Good day, and welcome to this presentation of PGS Q4 2023 results. My name is Bård Stenberg, Vice President Investor Relations and Corporate Communications in PGS. Before we start, I would like to give some practical information. For those of you on the webcast, you can ask questions by typing in on the webcast platform, and we will address the questions after management's concluding remarks. I would also like to draw your attention to the cautionary statement showing on the screen and available in the Q4 earnings stories and presentation. The agenda for the presentation is Rune Olav Pedersen, President and CEO, will give you the Q4 highlights, a financial summary, and the order book. Then Gottfred Langseth, EVP and CFO, will give you a financial review.
Then Rune Olav Pedersen will come back to give you an operational update and market comments, a bit on the merger process, a summary, and then we will do the Q&A. With that, I give the word to you, Rune Olav.
Thank you, Bård, and good morning. I will, as normal, start with the Q4 2023 highlights and start with our multi-client sales. We had decent multi-client sales in the quarter. Our late sales more than doubled or approximately doubled versus the average of the first three quarters, which was good to see. And compared to our peers, it was a strong late sales number of $82 million in the quarter. We had strong pre-funding level in Q4 and also for the full year of 2023. On the contract side, we are experiencing a more mixed winter season market. Profitability is keeping up on the projects we have sold both in the fourth quarter, as you saw, and also further through the winter season. But we are seeing lower acquisition activity in the winter season over the winter season than what we had expected some quarters back.
We anticipate that this will revert and that we will see a more robust summer season this year. We have, during 2023, established a significant new energy business. The highlight for 2023 was obviously that we entered the offshore wind market, and we have now Sanco Swift operating with a 3D spread in the offshore wind market. We are, with our solution, positioned for further growth in this segment in 2024, which I will come back to. Obviously, the combination with TGS is a highlight in Q4, and our shareholders and the shareholders of both TGS and PGS voted in favor almost unanimously on the 1st of December. The process is currently ongoing, planning for an integration process and also ongoing versus the competition authorities in Norway and the U.K., which I will always also come back to later.
I will be brief on the financial summaries, only mention the highlights as Gottfred will come back and review the numbers in more detail. In the fourth quarter last year, we had produced revenues of $227 million. We had produced EBITDA of $127 million and produced EBIT of $33 million, while net cash provided by operating activities sat at $116 million. So over to the order book. The order book at year end sat at $366 million, which is sequentially down from the very strong order book we had in the third quarter 2023, which you will remember was the strongest order book we've had for, I think it was eight years. So the order book year end is still at high levels, more in line with the order book in Q1 and Q2 of last year.
I expect the order book to remain at these high levels through the year. The book position is as of yesterday, so it's not at the same time as the order book. We have booked 20 vessel months in the first quarter, and we have booked 17 vessel months in the second quarter and 15 vessel months in the third quarter. Now, it is important to note that we are now reporting our book positions on eight vessels. The seven vessels we have in 3D mode in the traditional oil and gas market, and also Sanco Swift, which is operating in 3D mode in the wind market, offshore wind market. We are reporting the book position for all these 3D vessels.
On Ramform Victory, there has been quite a bit of discussion and worry on when Ramform Victory will be able to start the large 4D contract for Petrobras in Brazil. As you will remember, this should have started more or less mid-year last year, but that Petrobras have had issues with their permit. We are informed that most of those permit issues are now resolved and there are only formalities left. And we are, together with Petrobras, starting planning for a start of Ramform Victory on this 4D contract early April, which is immediately after Ramform Victory is finished with the current multi-client work she is doing in Brazil. So good news there on the Ramform Victory. And with that, I will leave the word to Gottfred to go through the financials, and then I will be back for more information later.
Thank you. I will start with clearing my throat and then moving to the key financial numbers. So the revenues of $227.3 were in line with what we had pre-announced. They are 9% down from Q4 last year. Produced EBITDA $126.7. That is as well a reduction of 9% compared to Q4 2022. Produced EBIT $33.3 million. IFRS or as reported revenues were higher this quarter than the produced number. The primary reason for that is that we completed and delivered the finally processed data on our 2022 Norwegian Sea campaigns. On operational highlights, we had contract revenues of $83.8 million. We used 45% of our active time for contract acquisition in the quarter. On the project level, the pricing profitability was maintained at level with the summer season. And we reported quite high revenues per active contract day in the quarter.
If we move to multi-client, the total produced revenues were $137.6 million, $82 million late sales, $56 million pre-funding. Pre-funding level or pre-funding rate of 148%, which is a high level and driven by strong pre-funded on our ongoing acquisition projects, as well as some additional sales on surveys in the processing phase. 56% utilization or active vessel time in the fourth quarter impacted by significant steaming and yard time. In addition, the Europe season ended earlier than planned due to weather. We do expect higher utilization in the first quarter in 2024 now and believe that we should get to around 70% area. On the cost, we have a sequential increase of gross cash cost, $146 million in the fourth quarter. We have an overweight of operations in high-cost regions in the quarter.
We're also using more than normal of source vessels in the operations, so using in the fourth quarter source vessels on two projects. Looking forward, we expect that the cost level in 2024 will be relatively consistent with the run rate that we report now for Q4 2023. This is primarily due to increased production with our vessels and increased utilization. Related to that, Ramform Victory will plan to operate for a full year in Brazil versus only the second half of 2023 and an increase of our offshore wind activities. It is obviously also impacted by inflationary cost increases, but these are quite moderate. The cash flow. We had the cash flow from operations of $115.8 in the quarter, $467.2 for the full year. Both reflect strong cash collection.
We managed to avoid, almost at least, an increase of working capital in the fourth quarter, so a very moderate increase. For the full year, we achieved a quite significant reduction of working capital. Looking at net cash flow after investing activities or before financing activities, $50.7 million in the fourth quarter and $182 million for the full year. That is after CapEx, as said, which ended lower than our plan for the year at $89 million. For 2024, we expect CapEx of approximately $125 million. That includes some carryover from last year, as well as expansion of our offshore wind activities. I will be very quick on the balance sheet, in a way, only just noting that our liquidity reserve or cash and cash equivalents amounted to $177.7 million end of year. The last slide that I will comment on today.
We have reduced our interest-bearing debt significantly in 2023. Gross debt or gross interest-bearing debt is down by $273 million. Net interest-bearing debt is down by $75 million, leaving a net interest-bearing debt at the end of the year of $542 million. We're satisfied with that. After the balance sheet date, three things to mention. Firstly, we have now in February repaid the remaining amount of the Term Loan B, which otherwise was due on the 19th of March. Secondly, relating to the super senior loan, instead of using the extension option for that loan, which matures on the 18th of March, we have decided to refinance it and we received commitment from TGS for such refinancing. I should note that the commitment is at terms which are consistent with terms otherwise available to PGS from other sources.
Then lastly, the amounts due to PGS from the arbitration award last fall regarding a transfer fee dispute have now been received in Q1. With that, Rune, I give the podium back to you.
Thank you, Gottfred. I will, as normal, again start with the fleet activity now in February and start in the northwest, if I can call it that, the Sanco Swift operating the 3D spread for offshore wind outside in the New York Bight area. We expect that she will be there through the second quarter before then moving over to the Europe season and continuing work there, which we have just announced. Then further south, you see the Ramform Victory in Brazil currently doing multi-client, as I said. And then she will move over to the very large 4D in Brazil, which will take her to the end of the year, at least. Then moving east, we have the Ramform Atlas in South Africa on a contract job. Further north, you will see Ramform Tethys and Ramform Vanguard in Las Palmas.
Ramform Vanguard finished off her job in January and are waiting for a yard stay, which will start in a few weeks, I think early March. And that is a full classing. So she will be then ready for work again when that is done. Ramform Tethys is currently in Las Palmas, waiting for the next assignment, and we are working with a few alternatives for her. In the Mediterranean, you will see Ramform Titan and Ramform Hyperion, both operating in Egypt, one on multi-client work and the other on contract work. Then in the Far East, Ramform Sovereign is currently on a pit stop in Singapore following completion of the job she had in Malaysia, and she will go back to Malaysia for a fairly large job thereafter is the plan. On the contract bids and leads, and you've seen this before, but I will still explain.
The dark blue line is the dollar value of the tenders we currently have in-house. The light blue line on top is the dark blue line plus the risk-weighted average of the leads we have recorded in PGS in the contract market only. As you can see, which is predominant here, is that the difference between the active leads and the active tenders is increasing and continues to increase. This is an, I would call it, abnormal situation and will adjust over time. We believe it will adjust with tendering activity going up as well as backlog increasing, obviously, because when it moves out of this, it goes into the backlog. We expect that during 2024 into 2025, this thing will normalize itself by lifting the tendering activity graph and the backlog in PGS, which is consistent with what we're hearing from our clients.
On the supply side, we expect that the supply side in 2024 will remain more or less intact with what we have observed in 2023, as illustrated by this graph. Of course, it is still a very consolidated vessel market where Shearwater and PGS control most of the 3D vessel capabilities worldwide. Now over to new energy. As I said, we have established a significant new energy business during 2023. The revenues from this business line in 2023 were approximately $35 million, which builds on the approximately $30 million we had of revenues in 2022. We have now established a fairly sizable level for this business. In 2022, this was only carbon storage-related revenues, both acquisition and data sales. In 2023, there is a combination. We have acquisition for carbon storage. We have data sales from our library related to carbon storage.
Then, very important, we have entered the wind market more or less in the middle of the year and have had continuous operation with Sanco Swift for the offshore site characterization market. The $35 million contains all these elements. Our solution we have brought to the offshore site characterization market is a 3D solution. The norm in this market worldwide is several 2Ds and several geotechnical surveys, which then in combination gives developers of offshore wind parks what they need to know of the subsurface before starting to develop the wind park. Our solution is that you can do one 3D, and together with geotechnical, you can then accelerate the start date for building or developing your offshore wind park. This has attracted and continued to attract considerable client interest. We have had a very successful entry to the market here.
As you know, we are expanding our capabilities. We have ordered a second 3D set or ultra-high-density 3D set, as we call it, for delivery mid-year 2024, which positions us to take a further chunk of this growing market. The outlook for 2024 is that we are currently seeing very high bidding activity for the North Sea season, or maybe more correctly, the Europe season, because it's not only the North Sea, it's other places in Europe as well. We believe we are well positioned to be awarded some of these jobs and therefore grow this business through 2024. We are also, which is interesting, maturing now multi-client prospects for carbon storage, our projects for carbon storage projects.
These are both combination surveys where you do get pre-funding both from a carbon storage player and from an oil and gas player, and also standalone multi-client projects where we're trying to attract pre-funding from carbon storage players alone. This is happening several places in the world. This is not only the North Sea. All in all, the outlook for 2024, we expect a fairly large increase in total revenues in this segment versus 2023. We are very excited about the growth we are seeing in our business in this market. Now over to the merger with TGS. I thought I would explain a little bit about the competition process. As I understand, there are several people that want to understand this further. We have to file with the Norwegian Competition Authorities because we meet the threshold for filing.
In the U.K, we do not meet the thresholds for filing, but the CMA, the U.K. Competition and Markets Authority, has requested a filing, so we also have to file in the U.K. These are the two places we have to file this merger for clearance. The process in the two countries is somewhat different. In Norway, excuse me, in Norway, we sent a draft notification in December, had a pre-meeting explaining our business to the competition authorities, and then we made the final, the formal filing early in January. When the formal filing is made, like we did early in January, there is a first phase of 25 working days where the competition authority gathers more information about the merger and the market.
They talk to our clients and talk to competitors, talk more to us, and then they decide whether they want to take a deeper look at the transaction or not. And they did yesterday decide that they wanted to take another or a deeper look at this transaction after this introductory or first phase of gathering information. So we are moving into a phase II, which lasts for 45 working days and ends then towards the end of April. In the U.K., this is slightly different. In the U.K., there is also a pre-notification filing where you file your document. But then before the U.K. authorities accept that filing has been made, they will ask a lot of questions, and they will talk to clients, they will talk to competitors, ask more questions, ask for more documents.
So similar, I would say, in process to the phase I in Norway is what's going on in the pre-phase in the U.K. We expect that the U.K. will accept our filing sometime towards the end of February. This is an estimation. And then their first phase will start and it has 40 working days, which will run in parallel then with the Norwegian Competition Authorities phase II. So although the two processes are somewhat different, what you can hear is that when you boil it down, the differences aren't that many. The phase I looks very much like the phase I in Norway looks very much like the pre-phase in the U.K. And then they have a deeper look in the 40 and 45 working days, and then they should conclude at approximately the same time.
We expect both TGS and ourselves expect that we will be able to close the merger sometime during Q2, obviously then after we have received clarifications from both the Norwegian and the UKA uthorITy. So this is a little bit to try to explain how these processes work so everyone can have a better understanding of what to expect going forward. So in summary, we had decent multi-client late sales in the fourth quarter and actually quite strong relative to peers. We are experiencing a mixed winter market for contract work. You saw that in the fourth quarter, and we are experiencing similar trends in the first quarter, if I can say that. And then as I have explained, we have established a significant new energy business. We expect that business to grow quite significantly in 2024.
Obviously, the combination between TGS and PGS to create the premier energy company is on track both in terms of the planning of the merger and with respect to the process versus the two competition authorities. So with that, Bård, I will give the word to you so that we can take some questions.
Yeah. Thank you, Rune Olav. We have some questions from the people on the web. So the first question is from Christopher Møllerløkken in SpareBank 1 Markets. Vessel utilization in 2023 ended at 73%, up from 71% in 2022. What's your ambition for 2024?
Well, the ambition is obviously always to have as high vessel utilization as possible. I think we expect to increase vessel utilization somewhat into 2024. We have not given a number, and I will not guide on the number.
As we have seen, we do not have full utilization in the first quarter, but we expect that to be much stronger and much more robust into the summer season and also when we get into the back end of 2024. Obviously, we also expect to merge in the middle of the year. And what then may happen to our vessel utilization, how much vessel capacity TGS will require, is difficult for us to predict as we are currently operating as competitors.
Another question from Christopher. I understand why you don't guide on multi-client investments for 2024, but could you provide any comments regarding what you would expect of a fair fleet mix in 2024 in terms of contract versus multi-client?
Yeah. And the reason we don't guide, obviously, on the multi-client investments is that we are in the middle of a merger process.
But I think if you assume, let's say, a similar multi-client investment level on a standalone basis for us this year as last year and maybe a slight overweight of contract work through 2024, I think you're pretty close to what we are looking at on a standalone basis. And then this may change, obviously, as the merger is completed. Yeah.
And we have two questions from Mick Pickup at Barclays. If I look at 4Q versus 4Q a year ago, you had 45 months of capacity booked for $460 million of order book. Now it's 52 months booked for an order book of $366 million. Can you talk about the dynamics of pricing given that on a first glance, it appears to be down? Is this wind-related?
Well, I think some of it is obviously wind-related, but I don't think that's the main effect.
The main effect is that in the booked position, we have several both fairly large multi-client program and contract work that has yet to be announced to the market and that is not sitting in the order book as of year-end. There is a larger difference between the booked position, which is as of yesterday, and the order book, which was as of year-end. The reason for this, obviously, is that as we have communicated many times, we cannot announce these jobs before they are signed and we're allowed to announce them by the client. Therefore, there will be this little time lag that we are experiencing. Right now, since we are reporting quite late, the time lag between year-end and now is larger than normal and certainly larger than last year.
There is also the point you point to there, Mick, that the day rate, because the cost of the wind jobs are, of course, lower. The margins are not lower, but the day rates are lower on average for the wind work we have booked for the first nine months than what you would see on average for a contract job in our normal operations for oil and gas.
Mick also has a question regarding the competition process. Can you confirm that no other countries need to look at the deal except for Norway and the U.K.?
Yes, that is correct. No other countries need to look at the transaction.
Very good. We have another question that's related to debt repayment, Gottfred. Are you planning to pay the term loan of $75 million in Q2? This is the one due in 2026.
There are no current plans with respect to that in a way. I can refer to what we in a way, these disclosures we have in the financial statements and Note 11. The outstanding debt will be impacted by the merger. With respect to the term loan, the $75 million, that in a way, the $70 million Term Loan B has been repaid already. The term loan of $75 million has a, depending on timing of the merger completion, a put option on the loan. So it may well be put on us, and it would have to be dealt with as part of completing the merger. There are no plans, call it on a standalone basis. We have no plans to repay it in Q2.
We have another question from Baptiste Lebacq in ODDO BHF related to new energy.
In the medium term, let's say next three to five years, how many vessels could be dedicated to new energy business? Could you transform existing assets or build new one?
Yeah, in terms of the vessel, our current plan would clearly be to utilize our existing vessels. In the near term, we may call it equip one of our current 3D vessels also with the wind kit. So that is a hybrid and can work both these markets again in the very near term. In what you're asking, in the three to five a year time frame, I think we will likely utilize some of our existing vessels, in particular on carbon storage, which is identical to what we do for oil and gas. It's identifying reservoirs several thousand meters below the seabed.
For offshore wind, it's probably a combination of utilizing existing vessels, maybe one or two, and chartering in, I would say, smaller vessels, more adapted to that kind of activity. But it's a little bit different. We have no plans to build vessels for this activity, but that obviously depends on how large it will be. I can easily foresee us having three to five vessels full year, full time on these activities in three to five years. That is not difficult to see. So a significant part of what we do.
Very good. Then we have another question related to the competition filing process. It seems you don't expect phase II in the U.K. Is that correct? And also, can you please let us know if you expect to offer certain divestitures in order to obtain the Norwegian merger control approval?
Take the U.K. first.
I think it's fair to say, and as we'll follow from the slide, that we don't expect phase II in the U.K. I mean, this is our expectations. The main reason for that is that the activity we have had in the U.K. over the last, call it, three to five years has been fairly low and for TGS very low. So we don't expect the effect of the U.K. market to be significant. And therefore, we believe that it would be sufficient with the phase I. But we will see. I think it's too early to say to what extent we will offer any remedies or mitigating factors to get approval in Norway or in the U.K. I think currently we believe that we will be approved without having to offer mitigating measures.
But once again, that can be ruled out, but it is too early to speculate what they may be.
Very good. We don't have any further questions from the people on the web. We can pause for a short moment to allow people to type in any last questions they may have. Well, it doesn't seem to be any further questions from the people on the web. But if you have any follow-up questions, I will be available later today. So feel free to send an email with the questions you may have. So with that, I thank you all for participating and logging on to the webcast and for coming to [Oslo] to watch the presentation. So have a nice day.
Thank you.
Thank you.