Magseis Fairfield ASA Q1 2019 28 th May 2019 The industry leader in - - PowerPoint PPT Presentation

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Magseis Fairfield ASA Q1 2019 28 th May 2019 The industry leader in - - PowerPoint PPT Presentation

Magseis Fairfield ASA Q1 2019 28 th May 2019 The industry leader in ocean bottom seismic technology Disclaimer This presentation (the Presentation ") has been prepared by Magseis Fairfield ASA (the The Company makes no representation or


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SLIDE 1

Magseis Fairfield ASA

Q1 2019

28th May 2019

The industry leader in ocean bottom seismic technology

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SLIDE 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.

Disclaimer

2

Source: Magseis Fairfield

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SLIDE 3

AGENDA

3

Introduction Financials Operations Business Strategy, Backlog and Market Outlook Appendix

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SLIDE 4

at a glance

4

  • The combination of Magseis, Fairfield and WGP shaped

the Industry leader in the Ocean Bottom Seismic market

  • Largest player in a growing global USD 1bn+ market with

improving visibility

  • Leading edge technology - automated handling systems
  • Largest nodal pool in the market – ability to scale
  • Global reach - diverse customer base
  • Asset light business model - flexible cost structure

Source: Magseis Fairfield

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SLIDE 5

Highlights Q1 2019

5

  • Revenue of USD 119.5m
  • EBITDA of USD 16.0m, including non-cash costs of USD 6.6m
  • Net loss of USD 6.5m
  • Completed Malaysia survey – learnings operationalized
  • Completed deepwater GoM survey for new node customer with excellent
  • perational performance and data quality
  • Completed mobilization for Middle East start-up late January
  • Change of deployment platform for GoM surveys – in operation from end of Q1
  • Successful delivery of second shipment of MASS I nodes and handling systems
  • Integration on track – benefits being realized
  • Revenue guidance of USD 500m and EBITDA of USD 100m in 2019
  • USD 453m already secured through Q1 revenue and current backlog

Source: Magseis Fairfield

Financial performance Operational Performance and Execution Outlook

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SLIDE 6

AGENDA

6

Financials Introduction Operations Business Strategy, Backlog and Market Outlook Appendix

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SLIDE 7

Q1 P&L – Revenue and EBITDA on track

7

120 16 28 11 91 5 7 7

10 20 30 40 50 60 70 80 90 100 110 120 130 Revenue EBITDA Revenue EBITDA Revenue EBITDA

EBITDA included non-cash costs of ~USD 7m, related to sale of existing MASS I node sales

Magseis Fairfield MASS I node sales Other

  • Strong margins from delivery of second shipment of

sold MASS I nodes

  • Soft margins in data acquisition
  • Zero margin on USD 12m in revenue in Malaysia
  • Mobilization ahead of contract start-up of large Middle East

contract in late January

  • Expensed USD 7.7m for change of deployment platform for

deep water GoM projects - start-up of program with new vessels and ROVs at end of Q1

  • Seasonally low activity and soft margins in reservoir

monitoring/source

  • Main part of revenue recognized in Q2, Q3 and Q4
  • Improving margins and market environment
  • Higher margins in recently signed contracts and current

contract negotiations

  • Improving utilization going forward
  • Improving revenue generation from reservoir monitoring/

source from Q2

Source: Magseis Fairfield

USDm

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SLIDE 8

Key financial figures

8

Profit and loss Q1 2019 Q1 2018 Full Year 2018 Revenues 119.5 24.6 136.5 Cost of sales 88.3 9.7 86.8 EBITDA 16.0 10.4 23.0 EBIT

  • 2.7

6.6 3.1 Net profit (loss)

  • 6.5

5.7

  • 2.8

Basic earnings (loss), weighted avg. shares

  • 0.04

0.08

  • 0.04

Financial position Total assets 587 165 527 Total liabilities 260 27 194 Total equity 327 138 334 Equity ratio 55.7 % 83.5 % 63.3 % Cash flow Net cash flow from operating activities

  • 1.9
  • 6.2

13.7

Key figures, USD million

  • EBIT USD -2.7m after total depreciation & amortization of USD 18.8m
  • Equipment regular depreciation of USD 10.8m
  • IFRS 16 lease depreciation of USD 4.0m
  • Intangibles (PPA) amortization of USD 4.0m
  • 5

5 10 15 20 25

EBITDA Non-cash costs MASS I node sales Increased Net Working Capital Other adjustments to CFFO, net CFFO

EBITDA to Net Cash Flow from Operations – main items (USDm)

Source: Magseis Fairfield

  • Net cash flow from operating activities: USD -1.9m
  • Net Working Capital increase of USD 24.3m in Q1, mainly

reflecting increased receivables from higher billable revenue that will be collected as they fall due

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SLIDE 9

AGENDA

9

Operations Financials Introduction Business Strategy, Backlog and Market Outlook Appendix

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SLIDE 10

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Integration on track - benefits being realized

  • Moved to common sales, commercialization and bid process – sales objectives being realized
  • Standardizing vendor management, leveraging purchasing and service providers
  • Optimizing back-office systems and processes
  • Moving from three business systems to one global system
  • Combined and harmonized QHSE and administrative policies, procedures and systems
  • Moving to a common technology platform

Source: Magseis Fairfield

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SLIDE 11

Malaysia Survey Completed

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  • Operation finalized early April
  • Improved operational performance and

source issues resolved in Q1

  • Good performance from second ROV vessel

entered into operation in January

  • Project loss covered by provisions in Q4’18
  • Lesson learned - corrective actions

implemented and operationalized

Customer quote:

“….considering the challenges we faced, I cannot be more impressed with the way Magseis have handled this project, and so offer you firstly my congratulations for completing a difficult job with an amazing level of persistence and tenacity….”

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SLIDE 12

Efficient delivery of MASS I nodes and MASS modular handling systems

12

  • Shipment by air carrier
  • Delivered 3,000 nodes in the second batch in

Q1-19 for large Middle East project

  • Adding to a delivery of 4,500 nodes in Q4-18
  • On track for delivery of remaining 8,500

nodes and two handling systems over the coming two quarters

Source: Magseis Fairfield

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SLIDE 13

Sale of MASS I nodes and modular handling systems

Financial effects

13

  • Total contract revenue of ~USD 150 million
  • Q4-18: USD 41m
  • Q1-19: USD 28m
  • Remaining: ~USD 80m
  • Total expected EBITDA of ~USD 50 million
  • Q4-18: USD 19m
  • Q1-19: USD 11m
  • Remaining: ~USD 20m
  • Total expected “Cash EBITDA” of ~USD 89

million

  • Q4-18: USD 39m
  • Q1-19: USD 18m
  • Remaining: ~USD 32m

10 20 30 40 50 60 70 80 90 100

Q4-18 "Cash EBITDA"* Q1-19 "Cash EBITDA" Remaining "Cash EBITDA" Total "Cash EBITDA"

Non-cash costs EBITDA

Illustration of «Cash EBITDA» from MASS I node sales, USDm

Source: Magseis Fairfield

* Q4-18 EBITDA and “Cash EBITDA” have been adjusted upwards from previous illustrations, to reflect actual SG&A resources used as well as the actual distribution of inventory expenditure for new (cash costs) and used (non-cash cost) equipment over time.

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SLIDE 14

Start-up of large Middle East survey in late January

  • 15,000 Z700 nodes – the largest OBS

node fleet ever deployed on a single project

  • Rigged and mobilized two new high-

capacity NHV’s - Normand Tonjer / MAC Pegasus in preparation for operation

  • Baseline survey in preparation for

future 4D monitoring from 2021 and beyond

  • Very active field:
  • Congested infrastructure with constant

simultaneous operations; platforms, diving, pipelines, construction, etc.

  • International border
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SLIDE 15

Successful delivery of deepwater project in Q1

Gulf of Mexico (GoM)

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  • Utilizing MASS I nodes, MASS Mini handling

system and ROV deployment system

  • Mobilizing in 2 days and 8 hours, de-mobilizing

in 5 hours

  • Great performance on all systems
  • Solid data recovery and data quality
  • Building customer loyalty through execution

Source: Magseis Fairfield

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SLIDE 16

Work commenced on the world’s largest deepwater OBS survey

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  • Started working on four-month MC-project in GoM at

the end of the quarter

  • New deployment platform with REM Saltire,

Oceaneering ROVs and new High-speed loader (HSL)

  • Five vessels in action with >200 offshore staff at any

time; one node handling vessel, three source vessels and one support vessel

  • 2nd sparse node survey ever acquired – both by Magseis

Fairfield

  • 3,100 square kilometres survey utilizing Magseis

Fairfield’s ZXPLR deepwater nodes

  • Challenging environment, with 18 surface obstructions

and hundreds of seabed constructions

  • Currently on schedule for early August finish

Source: Magseis Fairfield

3 100 km2

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SLIDE 17

New two months Letter of Intent secured for the GoM ZXPLR Crew I, announced on 22 May

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  • Fifth contract booked with the new

deployment platform

  • Back-to-back contracts; ZXPLR Crew I is

continuously booked through April 2020

  • Returning customer - building loyalty

through execution

Source: Magseis Fairfield

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SLIDE 18

AGENDA

Business Strategy, Backlog and Market Outlook Financials Operations Introduction Appendix

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SLIDE 19

19

2019 revenue guidance of USD 500 million

330 388

Q1 revenue

47 500 453

Gap to close 100 200 300 400 500 2019 backlog per Nov '18 2019 backlog per Q4 report 2019 backlog and revenue per Q1 report 2019 revenue guidance

Data Acquisition System sales/lease Reservoir Monitoring/ Near field exploration Multi-client

Estimated revenue split 2019

Source: Magseis Fairfield

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SLIDE 20

Strengthening market momentum Shift to OBS accelerating – demand/supply tightening

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  • Available capacity of 6 survey

months in Q4-19 for existing and new crews

  • Six ongoing addressable tenders

with start in Q4 for a total 18 survey months

  • Two ongoing addressable tenders

for 2020 – for a total 7 survey months

  • Significant amount of announced

but not yet tendered activity

Source: Magseis Fairfield

Data quality

1960s ~1990 2005-10 Today

Source: Magseis

Exploration Field Development and IOR

Narrow Azimuth Multi Azimuth Wide Azimuth

Full Azimuth

3D streamer OBS

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SLIDE 21

Building our business

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BUSINESS MODEL KEY GOALS BY 2020

  • Operational excellence
  • Client focus
  • Maintain and add customer

retention and loyalty

  • Technology champion in

nodes, systems and source

  • Asset light and modular business

model

  • Focus on total system efficiency
  • Robotics and automation
  • Deployment via cable, rope and ROV
  • Diversified revenue model
  • Investing in capacity
  • 6-8 parallel crews
  • Contract acquisition and MC
  • Equipment lease, sales and services
  • Leading edge reservoir monitoring

and source technology

Source: Magseis Fairfield

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SLIDE 22

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The industry leader in

Ocean Bottom Seismic (OBS) technology

  • Largest player in a growing USD 1 billion+ annual market
  • Global reach with broad customer base including the top-tier E&Ps
  • Leading market position with 30,000+ node pool and scale advantages
  • Asset light business model offers further scalability
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SLIDE 23

APPENDIX

23

Income Statement Balance Sheet Cash Flow Statement

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SLIDE 24

24

Income Statement

(unaudited)

Revenue: USD 119.5m

  • MASS I node sales: USD 28.1m
  • Magseis legacy other projects: USD 33.8m
  • Fairfield/WGP: USD 57.6 million

Cost of sales: USD 88.3

  • Mass I node sales: USD 16.7m
  • Magseis legacy other projects: USD 25.9m
  • Fairfield/WGP: USD 45.7m

EBITDA: USD 16.0m

  • Mass I node sales: USD 10.9m
  • Magseis legacy other projects: USD 2.2m
  • Fairfield/WGP legacy: USD 2.9m

in thousands of USD Q1 2019 Q1 2018 Full year 2018 (unaudited) (unaudited) (audited) REVENUE AND OTHER INCOME Revenue 119 502 24 564 136 477 Total revenue and other income 119 502 24 564 136 477 OPERATING EXPENSES Cost of sales 88 293 9 691 86 764 Research and development expenses 640 560 3 995 Selling, general and administrative costs and other expense 14 532 3 942 22 705 Depreciation 14 797 3 561 19 097 Amortisation 3 958 191 839 Impairment Total operating expenses 122 220 17 946 133 400 OPERATING PROFIT (LOSS)

  • 2 718

6 618 3 077 FINANCIAL INCOME AND EXPENSES Finance income 1 058 2 2 628 Finance costs

  • 3 177
  • 193
  • 5 058

Net finance costs

  • 2 119
  • 191
  • 2 430

NET PROFIT (LOSS) BEFORE TAX

  • 4 837

6 427 647 Income tax expense 1 642 760 3 468 NET PROFIT (LOSS)

  • 6 480

5 667

  • 2 821

Basic earnings (loss) per weighted avg. shares (in USD)

  • 0.04

0.08

  • 0.04

Diluted earnings (loss) per weighted avg. shares (in USD)

  • 0.04

0.08

  • 0.04

OTHER COMPREHENSIVE INCOME Other comprehensiv income Total comprehensive income (loss) for the period

  • 6 480

5 667

  • 2 821

Source: Magseis Fairfield

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SLIDE 25

25

Balance Sheet

(unaudited)

Goodwill & Intangible assets

  • Preliminary purchase price allocation related to the

Fairfield acquisition include USD 71 million allocated to technology and customer assets. Remaining value is recorded as goodwill

IFRS 16:

  • Established total right-of-use-asset of USD 38.5m and

corresponding lease liability in January 2019

  • USD 20.6m current and USD 17.9m non-current
  • bligations

Equity:

  • Equity ratio of 55.8%
  • Equity ratio of 59.3% adjusting for lease liability

in thousands of USD YTD 2019 YTD 2018 YE 2018 (unaudited) (unaudited) (audited) ASSETS Non-current assets Goodwill 93 731 93 731 Equipment 153 810 80 968 148 598 Multi-client library Other intangible assets 76 332 5 142 80 280 Total non-current assets 323 873 86 110 322 609 Current assets Cash and cash equivalents 50 006 44 597 68 110 Trade receivables 130 960 24 900 75 335 Other current assets 82 307 9 425 61 256 Total current assets 263 273 78 921 204 701 TOTAL ASSETS 587 146 165 032 527 310 EQUITY AND LIABILITIES Shareholders' equity Share capital 1 166 545 1 166 Share premium 382 155 178 508 382 152 Other equity 3 257 3 201 3 244 Retained earnings

  • 54 344
  • 39 377
  • 47 864

Currency translation reserve

  • 5 124
  • 5 124
  • 5 124

TOTAL EQUITY 327 109 137 754 333 573 LIABILITIES Non-current liabilities Obligation under finance lease 17 863 Other non-current financial liabilities 51 512 12 855 50 846 Total non-current liabilities 69 375 12 855 50 846 Current liabilities Trade payables 66 971 4 978 48 037 Current tax payable 2 828 1 473 1 855 Current portion of obligations, finance lease and loan 38 891 2 963 27 301 Other current liabilities 81 973 5 010 65 698 Total current liabilities 190 662 14 424 142 891 TOTAL LIABILITIES 260 037 27 278 193 737 TOTAL EQUITY AND LIABILITIES 587 146 165 032 527 310

Source: Magseis Fairfield

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SLIDE 26

26

Cash Flow

(unaudited)

Net cash from operating activities: USD -1.9m

+ Net cash flow effect, MASS I node sales of ~USD 17.5m

  • Negative NWC development of USD 24.3m, mainly reflecting

increased trade receivables will be collected as they fall due

Net cash used in investing activities: USD -4.8m Net cash from financing activities: USD -11.4m Net change in cash and cash equiv.: USD -18.1m Cash and cash equivalents: USD 50.0m

in thousands of USD YTD 2019 YTD 2018 Full YR 2018 (unaudited) (unaudited) (audited) Cash flows from operating activities Profit / (Loss) before tax

  • 4 837

6 427 647 Adjustment for: Income tax and withholding tax paid

  • 456
  • 334
  • 2 904

Depreciation and amortisation 18 755 3 752 19 936 Share based payments expense 13

  • 82
  • 40

Interest expense and other financial items 2 574 302 1 523 Interest income

  • 286
  • 2
  • 492

Cost of sales of nodes, non cash effect 6 599 9 221 Working capital adjustments: (Increase) / decrease in current assets

  • 59 468
  • 15 078
  • 43 033

Increase / (decrease) in trade and other payables and accruals 35 208

  • 1 111

29 313 Net cash from operating activities

  • 1 899
  • 6 243

13 732 Cash flow used in investing activities Interest received 286 2 182 Acquisition of equipment and prepayments

  • 4 970
  • 14 854
  • 34 402

Prepaid seimic equipment

  • 135

637 Investment in sudsidaries Fairfield and WGP

  • 163 263

Net cash used in investing activities

  • 4 819
  • 14 852
  • 196 845

Cash flows from financing activities Proceeds from loan 27 50 027 Payment of finance lease obligation and loan

  • 9 600
  • 937
  • 4 033

Proceeds from issue of share capital 4 38 580 183 823 Expenses related to issue of share capital

  • 1
  • 1 451
  • 7 597

Interest paid

  • 1 790
  • 302
  • 772

Net cash from financing activities

  • 11 387

35 917 221 447 Net change in cash and cash equivalents

  • 18 104

14 821 38 335 Cash and cash equivalents at 1 January 68 110 29 776 29 776 Cash and cash equivalents at period end 50 006 44 597 68 110

Source: Magseis Fairfield