Magseis ASA Q3 2015

13 November 2015

This is Magseis

OCEAN BOTTOM SEISMIC (OBS) PRODUCT DEVELOPMENT& MANUFACTURING

OSLO - BERGEN - STOCKHOLM SINGAPORE - BRAZIL

• Industry leading ocean bottom seismic company

• Start of operations Oct 2013

• One vessel in operations

• 77 employees

• Listed on Oslo Axess

Ticker

Shares outstanding

Market cap (NOKm)

Book Equity – Q3 15 (USDm)

Net Debt – Q3 15 (USDm)

MSEIS

29,818,014

450

64.7

(18.5)1

1) Excluding financial lease on winch package and contingent liability against Shell for ND project

KEY FIGURES Q3 2015

Source: Magseis

12.8REVENUE

2.2EBITDA

-0.3NET INCOME

18.5CASH BALANCE

16.6

35.1

3.8 1.9

REV. EBITDA

Q2 2015REV. EBITDA

YTD 2015

$ MILLION

$ MILLION $ MILLION

$ MILLION $ MILLION

REV. EBITDA

Q3 2015

12.8

2.2

A very successful first two years of operation

4Source: Magseis operating at South Arne Field (photo)

• Chevron survey completed and client very pleased– High density, complex survey– Seamless dataset: Combination of cable deployment and sensors with ROV

• Barents Sea MC campaign completed on-schedule– G2 employed commercially for the first time– Fully funded and with late sales potential

• Letter of Award received for project outside North Sea with duration of approx. 4 months– Maintaining steady utilisation in a challenging market

• Collaboration agreement signed with Shell Global solutions for high-potential deep-water project– Deep water pilot test to be completed during Q1 16

Q3 Highlights

Seismic acquisition – deep marine

Cable deployment

Node deployment

Depth range15-3000m

Product Development: Growing portfolio of sensors

MASS IGeneration 2

• Deployed with cable• 45 days battery lifetime• In commercial use

MASS II

• Deployed with ROV • 75 days battery lifetime• In commercial use

MASS III

• Deployed with ROV • >110 day battery lifetime• Prototype 2015

Product Development: Handling & Software systems

Marine Autonomous Seismic System (MASS)

Source: Magseis 9

100K$ per.km² 20K$ per.km²

Enables a step-change in OBS acquistion costs

201475km

2015150km

2016>300km

2017>600kmCable length

Source: Magseis 10

250

500

1000

2000

3000

0

Water Depth in metres Competing

cable systems

Source: Magseis

CompetingROV systems

MASScable

ROV/

Dev. Project

• Magseis can deploy OBS cable at much greaterwater depth than any competitor

• Joint development project announced with Shell provides step change in efficiency for deep-water 4D work

• Several projects in pipeline where Magseis’ deep-water capabilities will be a unique advantage

Cost-efficient acquisition from 0-3000m

A very successful first two years of operation

11

• Technology well established (G2 in production)

• Have completed ~500 sq.km. of high-density OBS acquisition

• Building reputation for very high-quality data

• Established as the lowest-cost supplier in the industry

Source: Magseis operating at South Arne Field (photo)

Qualified (2013):

Qualified (2015):

Ongoing (2015):

Current back-log• Vessel in transit to new contract

• Awaiting decision on other tenders

• Several large tenders in pipeline during coming months

Source: Magseis

Firm

Lead

Yard/transit

Tender

Market prospects 2016

Source: Magseis

1000m

2000m

3000m

300

200

100

Note: Based on prospects identified by Magseis (Transition zone not included)

Averagesurvey sizes

increasing YOY

USDmillion

Water Depth

800km²

150km²

500km²

800km²

300km²

300km²

Third quarter results- Comprehensive income – Q3 and YTD (2015 and 2014)

14

• Revenue• Less utilisation and lower rates in YTD 2015 vs 2014

• Cost of sales• In addition to less production in 2015 the decrease in cost of sales is

resulting from:– lower TC due to yard stay– reduced fuel prices – capitalised cost related to multi-client in Q3

• SG&A and finance items• Decrease mainly due to depreciation of NOK against USD

All figures in USD thousands Q3 15 Q3 14 YTD 15 YTD 14

Revenue 12 814 14 579 35 136 44 846Cost of sales 8 178 9 699 24 942 29 248Research and development 30 416 1 422 996SG&A and other expenses 2 384 2 990 6 875 8 233EBITDA 2 222 1 474 1 897 6 369

Depreciation and amortisation 2 307 1 845 6 718 5 571Impairment 0 798 35 1 036

EBIT -85 -1 169 -4 856 -238

Net interest and fx (gain)/loss 247 793 188 1 164Other finance cost 0 0 0 0Net finance costs 247 793 188 1 164

EBT -332 -1 962 -5 044 -1 402

Tax 0 0 245 0

Net income -332 -1 962 -5 289 -1 402

Currency translation differences 0 0 0 -1 155Total comprehensive income -332 -1 962 -5 289 -2 557

Third quarter results- Financial position 30 Sep 15

15

• Equipment and other intangibles• Increase mainly relates to Athene 4500 upgrade

• Multi-client library• Capitalised part of cost related to Barents Sea multi-client program

(USD 0.6M related to delayed final approval and 0.8M to expected late sales)

• Other current assets• Amortised client receivables based on percentage of completion

method - USD 4.3M • Fuel and battery stock USD 1.4M• VAT, prepayments etc. USD 2.0M

• Other non-current liabilities• USD 1.8M in funding from joint-development partner (Shell) treated

as a liability based on agreed contract provisions

All figures in USD thousands 30 Sep 15 30 Sep 14 31 Dec 14

Equipment and other intangibles 50 403 41 516 48 285Multi-client library 1 352 0 0TOTAL NON-CURRENT ASSETS 51 755 41 516 48 285

Cash and cash equivalents 18 505 21 901 21 591Trade receivables 1 171 7 613 7 621Other current assets 7 734 9 211 4 524TOTAL CURRENT ASSETS 27 410 38 725 33 736

TOTAL ASSETS 79 165 80 241 82 021

Share capital 254 237 237Share premium 90 944 83 774 83 755Other reserves 2 495 1 833 2 039Retained earnings -23 886 -14 509 -18 487Currency translation reserve -5 123 -5 123 -5 123TOTAL EQUITY 64 684 66 212 62 421

Obligation under finance lease 2 113 2 939 2 739TC amortisation 1 027 1 499 1 369Other non-current liabilities 1 813 0 0TOTAL NON-CURRENT LIABILITIES 4 953 4 438 4 108

Trade payables 3 847 2 266 8 050Current tax liability 24 0Current portion of obligation under finance lease 826 742 761Other current liabilities 4 831 6 583 6 681TOTAL CURRENT LIABILITIES 9 528 9 591 15 492

TOTAL LIABILITIES 14 481 14 029 19 600

TOTAL EQUITY AND LIABILITIES 79 165 80 241 82 021

Third quarter results- Cash flow YTD

16

• Cash flow from operations• Impacted by a net working capital decrease reflecting exceptionally high payables

at year-end 2014 as well as a re-classification of the liability related to the joint development project

• Cash flow from investments• Athene 4500 upgrade USD 8.1M• Capitalised R&D of USD 2.0M• Capitalisation of multi-client costs of USD 1.4M

• Cash flow from financing • Capital raise in May 15• Re-classification of the liability related to the joint development project from

current to non-current liabilities

All figures in USD thousands YTD 15 YTD 14

EBITDA 2 222 6 369Adjustment for non-cash items -327 -547Net working capital adjustments -2 943 -3 643Net cash flow from operating activities -1 048 2 179

Net cash flow from investing activities -10 037 -8 364

Net cash flow from financing activities 7 999 22 374

Net change in cash and cash equivalents -3 086 16 189Cash balance at the beginning of the period 21 591 6 867Foreign exchange differences in the period 0 -1 155Cash balance at period end 18 505 21 901

Delivering next generation seismic acquisition system

© Magseis ASA 2015