32 slides from Electromagnetic Geoservices Asa's earnings presentation, Nov 20, 2008
Slide 1: EMGS ASA Third quarter result 2008
EMGS ASA Third quarter result 2008 CEO, Terje Eidesmo CFO, Svein Knudsen Hotel Continental 20 November 2008
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: Group highlights Q3
Group highlights Q3 The world’s largest multi-client EM survey in the Barents Sea completed Late sales of approximately USD 10 million USD 10 million contract awarded by large independent oil company Shallow water contract worth USD 5 million awarded in Malaysia 3D EM products rapidly replacing 2D S
Slide 4: Financials
Financials
Slide 5: Financial highlights Q3
Financial highlights Q3 48.4 Revenues increased 40 per cent from 45 43.5 previous quarter to USD 33.4 million 37.8 35 33.4 OPEX reduced by USD 3.2 million from Q2 28.2 25.9 CAPEX set to be cut to USD 10 million 25 23.7 in 2009 15 Capital increase of USD 42 million 8.8 6.8 Liquidity reserve: Cash USD
Slide 6: Consolidated income statement
Consolidated income statement USD million Quarterly 01.01 – 30.09 Q3 2008 Q3 2007 YTD 2008 YTD 2007 Revenues 33.4 48.4 100.5 112.1 Charter hire, fuel and crew expenses 17.0 25.3 55.8 68.9 Employee expenses 10.8 7.3 31.1 25.2 Other operating expenses 4.9 7.0 19.4 16.7 EBITDA *) 0.7 8.8 (5.7) 1.3 Depr
Slide 7: Capital structure
Capital structure Assets as of 30.09 Equity and liabilities as of 30.09 Key investments (in USD million) (in USD million) in place 180 180 160 160 Comfortable cash 140 140 position 120 120 100 100 Low interest-bearing 80 80 debt 60 60 40 40 20 20 0 0 2007 2008 2007 2008 Non-current assets Shareholde
Slide 8: Operations
Operations IE
Slide 9: A flexible business model
A flexible business model Capital spending cut on all levels Downsizing of fleet and personnel - 3 vessels in fleet - Staff scaled down to new fleet level Operational expenses approaching USD 30 million in Q1 2009 Flexible operations Further increase in operational efficiency EMGS expects to generat
Slide 10: A more efficient fleet at lower cost
A more efficient fleet at lower cost Two purpose built vessels in production. First will be launched in December 2008 More than 100 receivers on each vessel gives All vessels have increased survey Dynamic positioning efficiency and ideal DP class II. for 3D based surveys. Latest generations of recei
Slide 11: High capacity equipment in place
High capacity equipment in place Receivers and source – purpose- built exclusively for EMGS Large equipment base Built-in redundancy All key equipment owned by EMGS Navigation setup – Custom modified based on navigation commercial package instruments Exclusive right adapted for EM of design for all
Slide 12: Markets
Markets
Slide 13: Current energy trend
Current energy trend “A sea change is underway in the Oil production decline 1 (Y/Y growth in %) upstream oil and gas industry with international oil companies facing 0 dwindling opportunities to increase their 06 06 06 06 07 07 07 07 08 08 08 1 2 3 4 1 2 3 4 1 2 3 Q Q Q Q Q Q Q Q Q Q Q reserves and
Slide 14: Focus on triple A
Focus on triple A Awareness Acceptance Adoption Technology Commercial Full Large scale R&D test adoption adoption adoption adoption ”Crossing the chasm”
Slide 15: Increased commercial focus
Increased commercial focus Increased resources in EAME Increased sales force in Stavanger More resources dedicated to Africa Reorganisation of Houston office More resources Own network Prepared for focus on Gulf of Mexico Improved sales performance in Asia One third of sales in Q3 Gulf of Mexico EMG
Slide 16: Successful multi-client model
Successful multi-client model Showcase MC survey in the Barents Sea Extensive survey covering more than 9,000 km2 of arctic acreage Seeking to apply the MC business model to other important oil regions Relevant projects with major oil companies in strong financial position EMGS will develop the MC m
Slide 17: Product deliverable
Product deliverable
Slide 18: Strong commercial base
Strong commercial base In excess of 400 surveys and 10-vessel years of continuous operation Staffed with the world’s leading experts in EM Customer base of more than 40 leading operators. Focus on ”Group of ten” Several customers with strong balance sheets and weaker on opportunities “Fewer, larger
Slide 19: The important role of oil authorities
The important role of oil authorities In addition to existing customer base EMGS is actively promoting technology to oil authorities Actively encourage and credit the use of EM as part of the exploration programs Use EM as part of the geophysical mapping Investigate the use of EM as a tool prior to
Slide 20: Technology
Technology
Slide 21: The value of EM
The value of EM A clearer, more complete understanding of the subsurface Better decisions, more quickly Reduced risk and finding costs per barrel
Slide 22: Technology development I
Technology development I Traditional 2D lines give inline responses 2D 3D over a limited area 3D EM gives areal resistivity information included azimuthal data between the lines 90 per cent of R&D i EMGS spent on developing 3D From zero in 2004 to more than 50 per cent of surveys in 2008 EMGS has a
Slide 23: Technology development II
Technology development II Going shallow water Seeing deeper targets
Slide 24: Summary
Summary Important funding in place A more streamlined business model Successful multi-client survey in the Barents Sea completed Advanced and effective 3D technology ready for large scale commercialisation Important contracts awarded in Asia Broad customer base with strong financial position EMGS’ s
Slide 25: Outlook
Outlook No need for funding in 2009 No need for substantial investments to maintain technology leadership Important and advanced products already in place Continued commercial focus Operational flexibility
Slide 26: Q&A
Q&A
Slide 27: Appendix
Appendix
Slide 28: Condensed balance sheet
Condensed balance sheet USD million As of As of 30 September 2008 30 September 2007 ASSETS Cash and cash equivalents 40.9 66.2 Trade receivables 36.4 41.8 Other current assets 27.0 22.3 Total current assets 104.3 130.2 Intangible assets 4.9 3.3 Property, plant and equipment 46.4 36.8 Investment in j
Slide 29: Condensed statement of cash flow
Condensed statement of cash flow USD million Nine months ended 30 September 2008 2007 Net cash flow from operating activities (12.1) (13.2) Net cash flow from investing activities (22.0) (22.1) Net cash flow from financial activities 34.3 81.0 Net profit (loss) (41.2) (13.0)
Slide 30: Ownership (as of November 4)
Ownership (as of November 4) Shareholder Shares Holding 1 WARBURG PINCUS 61, 873,434 67.57% 2 BJARTE HENRY BRUHEIM 2,350,088 2.57% 3 JPMORGAN CHASE BANK 2,041,600 2.23% 4 UBS AG, London branch 1,888,900 2.06% 5 JPMORGAN CHASE BANK 1,829,219 2.00% 6 MORGAN STANLEY & CO INC 1,082,720 1.18% 7 SVEIN ELL
Slide 31: EMGS experience and presence
EMGS experience and presence
Slide 32: Patent status
Patent status Current patent portfolio includes: - Over 180 cases - 19 patent families - 70 patents granted or applications accepted for grant EMGS has revoked or surrendered a number of patents throughout the years and expects to do so The portfolio relates primarily to the method. Equipment and in