DOLPHIN GROUP A NEW MARINE GEOPHYSICAL COMPANY COMPANY PRESENTATION SEB EnskildaNordic Seminar 7-9 January 2013 BY: ATLE JACOBSEN, CEO
Disclaimer This presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Dolphin Group ASA ( Dolphin Group or Dolphin ) and its subsidiaries. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the Dolphins businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time. Although Dolphin believes that its expectations and the information in this Report were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this Report. Dolphin nor any other company within the Dolphin group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the Report, and neither Dolphin, any other company within the Dolphin Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the Report. Dolphin undertakes no obligation to publicly update or revise any forward-looking information or statements in the Report. There may have been changes in matters which affect Dolphin Group subsequent to the date of this presentation. Neither the issue nor delivery of this presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of Dolphin Group has not since changed, and Dolphin Group does not intend, and does not assume any obligation, to update or correct any information included in this presentation. The contents of this presentation are not to be construed as legal, business, investment or tax advice. Each recipient should consult with its own legal, business, investment and tax adviser as to legal, business, investment and tax advice. This presentation is subject to Norwegian law, and any dispute arising in respect of this presentation is subject to the exclusive jurisdiction of the Norwegian courts. 2
AGENDA 1. Investments highlights 2. Company overview 3. Financials 4. Market update 5. Guidance and summary 3
Focus on operational efficiency and shareholder value Business Strategy Pure play seismic market exposure Low cost and highend vessel base Build a strong Multi- Client database Focus on operational efficiency and attractive returns Strong strategic position Dolphin 7% Market share 2014* Position Dolphin as a pure play exposure to the seismic market through contract seismic, Multi-Client and seismic data processing Focus on high-end vessels that meets client expectations Long term TC agreements with vessel owning companies Strong relative cash cost efficiency per streamer per day High utilization and OPEX savings due to proven vessel design Create attractive short and long term returns through building a strong Multi-Client database with industry support Initial focus on the North Sea, West Africa and Brazil Capitalize on fleet specifications and operational experience Healthy balance between contract seismic and Multi-Client Generate strong, stable and healthy cash flow Fleet expansion represents an opportunity for profitable growth Flexible and attractive structure to reach critical mass based on sound investment decisions *Source: SEB Enskilda CF, companies 4
AGENDA 1. Summary 2. Company overview 3. Financials 4. Market update 5. Guidance and summary 5
Dolphin Group at a glance A full service marine geophysical company providing high quality: Contract seismic Multi-Client Processing capabilities Long term charter of a fleet of 7 seismic vessels: Long term charter of five modern 3D high-end vessels, of which two are to be delivered in 2013 and 2014 One ice-class 2D vessel Industry recognised management team with extensive experience and with successful track record for listed companies Listed on Oslo Stock Exchange under the ticker DOLP Presence in Norway, UK, Singapore, Brazil and Houston Established as a marine geophysical company in 2010 6
Dolphin Group Business Segments MARINE MULTI-CLIENT PROCESSING TECHNOLOGY EXPANDING MODERN FLEET THROUGH LONG-TERM CHARTERS GROWING MULTI-CLIENT DATA LIBRARY FULL ONSHORE AND OFFSHORE PROCESSING SERVICE DOLPHIN INTERCONNECT IN PRODUCTION 2x High-End 3D vessels 1x Mid size 3D vessel 2x Ice-class 2D vessels UNDER CONSTRUCTION 2x High-End 3D vessels with delivery in Q2 2013 and Q1 2014 Library of modern 2D and 3D data Areas of focus: North Sea West Africa Brazil USD 52 m already invested. Totally 10,000 sq.km of 3D and 45,000 km of 2D successfully completed In house software development and R&D Processing centre in UK On-board processing on all vessels Developed advanced seismic broadband solution (SHarp) In-house software and hardware development Targeting the PCIe* market Technology integrated into Dolphin Processing hardware solution PCIe= Peripheral Component Interconnect express 7
Two high-end 3D seismic vessels to be delivered in 2013 and 2014, complementing one of the industry s most modern fleets Polar Explorer* (2D) Artemis Atlantic (2D) Polar Duchess (3D, 12-14 str) Sanco Swift Sanco Sword Delivered Jan 2011 Delivered May 2011 Delivered April 2012 Delivery July `13 Delivery Q1 14 Jan 11 May 11 Phase I Phase II Q1 12 July 13 Q1 14 Polar Duke (3D, 12-14) Artemis Arctic (3D -8str) Delivered May 2011 Delivered May 2011 * Polar Explorer will be redelivered in January 2013 as part of strategy to focus more on high end vessels 8
Geographic presence Barents Sea 2,000 km 2 3D MC Houston Central Graben 4,100 km 2 3D MC Artemis Arctic (contract) Bergen Oslo London North West Africa Atlantic 30,00 km 2D MC Deepwater Levantine Basin 2,230 km 2 3D MC Polar Explorer (Multi-Client) Sud Profond 3,600 km 2 3D MC Polar Duke (contract) Singapore Artemis Atlantic (contract) Polar Duchess (contract) Santos Campos Basins 13,650 km 2D MC Offices Target areas Dolphin 3D Multi-Client Dolphin 2D Multi-Client Vessels 9
A track record of excellence with Tier 1 counterparties 10
Multi-Client status Dolphin rapidly established in key 3D Multi- Client markets - 10,000 sq. km of 3D acquisition and 45,000 km of 2D successfully completed Continuing to build on 3D database focusing in UK 28th Round, Norway 23rd Round, Brazil, North-West Africa and West-Africa, and South America Target high pre-funding or partnership structure on all projects. Q3 pre-funding level of 75% 2D Multi-Client data, important for planning and growing 3D Multi-Client projects Consolidated Multi-Client sales in line with forecasts Secured funding for new Multi-Client projects Dolphin 2D Multi-Client Dolphin 3D Multi-Client Target areas 11
Dolphin s in-house processing capabilities provides clear benefits to the Company s growth ambitions Dolphin acquired processing company Open Geophysical in Q2 2012 On-board processing facilities on all vessels Dolphin has a modern processing centre in the UK and more than 30 persons working with processing By having in-house processing, Dolphin can develop and test new processing technologies, algorithms and sequences on Multi-Client datasets without divulging anything to competitors In-house processing also provides Dolphin with control over processing costs which is vital for Multi-Client budgeting Dolphin offer Sharp - an in-house developed broadband solution, combining advanced seismic acquisition and processing 12
AGENDA 1. Investment highlights 2. Company overview 3. Financials 4. Market update 5. Guidance and summary 13
Quarterly developments Revenues, EBITDA and EBIT 70 60 50 40 30 20 10 0 Revenues (USDm) EBITDA (USDm) EBIT (USDm) 35 20 61.2 16.8 28.9 30 50.0 15 25 23.0 43.0 10.6 34.6 20 10 30.1 5.5 15 5 10 9.1 5 4.5 0 2.6-0.6 0-5 -3.1 Q3 (11) Q4 (11) Q1 (12) Q2 (12) Q3 (12) Q3 (11) Q4 (11) Q1 (12) Q2 (12) Q3 (12) Q3 (11) Q4 (11) Q1 (12) Q2 (12) Q3 (12) Q3 Significant increase in revenues and operating margins Q3 EBITDA of USD 28.9 million, representing a 47.2% EBITDA margin Q3 EBIT of USD 16.8 million, representing a 27.4% EBIT margin Q3 Highest operating margins ever achieved by Dolphin The strong result is primarily caused by high operational efficiency, improved contract pricing, high utilisation of the seismic fleet and strong Multi-Client sales from Dolphin's new 2012 projects 14
Dolphin Multi-Client seismic data assets - BV of MUSD 37 Quarterly Multi-Client library BV, cash investments vs pre-funding and Net MCS Sales, (USDm) 40 30 USDm 20 10 0 25 20 15 10 USDm 5 0 45 40 35 30 25 20 15USDm 10 5 0 3 6 Library book value 9 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 3 2 5 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 7 13 14 21 Cash investments and pre-funding Cash investments Cash investments vs Net MCS Sales 0 11 37 21 Multi-Client pre-funding 42 37.1 3.9 2010 2011 Q312 YTD Net cash investments Net MCS sales The model of Non-exclusive, Multi-Client seismic data is becoming widely accepted and supported by oil companies Important part of Dolphin strategy, Book value of Multi-Client library was USD 37 million as of Q3 2012 Dolphin guides at Multi-Client investments of USD 50-70 million in 2013 The Company is experiencing increased Multi-Client pre-funding; increasing from 37% of cash investments in 2011 to 70 % YTD A total of USD 52 million invested during 2011 and 2012, compared with Net sales of USD 41 million 15
Strong value creation - delivering on original business plan Strong value creation, executing on Dolphin Geophysical strategy 2,500 Dec 2010: Private Placement NOK 391m at NOK 2.5 Oct 2011: Private Placement NOK 215m at NOK 3.0 Shareholders value delivered through strong share performance More than 2000 supporting shareholders at main list Oslo Stock Exchange Dolphin has raised new equity of NOK 897million since December 2010 Market Cap. of Dolphin ~ NOK 2.2 million (USDm 393) NOKm (Market cap vs injected capital) 2,000 1,500 1,000 500 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Share price (NOK) In addition to strong cash-flow, Dolphin has full access to both equity and bond market to fund new investments and acquisitions May June 2010: Private Placement NOK 12m at NOK 2.0 Market cap Injected capital Share price Nov 2011: Loan conversion NOK 34m at NOK 2.5 Mar 2012: Private Placement NOK 245m at NOK 4.60 Source: Factset 16
AGENDA 1. Summary 2. Company overview 3. Financials 4. Market update 5. Guidance and summary 17
Seismic market expected to grow by 19% in 2012 and 18% in 2013 Seismic market expected to grow strongly fuelled by a oil price well above the budgeting price 16,000 450,000 16,000 140 Global seismic spending (USDm) 14,000 400,000 12,000 350,000 300,000 10,000 250,000 8,000 200,000 6,000 150,000 4,000 100,000 2,000 50,000 0 0 95 97 99 01 03 05 07 09 11 13E Marine seismic market Onshore seismic market E&P spending E&P Spending (USDm) Global seismic spending (USDm) 14,000 120 12,000 100 10,000 80 8,000 60 6,000 4,000 40 2,000 20 0 0 95 97 99 01 03 05 07 09 11 13E Marine seismic market Onshore seismic market Oil price (brent) Oil price (USD/bbl) The historically high correlation between seismic spending and E&P spending is expected to continue going forward SEB Enskilda Equity Research expect a growth in seismic spending of 19% in 2012 and 18% in 2013 An average price of 113/bbl is expected in 2012 and USD 115/bbl in 2013, providing a healthy margin over the estimated budgeting price of USD 83/bbl, and supporting the positive E&P spending growth projections Source: SEB Enskilda Equity Research 18
Limited new supply growth is expected -only seven known 3D vessels to be delivered in 2013 and 2014 Seismic market growth in supply of streamers (net growth 1 ) Seismic vessels newbuild orders 30% 25% 20% 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Year 3D vessel Streamers 2 Deliv. Company Owner Polar Duchess 12 (16) Deliv. Dolphin Armada Seismic 2012 Polarcus Amani 12 (14) Deliv. Polarcus Polarcus Polarcus Adira 12 (14) Deliv. Polarcus Polarcus 15% 26% Net growth +5% Sinopec 8 (8) Q2 Sinopec Sinopec 10% 5% 0% -5% 7% 7% 6% 13% 11% -6% -8% -6% -3% 2% 21% 7% 9% 0% 12% 9% 5% 6% 7% 2013 Ramform W-class 18 (24) n.a. PGS PGS Sanco Swift 12 (16) Q2 Dolphin Sanco Net growth +6% Ramform Titan 2 18 (24) Q4 PGS PGS Sanco Sword 12 (16) Q1 Dolphin Sanco -10% 2014 Amazon 1 14 (18) Q2 WesternGeco WesternGeco Amazon 2 14 (18) Q4 WesternGeco WesternGeco Net growth +7% 1) Meaning that the growth is adjusted for expected upgrades and scrapings. 2) Defined as practical streamers (potential streamers in parentheses) Source: SEB Enskilda Equity Research 19
Favorable competitive landscape Dolphin now set to be the fifth largest player Commentary CGGVeritas announced that it will acquire Fugro s Geoscience, exclusive of the Multi- Client library The acquisition is viewed as positive for the industry - after the transaction has been completed, CGGVeritas 3D seismic market share measured by number of streamers will increase from 21% to 29% in 2014 The three largest players will control over 70% of the global fleet in 2014 Very favourable competitive landscape compared to previous cycles. Few global companies with defined growth plans. Market shares 2011 (# of practical streamers 3D fleet) 13% Market shares 2014E (# of practical streamers 3D fleet) 11% 7% 19% Other 3% 7% Other 5% 3% 3% 9% 23% 25% 29% 19% 24% 20
2013 Market Outlook Continued demand increase from Q2 2013, driven by another year with high activity level in North Europe, South America and Africa. Improved day rates for high-end vessels y-o-y day rate is expected to increase by 10%- 20%. Supported by current backlog. Significant increase in overall industry Multi- Client investments. All global players have improved balance sheets to support higher Multi- Client activity. Further industry consolidation is likely High barrier of entry for start-up companies, due to challenging financial market situation 21
AGENDA 1. Summary 2. Company overview 3. Financials 4. Market update 5. Guidance and Summary 22
Dolphin -assumptions and guidance 2013 New Vessel capacity to be delivered on time and budget Sanco Swift (3D, 14-16 str.) expected on TC, 13 July 2013 Sanco Sword (3D, 14-16 str.) expected on TC, mid April 2014 Potential short term hire of 2D and 3D capacity for Multi-Client projects, alternatively further consolidation of high-end 3D vessel capacity Pricing, costs, utilization Expected day-rate increased from ~220-280 USD/day in 2012 to ~ 280-330 USD/day in 2013 for 3D high-end seismic vessels Overall revenues expected to increase by 40-50% with targeted revenues above USD 300 million for 2013 Further improved YoY operating margins Utilization high-end 3D vessels, 84-90% Cash Opex high-end vessel of ~125-130 USD/day External third party costs and revenues, 6-8% of revenues for 3D vessels Estimated SG&A costs USD 4.5 5.0 million per quarter in 2013 Multi-Client activities MCS 2D,10-12 vessel months and MCS 3D, 8-10 vessel months Total Gross MCS Investment USD 50-70 million Pre-funding targets of 2D > 50% and 3D>85% Sales ratio s 1.8 2.4 times MCS investment costs Opportunistic, additional non organic growth considered Capex Sanco Swift, total approximately USD 60 million, whereby USD 15 paid in 2012 Capacity upgrade USD 8 million, dependent on client configuration request Processing 2013, USD 3-5 million 23
Summary Strong financial growth through the 2-year build up period with a favorable cost base and efficient operations, delivering best in-class operating margins Solid balance sheet that will allow for continued growth in Multi-Client segment Further improved market conditions, with contract backlog in excess of USD 150 million as of 1st January. Total vessel coverage is more than 70% for the period Q1-Q3 (excl. MCS) Continued opportunistic approach to further develop Dolphin through a mix of consolidation and organic growth in all business segments Picture taken by MMO onboard Polar Duke 24
Questions and Answer Session
DOLPHIN GROUP A NEW MARINE GEOPHYSICAL COMPANY COMPANY PRESENTATION SEB EnskildaNordic Seminar 7-9 January 2013 BY: ATLE JACOBSEN, CEO
Disclaimer This presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Dolphin Group ASA ( Dolphin Group or Dolphin ) and its subsidiaries. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the Dolphins businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time. Although Dolphin believes that its expectations and the information in this Report were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this Report. Dolphin nor any other company within the Dolphin group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the Report, and neither Dolphin, any other company within the Dolphin Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the Report. Dolphin undertakes no obligation to publicly update or revise any forward-looking information or statements in the Report. There may have been changes in matters which affect Dolphin Group subsequent to the date of this presentation. Neither the issue nor delivery of this presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of Dolphin Group has not since changed, and Dolphin Group does not intend, and does not assume any obligation, to update or correct any information included in this presentation. The contents of this presentation are not to be construed as legal, business, investment or tax advice. Each recipient should consult with its own legal, business, investment and tax adviser as to legal, business, investment and tax advice. This presentation is subject to Norwegian law, and any dispute arising in respect of this presentation is subject to the exclusive jurisdiction of the Norwegian courts. 2
AGENDA 1. Investments highlights 2. Company overview 3. Financials 4. Market update 5. Guidance and summary 3
Focus on operational efficiency and shareholder value Business Strategy Pure play seismic market exposure Low cost and highend vessel base Build a strong Multi- Client database Focus on operational efficiency and attractive returns Strong strategic position Dolphin 7% Market share 2014* Position Dolphin as a pure play exposure to the seismic market through contract seismic, Multi-Client and seismic data processing Focus on high-end vessels that meets client expectations Long term TC agreements with vessel owning companies Strong relative cash cost efficiency per streamer per day High utilization and OPEX savings due to proven vessel design Create attractive short and long term returns through building a strong Multi-Client database with industry support Initial focus on the North Sea, West Africa and Brazil Capitalize on fleet specifications and operational experience Healthy balance between contract seismic and Multi-Client Generate strong, stable and healthy cash flow Fleet expansion represents an opportunity for profitable growth Flexible and attractive structure to reach critical mass based on sound investment decisions *Source: SEB Enskilda CF, companies 4
AGENDA 1. Summary 2. Company overview 3. Financials 4. Market update 5. Guidance and summary 5
Dolphin Group at a glance A full service marine geophysical company providing high quality: Contract seismic Multi-Client Processing capabilities Long term charter of a fleet of 7 seismic vessels: Long term charter of five modern 3D high-end vessels, of which two are to be delivered in 2013 and 2014 One ice-class 2D vessel Industry recognised management team with extensive experience and with successful track record for listed companies Listed on Oslo Stock Exchange under the ticker DOLP Presence in Norway, UK, Singapore, Brazil and Houston Established as a marine geophysical company in 2010 6
Dolphin Group Business Segments MARINE MULTI-CLIENT PROCESSING TECHNOLOGY EXPANDING MODERN FLEET THROUGH LONG-TERM CHARTERS GROWING MULTI-CLIENT DATA LIBRARY FULL ONSHORE AND OFFSHORE PROCESSING SERVICE DOLPHIN INTERCONNECT IN PRODUCTION 2x High-End 3D vessels 1x Mid size 3D vessel 2x Ice-class 2D vessels UNDER CONSTRUCTION 2x High-End 3D vessels with delivery in Q2 2013 and Q1 2014 Library of modern 2D and 3D data Areas of focus: North Sea West Africa Brazil USD 52 m already invested. Totally 10,000 sq.km of 3D and 45,000 km of 2D successfully completed In house software development and R&D Processing centre in UK On-board processing on all vessels Developed advanced seismic broadband solution (SHarp) In-house software and hardware development Targeting the PCIe* market Technology integrated into Dolphin Processing hardware solution PCIe= Peripheral Component Interconnect express 7
Two high-end 3D seismic vessels to be delivered in 2013 and 2014, complementing one of the industry s most modern fleets Polar Explorer* (2D) Artemis Atlantic (2D) Polar Duchess (3D, 12-14 str) Sanco Swift Sanco Sword Delivered Jan 2011 Delivered May 2011 Delivered April 2012 Delivery July `13 Delivery Q1 14 Jan 11 May 11 Phase I Phase II Q1 12 July 13 Q1 14 Polar Duke (3D, 12-14) Artemis Arctic (3D -8str) Delivered May 2011 Delivered May 2011 * Polar Explorer will be redelivered in January 2013 as part of strategy to focus more on high end vessels 8
Geographic presence Barents Sea 2,000 km 2 3D MC Houston Central Graben 4,100 km 2 3D MC Artemis Arctic (contract) Bergen Oslo London North West Africa Atlantic 30,00 km 2D MC Deepwater Levantine Basin 2,230 km 2 3D MC Polar Explorer (Multi-Client) Sud Profond 3,600 km 2 3D MC Polar Duke (contract) Singapore Artemis Atlantic (contract) Polar Duchess (contract) Santos Campos Basins 13,650 km 2D MC Offices Target areas Dolphin 3D Multi-Client Dolphin 2D Multi-Client Vessels 9
A track record of excellence with Tier 1 counterparties 10
Multi-Client status Dolphin rapidly established in key 3D Multi- Client markets - 10,000 sq. km of 3D acquisition and 45,000 km of 2D successfully completed Continuing to build on 3D database focusing in UK 28th Round, Norway 23rd Round, Brazil, North-West Africa and West-Africa, and South America Target high pre-funding or partnership structure on all projects. Q3 pre-funding level of 75% 2D Multi-Client data, important for planning and growing 3D Multi-Client projects Consolidated Multi-Client sales in line with forecasts Secured funding for new Multi-Client projects Dolphin 2D Multi-Client Dolphin 3D Multi-Client Target areas 11
Dolphin s in-house processing capabilities provides clear benefits to the Company s growth ambitions Dolphin acquired processing company Open Geophysical in Q2 2012 On-board processing facilities on all vessels Dolphin has a modern processing centre in the UK and more than 30 persons working with processing By having in-house processing, Dolphin can develop and test new processing technologies, algorithms and sequences on Multi-Client datasets without divulging anything to competitors In-house processing also provides Dolphin with control over processing costs which is vital for Multi-Client budgeting Dolphin offer Sharp - an in-house developed broadband solution, combining advanced seismic acquisition and processing 12
AGENDA 1. Investment highlights 2. Company overview 3. Financials 4. Market update 5. Guidance and summary 13
Quarterly developments Revenues, EBITDA and EBIT 70 60 50 40 30 20 10 0 Revenues (USDm) EBITDA (USDm) EBIT (USDm) 35 20 61.2 16.8 28.9 30 50.0 15 25 23.0 43.0 10.6 34.6 20 10 30.1 5.5 15 5 10 9.1 5 4.5 0 2.6-0.6 0-5 -3.1 Q3 (11) Q4 (11) Q1 (12) Q2 (12) Q3 (12) Q3 (11) Q4 (11) Q1 (12) Q2 (12) Q3 (12) Q3 (11) Q4 (11) Q1 (12) Q2 (12) Q3 (12) Q3 Significant increase in revenues and operating margins Q3 EBITDA of USD 28.9 million, representing a 47.2% EBITDA margin Q3 EBIT of USD 16.8 million, representing a 27.4% EBIT margin Q3 Highest operating margins ever achieved by Dolphin The strong result is primarily caused by high operational efficiency, improved contract pricing, high utilisation of the seismic fleet and strong Multi-Client sales from Dolphin's new 2012 projects 14
Dolphin Multi-Client seismic data assets - BV of MUSD 37 Quarterly Multi-Client library BV, cash investments vs pre-funding and Net MCS Sales, (USDm) 40 30 USDm 20 10 0 25 20 15 10 USDm 5 0 45 40 35 30 25 20 15USDm 10 5 0 3 6 Library book value 9 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 3 2 5 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 7 13 14 21 Cash investments and pre-funding Cash investments Cash investments vs Net MCS Sales 0 11 37 21 Multi-Client pre-funding 42 37.1 3.9 2010 2011 Q312 YTD Net cash investments Net MCS sales The model of Non-exclusive, Multi-Client seismic data is becoming widely accepted and supported by oil companies Important part of Dolphin strategy, Book value of Multi-Client library was USD 37 million as of Q3 2012 Dolphin guides at Multi-Client investments of USD 50-70 million in 2013 The Company is experiencing increased Multi-Client pre-funding; increasing from 37% of cash investments in 2011 to 70 % YTD A total of USD 52 million invested during 2011 and 2012, compared with Net sales of USD 41 million 15
Strong value creation - delivering on original business plan Strong value creation, executing on Dolphin Geophysical strategy 2,500 Dec 2010: Private Placement NOK 391m at NOK 2.5 Oct 2011: Private Placement NOK 215m at NOK 3.0 Shareholders value delivered through strong share performance More than 2000 supporting shareholders at main list Oslo Stock Exchange Dolphin has raised new equity of NOK 897million since December 2010 Market Cap. of Dolphin ~ NOK 2.2 million (USDm 393) NOKm (Market cap vs injected capital) 2,000 1,500 1,000 500 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Share price (NOK) In addition to strong cash-flow, Dolphin has full access to both equity and bond market to fund new investments and acquisitions May June 2010: Private Placement NOK 12m at NOK 2.0 Market cap Injected capital Share price Nov 2011: Loan conversion NOK 34m at NOK 2.5 Mar 2012: Private Placement NOK 245m at NOK 4.60 Source: Factset 16
AGENDA 1. Summary 2. Company overview 3. Financials 4. Market update 5. Guidance and summary 17
Seismic market expected to grow by 19% in 2012 and 18% in 2013 Seismic market expected to grow strongly fuelled by a oil price well above the budgeting price 16,000 450,000 16,000 140 Global seismic spending (USDm) 14,000 400,000 12,000 350,000 300,000 10,000 250,000 8,000 200,000 6,000 150,000 4,000 100,000 2,000 50,000 0 0 95 97 99 01 03 05 07 09 11 13E Marine seismic market Onshore seismic market E&P spending E&P Spending (USDm) Global seismic spending (USDm) 14,000 120 12,000 100 10,000 80 8,000 60 6,000 4,000 40 2,000 20 0 0 95 97 99 01 03 05 07 09 11 13E Marine seismic market Onshore seismic market Oil price (brent) Oil price (USD/bbl) The historically high correlation between seismic spending and E&P spending is expected to continue going forward SEB Enskilda Equity Research expect a growth in seismic spending of 19% in 2012 and 18% in 2013 An average price of 113/bbl is expected in 2012 and USD 115/bbl in 2013, providing a healthy margin over the estimated budgeting price of USD 83/bbl, and supporting the positive E&P spending growth projections Source: SEB Enskilda Equity Research 18
Limited new supply growth is expected -only seven known 3D vessels to be delivered in 2013 and 2014 Seismic market growth in supply of streamers (net growth 1 ) Seismic vessels newbuild orders 30% 25% 20% 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Year 3D vessel Streamers 2 Deliv. Company Owner Polar Duchess 12 (16) Deliv. Dolphin Armada Seismic 2012 Polarcus Amani 12 (14) Deliv. Polarcus Polarcus Polarcus Adira 12 (14) Deliv. Polarcus Polarcus 15% 26% Net growth +5% Sinopec 8 (8) Q2 Sinopec Sinopec 10% 5% 0% -5% 7% 7% 6% 13% 11% -6% -8% -6% -3% 2% 21% 7% 9% 0% 12% 9% 5% 6% 7% 2013 Ramform W-class 18 (24) n.a. PGS PGS Sanco Swift 12 (16) Q2 Dolphin Sanco Net growth +6% Ramform Titan 2 18 (24) Q4 PGS PGS Sanco Sword 12 (16) Q1 Dolphin Sanco -10% 2014 Amazon 1 14 (18) Q2 WesternGeco WesternGeco Amazon 2 14 (18) Q4 WesternGeco WesternGeco Net growth +7% 1) Meaning that the growth is adjusted for expected upgrades and scrapings. 2) Defined as practical streamers (potential streamers in parentheses) Source: SEB Enskilda Equity Research 19
Favorable competitive landscape Dolphin now set to be the fifth largest player Commentary CGGVeritas announced that it will acquire Fugro s Geoscience, exclusive of the Multi- Client library The acquisition is viewed as positive for the industry - after the transaction has been completed, CGGVeritas 3D seismic market share measured by number of streamers will increase from 21% to 29% in 2014 The three largest players will control over 70% of the global fleet in 2014 Very favourable competitive landscape compared to previous cycles. Few global companies with defined growth plans. Market shares 2011 (# of practical streamers 3D fleet) 13% Market shares 2014E (# of practical streamers 3D fleet) 11% 7% 19% Other 3% 7% Other 5% 3% 3% 9% 23% 25% 29% 19% 24% 20
2013 Market Outlook Continued demand increase from Q2 2013, driven by another year with high activity level in North Europe, South America and Africa. Improved day rates for high-end vessels y-o-y day rate is expected to increase by 10%- 20%. Supported by current backlog. Significant increase in overall industry Multi- Client investments. All global players have improved balance sheets to support higher Multi- Client activity. Further industry consolidation is likely High barrier of entry for start-up companies, due to challenging financial market situation 21
AGENDA 1. Summary 2. Company overview 3. Financials 4. Market update 5. Guidance and Summary 22
Dolphin -assumptions and guidance 2013 New Vessel capacity to be delivered on time and budget Sanco Swift (3D, 14-16 str.) expected on TC, 13 July 2013 Sanco Sword (3D, 14-16 str.) expected on TC, mid April 2014 Potential short term hire of 2D and 3D capacity for Multi-Client projects, alternatively further consolidation of high-end 3D vessel capacity Pricing, costs, utilization Expected day-rate increased from ~220-280 USD/day in 2012 to ~ 280-330 USD/day in 2013 for 3D high-end seismic vessels Overall revenues expected to increase by 40-50% with targeted revenues above USD 300 million for 2013 Further improved YoY operating margins Utilization high-end 3D vessels, 84-90% Cash Opex high-end vessel of ~125-130 USD/day External third party costs and revenues, 6-8% of revenues for 3D vessels Estimated SG&A costs USD 4.5 5.0 million per quarter in 2013 Multi-Client activities MCS 2D,10-12 vessel months and MCS 3D, 8-10 vessel months Total Gross MCS Investment USD 50-70 million Pre-funding targets of 2D > 50% and 3D>85% Sales ratio s 1.8 2.4 times MCS investment costs Opportunistic, additional non organic growth considered Capex Sanco Swift, total approximately USD 60 million, whereby USD 15 paid in 2012 Capacity upgrade USD 8 million, dependent on client configuration request Processing 2013, USD 3-5 million 23
Summary Strong financial growth through the 2-year build up period with a favorable cost base and efficient operations, delivering best in-class operating margins Solid balance sheet that will allow for continued growth in Multi-Client segment Further improved market conditions, with contract backlog in excess of USD 150 million as of 1st January. Total vessel coverage is more than 70% for the period Q1-Q3 (excl. MCS) Continued opportunistic approach to further develop Dolphin through a mix of consolidation and organic growth in all business segments Picture taken by MMO onboard Polar Duke 24
Questions and Answer Session