Highlights
• Need for new capacity to capture growth opportunities
• Appointment of financial advisors to evaluate financing options
• Strong financial performance, Revenue of USD 20m and EBITDA of USD 5.5m• Very good technical performance in the Red Sea, completion mid -April
• More than USD 600m of contracts already awarded for 2017
• Several large projects announced/in pipeline for 2018
Best quarter to date
New contract won for ConocoPhillips
Marked increase in tender activity
Accellerating growth plans
• 4D monitoring survey, three months duration, 3000 nodes, multi year option
• First Smart Operation, mobile handling system, no Magseis operated vessels
2
KEY FIGURES Q4 2016
Source: Magseis
20.0REVENUE
5.5EBITDA
0.1NET INCOME
19.0CASH BALANCE
$ MILLION
$ MILLION $ MILLION
$ MILLION $ MILLION
20.0
58.9
5.5
REVENUE
Q4 2016
REVENUE
YTD2016
EBITDA
YTD2016
EBITDA
Q42016
8.5
3
Fourth quarter 2016 results- Key figures
• Solid underlying operational performance during Q4 (adjusted EBITDA of USD 8.5m)
• USD 1.2m in capitalised mobilisation costs amortised• USD 2.2m in late start compensation included in COGS
• Net loss for FY 2016 significantly impacted by• Impairment of USD 7.4m (G1 to G2 conversion)• Late start compensation • Low rates on Bokor project + long mobilisation for Red Sea
• Closing cash position of USD 19.0m and robust Equity ratio
• Net cash position of USD 2.7m
• Strong cash flow from operations during Q4• Negative FY 2016 cash flow from operations reflects
extraordinary low receivables at YE 2015
• Expected EBITDA for 2017 of > USD 20 million based on current run-rate
4Source: Magseis
OBS provides superior image quality - gaining market share over high-end streamer seismic
Streamer Seismic Ocean Bottom Seismic (OBS)
90%↓Market share
10%↑Market share
5
Marine Autonomous Seismic SystemMiniaturised node sensors
Handling system Applications
ROV deployment
Ultra deep water deployment
Cable deployment
6
Larger spread driving substantial cost reductions
100K$ per.km² 25K$ per.km²
201475km
2015150km
2016350km
2018>600kmCable length
Large spreads -rolling operations
Multiple patch deployment
7Source: Magseis
Established as a leading OBS provider
Solid customer baseProven track record Ongoing projects
• Completed >1,300 aq.km2
• More than 130,000 nodes deployed
• Excellent reputation for high quality data
• Strong QHSE culture
• Saudi Aramco’s S-78 project in the Red Sea
• Preparing for 4D survey for ConocoPhillips in North Sea
8Source: Magseis
Source: Magseis
Operational highlights• 9 months survey together with BGP for Saudi Aramco
• Second survey in the Middle East
• Complex survey design
• Rolling spread across very challenging seabed conditions
• Record amount of cable in operation (350 km)
• Long-life node electronics introduced
• Excellent cooperation with BGP and Aramco
Aramco Red Sea project
9
ConocoPhillips North Sea project
Contract highlights• 4D, full -azimuth survey over Eldfisk field • ROV and source vessels operated by ConocoPhillips • Magseis provides crew, nodes and handling• Potential for repeat work
High capacity, mobile ROV operation• Unlimited capacity of nodes• Modular handling system • Very strong interest from clients• Smart operations
MASS modular solution
10Source: Magseis
Strong market outlook
OBSMARKET
20202019201820172005 2016
2 250
2 000
1 575
1 500
1 250
1 000
750
500
250
0
Source: Magseis/Arkwright/Rystad Energy11
USD>600m
$ MILLION
Growth strategy- Towards $25K/km² Historical OBS surveysNo observed OBS survey
Source: Magseis/Rystad Energy
COM
PLEX
ITY
Reduced costs and maturity of technology
• Key Goals– Expand use of OBS through reducing costs > 50%
• Business model:– Operate large equipment spreads– Share pool of nodes across platforms – Build a flexible OPEX base
• By 2020:– Node pool of >30,000 nodes– 2-3 high capacity cable vessels– 2-3 modular ROV/Node Deployer systems
12
FIELD SIZE (mmboe)
Attractive economics for new, high-capacity vessel
Efficiency Economics
150km 400km
Sensors# of daysEfficiency
3,0001301.0
8,000851.6
Cable length
Current crew Cable vessel #2 Current crew
CAPEX EBITDA contribution1
13
Cable vessel #2
Source: Magseis
70
3045 >30
1) Based on 2017 EBITDA guidance for current crew less 2016 SG&A
Summary & Outlook
•Strong operational and financial performance
•Second crew will start operations June 2017
•Tender activity accelerating
•Engaged advisors to secure growth financing
14
20202019201820172005 2016
2 250
2 000
1 575
1 500
1 250
1 000
750
500
250
0
Larger spread driving cost reductions
Excellent operational performance Strong financial results
Strong market outlook
100K$ per.km² per.km²
201475km
2015150km
2016350km
2018>600km
Cable length
25K$15
Fourth quarter 2016 results- Comprehensive income
• Revenue• USD 20.0m from production on the Aramco S-78 project
• Cost of sales• Reflects full production in the quarter• Capitalised costs amortised based on expected duration
of pilot of USD 1.2m• Late start compensation of USD 2.2m
• Research and development• Capitalised all expenses related to the Deep water
R&D project (USD 0.2m) and development of MASS III
• Depreciation• Capitalised Depreciation from mobilisation amortised based on
expected duration of pilot survey (USD 0.4m)
• Amortisation and Impairment• USD 0.4m mainly related to improvement needed on
nodes damaged during Red Sea survey
• Finance • Primarily interest related to BGP pre -funding, GIEK and
Innovation Norway
• Tax• Relates to withholding tax and corporate in Saudi Arabia and
corporate tax in Singapore and Malaysia
In USD thousands Q4 2016(unaudited)
YTD 2016(unaudited)
Q4 2015(unaudited)
YTD 2015(audited)
16
Fourth quarter 2016 results- Balance sheet at 31 December
• Trade receivables primarily Aramco• December production (paid in 2017)
• Other current assets:• Primarily capitalised mobilisation costs
• Equity ratio of 56.6%• Debt covenants at 30%
• Non-current liabilities• Senior debt drawn down from Export Credit Norway and
Innovation Norway• Shell Deep Water R&D funding: USD 6.2m (contingent liability)
• Current tax liabilities– Withholding tax and corporate tax Saudi Arabia– Corporate tax in Singapore and Malaysia
• Other current liabilities– Short-term debt BGP USD 5.2m– Current portion of long-term debt USD 2.6m– Accruals for vessel operational costs USD 5.4m
In USD thousands YE 2016(unaudited)
YE 2015(audited)
17
Fourth quarter 2016 results- Cash flow
In USD thousands Q4 2016(unaudited)
YTD 2016(unaudited)
Q4 2015(unaudited)
YTD 2015(audited)
18
• Cash flow from operations• Variance from EBITDA resulting from:
• Favourable payment terms on receipts in Q4’16• (less) 10% withheld & accrued compensations• Non-cash costs in OPEX (amortised transit costs & provisions)• (less) reduced AP creditor position
• Cash from investments• Relates to investments for the Node Deepwater project
• Cash flow from financing • Instalments of USD 3.8m• Financing from Shell under Deepwater R&D agreement of USD 1.5m