Magseis ASA Q2 2018 16 th August 2018 Expanding operational footprint
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AGENDA Introduction Financials Market development and operations Summary 3
Highlights Q2 2018 Financial Performance Revenue of USD 19.7m and EBITDA of USD 5.2m Net cash flow from operations USD 3.2m Sufficient funding for node CAPEX program Operational Performance Successfully scaling from one to three crews in operation Interchangeable node covering cable, ROV & rope deployment Focus on more efficient and cost effective solutions Launching MASS III node, 150 days battery life with 40% CAPEX reduction Extended Athene on flexible charter at reduced rates No new vessel on long-term charter - cost base flexibility Further growth, backlog and outlook Three contract awards and backlog at USD 65m Continued guidance of expected revenue for 2018 of USD 100m 4
Corporate snapshot Geophysical company founded in 2009 with first operation in 2013 Develop and operate proprietary technology to be applied in seismic acquisition operations Headquarter in Oslo, Norway with offices in Stockholm, Singapore and Houston 168 employees of which ~45% offshore $ OSE:MSEIS MCAP USD~170 million Transferred to main list in JUN 18 5
AGENDA Introduction Financials Market development and operations Summary 6
Q2 2018 results - Comprehensive income In USD thousands Q2 2018 (unaudited) % Q2 2017 (unaudited) % YTD 2018 % FY 2017 (audited % Revenue 19 718 19 399 44 283 73 877 Cost of sales 10 114 8 659 19 805 35 701 Research and development 670 514 1 231 2 002 SG&A and other expenses 3 741 1 828 7 683 10 039 EBITDA 5 193 26.3 8 398 43.3 15 563 35.1 26 136 35.4 Depreciation & Amortisation 4 196 3 688 7 948 15 611 Impairment 0 0 0 233 EBIT 997 5.1 4 710 24.3 7 616 17.2 10 292 13.9 Net interest and fx (gain)/loss 1 311 560 1 502 397 Other finance cost 0 0 0 0 Net finance costs 1 311 560 1 502 397 EBT -314 4 151 6 114 9 895 Tax 227 838 987 3 199 Net income -540-2.7 3 313 17.1 5 127 11.6 6 696 9.1 Revenue Mainly related to Saudi Arabia Cost of sales & SG&A Scaling up operations 3 parallel operations in Q318 Scaling up sales & administration Depreciation Increased node pool to 14 000 Finance Unrealized exchange loss of USD 1,1m due to weakening NOK vs USD in Q218 Tax Withholding tax in Saudi Arabia net of USD 600k received from previous survey Currency translation differences 0 0 0 0 Total comprehensive income -540 3 313 5 127 6 696 7
Second quarter 2018 results - Balance sheet In USD thousands YTD 2018 (unaudited) YTD 2017 (audited) YE 2017 Equipment and other intangibles 94 450 59 930 74 416 Multi-client library 0 0 0 Cash and cash equivalents 36 168 33 657 29 776 Trade receivables 24 890 21 404 9 137 Stock (fuel and batteries) 2 616 1 318 1 752 Other current assets 5 105 4 714 8 469 TOTAL ASSETS 163 229 121 023 123 549 Share capital 545 438 438 Share premium 178 508 141 506 141 486 Retained earnings and other reserves -41 828-46 875-46 884 TOTAL EQUITY 137 225 95 069 95 040 Obligation under finance lease 0 447 0 Other non-current financial liabilities 12 447 13 675 13 049 TOTAL NON-CURRENT LIABILITIES 12 447 14 122 13 049 Trade payables 5 900 4 045 6 010 Current tax liability 765 1 489 1 111 Other current liabilities 6 892 6 298 8 338 TOTAL CURRENT LIABILITIES 13 557 11 832 15 460 Trade receivables comprising BGP/Saudi Aramco 1 overdue invoice end June paid in July Other current assets Prepayments and deposits of USD 3.5m Equity ratio of 84.1% In compliance with all covenants Liabilities Senior debt from Export Credit Norway and Innovation Norway of USD 7.0m @ 4.15% interest (split non-current USD 5.1m and USD 1.9m current) Shell Deep Water R&D funding: USD 7.3m (contingent liability) Received non-binding indicative term-sheet for funding of new nodes and working capital TOTAL LIABILITIES 26 003 25 955 28 509 TOTAL EQUITY AND LIABILITIES 163 229 121 023 123 549 8
Second quarter 2018 results - Cash flow In USD thousands Q2 2018 (unaudited) Q2 2017 (unaudited) YTD 2018 FY 2017 (audited) Earnings before tax -314 4 151 6 114 9 895 Depreciation & Amortization 3 493 2 044 7 012 12 555 Net working capital adjustments 64-15 677-16 125 1 708 Cash flow from operations Positive cash flow from operations; overdue trade receivables end June paid in July Net cash flow from operating activities Net cash flow from investing activities Net cash flow from financing activities 3 244-9 482-3 000 24 157-10 996-8 827-25 848-44 557-676 -2 229 35 240 31 201 Cash flow from investments USD 11m in new CAPEX for new nodes according to growth plan Cash from financing Equity issue in FEB 2018 sufficient to finalise CAPEX program for 10 000 new nodes Net change in cash and cash equivalents -8 429-20 538 6 392 10 801 Cash balance at the beginning of the period 44 597 54 195 29 776 18 974 Cash balance at period end 36 168 33 657 36 168 29 776 Cash position Robust cash position of USD 36.2m 9
Transfer to Oslo Børs On 1st June 2018, Magseis ASA transferred its listing of shares to Oslo Børs (Oslo Stock Exchange). This will bolster the company s exposure to capital markets and investors globally 10
KEY FIGURES Q2 2018 $ MILLION REVENUE 19.7 $ MILLION $ MILLION EBITDA 5.2 19.4 19.7 NET PROFIT -0.5 $ MILLION $ MILLION CASH BALANCE 36.2 8.4 5.2 REVENUE Q2 2017 EBITDA Q2 2017 REVENUE Q2 2018 EBITDA Q2 2018 11
AGENDA Introduction Financials Market development and operations Summary 12
Q2 2018 Preparing for increased activity The technical performance of both the Artemis Athene and our MASS Modular operations continue to impress with more than 99,7% technical uptime during Q218 One ROV based 4D monitor operation conducted in the North Sea, again proving the versatility of our MASS Modular system Recruitment and training of crew and support staff in preparation for three parallel operations in Q318 Two fully robotised MASS Modular systems readied in preparation for operation of MASS nodes in addition to the nodes already in operation in the Red Sea 13
Three parallel operations MASS Modular Crew 3 Fully automated MASS Modular Operation Shallow water - Nodes on a Rope Dual node deployment vessels End client - Major oil Company Operating as a subcontractor ATHENE Crew 1 MASS Modular Crew 2 Marine Autonomous Seismic System Fully automated MASS Modular Operation ROV & Source vessel chartered on project basis Two Major Oilco s and one National Oil Company Four different surveys combined into one project Magseis operating as prime contractor Artemis Athene Into her 24 th month in the Red Sea MASS Cable operation Very rugged seabed terrain Zero to 1100 m water depth Nodes on a rope in shallow water Multi vessel operation End client - National Oil Company Operating as a subcontractor 14
Magseis takes the next step in node development Current inventory Growth MASS I NEW MASS III 14 000 MASS I 6 000 MASS I Up to 65 days battery lifetime Up to 150 days battery lifetime 40% reduction in cost from MASS I 14 000 MASS I 10 000 MASS III Extended battery life will transform the node operation model and improve cost efficiency 15
Strong Market Outlook Undersupply in 2019 Node supply vs expected demand 120 000 100 000 80 000 60 000 40 000 20 000 0 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 16
Growth strategy Key goal Business model By 2020 Improve margins Increase addressable market, efficiencies & operational excellence Technology champion nodes, handling systems and source Modular handling systems Modular deployment systems cable, ROV and & rope Vessels @ opportunity Node pool of >30 000 nodes 4-6 containerised handling and deployment systems Deliver leading source technology Developing Magseis into the OBS market leader 17
AGENDA Introduction Financials Market development and operations Summary 18
Improving cost efficiency Shortage of supply in 2019 Sufficient funding for node growth plan Expanding operational footprint 19