Magseis ASA. Fourth quarter. Dicks Vei 10B, N-1366 Lysaker NORWAY, Phone:

Transcription

1 Q Magseis ASA Fourth quarter Dicks Vei 10B, N-1366 Lysaker NORWAY, Phone:

2 HIGHLIGHTS Revenue EBITDA USD million USD million Q1 Q2 Q3 Q Q1 Q2 Q3 Q Completed Barents Sea multi-client programmes Fourth quarter 2015 Commenced OBS survey for oil-major Petronas offshore Malaysia in the end of December Fourth quarter earnings are impacted by the vessel transit from the Barents Sea to Malaysia Revenues in the fourth quarter of USD 5.5 million compared to USD 12.8 million in the third quarter Fourth quarter EBITDA of USD -4.2 million compared to USD 2.2 million in the third quarter EBIT of USD million compared to USD -0.1 million in the third quarter Net Income of USD million compared to USD -0.3 million in the third quarter Subsequent event Contract with BGP to conduct OBS work for Saudi Aramco with duration of 9 months and likely extension option for an additional 12 months. The largest project award since inception of Magseis. Secured substantial pre-funding from BGP to assist in the financing of required investments. 2

3 CEO STATEMENTS During the fourth quarter we conducted two multi-client surveys in the Barents Sea before starting the transit towards Malaysia and the survey for Petronas. The Barents Sea survey builds on the work we have done in the area previously and we have now started to build a footprint in a very attractive area, situated as it is between Statoil s Johan Castberg development and Lundin s Alta and Gohta discoveries. The imaging uplift that OBS provides in the area will be essential to unlocking the potential of these blocks and we are already experiencing interest in further work in the area based on the results we have produced. The transit to Malaysia was conducted according to schedule and our vessel Artemis Athene arrived in Singapore on December 12 as part of the preparations ahead of starting the Petronas survey. This project marks a major milestone for Magseis as the first major project undertaken for a National Oil Company as well as the first large scale deployment of our G2 technology which provides an increase in battery life of more than 50% and much faster download speeds. On 10 February Magseis announced that it had been awarded, together with our partner BGP (China s largest geophysical company and a subsidiary of CNPC) the contract for Saudi Aramco s S-78 project in the Red Sea. This pilot survey has a duration of 9 months and is likely to be expanded by 12 months or more. We will deploy more than 350km of cable across a complicated survey area that comprises both shallow and deep water operations. This represents the largest spread ever deployed for an OBS survey and highlights the direction in which the industry is moving. Our full year figures with Revenue of USD 40.7 million and EBITDA of USD -2.3 million are well below our expectations and reflect a challenging year in which utilisation during Q1 and Q4 was weak. Despite this we managed to keep our crew fully employed through the year and more importantly continued to build our track record with the Aramco and Chevron surveys. During 2015 we have made significant investments to expand our sensor and cable capacity and introduce our G2 technology. This has increased our productivity significantly - enabling us to win contracts in a market where our competitors are reducing capacity. With the Petronas and Aramco contracts we are now effectively sold-out well into 2017 and have established ourselves firmly a leading international OBS service provider. On this basis Magseis is positioned to make 2016 our best year to date and with a strong foundation for further growth in the years to come. Ivar Gimse - CEO Magseis KEY FINANCIALS In thousands of USD Profit and loss Q Q YTD 2015 YTD 2014 Revenues Cost of sales EBITDA EBIT Net profit/loss Basic earnings per share Financial position Total assets Total liabilities Total equity Equity ratio 73.9% 76.1% Cash flow Net cash flow from operating activities

4 BOARD OF DIRECTORS REPORT FINANCIAL REVIEW Revenues Revenues for the fourth quarter of 2015 was USD 5.5 million whereas USD 2.4 million relates to the multi-client and contract work in the Barents Sea and USD 3.1 million relates to the Petronas survey in Malaysia which commenced in late December. This compares to total revenues of USD 11.8 million in the fourth quarter in The decrease mainly reflects the long transit required for Artemis Athene from the Barents Sea to Malaysia. The revenue for the full year 2015 amounted to USD 40.7 million compared to USD 56.6 million in The decrease results primarily from mobilisation incurred for Artemis Athene to the Red Sea and back during Q1 and the mobilisation to Malaysia during the fourth quarter. Cost of sales Cost of sales in the fourth quarter 2015 was impacted by a significant capitalisation of cost related to the multiclient survey in Tåkehavet. This resulted in a quarterly cost of sales in 2015 of USD 6.5 million compared to USD 10.0 million in the same period in In the same quarter, the mobilisation cost to Malaysia and Petronas work is reflected in the P&L. Cost of sales for the full year 2015 amounted to USD 31.4 million compared to 39.2 million in The reduction is mainly related to reduced time-charter hire as a consequence of the capacity upgrade being combined with the vessel owner s 5-year classing of the Athene in March, the capitalised cost related to the Tåkehavet multi-client survey and a general decrease in fuel and battery consumption resulting from the large portion of mobilisation during Selling, General and Administration expenses Selling, general and administration expenses amounted to USD 2.1 million and USD 7.6 million in the fourth quarter and the full year 2015, respectively. This compares to USD 2.0 million in the fourth quarter in 2014 and USD 7.8 million in the full year The decrease is mainly due to a strengthened USD in Research and development Recognised research and development (R&D) expenses for the fourth quarter in 2015 were USD 0.6 million compared to USD 0.6 million in R&D expenses in 2015 were USD 2.1 million compared to USD 1.6 million in The increase in the full year expenses reflects the increased activity level in the deep-water development project conducted in cooperation with Shell Global Solutions. The objective is to achieve capabilities to deploy our MASS system in ultra-deep water with 4D accuracy. From 1 July 2015 all expenses related to the project are capitalised as an intangible asset, and results are expected during early Q Depreciation In the fourth quarter of 2015, the depreciation of seismic equipment was USD 2.8 million compared to USD 1.9 million in the same period in Increased depreciation results from increased investments and capacity on Artemis Athene. Due to this depreciation for the full year has increased by USD 2.0 million, from USD 7.1 million in 2014 to USD 9.2 million in Amortisation Fourth quarter amortisation was USD 3.6 million and mainly relates to the multi-client library (USD 3.5 million). Amortisation in 2014 was USD 0.1 million. In addition to the amortisation of the multi-client library, full year 2015 includes amortisation of other intangibles of USD 0.4 million and totals to USD 4.0 million. Total amortisation in 2014 was USD 0.5 million. EBITDA and EBIT The EBITDA was USD -4.2 million in the fourth quarter of 2015 and USD -2.3 million for the full year. This compares to USD -1.4 million in the fourth quarter of 2014 and USD 5.1 million for the full year EBIT was USD million in the fourth quarter of 2015 and USD million for the full year 2015 compared to USD -3.5 million in the fourth quarter of 2014 and USD -3.6 million for the full year Balance Sheet At 31 December 2015, the Group s equity was USD 53.9 million compared to USD 62.4 million at 31 December The decrease from year end 2014 is a result of the net loss offset by the capital raise of USD 7.5 million conducted in June Tangible and other intangible assets amounted to USD 50.9 million at 31 December 2015 compared to USD 48.3 million in The increase reflects investments in seismic equipment to expand the capacity on Artemis Athene, capitalisation of expenses related to research and development less depreciation and amortisation. 4

5 At 31 December 2015, a net multi-client library of USD 0.9 million was recognised based on the survey conducted in the Barents Sea during the fourth quarter of At 31 December 2015, current assets amounted to USD 21.1 million compared to USD 33.7 million at 31 December The reduction results from a decrease in trade receivables and, cash and cash equivalents resulting from investments to increase the capacity on-board Artemis Athene. Non-current liabilities was USD 6.3 million at 31 December 2015 compared to USD 4.1 million at 31 December The increase is due to funding received, from Shell Global Solutions related to the cooperation agreement for development of a deep-water solution, for seismic operations. This is recognised as a finance arrangement in the financial statements. Refer to note 11 Research and development for further information. Current liabilities at 31 December 2015 amounted to USD 12.7 million compared to USD 15.5 million at 31 December The decrease from the beginning of the year mainly reflects a relatively high level of trade payables and accruals at year-end 2014 related to receipt of new equipment. Cash Flow Cash flow from operating activities was USD -3.6 million for 2015 compared to a positive USD 5.9 million during the same period of The deviation from EBITDA (USD -2.3 million) is due to changes in the working capital. The net cash outflow from investing activities amounted to USD million for 2015 compared to USD million during the same period of In 2015, cash flow from finance activities was USD 9.3 million and reflects a share issuance in June 2015, and the proceeds related to the cooperation agreement with Shell Global Solutions offset by instalments and paid interest relating to the finance lease and Shell finance arrangement. The cash flow from finance activities for 2014 was USD 23.3 million and reflects the share issuance conducted in April 2014 and proceeds from a convertible loan. OPERATIONAL COMMENTS Fourth quarter 2015 took the Artemis Athene from the arctic to South East Asia, but not before successfully conducting two surveys in the Tåkehavet/Havis areas of the Barents Sea. Operations in the Barents Sea were concluded towards the end of October and Artemis Athene started mobilisation to Malaysia, via Bergen and Singapore. Preparations for the work offshore Malaysia included an additional source vessel. The survey involves a so called rolling spread and require a separate vessel to conduct the shooting while the Artemis Athene primarily handles the MASS* cable. Following mobilisation tests at the end of 2015 commercial operation commenced with cable deployment on 27 December. The survey offshore Malaysia adds multi vessel operations to the Magseis portfolio and extend our experience with regards to handle complex survey designs, including continuous rolling to increase our productivity. EMPLOYEES Per 31 December 2015 Magseis had a total of 77 full-time employees (31 December 2014: 74) including offshore Seismic crew of 42 employees (31 December 2014: 43). OUTLOOK During the first quarter Magseis has started work on the survey for Petronas in Malaysia. The project has experienced some delay related to conducting a rolling operation for the first time, however, performance is rapidly improving and we have taken yet another important step up the learning curve. On 10 February Magseis announced that it has been awarded the largest project to date, by BGP for the provision of OBS acquisition services for Aramco s S-78 survey. The survey duration is estimated at 9 months with a potential extension of 12 months. The survey is expected to commence during Q3 2016, securing backlog well into The contract will require significant investments to further increase our efficiency, of which a major part has been secured through a pre-payment financing with BGP. In the current market, liquidity management is a key focus and a program has been initiated to adapt our cost base to market conditions. At the same time Magseis is undertaking tenders for a significant volume of work related to the 2017 season and we are positioning ourselves for further growth as our backlog develops. *MASS: Marine Autonomous Seismic System 5

6 STATEMENT OF FINANCIAL COMPLIENCE We confirm, to the best of our knowledge, that the condensed consolidated interim financial statements for the period 1 January to 31 December 2015 have been prepared in accordance with current applicable accounting standards and IAS 34 Interim Financial Reporting, and gives a true and fair view of the assets, liabilities, financial position and results of the group. We also confirm to the best of our knowledge that the condensed consolidated interim financial statements present a fair view of the development and performance of the business during the period, and together with the 2014 Annual Report a description of the principal risks and uncertainties facing the Group. Board of Directors of Magseis ASA, Lysaker, 25 February 2016 Anders Farestveit, Chairman Noralf Matre, Non-executive Director Jan Gateman, Director and Senior Vice President Bettina R. Bachmann, Non-executive Director Mari Thjømøe, Non-executive Director Ivar Gimse, Chief Executive Officer 6

7 20 LARGEST SHAREHOLDERS 31 DECEMBER 2015 Shareholder Holdings WESTCON GROUP AS % ANFAR INVEST AS % GEO INNOVA AS % CLIPPER A/S % BARRUS CAPITAL AS % VPF NORDEA KAPITAL % J.P. MORGAN CHASE BANK N.A. LONDON % OP-EUROPE EQUITY FUND % GNEIS AS % VERDIPAPIRFONDET KLP AKSJENORGE % VPF NORDEA AVKASTNING % STOREBRAND VEKST % STOREBRAND NORGE I % EUROCLEAR BANK S.A./N.V. ('BA') % INVESCO PERP EUR SMALL COMP FD % KOMMUNAL LANDSPENSJONSKASSE % MP PENSJON PK % WESTMAR AS % INVESCO FUNDS % J.P. MORGAN LUXEMBOURG S.A % Total 20 largest shareholders % Other shareholders % Total outstanding shareholders % 7

8 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME In thousands of USD Note Q (unaudited) Q (unaudited) YTD 2015 (unaudited) Q (unaudited) YTD 2014 (audited) REVENUE AND OTHER INCOME Revenue Total revenue and other income OPERATING EXPENSES Cost of sales Research and development expenses Selling, general and administrative costs Other expenses Depreciation Amortisation 6, Impairment Total operating expenses OPERATING PROFIT (LOSS) FINANCIAL INCOME AND EXPENSES Finance income Finance costs Net finance costs NET PROFIT (LOSS) BEFORE TAX Income tax expense NET PROFIT (LOSS) Basic earnings (loss) per share , Diluted earnings (loss) per share OTHER COMPREHENSIVE INCOME Currency exchange differences Total comprehensive income (loss) for the period, attributable to Owners of the Company

9 CONDENSED CONSOLIDATED BALANCE SHEET In thousands of USD Note Year End 2015 (unaudited) Year End 2014 (audited) ASSETS Non-current assets Equipment Multi-client library Other intangible assets Total non-current assets Current assets Cash and cash equivalents Trade receivables Other current assets Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Shareholders' equity Share capital Share premium Other equity Retained earnings Currency translation reserve Total equity attributable to equity holders of the Company TOTAL EQUITY LIABILITIES Non-current liabilities Obligation under finance lease Other non-current financial liabilities Total non-current liabilities Current liabilities Trade payables Current tax payable 18 0 Current portion of obligations under finance lease Other current liabilities Total current liabilities TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES

10 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY In thousands of USD Share capital Share premium reserve Share based payments reserve Retained earnings Currency translation reserve Total Balance at 1 January Profit / (loss) for the period Other comprehensive income Total comprehensive income for the period Share issuance Conversion loan Fair value adjustment convertible loan Expenses related to share issuance Expenses related to conversion of loan Share-based payments (options) Balance at 31 December Balance at 1 January Adjustments to the opening balance Adjusted balance at 1 January Profit / (loss) for the period Other comprehensive income Total comprehensive income for the period Share issuance Expenses related to share issuance Share-based payments (options) Balance at 31 December

11 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW In thousands of USD Note YTD 2015 (unaudited) YTD 2014 (audited) CASH FLOWS FROM OPERATING ACTIVITIES Profit / (Loss) before tax Adjustment for: Income tax paid Deferred lease discount amortisation Depreciation and amortisation 5, 6, Impairment Fair value adjustment convertible loan Share based payments expense Interest expense Interest income Working capital adjustments: (Increase) / decrease in current assets Increase / (decrease) in trade and other payables and accruals Net cash from operating activities Cash flows from investing activities Interest received Acquisition of equipment Payments for capitalised development and intangibles Multi-client library investments Net cash used in investing activities Cash flows from financing activities Proceeds from loan Payment of finance lease obligation Proceeds from issue of share capital Expenses related to issue of share capital Interest paid Net cash from financing activities Net change in cash and cash equivalents Cash and cash equivalents at 1 January Net foreign exchange difference Cash and cash equivalents at period end

12 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. Reporting entity Magseis ASA is a public limited liability company listed on Oslo Axess and incorporated in Bærum, Norway. The address of the Company s registered office is Dicks Vei 10b, 1366 Lysaker. These condensed consolidated interim financial statements comprise Magseis ASA (referred to as the Company ) and its subsidiaries (together referred to as Magseis or the Group ). The Group is primarily involved in marine seismic operations and seismic-related activities. 2.1 Basis of preparation (a) Statement of compliance The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and adopted by the European Union (EU). The condensed consolidated interim financial statements does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the annual financial statements as at 31 December The condensed consolidated interim financial statements were authorised for issue by the Board of Directors on 25 February (b) Basis of measurement The condensed consolidated interim financial statements have been prepared on the historical cost basis except for financial instruments at fair value which are recorded through the profit and loss. (c) Going concern The condensed consolidated interim financial statements have been prepared on the going concern basis. (d) Functional and presentation currency Since 1 July 2014, the Group s functional and presentation currency has been United States Dollars (USD). All financial information is presented in USD and has been rounded to the nearest thousand unless otherwise stated. 2.2 Basis for consolidation The condensed consolidated interim financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December Subsidiaries are entities controlled by the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Intra-group balances and transactions, and any unrealised income and expense arising from intra-group transactions, are eliminated. 2.3 Significant accounting judgements, estimates and assumptions The preparation of the Group s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The accounting judgements, estimates and assumptions used to prepare the condensed consolidated interim financial statements are the same as those used to prepare the 2014 annual financial statements. The accounting judgements, estimates and assumptions used to prepare the condensed consolidated interim financial statements are the same as those used to prepare the 2014 annual financial statements. 12

13 2.4 Summary of significant accounting policies The accounting principles used to prepare the condensed consolidated interim financial statements are the same as those used to prepare the 2014 annual financial statements. There are no new standards effective in 2015 that have had a significant impact to the Group s financial statements. 3. Operating segments The Group is operating in one segment being geophysical surveys with respect to products and services. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole. 4. Operating Revenues In thousands of USD Q Q YTD 2015 YTD 2014 Revenue and other income Contract revenue Multi-client revenue Total revenue and other income

14 5. Equipment In thousands of USD Office machines Seismic equipment Seismic equipment under finance lease Under construction Total Cost Balance at 1 January Additions Disposals Impairment Adjustment currency conversion Balance at 31 December Balance at 1 January Asset completed and ready for intended use Additions Disposals Impairment Balance at 31 December Depreciation and impairment losses Balance at 1 January Depreciation for the year Disposals Impairment Adjustment currency conversion Balance at 31 December Balance at 1 January Depreciation for the year Disposals Impairment Balance at 31 December Carrying amounts at 1 January at 31 December at 1 January at 31 December

15 Useful life of equipment Useful life of seismic equipment and office machines are 3-7 years. Capitalisation During 2015 Magseis has capitalised USD 1.5 million (2014: USD 1.8 million) in cost relating to the development of the seismic equipment. In the fourth quarter of 2015, USD 0.7 million of current year s capitalised cost has been reclassified to intangibles. Impairment Magseis has during 2015 recorded an impairment related to damaged equipment of USD 119 thousands (2014: USD thousands). 6. Multi-client library In thousands of USD Cost Balance at 1 January 0 0 Additions Disposals 0 0 Balance at 31 December Amortisation Balance at 1 January 0 0 Amortisation for the period Disposals 0 0 Impairment 0 0 Balance at 31 December Carrying amounts at 1 January 0 0 Balance at 31 December Multi-client library In the fourth quarter of 2015 Magseis finished a multi-client project in the Barents Sea. The net booked value at 31 December 2015 relates to expected late-sales in the first quarter of The Company has adopted the amendments to IAS 38 Intangible asset for periods starting on or after January 1, 2016: During the work in progress (WIP) phase, amortisation will continue to be based on total cost versus forecasted total revenues of the project. After a project is completed, a straight-line amortisation is applied. The straight-line amortisation will be assigned over the project s remaining useful life, which for most projects is expected to be 4 years. The straight-line amortisation will be distributed evenly through the financial year independently of sales during the quarters. The minimum amortisation policy will be discontinued from 1 January

16 7. Other intangible assets In thousands of USD Cost Balance at 1 January Additions Disposals 0 0 Adjustment currency conversion 0-28 Balance at 31 December Amortisation Balance at 1 January Amortisation for the period Disposals 0 0 Adjustment currency conversion 0-1 Balance at 31 December Carrying amounts at 1 January Balance at 31 December Development costs In the fourth quarter of 2015, USD 2.1 million related to research and development projects has been capitalised. Of total additions, USD 0.7 million related to capitalised cost during 2015 which has been reclassified from equipment. 16

17 8. Share capital and reserves The shares of Magseis are listed on Oslo Axess. SHARE CAPITAL ISSUED Number of shares Share capital USD 000 Share premium reserve USD 000 Ordinary shares - Issued and fully paid At 1 January April 2014 Private placement of 254,274 at 475 NOK per share May 2014 Share split - 20 for June million USD loan converted for 1,011,101 at NOK per share Capital raising costs At 31 Dec Ordinary shares - Issued and fully paid At 1 January June 2015 Private placement of 2,655,453 shares at NOK 22 per share Capital raising costs At 31 Dec No dividends were paid during the period ended 31 December 2015 (2014: USD 0). 9. Related parties In 2015, share-options were granted to employees. The grants have the a strike price between NOK 22 and 25, and vesting criteria of which 20% become exercisable after one year, 30% become exercisable after two years and 50% become exercisable after three years. As part of the grants, Ivar Gimse, CEO, Mikkel Ektvedt, CFO, and Jan Gateman, VP Technology, were all granted 15,000 share-options each while Bjørn Jensen, COO, was granted 5,000. All grants to senior management have a strike price of NOK 22. After this, Ivar Gimse holds a total of 265,000 options, Mikkel Ektvedt 281,580 options, Jan Gateman 175,000 options and Bjørn Jensen 105,000 options. Magseis has recognised share-based expense of USD 0.6 million in 2015 (2014: USD 1.1 million). Key management personnel and director transactions A number of key management persons and board members, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities. A number of these entities transacted with the Group in the reporting period. The terms and conditions of the transactions with management persons, board members and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm s length basis. The aggregate value of transactions and outstanding balances related to key management personal, board members and entities over which they have control or significant influence were as follows: 17

18 RELATED PARTIES TRANSACTIONS AND OUTSTANDING BALANCES: In thousands of USD Transaction value Balance outstanding Name Transactions Note 31 Dec Dec Dec Dec.2014 J B Gateman Consultant costs (I) N Matre/Westcon Group Leases (II) N Matre/Westcon Group Other services (III) Total (I) J B Gateman is engaged as an independent consultant as Senior Vice President. (II) Relates to time charters (TC) for two vessels and a sale and leaseback arrangement. As part of the TC agree ment for Artemis Athene, Westcon Group also delivers Marine Management services. In 2015 this cost amounts to USD 0.5 million. As at 31 December 2015 the remaining time charter lease term is 3 years and the sale and leaseback is 2 years and 11 months. (III) In addition to the leases Westcon Group also delivered yard services during Senior unsecured loan On 18 December 2015, shareholders and board members Anders Farestveit and Jan Gateman provided Magseis with a senior unsecured loan with a principal of NOK 4.0 million (approx. USD 450 thousands). The loan matures 18 December 2020 and has an interest of 5% p.a. The loan will be repaid in semi-annual instalments with first instalment falling due in June In 2015, USD 1.0 thousand is recognised in the profit and loss. 10. Leases Operating leases The TC agreements with Westcon Group (related party) is classified as an operating lease. The table below sets out the future minimum lease payments of the arrangement based on full day rates: FUTURE MINIMUM LEASE PAYMENTS OPERATING LEASES In thousands of USD 31 December December 2014 Less than one year Between one and five years More than five years 0 0 Total

19 Finance lease The sale and leaseback arrangement with Westcon Group (related party) is treated as a finance lease. Future minimum lease payments under the finance lease together with the present value of the net minimum lease payments are as follows: FUTURE MINIMUM LEASE PAYMENTS FINANCE LEASES In thousands of USD Future minimum lease payments 31 December December 2014 Present value of minimum lease payments Future minimum lease payments Present value of minimum lease payments Less than one year Between one and five years More than five years Total minimum lease payments Less amounts representing finance charges Present value of minimum lease payments Refer to note 9 Related parties for further information about leases with related parties. 11. Research & Development In September 2015 Magseis and Shell Global Solutions ( Shell ) entered into a cooperation agreement related to their joint development program, where Shell funds parts of the development cost borne by Magseis. Due to the content of the arrangement, the funding is treated as a liability in the financial statements under Other non-current financial liabilities and amounts to USD 3.0 million at 31 December 2015 (2014: USD 1.2 million). The liability assumes successful commercialisation of the developed product. If the development for any reason is cancelled or the product never commercialises, Magseis has no obligation to repay the liability. 12. Capital commitments Future minimum commitments relating to equipment are as follows: In thousands of USD 31 December December 2014 Contracted but not yet provided for and payable: Within one year One year later and no later than five years Later than five years 0 0 Total Dicks Vei 10B, N-1366 Lysaker NORWAY, Phone: