Magseis ASA Q2 2017 18th August 2017
Highlights • Strong financial performance: Revenue of USD 19.4m and EBITDA of USD 8.4m Another strong quarter • Working capital increase from operational growth and payment terms in the contract • Two simultaneous operations for the first time (one cable and one ROV) Operational Performance • Very strong performance on the S-78 Extension and ConocoPhillips Eldfisk projects 2 Crews • Mobile ROV more efficient than expected, demonstrated applicability for Continuous focus on more a larger share of the OBS market than anticipated efficient and cost effective • Test of new shooting technology to improve efficiency planned during Q3 solution • BGP/Aramco and ConocoPhillips are very satisfied with our performance and Further growth, backlog we expect additional work to be awarded and outlook • Contractual negotiations for new cable vessel ongoing, Q2 2018 start-up date unchanged, 6000 new MASS nodes already in production 2 Source: Magseis
Y FIGURES Q2 Q2 2017 KEY F 17 $ MILLION 19.4 REVENUE 19.4 EBITDA 8.4 8.4 $ MILLION $ MILLION 7.7 NET INCOME 3.3 CASH BALANCE 33.7 -1.6 REVENUE EBITDA REVENUE EBITDA Q2 Q2 Q2 Q2 $ MILLION $ MILLION 2017 2017 2016 2016 3 Source: Magseis
Second quarter and first half 2017 - Key figures USD 19.4 million in Revenues • Profit and loss Q2 2017 Q2 2016 YTD 2017 YTD 2016 • Higher than expected due to strong operational performance 19 399 7 671 40 475 25 786 Revenue on both Red Sea and ConocoPhillips projects 8 659 5 903 18 656 19 532 Cost of sales • USD 1.5m of paid standby incurred during the quarter 8 398 -1 578 16 727 -19 EBITDA EBIT 4 711 -3 546 9 472 -6 032 Net profit/loss 3 313 -3 970 6 823 -7 912 • Very strong EBITDA performance at USD 8.4 million Basic earnings per share 0.05 -0.25 0.11 -0.12 • Capitalised 10 day yard stay during April (USD 2.0m reduction) • Financial position Total Amortisation of USD 2.8m during the quarter Cash 33 657 16 855 Working Capital 1) • Closing cash position of USD 33.7 million 17 359 -4 238 95 069 57 563 Total equity • Equity ratio of 78.6% 78.6% 66.4% Equity ratio 9 752 6 329 Gross interest bearing debt Working Capital increase • 1): Working Capital defined as Trade Receivables less Trade Payables • Reversion to more normalised payment terms from BGP Cash flow • Increased revenue base Net cash from operating activities - 5 461 592 -3 928 - 9 481 • Low level of payables Net cash from investing activities -8 399 -18 276 -10 714 - 8 827 Net cash from financing activities 15 497 32 367 20 062 - 2 228 Full-year guidance re-iterated • • Expected EBITDA for 2017 of > USD 20m 4 Source: Magseis
OBS provides superior image quality - gaining market share over high-end streamer seismic Streamer Seismic Ocean Bottom Seismic (OBS) 80% 20% Market share Market share 5 Source: Magseis/Statoil
MASS technology - Marine Autonomous Seismic System Handling system Applications Miniaturised node sensors Cable Cable deployment • Highest spec sensor on the market • Smart, light, robust and easy-to-handle node ROV • ROV deployment Superior logistics and efficiency • Automated handling system Node Deployer Ultra deep water deployment 6 Source: Magseis
Larger spread driving substantial cost reductions 2018 2015 2014 2016 >600km 150km 75km 350km Cable length Large spreads - 25K rolling operations Multiple patch deployment 100K $ per.km² $ per. km² 7 Source: Magseis
S-78 Extension Red Sea Operational highlights • Smooth transition from S-78 to the S-78 Extension due to good coordination with BGP and implementation of new MASS technology • Very strong operational performance during May and June • Excellent cooperation with BGP’s transition zone crew • Strong operational performance continued into Q3 • Expected completion of current survey Late Q3/Early Q4 2017 8 Source: Magseis
Red Sea Exploration Saudi Aramco was the first to use a deepwater rig in the Red Sea region after a 15-month seismic study in 2009 indicated the presence of natural gas. The company discovered three oil and two gas fields in 2013. ( Abdelghani Henni, HartsEnergy ) “We continue our program to explore the shallow waters of the Red Sea, completing our largest single survey of the seabed encompassing Saudi Arabian territorial waters,” Saudi Aramco said in its latest annual report (2016). ( Abdelghani Henni, HartsEnergy ) State-owned Saudi Aramco is hoping that innovative seismic acquisition technology will help the company to successfully explore the geologically complex sub-salt of the ecologically sensitive Red Sea. The operator had said its share of Red Sea oil and gas resources had the potential to boost Saudi Arabia’s reserves base by more than 30%. (Saleh Al Saleh, Upstream online) Red Sea 9 Source: Magseis, NASA
ConocoPhillips Eldfisk project • First full scale Mobile ROV operation • 3000 MASS nodes and 2 ROVs • Project on-track to complete within schedule and budget • Using ROV vessel and Source vessels already on charter with ConocoPhillips • Delivering a high-quality 4D OBS survey to our client at a substantially lower cost • Operational efficiency can be improved further by deploying more MASS nodes and faster ROVs 10 Source: Magseis
MASS Modular High capacity, mobile ROV operation • Containerised, modular system • Can be rigged up/down within 1 week on vessels of opportunity or onshore • Unlimited number of nodes can be deployed • Efficiency comparable to high-end cable based deployment platforms • Commercially available from Q3 17, strong interest from clients 11 Source: Magseis
Crew #3 preparations ongoing • Charter negotiations in final stages • Focus on securing a good long-term agreement • 6,000 MASS sensors in production, long-lead components for handling system ready to be ordered • Detailed design for chosen vessel ongoing • Target start of operations during Q2 2018 • Bidding on projects for 2018 North Sea season 12 Source: Magseis
Ramping up capacity to meet market growth: • MASS node inventory growing from 5,000 to 14,000 by Q1 MASS Node Inventory 2018 30 000 • Critical long-lead components for an additional 6,000 has 25 000 been secured, enabling Magseis to reach 20,000 MASS nodes by YE 2018 20 000 • Firmly establishing Magseis as a joint industry leader in terms 15 000 of OBS node capacity 10 000 • Strategic focus on maximizing the utilisation of our MASS nodes and Return On Capital Employed 5000 – Carefully managing the proportion of modular ROV crews vs. dedicated cable crews 0 2018 2019 2016 2017 Committed orders for complete MASS nodes Secured, critical long-lead items 13 Source: Magseis
Strong market outlook OBS market drivers IOR $ MILLION Focus 2 250 2 000 USD 1 575 >750 m Increasing 1 500 geological complexity 1 250 1 000 750 Technology 500 development 250 0 2005 2016 2017 2018 2019 2020 Customer confidence & adoption 14 Source: Magseis/Arkwright/Rystad Energy/Statoil
Second quarter and first half 2017 • Revenue - Comprehensive income • USD 19.4m, strong performance on the Aramco S-78 and ConoccoPhillips projects Cost of sales • Q2 2017 YTD 2017 Q2 2016 YTD 2016 In USD thousands (unaudited) (unaudited) (unaudited) (audited) • Full quarter of production Revenue 19 399 40 475 7 671 25 786 • Amortisation of capitalised mobilisation and yard costs Cost of sales 18 656 5 903 19 532 8 659 (net effect of USD 0.8m during Q2) Research and development 514 1 013 769 1 261 • Lower Cost of Sales due to fuel provided on survey SG&A and other expenses 1 828 4 079 2 578 5 012 (Q2 2016 also included source vessel costs) EBITDA 8 398 16 727 -1 578 -19 Depreciation 3 572 6 791 1 580 4 571 • Depreciation 116 Amortisation 231 133 1 143 -00 Impairment 233 254 300 • Amortisation of capitalised mobilisation and yard cost USD 0.4m EBIT 4 711 9 472 -3 546 -6 032 560 Net interest and fx (gain)/loss 1 022 117 594 Amortisation and Impairment • -00 -00 -7 -00 Other finance cost Net finance costs 560 1 022 109 594 • No impairment in the second quarter EBT 4 151 8 450 -3 655 -6 627 838 Tax 1 627 315 1 285 • Finance Net income 3 313 6 823 -3 970 -7 912 Currency translation differences 0 0 0 0 • Primarily interest related to BGP pre-funding, GIEK and Total comprehensive income 3 313 6 823 -3 970 -7 912 Innovation Norway • BGP pre-funding repaid Tax • • USD 0.8m for withholding tax in Saudi Arabia 15 Source: Magseis
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