EMGS ASA Svein Knudsen, CFO 21 March 2013
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 Electromagnetic Geoservices ASA (EMGS) 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 EMGS’s 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 Electromagnetic Geoservices ASA believes that its expectations and the information in this presentation 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 presentation. Electromagnetic Geoservices ASA nor any other company within the EMGS Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the presentation, and neither Electromagnetic Geoservices ASA, any other company within the EMGS 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 presentation. Electromagnetic Geoservices ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in the presentation.
EMGS IN BRIEF • Pioneered the EM industry • 300 employees • Listed on OSE March 2007 • Technology & market leader • Worldwide experience • 2012 revenues: USD 201 million • Delivered >650 surveys • Efficient & stable operations • 2012 EBITDA: USD 56 million
MEASURING RESISTIVITY Well log resistivity [ m] -1 0 1 2 3 4 10 10 10 10 10 10 10 10 10 10 10 10 Water-bearing sediments: 1 - 2 Ω m Low resistivity Hydrocarbon reservoirs display Hydrocarbon reservoirs: high resistivity 10 - 100 Ω m High resistivity
THE 3D EM METHOD Source towed above a grid of receivers Receivers deployed in a predetermined grid on the sea floor 3D EM data indicates oil reserves (high resistivity matches seismic anomaly)
WORLDWIDE EXPERIENCE AND PRESENCE Include PNG Survey water depths from ~ 30 to 3500 metres in mature and frontier basins worldwide
3D EM IN THE EXPLORATION & PRODUCTION (E&P) WORKFLOW
EM IN THE E&P WORKFLOW – PORTFOLIO OPTIMIZATION - MEXICO • 2010 - 2012 • >12,000 km 2 • 35 deep-water prospects Calibration Prediction Generation • EM prediction success rate: 4 out of 4 wells Data courtesy of PEMEX Ref : Escalera et al : The Road Ahead : SEG , Las Vegas 2012
REGIONAL EXPLORATION BARENTS SEA MULTICLIENT 3D EM Apparent anisotropy 7.0 6.0 5.0 4.0 3.0 2008 – 2012 2.0 24,000 km2 1.0
2013 BARENTS SEA MULTI-CLIENT 3D EM PROGRAM Area A: Fingerdjupet - Hoop Area B: South Eastern Barents Area C: Western Barents
3D EM IN SUB-BASALT EXPLORATION • Preliminary 3D CSEM and MT inversion results • EMGS responses match well log results • Mapping basalt distribution and thickness • Confirms potential in sub-basalt exploration
STRONG FOOTHOLD IN BRAZIL Successful Petrobras campaign • Defined as a “pilot project” by Petrobras • USD 100 million contract (incl. extension) • Petrobras transition from 2D to 3D • 9505 km source towing, 5075km2 Drilling results match 3D EM responses • Four discoveries Six out of six • Two dry wells Multi-client program recently completed • Frontier Ceará basin in northern Brazil • Blocks included in 11 th licensing round • Major discovery announced in August 2012
NEW MULTI-CLIENT PROGRAM: FOZ DO AMAZONAS BASIN, BRAZIL Highly prospective equatorial margin • Zaedyus discovery in French Guiana • Petrobras’s Pecém discovery in the Ceará basin • Analogous discoveries in the West African equatorial margin Collaboration with Spectrum • Combining 2D seismic and 3D EM • Early stage exploration in a frontier basin • Improved imaging and prospecting • Spectrum has 21,000 km multi-client 2D seismic • EMGS shortly commencing multi-client 3D EM survey covering 8000 km2
Q4 AND FULL YEAR 2012 HIGHLIGHTS
HIGHLIGHTS Revenues per year (USD million ) Q4 financial results 250 • Revenues of USD 45.0 million 16% • EBITDA of USD 10.1 million 200 150 100 Full-year 2012 financial results • Revenues of USD 200.8 million 50 • EBITDA of USD 55.9 million 0 2008 2009 2010 2011 2012 Key investments made in 2012 EBITDA per year (USD million) • Proof of concept studies 80 • New acquisition technology 60 • Expanding multi-client data library 40 28% 25% 20 0 Market and outlook 2013 -20 • New market segments -40 • Visibility improving -60 • Expect 2013 revenues of USD 210 – 230 million 2008 2009 2010 2011 2012
FINANCIAL POSITION Assets (USD million) Equity and liabilities (USD million) 200 200 180 180 47 160 160 140 140 120 120 100 48 100 75 80 80 60 60 55% 40 40 20 20 0 0 31.12.2012 31.12.2011 31.12.2012 31.12.2011 Shareholders equity Liabilities Interest bearing debt Non-current assets other than cash Cash Current assets other than cash
MARKET AND OUTLOOK
KEY DRIVERS FOR MARKET GROWTH New technology New applications Increased adoption • See deeper, higher resolution • Structural imaging (salt/basalt) • EM integrated in E&P workflow • Step-change • Volume estimation, appraisal • Customers’ EM expertise • Recognition of value proposition • Shallow water • Regional exploration Industry partnerships, joint ventures and multi-client business model Improved data integration
VESSEL ACTIVITY AND BACKLOG Expected vessel schedule as of 7 February 2013. Q4 2012 Q1 2013 Q2 2013 Q3 2013 Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Proof of concept BOA Thalassa Asia US Gulf of Mexico Petrobras Brazil BOA Galatea Brazil Brazil Basalt Atlantic Guardian Barents Sea multi-client / contract WoS/NCS Brunei Malaysia Myanmar Malaysia EM Leader Norway EM Express (Standby at no cost in Bergen) Contract: Multi-client: Contract negotiations: Dry dock: Steaming:
IMPROVING VISIBILITY Building backlog is job number 1 Order book (USD Million) • As expected, backlog has diminished in 120 2012 due to completion of large contracts • Awarded 6-month contract and string of 100 small contracts in Asia 80 Pursuing long-term contracts 60 • Expect at least one long-term NOC 54 contract for 2H13 40 • Targeting additional NOCs for major projects in 2H13 and 2014 20 21 0 Partnering with seismic providers • Increased interest from several companies • Joint multi-client projects for 2013
2013 GUIDANCE • Revenues of USD 210-230 million • EBITDA margin of 25-30% • Backlog at a minimum of USD 100 million by end 1H13 Assumptions: • ~ 3.7 vessel years (44 vessel months) with a utilisation rate of ~ 80% • vessels allocated 20-25% to multi-client programs • multi-client revenues of USD 40-60 million • average multi-client pre-funding level of at least 100% • contract pricing and capex in line with 2012 levels • Soft Q1 2013
SUMMARY Current status Revenue scenario by application/market segment • Robust E&P environment • 4 vessels operating Growth potential • Increased customer adoption • New technology Regional Pre-drilling – Deeper penetration Development Structural exploration risk and Production imaging reduction – Increased resolution (salt/basalt etc.) – Continental shelf applications 2015 • New applications 2012 – Regional exploration – Portfolio scale de-risking – Development applications – Structural imaging
Q & A
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