TGS provides seismic data and energy-data/analytics, with a large multi-client data library, enlarged by the PGS merger. The library is cash-generative (10.6% FCF yield), but the business earns below its cost of capital — adjusted ROIC of 5.3% against an 8% WACC, with −NOK 726M economic profit — reflecting structural E&P capital discipline and seismic-market overcapacity.
The reverse-DCF implies the price embeds ~15% perpetual growth, against a sub-WACC, cyclical, structurally-challenged business — a demanding assumption. The data-library cash flow is the support; the economics are the caution.
Capitalising adjusted NOPAT, reverse-DCF fair value sits well below the NOK 153 price (negative economic spread). The multi-client library's high FCF conversion supports the equity, but on through-cycle economics it is not value-creating.
Base NOK 130 (−15%, de-rate toward sub-WACC economics); bull NOK 200 (an energy-data/seismic upcycle plus PGS synergies lift returns above WACC); bear NOK 100 (continued E&P discipline and overcapacity).
At today’s enterprise value the constant-ROIC reverse-DCF maxes out: even at its sustainable-growth ceiling (~-50.0%, limited by ROIC 5% ≈ WACC 8%) it cannot reach the current EV. No-growth value is NOK 42/share (28% of price); the market prices in growth and/or a higher ROIC than booked — richly valued on this lens. Read the sensitivity grid.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | NOK 200 | ≥-50% | +31% | 30% | Seismic/energy-data upcycle + PGS synergies |
| Base | NOK 130 | ≥-50% | -15% | 40% | De-rate toward sub-WACC economics |
| Bear | NOK 100 | ≥-50% | -35% | 30% | E&P discipline + seismic overcapacity persist |
| Prob-weighted | NOK 142 | — | -7% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 67 | 62 | 58 | 51 | 45 | 25 |
| 7.25% | 53 | 46 | 41 | 32 | 24 | -0 |
| 8.00% (base) | 42 | 35 | 29 | 18 | 9 | -18 |
| 8.75% | 34 | 26 | 19 | 7 | -2 | -31 |
| 9.50% | 28 | 19 | 12 | -1 | -11 | -41 |
Green = fair value above the current price of NOK 152.70. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
A large seismic library generates high-FCF-conversion late-sales revenue.
Integration cost/scale synergies could lift returns.
New-energy/data analytics diversify beyond pure seismic.
An offshore E&P/seismic upcycle would lift utilisation and pricing — the bull path.
10.6% FCF yield from the data library supports the dividend.
TGS generates real data-library cash flow but earns below its cost of capital, with the price assuming a steep recovery. HOLD with a bearish lean, medium conviction; base target NOK 130 (−15%).
A genuine seismic/energy-data upcycle plus PGS synergies lifting returns above WACC would change the thesis; sub-WACC economics are the principal caution.