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.
