Electromagnetic Geoservices ASA

Quarterly Report • Nov 7, 2019

Oslo, 7 November 2019

Bjørn Petter Lindhom, CEO Hege Veiseth, CFO

Disclaimer

This quarterly presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Electromagnetic Geoservices ASA (EMGS) and its subsidiaries. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the EMGS' businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time. Although Electromagnetic Geoservices ASA believes that its expectations and the information in this Report were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this Report. Electromagnetic Geoservices ASA nor any other company within the EMGS Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the Report, and neither Electromagnetic Geoservices ASA, any other company within the EMGS Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the Report. Electromagnetic Geoservices ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in the Report.

Operations, Market and Outlook

Q3 2019 Highlights

Operational highlights

• Ongoing USD 24 million proprietary survey offshore Borneo for Petronas
• Commencement of the Pemex contract in Mexico
• Backlog end Q3 of USD 78 million, whereof USD 37 million is firm

Financial highlights

• Revenues of USD 26.9 million
• EBITDA of USD 15.7 million
• Adjusted EBITDA of USD 11.6 million
• Payment delay under on-going acquisition contract

Subsequent events

• Multi-client sales of total USD 8.0 million
• Positive free cash effect of USD 3.7 million following final verdict in ISS litigation in Brazil

Vessel Update and Backlog

• Order backlog at USD 78 million at end of Q3 2019, whereof USD 37 million is firm • Atlantic Guardian will acquire data in Mexico for the remainder of the year • Thalassa is currently acquiring data for Petronas offshore Borneo • Expect to move Thalassa out of Asia in Q4 Comments Order backlog (USD million) 37 41 0 10 20 30 40 50 60 70 80 90 100 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Firm Optional

5

Strong operational performance for both vessels

• Despite both vessels operating under challenging conditions, both are delivering outstanding operational performance
• The Atlantic Guardian has been operating in ultra shallow waters, with towing as shallow as 11 meters and Rx deployment as shallow as 18 meters
• The Petrel Explorer (BOA Thalassa) has been acquiring a regional 2D program, with line lengths up to 500 km

Global exploration success is low

Source: Richmond Energy Partners / Westwood Group

Value of CSEM in exploration

• EMGS internal, and previously published external, calibration studies estimate CSEM to be able to correctly predict large discoveries 8 out of 10 times, i.e. a prediction strength of around 80%
• Assuming an 80% prediction strength, the presence of a large CSEM anomaly would upgrade a frontier prospect from a theoretical 8% success rate to a theoretical success rate of 25%
• This means that the number of exploration wells a company must drill to have a 50% theoretical chance of making at least one commercial discovery drops from 8 to 3
• The Return on Investment (ROI) of using CSEM to de-risk frontier well is therefore significant

Well calibration studies

"Qualitative correlation with the well results approximately support the 80% published success rates."

"These results can clearly modify the probability of success in an exploration

context"

Building Confidence in CSEM for Exploration – Benchmarking

SEG 2019 – Antony Price (Total), Pål Gabrielsen, Claudia Twarz (EMGS)

Seismic data courtesy of

EMGS has now signed well calibration studies with Equinor, Total and one other super major

Third quarter 2019 performance I Increase in revenues and EBITDA

• Revenues
• USD 26.9 million
• Proprietary work in South East Asia and Mexico
• Vessel utilisation of 73%
• Two vessels on charter
• EBITDA
• USD 15.7 million
• Adjusted EBITDA* of USD 11.6 million
• Significantly improved EBITDA margin

*Adjusted EBITDA includes capitalised multi-client expenses and vessel and office lease expenses

Key financial metrics Quarterly development (USD million)

Operational costs

Quarterly operational cost base* development (USD million)

Comments

• Operational costs base in Q3 19 of USD 15.3 million
• Higher than Q3 2018 and Q2 2019 as a result of higher activity level
  • Supply vessels in Mexico and Malaysia (USD 0.7 million)
  • Withholding taxes (USD 0.6 million)
• Cost control
• Strong focus on cost optimisation

*Cost base is defined as operational costs (charter hire etc, employee expenses, other operating expenses) plus MC investments and vessel and office lease payments presented as financial leases from 1 January 2019, restructuring charges and other extraordinary items

Capitalised multi-client expenses

• Charter hire, fuel and crew expenses
• Vessel and office lease expenses
• Other operational expenses
• Employee expenses

Decrease in free cash in Q3 2019

Quarterly free cash development (USD million) Comments

• Net decrease in free cash of USD 2.0 million to USD 3.8 million
• EBITDA of USD 15.7 million, with an adjusted EBITDA of USD 11.6 million
• Trade receivables increased by USD 12.1 million to USD 20.0 million
  • Delayed payment under on-going contract
• USD 0.7 million in interest-payments on convertible bond (maturity May 2023)

Summary

• Strong quarter with revenues of USD 26.9 million and adjusted EBITDA of USD 11.6 million
• Cash position adversely affected by delayed payments
• Order backlog at end of Q3 of USD 78 million, of which USD 37 million is firm