Fjord Defence Group ASA

Investor Presentation • Feb 26, 2020

Fourth quarter 2019

Axxis Geo Solutions

Lee Parker, CEO and Svein Knudsen, CFO

26 February 2020

Disclaimer

• The information in this presentation has been prepared by Axxis Geo Solutions ASA ("AGS" or the "Company"). By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations and provisions:
• This presentation has been prepared by the Company based on information available as of the date hereof. By relying on this presentation you accept the risk that the presentation does not cover all matters relevant of an assessment of an investment in the company. The securities of the Company may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"). The securities of the Company have not been, and will not be, registered under the U.S. Securities Act.
• No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Company, any advisor or any such persons' officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this presentation. The information herein is subject to change, completion, supplements or amendments without notice.
• The presentation is based on the economic, regulatory, market and other conditions as in effect on the date hereof, and may contain certain forward-looking statements. By their nature, forwardlooking statements involve risk and uncertainty because they reflect the Company's current expectations and assumptions as to future events and circumstances that may not prove accurate. It should be understood that subsequent developments may affect the information contained in this document, which neither the Company nor its advisors are under an obligation to update, revise or affirm.
• This complete presentation is for informational purposes only and does not constitute an offer to sell shares in of the Company. This presentation is not a prospectus, disclosure document or offering document and does not purport to be complete. Nothing in this presentation should be interpreted as a term or condition of the Transaction. The presentation is strictly confidential and may bot not be reproduced or redistributed, in whole or in part, to any other person.
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• The contents of this presentation are not to be construed as legal, business, investment or tax advice. Each recipient should consult with its own legal, business, investment and tax adviser as to legal, business, investment and tax advice.
• Any investment in the Company involves inherent risks and is suitable only for investors who understand the risks associated with this type of investment and who can afford a loss of all or part of the investment. Investors should carefully review the summary of risk factors set out in the following slides before making any investment decision.
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1.About AGS

2.Highlights

3.Financials

3

Axxis Geo Solutions in brief

• An ocean bottom node (OBN) seismic service company
• Multi-client and contract seismic
• Experienced management and organizational core
• Headquarter at Lysaker, Norway
• Listed on Oslo Axess (ticker AGS)

Axxis Geo Solutions' competitive edge in the OBS market

Asset light model Core competence & Operational excellence proprietary technology

Flexible and cost efficient asset light leasing model

Vessels

• Flexibility on vessel type and capacity
• Adjust fleet capacity to survey backlog
• Avoid seasonal utilization discrepancies

• Lease nodes based upon demand
• Multiple node suppliers can be used
• Enabling use of latest technology

Nodes Crews

• Possible to adjust number of crews
• Flexibility proven in the North Sea
• Using crews with node handling experience

Cost base closely linked to utilization and activity level

Strong market forces driving OBS market growth

• Rapidly growing USD >1 billion OBS market
• Shallow and midwater 60-70% of the OBS market
• Demand for high resolution data
• OBS cost coming down driving demand increase
• An attractive alternative to "high-end" towed streamer seismic

1.About AGS

2.Highlights

3.Financials

7

Q4 Highlights Contract signature delay

• Completed Utsira Multi-client survey with TGS
• Upgraded and tested Nodal handling systems
• Mobilized Neptune Naiad to Brazil to start source operations for the Company's Brazil campaign
• Mobilized to Malta awaiting contract start in Egypt, Gulf of Suez
• Final LOA for work program in Egypt received 30 December 2019
• Started mobilization from Malta to Egypt end of Q4

Neptune Naiad crew

1.About AGS 2.Highlights

3.Financials

9

Fourth quarter segment financial review

• Revenues mainly driven by the Brazilian contract of NOK 35 million and pre-funding from multi-client program at Utsira of NOK 12 million
• Cost of sales related to Brazil contract work and waiting in Malta for the Egypt project
• EBITDA of negative NOK 52 million
• Write down of multi-client library of NOK 308 million, goodwill of NOK 11 million and lost equipment of NOK 5.8 million
• EBIT of negative NOK 399 million

Fourth quarter Segment P&L

Financials segment overview

In NOK million In NOK million

Sequential performance

• Segment revenue derives from both contract and multi-client activity
• Extra ordinary write down of goodwill and multi-client library
• High level of fluctuation quarter by quarter

Financing and segment financial position

• Investments in multi-client library in fourth quarter of NOK 107 million, write down of NOK 308 million
• Investment in node handling system of NOK 13 million
• Other non-current assets zero as of December;
  • Goodwill written off, deferred tax asset reversed and sale of financial assets during the quarter
• Total current assets of NOK 286 million:
  • Account receivables of NOK 108 million
    • NOK 86 million related to self-assessment of VAT, paid in Feb 2020
  • Accrued revenue of NOK 104 million
    • Mobilization revenue NOK 54 million, Processing revenue MCL NOK 35 million, Brazil revenue NOK 16 million
  • Other current asset of NOK 54 million
    • Capitalized mobilization cost of NOK 44 million

In NOK million

Financing and segment financial position cont.

• Equity net of NOK 31 million
• Non-current liabilities zero as of December
  • Interest bearing debt reclassed to short-term debt
• Total liabilities of NOK 654 million:
  • Account payable of NOK 366 million
  • Interest bearing debt of NOK 20 million
  • Other current liabilities of NOK 267 million
    • NOK 83 million related to self-assessment of VAT, paid in Feb 2020
    • Deferred mobilization revenue of NOK 54 million
    • Accruals and deferrals on project cost and taxes of NOK 72 million
    • TGS credit Utsira of NOK 57.8 million

In NOK million

Equity and liabilities - Segment reporting

Project delay mitigation measures

• Secure the contract and associated positive cash flow
• Agreed payment plans with fuel suppliers amounting to USD 4 million
• Payment plans of approx. USD 25 million with all larger suppliers of which USD 15 million is expected to be converted to long-term debt
• Will approach residual suppliers for payment agreements
• Plan requires for bank and debt waivers

Difference between expected and actual change in working capital

15

1.About AGS 2.Highlights 3.Financials

Mobilized to Egypt, Gulf of Suez Q4-Q1 project

• Contract letter of award 30 December
• The survey commenced early January after testing completed
• Requires modern OBN imaging and processing techniques to unlock further hydrocarbon potential
• Supporting customers as a one-stop-shop partner • The area is well known to AGS management and is expected to yield future opportunities
• Important commercial milestone in AGS history, significantly improving backlog visibility

Step-change in productivity

Utsira 3D OBN productivity

• Record productivity in source and receiver operations
• Safe operations with technical down time on nodal operations of only 1.2%
• Possible to move up to 24km²of high-density receiver spread per day

Improvements since 2018

• 50% efficiency gain with triple-source acquisition

• 20% organic productivity increase compared to 2018

• Node handling system refinements

Backlog and outlook

~ USD 38 million backlog as of Q4

and ~USD 900 million tenders / pipeline 2020 / 2021

Q&A Lee Parker, CEO and Svein Knudsen, CFO

US Office

14511 Old Katy Road Suite 150 Houston, TX 77079 United States

+1 281 810 2550

Norway Office Strandveien 50 1366 Lysaker Norway

+47 480 95 555