revenues by more than 30% compared to last year and again showing a strong backlog and order inflow during Q2. So very pleased about that. Sven is now going to go through the financials and give you more details about that, and then I will come back and talk about the outlook for TGS for the remainder of the year and also for the future. Thank you very much.

Thank you for that, Kristian, and good morning to you all. I will start by going through the net revenues by nature for the second quarter of 2026. So if we turn to Page #12, you'll see that we had multiclient revenues of $250 million in total in the quarter. This was largely, of course, generated by our multi-client business unit with $247 million, while other businesses generated $3 million of multiclient revenues in this particular quarter. If you look at the contract revenues on the right-hand side of the page, you'll see that we had $151 million in total contract revenues in the quarter. This was generated by multiclient business unit with $37 million. You may think that it's strange that our multi-client business generates a lot of contract revenue, but that has to do with joint venture projects that the multiclient business units enters into with respect to projects. So if we get a partner in on a multiclient project, which pays for -- who's paying for 50% or 33% of the cost, that will be booked as contract revenue in the multiclient business unit. The Marine Data Acquisition business unit, MDA had contract revenues of $98 million, our imaging business had external contract revenue of $14 million and other businesses had $2 million. So turning to the next page, looking at our produced segment numbers. The multiclient business unit generated $247 million of multi-client licensing revenues and as I said, $37 million of JV revenues or contract revenues, which led to a total revenue of $284 million for the multiclient business unit, the EBITDA margin, strong as always in multiclient $253 million. This compares to Q2 of last year, when we had $132 million of multi-client licensing revenue and only $5 million of joint venture contract revenues which gave a total of $137 million in revenues and an EBITDA of $126 million. Looking at multi-client investments, for this quarter, we continue to invest a lot in our multiclient library, $168 million this quarter, almost the same as we had in Q1. and significantly higher than what we saw in the same period of last year with $114 million. Then looking at the MDA business, it had $98 million of external revenues and $142 million of internal production. So this is obviously a reflection that we are doing a lot of multi-client for the time being. So as you can see from the bar charts in a historical perspective, we keep a very high activity level in our data acquisition business. EBITDA came in at $50 million compared to $53 million in the quarter of last year. Bear in mind that, as Kristian already alluded to, the internal production or the internal revenue is basically charged with a 0% margin, which means that when we are doing a lot of internal multi-client work instead of working for external customers, that will impair the margin for the MDA business unit. Then looking at the imaging business unit on the bottom left -- right-hand corner, sorry. We had $14 million of external revenue, sorry, for the imaging business and $18 million of internal production again. We are doing a lot of multi-client projects currently, which is also reflected in the imaging business unit. EBITDA was $8 million in this quarter. Then looking at the group financials, the revenues that I've gone through now gave a total of $400 million. So that was made up by $250 million of multi-client revenue and $151 million of contract revenue. This compared to $308 million in the same quarter of last year, which consisted of $136 million of multi-client revenue and $172 million of contract revenue. Then looking at our operating expenses, net operating expenses in Q2 ended up at $156 million after capitalizing $111 million on internal work. This means that gross operating expenses was -- were $267 million in the quarter. In the first half of 2026, we have experienced that operating -- gross operating expenses has been a bit higher than what we originally expected. And that has mainly to do with 3 factors. Number one, we have had a higher activity level in our marine data acquisition business than anticipated. We've had a record high utilization on our streamer and also somewhat higher -- somewhat higher activity level on side than we originally anticipated. Also, we have had a different geographical mix than we had when we originally gave the cost guidance. which means that we have been working more in high-cost countries, and we have had more costs flowing through our accounts. And then we have also experienced some higher fuel prices, which has been related, of course, to the higher oil price we've seen during the first half of the year. These higher costs have largely been mitigated by higher revenue. So it hasn't hurt EBIT to the same extent as the cost increase should suggest. For the second half of the year, we expect costs to go back to the annualized run rate of $950 million, as we originally guided for this year, possibly with a bit higher in Q3 and a bit lower in Q4. But it means that in total for the year, the gross operating expenses will be somewhat higher than the original full year guidance of $950 million. Then looking at the depreciation and amortization, we had depreciation of $36 million in this quarter compared to $65 million in the same quarter of last year. Again, the low net depreciation number is a reflection of the high multi-client activities because we capitalize a larger portion of the depreciation of our assets when we're using them for multi-client projects. Straight line amortization remains fairly stable, $54 million in this quarter and then we had $34 million of accelerated amortization, which is largely related to ongoing multiclient projects. This gave a total EBIT of $120 million in the quarter, a margin of 30%. This compares to a loss of $22 million in the same quarter of last year. The margin of 30%, as you can see, is also quite strong compared to both Q1 and Q4 of last year and Q3 of last year. So we're quite happy with the EBIT development for the group. Then looking at the profit and loss account, we had total revenues of $400 million that I've gone through. Cost of sales, $72 million, personnel cost, $57 million and other operating expenses of $28 million, which gave an EBITDA of $244 million compared to $153 million in the same quarter of last year. subtracting straightline amortization of $54 million accelerated amortization of $33 million. We had some -- a smaller impairment of $2 million and depreciation -- net depreciation of $36 million. And this gave, as I said, an EBIT of $120 million compared to the $22 million of loss of last year. Financial income, $2 million, financial expenses of $13 million and exchange losses of $2.4 million profit before taxes of $107 million for the quarter compared to a loss of $48 million in the same quarter of last year. Then looking at cash flow, and this is the produced cash flow. So it's linked to the produced EBITDA that we present. The EBITDA was $244 million in the quarter. We paid a bit of taxes, $12 million. And then you can see we have negative $78 million in change of balance sheet items, which is essentially net working capital on a produced basis. So we had a big negative contribution from working capital in this particular quarter. As you may recall, we had a quite positive impact in Q1. It's quite normal that we see a negative impact in working capital in Q2 from a seasonal perspective. It's typically a result of, number one, that we have typically have fairly low or reasonably lower multi-client sales in Q1 that is being collected in Q2. And number two, that we typically start up -- we are in the start-up phase of a lot of projects for the summer season, the data acquisition summer season in the Northern Hemisphere. So it's quite normal that there is a significant negative contribution from working capital in Q2. Although in this particular Q2, it was probably more negative than normal. Then we had paid multi-client investments after removing the noncash elements and also adjusting for multi-client investments that were capitalized in other periods of $148 million. We had CapEx of $24 million, and then we had a small M&A investment in this company Apparition geo services as Kristian talked about and a bit of interest received, which meant that we had cash flow from investment activities, negative by $173 million. We had a net change in interest-bearing debt and leasing of $2 million negative. We paid interest of $5 million and we paid dividend of $31 million, which gave a cash -- negative cash flow from financing activities of $37 million, which in total gave a negative net cash flow $56 million in the quarter. Looking forward to Q3 and Q4, so we expect to see much more positive cash flow in the second half of the year, although we will some headwind from working capital also in Q3. Again, it has to do with seasonal factors and that we are still starting -- we are we are shifting to different projects now in the very late part of Q2 and Q3 -- so a lot of that revenue won't be collected until early Q4. But we expect a quite strong cash flow in the second half as a whole with somewhat weaker in Q3 and quite strong in Q4.. And then looking at the balance sheet. I will not go into a whole lot of detail on the balance sheet other than noting that the balance sheet remains very strong. We had -- due to the negative cash flow, we had an increase in net debt to $503 million in -- towards the end of Q2. But if you adjust for the well data products transaction, we're just above $400 million on a pro forma basis at the end of Q2. And with strong cash flow expected for the second half of the year. we would expect to be -- at this stage, we would expect to be within the -- our target range of $250 million to $350 million towards the end of the year. And this strong balance sheet allows us to continue to pay dividends. So the Board has resolved to maintain the quarterly dividend at USD 0.15 per share. The ex date is on are we from now on the 30th of July and the payment date will be on the 30th of August. And as I said, when we expect to come in to the guided range of $250 million to $350 million in the not-too-distant future, and that's the time point in time when you should expect us to start increasing shareholder distribution. So by that, I'll hand the word back to Kristian, who will take you through the outlook section of the presentation.

Thank you very much, Sven. So the first slide we're showing here is just repeating the same message as we did in Q1. And I think if anything, this message has been further confirmed by our strong numbers in Q2. So I'm just going to repeat the highlights of this. Number one, peak oil has been extended by more than 20 years. And the reason why this is really critical for exploration activity is that if you go back 2 years and you look at the peak oil estimates of between 2030 and 2032, it was really hard to make a strong case for exploration, because if you think that overall demand going to taper down or taper off after 2030. And you know that from the time you buy seismic until you're in production, could be between 5 and 10 years. there's not really a strong case for increased seismic spending and exploration spending. . That has, however, changed dramatically over the past 6 months, I would say. And I think most people would agree now that peak oil is not going to happen anytime soon. most experts would say that it's not going to happen until after 2050, and that provides a very good background and a very good tie up for exploration spending for the future. And we think a lot of our clients are now going back to the drawing board in terms of rethinking their strategies in terms of how can they renew their reserves and make sure that they extend the reserve life as the peak oil has been extended by more than 20 years. Second point, reserve life continues to decline. This is rather obvious. If you look at the super majors today, most of them have a reserve life of between 6 and 9 years. And obviously, that sounds like a lot, but if peak oil is sometime after 2050, it puts a lot of pressure on these companies to continue to invest in their business, increase their reserve life. And some of them are doing that through M&A. We believe that some of that will shift back to exploration spending that we will see a new cycle in exploration, potentially starting in 2027. This is not going to change overnight, and we all know that super majors and IOCs and any other E&P company, they set their budgets back in October or November last year. At the time, the oil price started with a 5. So it was in the 50s, and we expected it to be even lower turning into 2026. That has obviously not turned out to be true. We've actually seen renewed focus on energy security. We've seen higher geopolitical risk. We see a very unstable situation now in the Middle East, we see the same in Russia, Ukraine, which means that a lot of the oil in today's market is sort of trapped. There may be short-term solutions to that, that there is no long-term solution to geopolitical risk, which means that E&P companies will have to diversify their portfolios. They need to look for oil elsewhere in the world and that is going to be one of the triggers to a new exploration cycle. Point number 4 here is quite interesting in terms of investor sentiment is changing. It used to be the way that if an oil company announced a new discovery, their share price would either stay flat or it would actually go down because of the CapEx requirements related to some of these discoveries. That is not the case anymore. We finally see that Wall Street is putting value on exploration and we actually see or Goldman Sachs just reported or published a report where they're saying that all companies who reinvest in their own business are in general, priced at higher multiples than companies who pay out all their cash flow in dividend. So another very positive sign and another reason why we think that exploration spending will see a recovery and growth from 2027. Number 5 here, and this is quite interesting. If you look at the yellow circles on the map, you see discoveries that have been announced on a global basis in 2026, and there's a couple of takeaways from that. Number one, it's actually been pretty decent in terms of exploration success. And we know that exploration success drives exploration spending. So that's good. The second point on that is that if you look underneath the yellow circles, you see that there is basically TGS data everywhere, which means that TGS data is being used to find new oil and gas, that means that our portfolio is very well positioned for a new exploration up cycle. If we go to the next slide, this is showing the offshore acreage awards from 2020 to 2025. And then it's on the lower left-hand corner, it shows the offshore exploration wells. And you see that there is no correlation between the 2. Over time, there should be a correlation because if you pick up more acreage it is eventually going to drive more exploration spending. It's going to drive a higher number of wells. It's going to drive higher spending on seismic. We haven't seen that yet, but what we've seen and what you can see from the upper left-hand corner bar chart is that we see a sharp increase in offshore acreage awards, meaning that our customers go out and they capture a lot of acreage -- and they don't do that for fun. They capture their acreage because they want to drill eventually and they want to buy the seismic to understand the potential of that acreage. So we think there is a time lag here, but we think this is a really good leading indicator of stronger and higher exploration spending for the future. We look at 3D streamer contract tenders. Yes, there is a positive trend recently. But there is a reason why we don't show this slide every quarter. It's extremely volatile. It's really hard to get a good grasp on what it actually shows. Yes, it's pointing in the positive direction. There's a few caveats to this. Number one, multi-client is not part of it. And I know and as you saw in Q2, multi-client is actually the majority of our 3D streamer activity. So I wouldn't read too much into it, but it's always good to see the line pointing in the right direction in terms of contract tendering activity. The reason why it's up now recently is mainly driven by tendering activity in the Asia Pacific region. Again, that could turn down again next quarter or 2 quarters later, but keep in mind that multi-client is not part of this. And the majority of what we did in Q2 was multi-client, and these are projects that are very much driven by TGS rather than driven by the clients. So there are signs of improving streamer and OBN activity. And I'll point to the upper bar chart first, and you look at contract vessel months and bids node 1 and how the outlook for streamer market looks. And right now, we think, number one, it has declined by almost 50% from 2019 to 2025. Based on what we see in the market right now, what we have or the industry has booked about 75% of expected capacity. We think it's going to be slightly up in '26 versus '25 and then obviously, the macro data is pointing in the right direction in terms of supporting also continued growth in 2027 in terms of the streamer vessel market. On the OBN side, sales cycles are longer on the OBN side than on the streamer side. We actually -- as it looks right now, we expect 2016 activity to be slightly down from 25%, and you see that from TGS' numbers as well. However, we've seen a pickup in terms of tender activity for programs for 2027. So we're still quite optimistic in terms of seeing growth in the OBN market in '27 versus 26, but what we see right now and the sales cycles are pretty long, is that '26 may be slightly lower than '25. Again, the markets are different in terms of -- on the streamer side, there's basically 2 players. On the OBN side, you have 5 players or 5-plus. So it's a more fragmented supply side. driven by very poor discipline in the past 12 or 18 months. So we've seen some positive signs in that regard to where we see some of the smaller players. So probably burn their fingers a little bit on big projects that have been picked up at very low margins. And we think right now, the pricing is probably slightly better than what you've seen in the last 12 to 18 months. We talked about the strong order inflow in the quarter. You see we had an order inflow that is pretty close to what we had in Q1 of '26 following a very strong Q4 and Q3. So overall, the last 4 quarters have been very strong in terms of signing new orders. And as a result, you see a stable order backlog at around $750 million to $800 million, which obviously tees us up really well in terms of continuing to grow the business going forward. So very pleased that we can come back quarter after quarter and show strong order inflow and backlog. On the right-hand side, we show the expected timing of the Marine Data acquisition backlog and revenue recognition of that so you can help you kind of build your models in terms of estimating the next couple of quarters activity on the data acquisition side. And we're also showing booked positions. These are not necessarily the same as backlog. This is more like what we have booked internally where we have booked our vessels and the OBN crews, and it also helps to for you to build your models and to estimate the activity level for the near term. So here, we're showing Q3 and Q4. You see the composition of streamer contracts, stream multiclient. And then obviously, there is some planned steaming and yard stays. And on the OBN side, you see the normalized crew count that we have booked internally now for the next 2 quarters. I'm not going to touch on the details on that, but it's for your information, and it obviously provides you some information in terms of building your own models. Vessel utilization has been very strong in Q2. I highlighted this as 1 of the highlights of the quarter. We're super pleased about the ability to move vessels and OBN gross and shifting from multi-client to contract, and it obviously reduces the downtime, which is very expensive, particularly on the streamer side. So we've improved our internal teams, our internal processes and procedures and very pleased to see such a strong utilization in Q2. In Q3, we expect it to continue to be very strong. We're saying to 85%, which is pretty much as high as it gets. I think 94%. As we said earlier today, it's as high as it's been since 2013, even 85% is a really good number. So very pleased about that. So in terms of the guidance, I think we've been through this already on the multi-client side. We narrowed the range. We had a range of $525 million to $575 million. Our new number is approximately $550 million, so pretty much in the middle of the range. still supported by strong customer commitments. We have good funding for all our multi-client programs that we do and in that regard, very, very positive development of that. CapEx is going to be pretty much the same level as in 2025, and we see that we're tracking pretty much according to that right now. On the gross operating cost, as Sven talked about that, yes, we had higher costs, partly due to the business mix in Q1 and Q2. For the rest of the year, we're planning to be pretty much in line with the annual run rate that we have guided of about $950 million. And then on utilization, again, we see significant increase in streamer vessel utilization, partly driven by higher multi-client activity. But again, as I mentioned previously, we're probably going to see -- or we are going to see a shift from multi-client to more contract in Q3, and these are contracts that are already booked, of course. On the OBN side, we expect to average about 2 normalized crew counts for 2026. Again, we've already mentioned that our comfort zone in terms of long-term net debt target is $250 million to $350 million. We think we're going to be there in the not too distant future, as Sven said. So pretty soon, you will see that we will get into that range, hopefully, and then we will discuss shareholder distribution with our Board. whether that's going to be dividend or share buybacks and what we do with the balance sheet going forward. So we're probably going to talk more about that at the Q3 presentation later this fall. So in summary, EBITDA and EBIT margins of 61% and 30%, respectively. Very pleased about the profitability. Yes, cost was slightly higher this quarter, partly due to the business mix, but very pleased about the revenues and overall pleased with margins that stack well up against the historical averages. We talked about the streamer vessel utilization, again, 94%, the strongest it's been since 2013, keep on having high order inflow, which is a good sign that the market is developing in a positive direction, which means that our backlog is substantially higher than it was about a year ago. We're strengthening the acquisition technology portfolio through the acquisition of Apparition. We're maintaining a quarterly dividend in line with previous quarters. And last but not least, after quarter end, we divested our North American well data business, which again further strengthens our already strong balance sheet. So with that, I want to say thank you for the attention. I want to open up for Q&A and hand it over to Bård, please.

Thank you, Kristian. We have a couple of questions from the people on the webcast already. So we can start with a question from John Olaisen in ABG. How is the outlook for the vessel utilization over the normally softer winter season? And also, could you comment on your expectations of second half not the client late sales, please?

Yes. I think the vessel utilization, we see a positive trend. I think obviously, if you compare Q2 this year compared to Q2 last year, it's a different world. We are constantly working on signing up new opportunities. Obviously, the winter season is always a bit more challenging. I think Q2 and Q3, you would normally see very high utilization. So it's a bit early to comment specifically on that. But I think overall, we -- when you look at the macro drivers, I think we're quite optimistic. We think it will gradually improve, and we're working 24/7 now with securing backlog for the winter season. So probably going to talk more about that at the next quarter. I mean the sales cycles are probably between 3 and 6 months for most of the streamer work and slightly longer for OBN. So we still have some time for the streamer backlog to the same. Commenting on late sales for Q2?

Late sales second half of the year?

Yes, it was fairly strong. I think we came in slightly higher than we expected and probably than most analysts expected. So it was a good quarter in that regard. I think late sales, again, we're pleased about that. I'm sure there's going to be a question on transactions from -- or transfer fees or revenues generated by M&A activity and yes, we had some of that, but it wasn't substantial this quarter, but there were some M&A-related fees as well. But we're not talking tens of millions of dollars in that regard. .

John Olaisen has another question. That's probably to you, Sven Boree. In Q1, you commented that you had experienced delays in finalizing prefunding commitments for us in Brazil. Has this prefunding commitment now closed?

I can answer that question. And the answer is that it has been closed. We said last quarter that we hope to have it sometime in late Q2 or early Q3, and it happened in Q2. So obviously pleased about that. So we've closed that, signed the deal with the client. We haven't received the cash yet, but obviously, that's going to happen in early Q3. .

Next question comes from Kevin Roger, Kepler Cheureux. Can you give a sense on what has been the prefunding rate in Q2 and your expectations for the full year?

Yes. We don't report that. So we don't disclose that in detail. I think overall, it's been pretty good. It was a bit lower in the last quarter, and we talked about that 1 contract where we had delayed signature by 1 of our key clients, and this is a big project in Brazil, of course. That has now been signed up. And I think overall, our -- we're pleased about the prefunding level. We don't feel like we're taking a lot of risk, a lot of the multi-client activity that we have is in very proven basins. There is probably less frontier. I hope to see more frontier going into 2027 in line with a more positive market development. But overall, very pleased about the prefund, but we don't disclose that number specifically.