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Royce Funds Comments on TGS-NOPEC Geophysical Co.

Lauren Romeo: A recent addition to the Premier portfolio is a company called TGS-NOPEC ( OSL:TGS ), which is a provider of seismic data to energy companies that are doing exploration for oil and gas offshore. Seismic data is critical to E&P companies as they constantly need to replenish their reserves. TGS-NOPEC has been doing seismic surveys for decades, and as a result it's built up an extensive seismic data library that is really a competitive advantage for the company.

TGS-NOPEC has several characteristics that we like in Premier companies, including an asset-light business model and a variable cost structure. Unlike most of its competitors, TGS-NOPEC does not own the vessels that go out and shoot the seismic data. As a result, the company is able to maintain high operating profit margins even in down periods for the industry.

TGS-NOPEC is a great example of how companies find their way into the Premier Fund. It's a name that we've owned in other Royce Funds for many years, so we're very familiar with that company and have lived with management through different cycles. We knew it was a company that we wanted to own when the price of oil fell 50% in the back half of last year that had a severely negative impact on oil services companies. As a result, TGS's market cap came back into the buyable range for the Premier Fund and, as a result, we were ready and able to take advantage of that opportunity.

From Royce Premier Fund: Looking for Enduring Franchises .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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