22 slides from Electromagnetic Geoservices Asa's earnings presentation, Nov 5, 2015
Slide 1: Third Quarter 2015 Results
THIRD QUARTER 2015 RESULTS. Oslo, 5 November 2015 CEO Stig Eide Sivertsen
Slide 2: Disclaimer
Disclaimer This quarterly 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
Slide 3: Overview third quarter 2015
Overview third quarter 2015 • Contract survey for oil company in Malaysia - First phase: ~USD 4 million completed - Currently operating on extension worth ~USD 7 million • Deep-water acquistion for PEMEX in September • Received permits for multi-client in Mexico and India • Tender process in India,
Slide 4: Third quarter vessel operations
Third quarter vessel operations BOA Galatea Atlantic Guardian MC in US Gulf of Mexico Contract for PEMEX Sept MC in Norway BOA Thalassa EM Leader Contract in Malaysia Sept Offhire from 15 May 4
Slide 5: Targeted multi-client investments in key regions
Targeted multi-client investments in key regions 2015 multi-client investment (USD million) • Tiddlybank/Nordkapp - 50/50 JV with TGS in 1H - Relevant for 23rd licensing round • Hammerfest/Froan/Nyk 2.9 - Relevant for APA rounds 3.9 • Daybreak/Radiant, western US GoM 0.3 - Annual licensing round, cl
Slide 6: Current market situation
Current market situation Order book as of 30 June After close of quarter • Challenging market - Catious spending from oil companies affects EM demand - Low visibility in some regions - Market outlook hard to predict, high uncertainty • Progress on adoption - Good response from oil companies, high in
Slide 7: Third quarter key financials
Third quarter key financials Revenues and revenues/costs per vessel month (USD Million) • Revenues of USD 16.3 million 60 6 • Run rate* of ~USD 29 million in Q3 50 5 40 4 • Provisions and one-off costs of ~USD 6 million in the quarter 30 3 • 9.0 vessel months as EM Leader is laid up 20 2 7.2 10 1 •
Slide 8: EMGS adjusts to current market conditions
EMGS adjusts to current market conditions • Implementation of comprehensive cost reducing measures to align to market activity • Dialogue with vessel owners to secure charter agreements in line with current activities • Consultations with shareholders regarding the potential to raise additional equi
Slide 9: Cost reduction program progressing as planned
Cost reduction program progressing as planned Implications on operational cost base – USD million Comments • Cost reducing measures implemented to bring 170 cost base in line with expected activity level 35 – Phase I (January 2015): Re-evaluation of new hires, consultants, agents and travel costs –
Slide 10: Overview of the transaction
Overview of the transaction Bond extension and partial buy-back Rights issue • The maturity date of the EMGS02 is extended by 36 months, • Rights issue with gross proceeds between NOK 214-278 from 27 June 2016 to 27 June 2019 million at a subscription price of NOK 0.25 • Outstanding debt will be red
Slide 11: Impact of the transaction
Impact of the transaction Comments Pro-forma effects post transaction1 Operational Debt maturity profile (USDm) Cash balance (USDm) 41 41 +USDm25 • The transaction provides EMGS with sufficient financial flexibility to weather the current downturn Total cash balance 48 increased by • EMGS is now rig
Slide 12: Transaction timeline
Transaction timeline Month November December Activity Week of 02.11. 09.11. 16.11. 23.11. 30.11. 07.12. 14.12. 21.12. Restructuring of bond Announcement of deal 05. Nov Bondholder Meeting 19. Nov Bond buy-back 19. Nov - 25. Nov Settlement of buy-back 21. Dec Rights issue Announcement of deal 05. Nov
Slide 13: Market and outlook
wemegs Market and outlook Spot the difference.
Slide 14: Contract opportunities and revenue triggers in the near term
Contract opportunities and revenue triggers in the near term Norway: • MC library performing well • 23rd licensing round, close December - Late sales related to awards expected in 2H16 - Uplift revenues expected in Q316 • Annual APA round, close September - Late sales related to awards expected in 1
Slide 15: Summary and outlook
Summary and outlook • Challenging market continued in Q3 • Cost level reduced to sustain operations with a low oil price • Equity increased by up to USD 32.5 million • Bond loan to be extended by 36 months • Up to USD 7.5 million buy-back of bonds • High interest from oil companies and authorities –
Slide 16: Long term story remains intact
Long term story remains intact EMGS is the market leader in an attractive niche market, offering services highly complementary to traditional geophysical methods E&P companies are showing increased interest in EMGS’ technology, although current exploration spending is reduced from previous levels an
Slide 17: Questions?
wemegs Questions? Spot the difference.
Slide 18: Appendix
SPOT THE DIFFERENCE
Slide 19: Income statement
Income statement USD million Quarter ending Nine months ending Year ending 30.09.2015 30.09.2014 30.09.2015 30.09.2014 31.12.2014 Contract sales 9.1 29.8 36.0 111.7 137.2 Multi-client sales 7.2 11.9 24.6 33.8 60.8 Total revenues 16.3 41.7 60.6 145.5 198.0 Charter hire, fuel and crew expenses 9.3 11.
Slide 20: Financial position
Financial position USD million ASSETS 30.09.2015 30.06.2015 31.12.2014 Goodwill - - 14.4 Deferred tax asset 1.8 3.0 3.0 Multi-client library 53.1 51.2 33.8 Other intangible assets 4.2 4.6 3.2 Property, plant and equipment 17.9 14.3 19.2 Assets under construction 27.5 34.0 31.2 Financial assets 1.9 2
Slide 21: Largest shareholders as of 3 November
Largest shareholders as of 3 November Shareholder Shares Holding 1 SIEM INVESTMENTS INC 22,926,866 11.48 2 PERESTROIKA AS 18,889,449 9.46 3 Morgan Stanley & Co. MS & CO LLC MSCO CLI 18,576,200 9.30 4 ODIN OFFSHORE 9,651,299 4.83 5 CLEARSTREAM BANKING 8,164,590 4.09 6 ODIN NORGE 7,522,609 3.77 7 SKAG
Slide 22: Vessel charters
Vessel charters BOA Thalassa BOA Galatea Atlantic Guardian EM Leader Firm Charter 1 April 2017 15 December 2015 18 December 2017 8 December 2016 Current status In operation, Asia In operation, Mexico Off-hire Off-hire Vessel owner BOA Offshore BOA Offshore North Sea Shipping Seatrans Flexible rates