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Magseis Fairfield ASA Q4 2018 28 th February 2019 Global reach and scale Disclaimer This presentation (the Presentation ") has been prepared by Magseis Fairfield ASA (the The Company makes no representation or warranty, expressed or


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SLIDE 1

Magseis Fairfield ASA

Q4 2018

28th February 2019

Global reach and scale

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SLIDE 2

Disclaimer

2 This presentation (the “Presentation") has been prepared by Magseis Fairfield ASA (the “Company” or “Magseis Fairfield”). The Presentation contains forward-looking information and statements relating to the business, financial performance and results of the Company and/or industry and markets in which it

  • perates.

Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “aims”, “anticipates”, “believes”, “estimates”, “expects”, “foresees”, “intends”, “plans”, “predicts”, “projects”, “targets”, and similar

  • expressions. Any forward-looking statements and other information contained in this

Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts based on the current expectations, estimates and projections of the Company or assumptions based on information currently available to the Company, which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although the Company believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to its actual results. The Company makes no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither the Company nor any of its directors, officers or employees shall be liable to you or to any other party for any losses incurred as a result of your or their use of, or reliance on, any information contained in the Presentation. This Presentation does not constitute or form part of, and is not prepared or made in connection with, an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or on its completeness, accuracy or fairness. The information in this Presentation is subject to verification, completion and change. The contents of this Presentation have not been independently verified. The Company’s securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “US Securities Act”), and are offered and sold only outside the United States in accordance with an exemption from registration provided by Regulation S under the US Securities

  • Act. This Presentation should not form the basis of any investment decision.

The Presentation speaks and reflects prevailing conditions and views as of the date of this presentation. It may be subject to corrections and change at any time without notice except as required by law. The delivery of this Presentation or any further discussions of the Company with any recipient shall not, under any circumstances, create any implication that the Company assumes any obligation to update or correct the information herein, nor any implication that there has been no change in the affairs

  • f the Company since such date.
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SLIDE 3

AGENDA

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Operations and business strategy Financials Market outlook Introduction

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SLIDE 4

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Headquarter in Oslo, Norway with offices in Houston, Stockholm, Singapore and Brazil ~430 employees As of 27th February, 6 crews in operation with 28 200 nodes deployed

Coupling industry leading nodes with automated handling systems, Flexible deployment systems and next generation source technologies Creating the new future in marine seismic OSE:MSEIS

  • Market Cap MUSD~435
  • Revenue Guidance 2019: MUSD 500

Node Pool:

  • 9 500 MASS
  • 20 700 ZNODAL

Geophysical company founded in 2009 with first operation in 2013. December 2018 Magseis acquired Fairfield’s Seismic Technologies business.

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Source: Magseis Fairfield

At a glance

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SLIDE 5

Highlights Q4 2018

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Source: Magseis Fairfield

Financial Performance Operational Performance Technology Further growth, backlog and outlook

  • Successfully completed MUSD 233 aquisition of Fairfield
  • Revenue of MUSD 76.2 and EBITDA of MUSD 8.0
  • MUSD 150 technology sale to BGP Offshore
  • Mobilisation for Middle East survey of 15 000 Z700 nodes
  • Portable modular triple source system for Johan Sverdrup
  • Delivered first crew to BGP offshore ahead of schedule
  • Operational challenges in Malaysia
  • Record total backlog of MUSD 418 (MUSD 388 in 2019)
  • Revenue guidance for 2019 of MUSD 500
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SLIDE 6

AGENDA

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Introduction Financials Market outlook Operations and business strategy

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SLIDE 7

Malaysia operations

The Malaysia project has been delayed with three months and

  • ne additional ROV vessel has been engaged to complete the

project in a timely manner

  • Short time between award and start-up in a challenging
  • perational environment
  • Delayed permitting process with changing local regulations
  • Poor ROV performance vs. modelled timeline
  • Lack of Source vessel performance due to unusual amount
  • f technical downtime

The project will make a loss of MUSD 14 and full provision taken in Q418 financial despite end-date in late Q119 Measures taken to mitigate similar risks for future projects in combination with cross knowledge transfer across the Magseis Fairfield organisation. Already seen effect on mobilisation and start of the subsequent project. GoM project mobilised and commenced operation ahead of schedule.

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Source: Magseis Fairfield GK Kikeh KBB Malakai
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SLIDE 8

Technology sale to BGP – MUSD 150

Antonov transport of seismic equipment from Sola Airport Norway.

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Source: Magseis Fairfield Stavanger Abu Dhabi
  • Air freight of full MASS Modular system

and 4 500 MASS I nodes to BGP in Abu Dhabi ahead of schedule

  • Demonstrates flexibility uniqueness of

MASS modular nodes

  • Equipment in operation January 2019
  • Allows for ultra fast mobilisations

across the world.

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SLIDE 9

Magseis Fairfield integration process

9

  • Magseis Fairfield operated from “Day 1” as one

company

  • Focused integration process well underway

 Integration Management Office established  Operational knowledge sharing on ongoing and future contracts  Coordinated account management and tender process  Technology coordination and integration  Back-office systems and process

  • ptimisation

Technology Western Hemisphere Operations Eastern Hemisphere Operations

Source: Magseis Fairfield
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SLIDE 10

Focus areas for growth and operational efficiency

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  • Continuously advance technology pool and leverage IP portfolio
  • Full system development to further drive efficiency
  • Leverage new operating platform to increase utilisation
  • Sale and rental of nodes for use in shallow / transition zone
  • Ability to capitalise on previous generations of technology at attractive margins
  • Optimise deployment of node pool by assessing technology vs. acquisition opportunities
  • New business unit focusing on multi-client business development
  • E&P companies are showing increased interest in the benefits of nodal seismic data
  • Partnership or proprietary surveys
  • Drive down the high costs associated with the current reservoir monitoring systems
  • Introduce a coordinated operating model
  • Leverage existing customer base
Source: Magseis Fairfield

Contract data acquisition Technology lease and sale Multi-client projects Reservoir monitoring/Near field exploration

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SLIDE 11

Building our business

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BUSINESS MODEL KEY GOALS BY 2020

  • Operational excellence
  • Client focus
  • Technology champion
  • Recording nodes
  • Handling systems
  • Deployment systems
  • Source technology
  • Asset light and modular

business model

  • Focus on total system

efficiency

  • Robotics and automation
  • Deployment via cable, rope

and ROV

  • Diversified revenue model
  • 6-8 parallel operations
  • 3 -4 regional operational hubs
  • Contract acquisition, multi-client and

reservoir monitoring

  • Automated containersed handling

and deployment systems

  • Leading edge modular source

technology

  • Equipment lease, sales and services
Source: Magseis Fairfield
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SLIDE 12

AGENDA

12

Introduction Market outlook Financials Operations and business strategy

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In USD thousands Q4 2018 (unaudited)

%

Q4 2017 (unaudited)

%

Full Year 2018 (unaudited) % Full Year 2017 (audited

%

Revenue 76 198 4 752 136 477 73 877 Cost of sales 55 874 5 455 86 764 35 701 Research and development 2 183 494 3 995 2 002 SG&A and other expenses 10 160 3 318 22 705 10 039 EBITDA 7 980 10.5

  • 4 514
  • 23 012 16.9

26 136 35.4 Depreciation 7 591 3 395 19 097 15 148 Amortisation 266 116 839 463 Impairment 233 EBIT 123 0.2

  • 8 025
  • 3 077 2.3

10 292 13.9 Net interest and fx (gain)/loss 638 684 2 430 397 Other finance cost Net finance costs 638 684 2 430 397 EBT

  • 515
  • 8 709

647 9 895 Tax 1 484 1 078 3 468 3 199 Net income

  • 1 998
  • 9 787
  • 2 821
  • 6 696 9.1

Other comprehensive income Total comprehensive income

  • 1 998
  • 9 787
  • 2 821

6 696

Q4 2018 P&L – (Includes 18-31 DEC 2018 legacy FF & WGP)

Revenue

  • First Crew of nodes to BGP - MUSD 40.8
  • Data aquisition legacy MS - MUSD 32.0
  • Revenue legacy FF&WGP (13 days) - MUSD 3.4

Cost of sales

  • COS finished goods to BGP - MUSD 21.0
  • COS Malaysia - MUSD 24.2 (incl. MUSD 7.4 2019)
  • COS legacy MS – MUSD 8.7
  • COS legacy FF&WGP (13 days) MUSD 2.0

SG&A

  • Legacy MS – MUSD 8.9 (bonus 2.8, cons.fee 1.8)
  • Transaction costs of MUSD 6.2 against Equity
  • Legacy MS&WGP MUSD 1.2

Depreciation

  • Legacy MS MUSD 6.7

Finance

  • Net gain on Warrants of MUSD 0.3

Tax

  • Withholding Tax and Corporate tax in Saudi Arabia and

Malaysia

Source: Magseis Fairfield
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Q4 2018 Balance Sheet

Goodwill

  • Purchase price MUSD 231.4 + Warrants MUSD 7.0
  • Booked Equity in FF & WGP (OB) MUSD 98.8
  • WGP (OB) MUSD 0.7
  • PPA will be included in Annual Report – reallocations

Equipment

  • Legacy MS MUSD 82.6 (intangibles 4.6)
  • Legacy FF MUSD 62.5 (intangibles 0.7)
  • Legacy WGP MUSD 22.2 (intangibles 9.0)

Trade receivables

  • Legacy MS MUSD 48.1
  • Legacy FF MUSD 25.0
  • Legacy WGP MUSD 2.2

Inventory

  • Legacy MS MUSD 2.7 (fuel + batteries)
  • Legacy FF MUSD 29.0 (fuel 1.1)
  • Legacy WGP MUSD 7.3

Equity

  • Net Equity of MUSD 176.2 after transaction costs in 2018

Non-current Liabilities

  • DNB loan MUSD 50 @ 4,5% margin (non-current MUSD 33)
  • Shell contingent liability MUSD 7.9
  • Warrants of MUSD 6.7

Current liabilities

  • Company settled the MUSD 6.1 to GIEK/IN Jan 2019
  • Prepayment clients MUSD 25.6
  • Project related accruals MUSD 15.8
  • Provisions MUSD 8.4
In USD thousands Year End 2018 (unaudited) Year End 2017 (unaudited)

Goodwill

140 333

Equipment and other intangibles

167 256 74 416

Multi-client library Cash and cash equivalents

68 110 29 776

Trade receivables

75 335 9 137

Inventory

38 994 1 752

Other current assets

28 672 8 469

TOTAL ASSETS

518 701 123 549

Share capital

1 166 438

Share premium

382 152 141 486

Retained earnings and other reserves

  • 49 744
  • 46 884

TOTAL EQUITY

333 573 95 040

Other non-current financial liabilities

54 703 13 049

TOTAL NON-CURRENT LIABILITIES

54 703 13 049

Trade payables

48 037 6 010

Current tax liability

1 855 1 111

Other current liabilities

80 532 8 338

TOTAL CURRENT LIABILITIES

130 424 15 460

TOTAL LIABILITIES

185 128 28 509

TOTAL EQUITY AND LIABILITIES

518 701 123 549

Source: Magseis Fairfield
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SLIDE 15

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Q4 2018 Cash Flow

Earnings before tax
  • 515
  • 8 709
647 9 895 Depr, Amor, Impair (non cash-effect) 7 771 3 424 19 497 15 405 Finance and taxees paid (cash-effect)
  • 594
  • 995
  • 1 912
  • 2 850
Cost of sales Nodes (non cash-effect) 9 221 9 221 Net working capital adjustments (Increase)/decrease in current assets
  • 33 796
4 975
  • 43 033
2 368 Increase/(decrease) in trade and other payables and accruals 27 036 3 685 29 313
  • 660
Net cash flow from operating activities 9 123 2 380 13 732 24 157 Interest received 134 18 182 23 Acquisition of equipment 1 336
  • 17 430
  • 33 765
  • 44 366
Acquisition of Fairfield Geotechnologies´Seismic Technologies business
  • 163 263
  • 73
  • 163,263
  • 214
Net cash flow from investing activities
  • 161 793
  • 17 485
  • 196 845
  • 44 557
Proceeds from loan net 50 000 117 50 027 934 Installment finance lease and loan
  • 1 622
  • 419
  • 4 033
  • 7 412
Proceeds from issue of share capital 145 243 183 823 40 511 Expenses related to issue of share capital
  • 6 146
  • 7 597
  • 1 485
Interest paid
  • 198
  • 245
  • 772
  • 1 347
Net cash flow from financing activities 187 277
  • 547
221 447 31 201 Net change in cash and cash equivalents 34 606
  • 15 651
38 334 10 801 Cash balance at the beginning of the period 33 504 45 427 29 776 18 974 Cash balance at period end 68 110 29 776 68 110 29 776 In USD thousands Q4 2018 (unaudited) Q4 2017 (unaudited) Full Year 2018 (unaudited) Full Year 2017 (audited) Source: Magseis Fairfield

Operating Cash flow

  • NCF effect from node sale ~MUSD 20
  • AR partly related to node sale and Malaysia project

Investing Cash flow

  • Cash consideration for Fairfield MUSD 166.2
  • Disposal of new assets ~MUSD 10

Financing Cash flow

  • Net Loan facility from DNB MUSD 48.8
  • Net equity MUSD 139.1
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16

KE KEY FIGU GURES

Q4 Q4 2018

Source: Magseis Fairfield

76.2

REVENUE

8.0

EBITDA

  • 2.0

NET PROFIT

68.1

CASH BALANCE

$ MILLION $ MILLION $ MILLION $ MILLION $ MILLION

EBITDA REVENUE EBITDA

Q4 2018

REVENUE

Q4 2018

  • 4.5

4.7 8.0 76.2

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SLIDE 17

17

Source: Magseis Fairfield

KEY FIGURES

Full Y l Year ar 2018

136.5

REVENUE

23.0

EBITDA

  • 2.8

NET PROFIT

68.1

CASH BALANCE

$ MILLION $ MILLION $ MILLION $ MILLION $ MILLION

26.1

EBITDA

136.5

REVENUE

23.0

EBITDA

YTD 2018

REVENUE

YTD 2018

73.9

Source: Magseis Fairfield
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SLIDE 18

AGENDA

18

Introduction Financials Market outlook Operations and business strategy

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SLIDE 19

Significant backlog provides near-term visibility

19 “Magseis” 2019 Backlog

500
  • 400
  • 300
  • 200
  • 100
  • “Fairfield”

2019 Backlog COMBINED 2019 Backlog 2019 Gap to close 2019 REVENUE GUIDANCE

Full Year 2019 Guidance:

  • EBITDA: MUSD 100
  • Maintenance CAPEX and R&D: MUSD 15
  • Growth CAPEX: MUSD 50

152 236 388 112

500

Source: Magseis Fairfield
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SLIDE 20

2019 Guided Revenue breakdown

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Revenue by status

In Tender Leads Firm

500

  • 400
  • 300
  • 200
  • 100
  • Acquisition

Systems Reservoir Monitoring/ Near field exploration Multi-client

Revenue by type

Source: Magseis Fairfield
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SLIDE 21

creating the leading provider of marine seismic solutions

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Successfully acquired Fairfield Seismic Technologies Sale of 17 000 MASS I Nodes to BGP Offshore Record backlog of MUSD 418