TGS-NOPEC delivers strong 3rd quarter results in line with Management's stated expectations.

"This ranks as the best 3rd Quarter result in our Company's history, " states Chairman David Worthington. "We are especially pleased to deliver such strong results during a period of severe global economic disruption. Our financial health is stronger than ever, and we are well-positioned to capitalize on new opportunities for growth."


Revenue Breakdown
Net Late Sales of NOK 189,0 million accounted for 69% of Net Consolidated Revenues. Net Early Participant revenues totaled NOK 68,4 million. Proprietary Contract Revenues in Q3 2001 were NOK 17,9 million, representing approximately 7% of total revenues. The Company had no proprietary contract revenues in Q3 2000.

The strong sales momentum in Europe continued during the 3rd quarter mostly due to oil company preparations for the 17th licensing round in Norway and the concession round in 2002 in Greenland. Year-to-date Europe revenues have increased 68% from the same period in 2000. Gulf of Mexico sales remained steady and Canada sales grew substantially from Q2 to Q3. Net Revenues from 3D represented 44% of Total Net Revenues and 47% of Net Multi-Client Revenues during the quarter. For the first nine months of 2001, 3D accounted for 42% of Net Revenues, compared to 24% for the same period last year.

Operational Costs
The amortization charge associated with Net Multi-Client Revenues increased to 40% during Q3 2001. The corresponding amortization rate for Q3 2000 was 37%. This rate does fluctuate from quarter to quarter, depending on the sales mix of projects. For the first nine months of 2001, the amortization rate is 37%. Management still expects an average amortization rate of 35-40% for the full year 2001.

Operational costs payable for the quarter, excluding materials, were NOK 38,3 million compared to NOK 28,1 in Q3 2000. Costs of materials were NOK 17,0 million versus NOK 5,2 in Q3 2000 as a result of costs of vessels associated with the increased proprietary contract revenues. Personnel related costs and Other Operational costs totaled approximately 8% lower than in Q2 2001.

Profit
Operating Profit for the quarter was NOK 112,4 million, representing 41% of Net Revenues and a 21% increase over Q3 2000 (NOK 93,1 million).

The quarterly Pre-tax Profit of NOK 110,3 million was 37% higher than the NOK 80,8 million reported in Q3 2000.
EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) for the three months ended September 30th was NOK 220,0 million, 80% of Net Revenues, up 26% from NOK 174,3 in Q3 2000.

Change in Exchange Rate/Financial Items
A portion of the increase in reported revenues stems from the change in exchange rate between the USD and the NOK. In Q3 2000, the average exchange rate was NOK 8,652 to the USD, while in Q3 2001 the corresponding rate was NOK 8,996 to the USD. This change eliminated, the increase in Net Revenues would have been approximately 28% and increase in EPS approximately 29%.

Had the exchange rate stayed the same in Q3 2001 as in Q2 2001, the Net Operating Revenues for the quarter would have been approximately NOK 281 million.

The rate of exchange between the USD and the NOK changed from 9,30 per June 30th, 2001 to 8,88 per September 30th 2001. In accordance with NGAAP, all balances in other currencies are recalculated at Balance Sheet Date to reflect the currency picture. As the Company's cash holdings in USD far exceed its debt in USD, the non-cash exchange gain of NOK 6,2 million associated with the USD 14,7 million loan per September 30th was eliminated by a non-cash exchange loss on the cash holdings. The net currency exchange loss was NOK 0,3 million in Q3 2001 compared to a loss of NOK 10,3 million in Q3 2000.

Tax
Management estimates the tax rate for the year 2001 to be 34%. The Norwegian entity continued to earn taxable profits bringing the effective total tax rate down from 35,95% in Q1 2001 to 34,55% in Q2 2001 and 34,44% in Q3 2001. The year-to-date tax rate per September 30th, 2001 was 34,94%.

Net Income and Earnings per Share (EPS)
Net Income for Q3 2001 was NOK 72,3 million, up 34% from the NOK 53,8 million reported in Q3 2000. Earnings per Share (EPS) were NOK 2,96 undiluted and NOK 2,77 fully diluted, up 34% and 32% respectively from reported in Q3 2000 (NOK 2,21 and NOK 2,10 per share). The average number of shares outstanding during the quarter was 24,427,000. The fully diluted average number of shares outstanding was 26,060,000.

Business Segments and Investments
TGS-NOPEC's main business is developing, managing, conducting, and selling non-exclusive seismic surveys. This activity accounted for 93% of the Company's business during the quarter. Investments in the data library totaled NOK 136,8 million for the third quarter, 2% higher than in Q3 2000 (NOK 133,5 million). The year-to-date investments per September 30th, 2001 were NOK 418,8 million, 44% higher than for the first nine months of 2000, and well in line with the Company's stated 2001 investment plan. As previously stated, TGS-NOPEC management intends to continue investments in new seismic programs but the Company will also actively pursue opportunities to increase its ownership in existing surveys. The Company recognized NOK 68,4 million in Early Participant revenues during the quarter, funding approximately 50% of the Multi-Client investments for new surveys. Management expects somewhat lower pre-funding rates in the fourth quarter.

Balance Sheet
As of September 30th, 2001, the Company's total cash holdings amounted to NOK 318,7 million compared to NOK 224,6 million on December 31st, 2000. The Company's cash holdings increased by NOK 72,1 million compared to June 30th, 2001.

Total interest bearing debt was NOK 158,6 million versus NOK 206,1 million per December 31st, 2000. Total Equity per September 30th, 2001 was NOK 1.026,4 million, 69% of Total Assets.

Operational Highlights
The Company added approximately 22,000 kms of 2D and 1,200 sq kms of 3D to its library of marketed surveys during the 3rd quarter. A total of seven different seismic vessels contributed to this effort. TGS-NOPEC completed the acquisition phase of two major new 3D surveys in the quarter: Flinders (Australia) and Grip High (Norway). Other areas of significant new activity included the Gulf of Mexico, Greenland, New Zealand, Portugal, Spain, Madagascar, and the eastern Mediterranean Sea. Additionally, the Company commenced well-funded PSDM and PSTM reprocessing projects on its highly successful NS-100 program offshore Eastern Canada.

Outlook
The Company's backlog of secured pre-funding for new projects declined seasonally during the quarter to NOK 107,9 million, but remains a healthy 28% above levels one year ago.

Due to seasonal weather conditions, the Company plans to reduce acquisition activity on new projects during the next two quarters, but increase activity on value-added and reprocessing projects during the same period. On top of this, the Company is pursuing opportunities to increase its equity ownership percentage of the marketed library. Management continues to focus on opportunities to grow the Company's 3D investments and revenue stream.

Recent announcements of blocks for Brazil's Round 4 and nominated blocks for Norway's 17th Round are positive drivers for TGS-NOPEC Late Sales. In view of seasonal buying patterns and year over year market improvement, management expects Net Revenues in Q4 to exceed Q4-2000 and Q3-2001 levels.

Demand for new seismic data remains firm. Global oil prices have recently deteriorated but currently remain above the threshold necessary to promote new exploration. Both the level of world oil demand and OPEC's ability to keep oil prices within its desired band are short-term uncertainties. In contrast, natural gas prices in North America have recently strengthened as production has dropped with the reduction in rig count. Despite volatility and uncertainty in commodity prices, oil companies need new drillable prospects and newer and better seismic data to develop those prospects. Management expects total exploration and production spending to increase only modestly in 2002. In such an environment TGS-NOPEC's strong balance sheet and flexible business model will be the catalysts for the Company's continued profitable growth.

TGS-NOPEC is a leading global provider of non-exclusive seismic data and associated products to the oil and gas industry. TGS-NOPEC specializes in the planning, acquisition, processing, interpretation and marketing of non-exclusive surveys worldwide. The company places a strong emphasis on providing high-quality seismic data and the highest level of service to the industry. TGS-NOPEC also offers proprietary seismic acquisition and processing services, as well as gravity and aeromagnetic surveys.

TGS-NOPEC is listed on the Oslo Stock Exchange (OSLO:TGS).

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