TGS ASA

OSE:TGS

Earnings Call Transcript 2019-Q2

[Kristian Kuvaas Johansen, Chief Executive Officer]

Good morning, everyone. And welcome to the Q2 2019 earnings release from TGS. My name is Kristian Johansen. I'm their Chief Executive Officer of TGS. So with me today I have Sven Børre Larsen, our CFO, who is going to cover the financial section of the presentation.Let me first draw your attention to the forward-looking statements and then move to Q2 of 2019 which for TGS was a strong quarter with a positive or continued positive sales momentum. So we had net revenues in the quarter of $166 million. That compares to $158 million in Q2 of 2018. And for those of you who remember back to Q2 last year, we had a positive profit warning. We had very strong late sales in particular and partly due to some transfer fees that we had in that quarter.So our late sales are substantially up sequentially and is in line with Q2 despite, as I said, lower transfer fees this quarter. Our prefunding also increased substantially both from last quarter and also compared to Q2 of last year. We continue to have a very strong balance sheet with a cash balance of $354 million at the 30th of June. And in addition to that we have an undrawn credit facility of about $100 million which means that TGS still has a total liquidity of close to $0.5 billion.That means that we can continue to increase distribution to shareholders. Our quarterly dividend is maintained at $0.27 per share. That's up 35% from Q2 of 2018. In addition to that, we also introduced a $50 million share buyback program in Q2. We spent about $16 million in the quarter buying back shares.We see a continued positive development in order backlog which I will come back to. Their market outlook continues to improve, although rather slowly with high volatility. And last but not least, we're obviously very excited about the Spectrum transaction which now has been approved by shareholders and it's on track for closing for mid-August of 2019. So after mid-August we're going to be one company.Let's go to the operational highlights. So as you see in any Q2, we have quite a lot of vessel activity. And the reason obviously being that most of our markets are open at that point of time. So both the Northern and Southern Hemisphere is open. So if we look at the Western Hemisphere and we start in the north, you see that we have 3 vessels, 2 Ramform 3D vessels and 1 2D vessel in -- on the East Coast of Canada. This is a partnership that we have with PGS, so a joint venture.Then we have MagseisFairfield crew in the U.S. Gulf of Mexico where we are acquiring about 103 blocks of OBN data in a partnership with WesternGeco, Schlumberger. Then we have Amazon Warrior and we have a coastal vessel and we have Fugro Searcher in Brazil. So it's been a very active quarter in Brazil. And that's something I will come back to.In the Eastern Hemisphere we had 2 vessels in Norway. We have the Polar Duchess in the Norwegian Sea. It's an expansion of our Atlantic Margin project. And then we have the Axxis joint venture, OBN crew starting out in late Q2 and which will continue in Q3 this year. And then we have the NWAAM, so the -- or the MSGBC Basin where we have BGP Prospector and we have a SeaSeep project as well. So it's a -- it's been a very hectic quarter in terms of operational activity. And that's going to continue in Q3 where we also see quite significant investments particularly in offshore.So let's go to the different markets and look at the activity for the quarter. So let's start with Brazil. First of all, a few words on Brazil. As you as you noted, yes, we've had data. And you see from the map here that we have a lot of 2D data covering both Campos and Santos in Brazil. Most of this data is quite old. We haven't been particularly active in Brazil in the period from 2019 until 2014 and -- 2009 to 2014. And the reason for that being that the regulatory regime in Brazil has been very uncertain. There's been a lot of delays on license rounds. You all remember the Car Wash scandal, et cetera, et cetera. So we haven't been very active in Brazil. And then we made a decision in the summer or fall of 2018, is that we have to get stronger in Brazil because we see significant growth. So we hired a new team. And this is probably the first quarter where we see significant improvements in our activity and the results in Brazil as a result of that.So Brazil is characterized by a proven petroleum system which is obviously great. You have some of the largest discoveries in the world in Brazil. Libra as an example is going to produce about $100 dollars per day in cash flow. So it's a proven exploration and petroleum system which is probably close to the best in the world. We also see improved political stability in Brazil. That's been the foundation for our increased focus on Brazil. And as a result of that we also see regular license rounds.So going back to this quarter we had a SeaSeep program that continued. So we're basically doing a SeaSeep program covering the entire Campos and Santos with 210,000 square kilometers. We also did a 15,000 square kilometer multiclient 3D in the Santos basin. So this is in the outboard Santos basin as you see from the map here. And we've actually moved that vessel inboard or closer to shore where we continue a program called Phase 3. So that's a program where we target some blocks for the 16th round. And that program already has prefunding. So that's a move that we did about a month ago.And then we have Campos where we have an 11,200 square kilometer 3D. This is a project that is a standalone TGS. And it's been a great success for us. We started out acquiring that project in couple of months ago. And we have significant prefunding for the project. And it has continued to sell really well. The reason obviously being that a lot of these blocks are part of the 16th round. And companies are very eager to see the results of that before they start bidding.So if we move from Brazil to East Canada. You see a very active season in East Canada as well. And again, Canada has been a good market for TGS for many years. We have a partnership with PGS, a joint venture. We're into their eighth year of that joint venture. And as you see from the map, there is a lot of 2D data here. But there's also an increasing number of 3Ds.This year we're doing 3 different 3D projects. You see Jeanne D'Arc, Torngat and North Tablelands. Two of these surveys are in the core area of Newfoundland. But then you also see that we're shooting the first 3D ever in Labrador Seas. You see Torngat is further north. It's in the Labrador Sea. And the reason being Canada is -- or the reason why Canada is an attractive market for us is that again as with Brazil it's a proven petroleum system. In fact Canada ranks top 5 in the world in terms of proven oil reserves.Number two, it has an existing infrastructure. So it's a relatively safe way -- safe place to explore. It has political stability and it has had political stability for many years which is obviously a very important box to tick off as well. Competition, we see about 14 companies who have exploration licenses in Canada, and that's good enough for creating a pretty good multiclient environment. And so that's the reason why TGS has been active here and why we will continue to grow our presence and our partnership with PGS in the region.You'll also see that we continue to do 2D in Canada. And the reason for that is that as you see from our strategy for many years we start with 2D. And then when we get closer to the big license rounds we shoot 3D over our 2D and we target the license rounds areas.If we move to the U.S. Gulf of Mexico. We had activity in the U.S. GOM as well. Amendment Phase 2. So this is the OBN survey that we're doing together with WesternGeco using the Fairfield or the Magseis crew. This is a 2,758 square kilometer ocean bottom node survey. It's the largest multiclient OBN survey ever carried out.The US GOM has been characterized by a smaller number of players for the last few years. If you'll remember back to 2008 to 2011 you had about 80, up to 90 companies participating in the license rounds. That number is now down to somewhere between 20 and 30. So that obviously has an impact on our business in the U.S. GOM. But at the same time there's also been a significant number of asset transactions. So you see companies rather than focusing on exploration they've been focusing on trading assets between them. And that's obviously good for us in the short term because it triggers some transfer fees. And this is where we've had most of our transfer fees over the last 2 years. It's actually been in the U.S. Gulf of Mexico. So it continues to be a healthy region for us in terms of activity and revenues. And Q2 was actually a very strong quarter in the U.S. Gulf of Mexico.Then North West Africa. So we have the MSGBC Basin, so Mauritania, Senegal, Guinea Bissau. This is -- we've been quite active there for a number of years. So we're doing a 3D there, Jaan 3D. It's one of the largest 3Ds that we've ever done. It's only 11,000 square kilometers of new seismic. But we bundle that with lot of existing seismic and we create some kind of a mega merge which is close to 30,000 square kilometers of 3D as you see from the map.In addition to that, if you look at the dotted line on the map, you see a significant SeaSeep survey as well. So MSGBC has been one of the more active basins in West Africa for the last few years. And we think that will continue given that it has a very proven petroleum system. And we see growing interest from a number of the super-majors.And then last but not least, Norway. So we had activity in Norway this quarter as well. We have the Utsira, which is a multiclient node project in the North Sea. This is in collaboration with Axxis Geo Solution. We started that survey last year. We're going to complete it this year. So the vessel just returned from a job in India.And then we have another new project. That's the Atlantic Margin. So it's a further expansion of the Atlantic Margin, which we started in 2017. We'll continue that in 2018. And now we're doing another 7,000 square kilometers in one of that last frontier areas on the Norwegian shelf. So this is the outboard Norwegian Sea, as you can tell from the map.Norway is also an interesting area. We see a pickup in the number of players. So in the last APA round I think there was 37 companies participating. It's obviously a very favorable country in terms of exploration due to the tax regime. And last but not least, we see a significant shift from super-majors actually leaving Norway. And then we see a lot of smaller startups taking more active roles in Norway, which is good for our business.So I think that was a summary of the key basins where we've had activity in Q2. And also some reasoning for why we are investing in the areas where you see investments from TGS.I'm going to hand it over to Sven Børre. He's going to go through the financials. And then I will come back and talk about the outlook for the rest of the year. Thank you very much.

[Sven Børre Larsen, Chief Financial Officer]

Thank you for that, Kristian. And good morning to you.First, just let me remind you that we are going to focus on the segment reporting numbers in this presentation. And you can find the IFRS numbers either in the quarterly report or as an attachment to this presentation. Then I will cover the net revenues on Slide Number 13.We have seen strong late sales momentum lately, particularly driven by strong performance in Brazil as Kristian mentioned. We had $134 million of late sales in Q2, which is more or less in line with what we saw in the same quarter of last year, despite the fact that we had roughly $20 million less of transfer fees in this quarter compared to the same quarter of last year. So the underlying performance on late sales is quite strong in Q2 of 2019.On the prefunding side, we had $28 million of prefunding revenues in the quarter, which is an increase of 36% compared to the same quarter of last year. The change is largely attributable to Brazil and Gulf of Mexico, partially offset by lower activity in Europe compared to what we saw in the same quarter of last year.Proprietary revenues, $4.3 million in the quarter. So that's almost 3x as much as we had in the same quarter of last year. And going forward, we expect it to remain roughly at the same level in the coming quarters. So this meant that we had $166 million of total net revenues in the second quarter, which is 5% up from the same quarter of last year.Looking at the breakdown on net revenues. As we said, we had strong performance in Brazil and we also had quite decent performance in North America, both in Canada and in Gulf of Mexico. So this means that North and South America NSA accounted for 72% of our revenues in the quarter. 12% came from Europe, and Asia -- sorry Africa, Middle East and Asia Pacific accounted for 8%, whereas geological products and services accounted for 5%. In terms of technology, 86% came from 3D service, 9% from 2D and 5% again from GPS.Then looking at the operating costs on the top left-hand chart on this Slide Number 15. We had $25 million of operating expenses, cash operating expenses in the quarter, which is the same as we had in Q2 of 2018. Note that we have excluded $1 million of charges related to the Spectrum transaction from this calculation.Amortization was high in the quarter, $93 million. It's up 26% compared to the $74 million we had in Q2 of 2018, and also of course significantly up compared to the $66 million we had in the first quarter. I'm going to cover or talk in more detail about amortization on the next slide. So I'll leave it for now.The operating profit, EBIT, you can see on the bottom left-hand chart, $44 million in this quarter, 26% margin. And this is lower than what we saw in the second quarter of last year. Again, due to the much higher amortization. Free cash flow was $8 million this quarter. So it was -- it's not a natural that we have a lower free cash flow in Q2, particularly when we have had a strong Q1 which we had this year. So nothing unusual there.And then some more details on the amortization. As I said, we had $93 million of amortization in this quarter compared to $66 million in the first quarter. The straight-line amortization is roughly the same in both quarters, about $50 million, which means that the increase is entirely due to increased amortization in relation to sales of uncompleted, unfinished surveys.So we had prefunding revenues, as we have already seen, of $28 million, which is up from $14 million in Q1. And we also had quite strong late sales from uncompleted surveys, $59 million versus $15 million in Q1. So all of this leads to higher sales-based amortization in Q2.Then looking at multiclient library in more detail. We had $87 million of the multiclient investments in new projects in the quarter. And on top of that we had roughly $6 million of risk-sharing in investments. Of this $87 million, 32% was covered by precommitments from our customers. The $87 million is a little bit higher than what we indicated in early May as we have had better production on a couple of surveys than -- or better production unexpected on a couple of surveys during the quarter.Looking at the net book value of the library, it stood at $699 million as of 30th of June, which is 5% roughly below what we had at the same point last year. Looking at the investments and net book value by year of completion, you see on -- you can see that on the bottom left-hand chart. The blue bar shows the historical investments and the diamonds shows you where the net book value sits currently.So generally you can see that we have a conservative valuation all of our library in our balance sheet. I will in particular draw your attention to the WIP balance where -- which currently sits at only 58% of the original investment. So we have amortized away already 42% of those investments.Looking at the distribution of net revenues on vintages, you can see that we had as much as 20% coming from older mostly fully written down vintages. And we also had quite a bit of sales, 57%, coming from ongoing surveys. And that -- we have talked about that already.Then to the income statement. I'm going quickly through these numbers as we have covered most of them already. Net revenues, $166.4 million this quarter. As I said earlier, a 5% increase compared to the same quarter of last year. Subtracting personnel cost of $17.2 million, other operational costs of $8.2 million and this $1 million cost related to the Spectrum transaction. We ended up with an EBITDA of $140 million compared $130.2 in the same quarter of last year. Amortization of $92.9 million, depreciation of $4.3 million gave an operating result of $42.9 million. Net financial items was were negative by $200,000, giving us pretax profit of $42.7 million. Tax cost was $19.5 million in the quarter. So as you can see, we had a pretty high effective tax rate of 46% in this quarter. And that has mostly to do with the currency movements we've seen during the quarter.So there's basically two things related to the Norwegian krone-dollar movement that affects our tax rate negatively or positively impacts the tax rate upwards in this quarter.First of all, the tax rate, the average tax rate during the quarter -- no, the average Norwegian krone rate during the quarter was weaker than it was at the end of the quarter. Meaning that in our Norwegian krone-based tax accounts we're exchanging revenues from dollars to Norwegian krone at a higher rate during the quarter than when we calculate the tax cost back to dollars at the end of the quarter.The other impact we have is from the intercompany balances. So we have intercompany loans between our subsidiary in the U.S. and the Norwegian parent company. So the Norwegian parent company owes the subsidiary in the U.S. a certain amount of U.S. dollars. And when the dollar -- no, sorry, when the Norwegian krone strengthens during the quarter, so that the Norwegian dollar is stronger at the end of the quarter than it was at the beginning of the quarter, we get the profit, pretax profit contribution in our NOK-based tax accounts, which is eliminated away in the consolidated accounts. And this of course push up the effective tax rate.So all of -- all these effects have no immediate cash impact. And it's a bit arbitrary obviously where it ends up in the different quarters based on where the currency rates are moving.So all-in-all, this gave us a net income of $23.2 million, corresponding to a fully diluted EPS of $0.22 compared to $0.45 in the same quarter of last year. But the reduction we've seen of 50% in EPS is entirely due to noncash items like amortization and this cash impact that I talked about.The balance sheet remains strong. We had $354.3 million of cash at the end of the quarter, in addition to the $100 million undrawn facilities. So the liquidity position remains very comfortable. And also the solidity remains robust with 79% equity ratio at the end of the quarter.Cash flow statement. We had $59.7 million of operating cash flow, a bit lower than we -- obviously we saw in the same quarter last year. And that has to do with the strong collection that we had in Q1 of this year. Net cash flow from investing activities was negative by $53.9 million. And net cash from financing activities were negative by $41 million.Here you should note that we repurchased TGS shares for $15.8 million during the quarter, in addition to the dividend payments of $25.3 million. So all-in-all, net cash flow was negative by $35.7 million in Q2.Then dividends. So the board has resolved to pay another dividend of $0.27 per share. The ex date is set at 1st of August and the payment date will be 15th of August. And in addition to that, as you know, we introduced a $50 million share repurchase program during the second quarter. So the plan is to buy back up to $50 million worth of shares before the next AGM in May of 2020.And as I said, in Q2 we bought back shares worth $15.8 million, which means that we have roughly $34 million remaining on that program.And by that I hand the word back to you, Kristian.

[Kristian Kuvaas Johansen, Chief Executive Officer]

Thank you, Sven Børre.Going back to the outlook. Let's have a look at the market first. So as we said initially, the market continues to improve but the volatility is still high. And I think this slide really -- do a really good job in explaining that. If you look on the left-hand side, you look at the aggregate multiclient revenues from the top 6 or 7 players in our industry. And I think it really fits the characteristics of taking the elevator down and the stairs up again. So you see a quite dramatic down-cycle starting with the drop in the oil price. And going down all the way to Q4 of 2016 or early 2017 which kind of marked the trough for the entire industry.And then since then we've seen a gradual improvement of the market. But it's not as steep as you've seen the down-cycle. And I think that's where -- that's what has probably surprised most of us. It's probably surprised most of our investors and analysts but also the companies. We see that the up-cycle takes longer than first expected. We still see some volatility. So if you look on the right-hand side, you see the change, the year-on-year change in aggregate multiclient revenues. And it's actually quite volatile.Every single quarter you see a few seismic companies who are surprising very positively, but at the same time you also see someone who's -- who show some negative surprises. And I think that's kind of how the market is going to play out for the next year or 2, because all companies tend to be extremely disciplined now in terms of their spending. So signing a deal today compared to signing deals back in 2013 is a completely different story. And you have to go through a much more heavy bureaucracy with procurement teams and the push to do global deals and the push to get significant discounts, et cetera, et cetera.So if we turn to the next slide and look at how is this going to move forward. So seismic spending in general is down from about $9.2 billion back in 2012-2013. And is down to a level which is only slightly more than 40% of what the market was. So it's down by 54%.If we analyze this in more detail, we would claim that 77% of this 54% downturn in the market is due to price. And then only 23% is actually due to volumes. Meaning that all companies get pretty much the same data for the buck today as the -- or the same amount of data today as they did back in 2013 or '14, but they pay far less for it.Our argument is obviously that current prices are not sustainable for keeping healthy industry. If you look at the overall vessel market and you analyze the different players, you see that this is not sustainable in terms of their economics. But we have seen some signs of improvement. We see a structural change in the industry. So you see that companies now tend to focus on either multiclient and they tend to be pure-play multiclient companies such as TGS, Spectrum, WesternGeco has made that move. CGG is about to make that move. And then you have some companies who just specialize on the acquisition part of the market share. Water is a great example. Polarcus is another one. And then you have PGS, which is kind of in-between there and still want to be an integrated company. But we think this change or the structural change that you've seen in the industry will probably be good for the industry going forward. It's going to lead to a more consolidated supply side. And you could argue that TGS as a customer of this would not likely benefit from it. But I think it's going to benefit all of us because it means that improving vessel day rates is actually a good thing for us because when we come back to the next slide and we look at our backlog, you know, the main action we can do to get our backlog up is actually to pay more for the vessels. Because if we're able to pass that over to our clients, then that's how we're going to grow. We're going to grow by partly price and partly volume, but probably more price than volume. That's our statement in terms of how this industry can get healthy again, because right now it's not sustainable, particularly on the supply side.If we move to the backlog. We see a very healthy development of the backlog. You see Q4, which is usually the lowest part of the year or lowest quarter of the year, you see our backlog was about $63 million. It grew $112 million after Q1. And now it's up to $130 million. And if we look forward for Q3 and Q4, I'm actually quite optimistic that we're going to continue to improve and increase our backlog. And the reason being that we see quite a lot of activity now and especially in the South Atlantic area where Africa is really picking up. We're looking at some big converted contracts in Africa. We see that Brazil has played out really well for us. So we're probably going to continue to do investments in Brazil. So I'm quite optimistic in terms of continuing to see that positive trends in terms of the backlog despite the fact that we're producing a lot from this backlog as we speak.If you look at this picture, and if you look at our backlog of Q2 of 2019 and you compare that back to 2015, which is the first bar on the left-hand side, you see that it's about half of what it used to be. But again, if you look back on the previous slide, the reason for that is price rather than volume, because in this quarter we had about 15 different projects in the world. It's close to all-time high in terms of the activity level measured by volumes. But still our backlog is about half of what it used to be in the previous up-cycle.So again, it just proves our point that a more healthy up-cycle and a quicker recovery of this industry will have to come from a combination of volumes and price. Possibly more price than volumes.If we look at the project schedule. As I said, we had close to 15 active projects in Q2. So if you look at as we speak, so we're towards the end of July or early August, you see that it's a record-high activity in terms of number of projects. And then obviously we're going to close the Spectrum transaction sometime in mid-August and we're going to add to this backlog. We may actually have to add another slide in the presentation because we cannot fit more projects on this slide.But it obviously excites us to see that it's a pickup in terms of activity level overall. I think for those of you who look at our investments year-to-date and you look at our prefunding percentage and you multiply it by 2 and you see you don't get to our full year guidance, I still think that there is a lot to be done in November and December this year. You see we are very active until end of September, then it tapers off a little bit in October, obviously partly due to the winter season. But again, I really feel comfortable that you will see new projects, especially in the South Atlantic area for November and December, which is going to make us meet our investment guidance for the year. And I think it's going to be on healthy prefunding as well.So a quick status on the Spectrum transaction. It's approved by the EGM in both companies on the 21st of June. All the reviews by the competition authorities have been completed. So it means that we are on track for closing sometime in mid-August. I think the date right now that we're targeting is about 15th of August. The integration planning is in progress. So we're spending a lot of time now on the integration. Obviously we cannot really start the active part of that before we close the transaction. But I think we're going to have a very busy time from mid-August and to the end of the year in terms of integrating these 2 companies.Our estimate of annual synergy cost savings of approximately $20 million are maintained. We think we can meet that. And I think on the next slide you see really the benefit of this transaction in terms of very complimentary databases. So if we focus on the Atlantic margin and you look at the northern side of the Atlantic margin, TGS has historically been very strong.On the other hand, Spectrum has been really strong in the southern part of the Atlantic margin. But together this is a very strong company who has a very comprehensive modern database. So if you look at all the seismic that has been shot in the world over the last five years and you look at the proportion, especially in the Atlantic margin, from these 2 companies, and you add the U.S. Gulf of Mexico and you add the U.S. onshore, this is a very, very strong seismic company. There is no reason to not believing that for the future.So we are very, very excited about this transaction. We think this will build the optimal investment portfolio for the future. The way we would like to split it up in terms of our investment focus is that we basically have 4 very important and equally-sized strategic hubs. One is North America offshore, that's where TGS has historically been very strong with East Canada and U.S. Gulf of Mexico. That's probably going to make up approximately 25% of our total investments for the future. Then we have U.S. onshore and Canada onshore and possibly Latin America onshore as well, where you see a significant growth in our portfolio today. And I think there is a reason to believe that we can add another 25% of our total investment in that area if you add some international onshore projects.And Europe and Asia Pacific would probably represent another 25%. So Europe for us is mainly Norway and U.K. And then both companies have a very strong portfolio in -- especially in Australia. So AP is going to be a strong hub for this combined company as well. And then the last 25th percentile of our total investments for the future is probably going to be or is certainly going to be South Atlantic. That's probably where we see upside in terms of the investment potential.So if you just look at this from a 10,000-feet level and you say, well, we should be able to invest about 25% in each of these strategic hubs, I think the investment potential here would possibly be somewhere between $100 million and $150 million per year in each basin, which means that this new company should be able to invest between $400 million and $600 million per year. And I'm certainly not guiding that this is going to happen in '19 or in '20, or in '21, but this is how we think about this. This is how we think about synergies. This is how we think about complementary databases. And obviously the strength of 2 companies that we can build an even stronger company together.In terms of the summary from Q2, I just want to repeat. Net revenues of $166 million, which we are very pleased about. We compare ourselves to very strong quarter in Q2 of last year with a solid positive profit warning. And we're pleased to beat that with 5%. We still have a very strong balance sheet, by far the strongest balance sheet of the industry, obviously with $354 million.We're increasing our distribution to shareholders. We'll continue to do that. This is very important for management. We continue to see a positive development in the order backlog. And I'm actually quite optimistic that we're going to continue to see that trend for Q3 and Q4 and hopefully into next year.We see a market outlook that continues to improve. But again, as I said, the volatility remains high. And then, last but not least, the acquisition of Spectrum is approved. We are very, very excited. We're on track for closing in mid-August 2019. And while we're going be really, really busy for the next few months, we are very excited about this transaction. Looking forward to be one company after mid of August.With that, thank you very much. And we'll take your questions.

[Kristian Kuvaas Johansen, Chief Executive Officer]

Christopher?

[Christopher Møllerløkken, Former Research Analyst]

Christopher from Carnegie. Two questions. Some of your competitors have seen a significant improvement in contract day rates in the second quarter versus last year. Have you seen any changes among your customers for the willingness to pay up, for example late sales?

[Kristian Kuvaas Johansen, Chief Executive Officer]

Yes, I mean we always say that. You need to have data at the right place and at the right time. And I think that statement is probably even stronger today. I think if you have data at the right place, at the right time, so take Brazil as an example, we have the 16th round coming up late this year. If you have data at the right place and you're ahead of the round, there is a willingness to pay up for data. So we've seen a positive development in that regard. And we continue or we continue to expect that that positive development will continue for the future. And you're right, vessel rates are up, perhaps not as much as what we read in some of your reports. But they're up compared to last year. And we're prepared to pay up because we think we can pass it over to our clients because again what we've seen over the past few years is clearly not sustainable.

[Christopher Møllerløkken, Former Research Analyst]

In terms of the multiclient investments for this year, would you say how much have been secured for the projects you announced so far?

[Sven Børre Larsen, Chief Financial Officer]

Roughly $275 million.

[Kristian Kuvaas Johansen, Chief Executive Officer]

Other questions?

[Sven Børre Larsen, Chief Financial Officer]

See if we have some questions on the Internet? This is from John Delos Santos from UBS. Are you seeing any new upstream players coming into the Brazil market? Is there increasing interest from independents?

[Kristian Kuvaas Johansen, Chief Executive Officer]

Yes, we do. And I think this is part of the reason why we want to increase our investments and our activity level in Brazil, is that we've held back a little bit. Brazil has been dominated by the big players. And you've had a handful of players who basically picked up all the acreage in all the license rounds. If you go back to the 14th, 15th. And possibly that's going to be the result in the 16th round as well. But now we start to see interest for data purchases from smaller players, from new players as well in Brazil. And obviously that will trigger more activity in terms of seismic sales and makes this quite exciting.

[Sven Børre Larsen, Chief Financial Officer]

That's it.

[Kristian Kuvaas Johansen, Chief Executive Officer]

That's it? I guess on a nice summer day in late July that's what we would expect. So I want to thank you very much for your attention today. Thanks for coming out here on a nice day. Wish you a great summer holiday FOR those of you who are who are still waiting for that. And welcome you back to our Q3 presentation which we're obviously going to do as a combined company with Spectrum later this year. Thank you very much.