Magseis ASA: Third Quarter 2014 26 November 2014 Disclaimer This - - PowerPoint PPT Presentation

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Magseis ASA: Third Quarter 2014 26 November 2014 Disclaimer This - - PowerPoint PPT Presentation

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Magseis ASA: Third Quarter 2014 26 November 2014 Disclaimer This Presentation of Magseis ASA (the Company) has been prepared solely for information purposes. This Presentation may not be distributed, reproduced or used without the consent

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Magseis ASA: Third Quarter 2014

26 November 2014

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Source: Magseis

Disclaimer

This Presentation of Magseis ASA (the “Company”) has been prepared solely for information purposes. This Presentation may not be distributed, reproduced or used without the consent of the Company. The information contained herein does not purport to contain all information concerning the Company. No party has made any kind of independent verification of any of the information set forth herein, including any statements with respect to projections or prospects of the business or the assumptions on which such statements are based. The Company nor any of its subsidiaries make any representations or warranty, express or implied, as to the accuracy, reliability or completeness of this Presentation or of the information contained herein and shall have no liability for the information contained in, or any omissions from, this Presentation. Included in this Presentation are various “forward-looking statements”, including statements regarding the intent, opinion, belief or current expectations of the Company or its management. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance and outcomes to be materially different from any future results, performance or outcomes expressed or implied by such forward-looking statements, including, among others, risks or uncertainties associated with the Company’s business, segments, development, growth management, financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors, including lack of operating history. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this document. No information contained herein constitutes, or shall be relied upon as constituting, any advice relating to the future performance of the

  • Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements included in this Presentation.
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Content

3

  • 1. Highlights
  • 2. Operational and Market update
  • 3. Financials
  • 4. Summary and Q&A
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Note: 1) Excludes Financial Lease for winch package Source: Magseis

This is Magseis

Ticker: MSEIS Shares outstanding: 27,162,561 Market cap (NOKm) 670 Book Equity – Q3 14 (USDm) 66.2 Net Debt – Q3 14 (USDm) (21.9)1

  • Industry leading ocean bottom

seismic (OBS) company

  • Start of operations Oct 2013
  • One vessel in operations
  • 75 employees
  • ~NOK 500m in equity raised
  • Listed on Oslo Axess
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Highlights from the Third Quarter

Operational highlights:

  • Completed Gullfaks and Oseberg surveys
  • Started operations on South Arne for Hess
  • 4,500 sensor upgrade ongoing

Financial highlights:

  • Revenue

– USD 14.6 million – Impacted by yard stay and production speed

  • EBITDA

– USD 1.5 million

  • Net income

– USD - 2.0 million – Negatively impacted by impairment and NOK/USD conversion 5

Source: Magseis

13,9 2,0 16,4 2,8 14,6 1,5 44,8 6,3 Rev. EBITDA Rev. EBITDA Rev. EBITDA Rev. EBITDA Q1 14 Q2 14 Q3 14 YTD 14 USD mill.

Financial performance to date

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Content

6

  • 1. Highlights
  • 2. Operational and Market update
  • 3. Financials
  • 4. Summary and Q&A
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A very successful first year of operations completed

7

  • Surveys successfully completed for Statoil and Talisman, now

working for Hess Denmark

– Albatross/Snøhvit – Varg – Oseberg – Gullfaks – South Arne

  • Very good data quality
  • Unparalleled deployment accuracy
  • Established ability to work near complicated infrastructure
  • Work performed in extreme conditions, thus expanding the

traditional OBS weather window

Source: Magseis and Talisman Energy (photo)

Surveys completed to date

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Q3 performance

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  • Magseis continuing to establish MASS as the leading system for 4D work on

producing fields (with lot of infrastructure and simultaneous operations)

  • Very strong HSE performance
  • However, Q3 Production negatively impacted by:

– Unplanned yard stay – Lower than expected production due to field activity and technical issues

Source: Hess, Magseis

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Relative cost position

9

Source: Magseis

  • Significant improvements in efficiency

since start-up

– Increased deploy/recovery speeds – Increased shooting speed – Reduced technical downtime

  • Current efficiency (on Hess) fully on par

with most relevant competitors

  • Further improvements now coming

– New INEX machine – Greater sensor unit/cable inventory

  • Post-upgrade the Athene crew will be very cost effective relative to competition
  • 0,5x

1,0x 1,5x 2,0x 2,5x 3,0x

Albatross Varg Oseberg/Gullfaks INEX machine More Equip.

USD/km2

50% improvement to date Larger equipment count will increase efficiency further

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Backlog and market outlook

10

Source: Magseis

  • Current Hess survey expected to run

through mid-December

  • Currently bidding on several projects

for 1H 2015 both with short and mid- term start up

  • Several large projects scheduled for

start in 2H 2015

  • Magseis establishing agent/sales

networks in all key regions

  • Based on projected demand for 2H 15 – 1H 16

capacity may be tight

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Planned Athene upgrade

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  • New back-deck handling system (INEX) will be

installed after Hess survey

  • Remaining upgrade being planned for February

2015 (will be coordinated with vessel schedule)

– Additional sensor units (1,500) – Additional cable (75km) – Additional handling equipment

  • Will be combined with 5yr classing of Athene

– Estimated at approx. 14 days – No T/C payable during the period

  • Will start work to facilitate further expansion of

Athene

Source: Magseis

Artemis Athene

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Content

12

  • 1. Highlights
  • 2. Operational and Market update
  • 3. Financials
  • 4. Summary and Q&A
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Q3 2014 results

  • Comprehensive income
  • Revenue

– Revenue below expectations due to yard stay and lower than expected production

  • Cost of sales

– Includes an accrual for repair of node houses (USD 0.3m)

  • R&D

– Capitalised USD 0.4m in Q3 2014 and a total

  • f USD 0.8m YTD 2014.
  • SG&A

– Includes share options cost of USD 0.2m in Q3 2014 and USD 0.8m in YTD 2014

  • Impairment

– USD 0.5m relates to nodes damaged during shake down period – USD 0.3m related to parts of back-deck handling system being replaced

  • FX loss Q3 2014

– Mainly relates to conversion of functional currency from NOK to USD 13

All figures in USD thousands Q3 14 Q3 13 YTD 14 YTD 13 Revenue 14,579 44,846 Cost of sales 9,699 29,248 Research and development 416 570 996 791 SG&A and other expenses 2,990 2,938 8,263 5,319 EBITDA 1,474

  • 3,508

6,339

  • 6,110

Depreciation and amortisation 1,845 47 5,571 137 Impairment 798 1,036 EBIT

  • 1,169
  • 3,555
  • 268
  • 6,247

Net interest and foreign currency (gain)/loss 793

  • 71

615

  • 374

Other finance cost 549 Net finance costs 793

  • 71

1,164

  • 374

EBT

  • 1,962
  • 3,484
  • 1,432
  • 5,873

Tax Net income

  • 1,962
  • 3,484
  • 1,432
  • 5,873

Currency translation differences 176

  • 1,155
  • 4,083

Total comprehensive income

  • 1,962
  • 3,308
  • 2,587
  • 9,956

Earnings per share

  • 0.07
  • 0.17
  • 0.06
  • 0.28

Diluted earnings per share

  • 0.07
  • 0.17
  • 0.06
  • 0.28
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Q3 2014 results

  • Balance sheet

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  • Other current assets

– Includes USD 7.6m in receivable from Statoil for acquisition in August and September – USD 5.1m in accrued revenue and prepayments to suppliers

  • Equity

– Currency translation reserve reflects differences arising from using different rates when translated historical P/L, assets and liabilities and equity.

All figures in USD thousands YTD 14 YTD 13 2013 Equipment and intangibles 41,516 38,552 39,548 Cash and cash equivalents 21,901 11,525 6,867 Other current assets 16,803 1,433 12,277 TOTAL ASSETS 80,220 51,510 58,692 Share capital 237 186 186 Share premium 83,755 60,026 60,026 Other reserves 1,833 749 1,044 Retained earnings

  • 14,510
  • 10,287
  • 13,078

Currency translation reserve

  • 5,123
  • 3,392
  • 3,968

TOTAL EQUITY 66,192 47,282 44,210 Obligation under finance lease 2,939 3,501 TC amortisation 1,499 1,867 TOTAL NON-CURRENT ASSETS 4,438 5,368 Trade payables 2,266 109 4,335 Current portion of obligation under finance lease 742 685 Other current liabilities 6,582 4,119 4,094 TOTAL CURRENT LIABILITIES 9,590 4,228 9,114 TOTAL LIABILITIES 14,028 4,228 14,482 TOTAL EQUITY AND LIABILITIES 80,220 51,510 58,692

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Q3 2014 results

  • Cash flow

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  • Cash flow from operations

– Variance from EBITDA is due to increase in working capital (pre-payments related to Athene upgrade)

  • Cash flow from investments

– Mainly consists of costs related to 4,500 node upgrade on Athene

  • Cash flow from finance

– Consists of share issuance and convertible loan

All figures in USD thousands YTD 14 YTD 13 2013 Cash flow from oprating activities 2,176

  • 2,033
  • 7,170

Cash flow from investing activities

  • 8,360
  • 28,645
  • 31,586

Cash flow from financing activities 22,373 3,997 Net change in cash and cash equivalents 16,189

  • 30,678
  • 34,759

Foreign exchange differences in the period

  • 1,155
  • 4,083
  • 4,660

Cash balance at period end 21,901 11,525 6,867

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Content

16

  • 1. Highlights
  • 2. Operational and Market update
  • 3. Financials
  • 4. Summary and Q&A
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Next step in strategic growth plan

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  • Upgrade of Artemis Athene to 150km of cable

(4,500 sensor units) capacity underway – Equipment being delivered – Target completion by Q1 2015

  • Preparations for Crew # 2 well underway

– 6,000 sensor units / 300km, target start up during 2015 – Estimated capex in line with previous communication at USD 60m – Vessel identified and engineering complete

  • Funding strategy

– Capital requirement assumed at USD 50m – Capital structure partly depending on market developments Planned timeline of crew expansion

Crew #1 (75 km) Crew #1 (100 – 150km) Crew #2 (150 - 300km) Crew #3 (>300km)

  • 50

100 150 200 250 300 350 400 450 2013 2014e 2015e 2016e Total km of cable Source: Magseis

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  • Strong improvement in productivity during 2014
  • Now proven - Clients extremely pleased with data quality

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Short-term is challenging Ready to accellerate when market allows Very solid foundation

  • Severe cost cuts across industry
  • Key focus is to secure good utilization through the winter
  • Many large projects coming
  • Preparations for Crew #2 in place – significant client interest

Summary

Source: Magseis

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Questions?