Norway's TGS-NOPEC Geophysical (OSL:TGS, Financial), which is our lone position in the Energy sector, saw its shares decline. The company provides geoscience data to oil and gas exploration and production companies worldwide. The ongoing struggles in the energy industry have had a markedly negative impact on the exploration budgets of TGS-NOPEC's customers. Given the cyclical nature of its business, we have always sought to manage our position in an effort to take advantage of this cyclicality, especially in light of the company's ability to rapidly flex up and down its operating and capital expenditures to continue generating cash in even the most severe downturns. To that point, we were pleased that TGS-NOPEC has been effectively managing its business through an extraordinarily difficult period. For example, the company generated improved cash flow from operations in 2Q20 compared to 2Q19. Its balance sheet also remains strong, positioning TGS to continue generating strong cash flow and industry-leading returns on capital.
From Royce Investments Partners' International Premier third-quarter 2020 update and outlook.
