Electromagnetic Geoservices ASA

Earnings Release • Mar 4, 2015

ELECTROMAGNETIC GEOSERVICES.

DNB Oil and offshore conference Oslo, March 2015 CFO Svein Knudsen

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.

EMGS today

• EMGS is building the EM market
• Increase adoption of the technology
• Make EM an integrated part of the exploration workflow
• Strong financial position
• Flexible and asset-light business model
• Revenue-generating assets
• 4 vessels in operation
• 4 growing multi-client libraries
• Proven technology 3D platform
• Full-azimuth 3D EM
• Next generation EM equipment with Shell and Statoil
• Changed and invested in strengthened sales organisation tailored to meet exploration needs

Electric resistivity has been used for centuries in well logs..

EMGS revenue-generating assets – MC libraries

EMGS revenue-generating assets – Fleet

EMGS after 3D EM introduction - a sustainable business

Amounts in 1,000 USD	2011	2012	2013	2014	SUM
Contract revenue	162 904	176 118	111 284	137 222	587 528
MC Revenue	9 510	24 713	33 314	60 801	128 338
Net Revenue	172 414	200 831	144 598	198 023	715 866
Operating profit	25 139	29 224	-12 285	30 128
Net Income	10 153	11 895	-15 095	27 886
Earnings Per Share, in 1.00 USD	0,06	0,06	-0,08	0.14
EBITDA	41 833	55 853	17 547	61 017
EBITDA Adjusted for MC	39 536	34 584	-14 509	31 216
MC Library in square kilometer	29 999	44 429	60 579	76 394
MC Library Balance Sheet value	5 176	14 126	28 108	33 758

Improvements to commercial model

Sales organisation strengthened and tailored to meet exploration needs

• Sales force located close to NOCs
• Geographic deployment of sales force:
• Houston
• Oslo
• Kuala Lumpur
• Mexico
• Brazil
• India

Positive development in new customers.

Fourth quarter overview

Financial highlights

Key figures Q4

• Revenues of USD 52.5 million
• EBITDA of USD 18.6 million
• Net income of USD 15.1 million

Cost flexibility

• Cost control
• Option to reduce fleet by 25%

Key figures 2014

• Revenues of USD 198.0 million
• EBITDA of USD 61.0 million
• Net income of USD 27.9 million

Revenues and revenues/costs per vessel month (USD Million)

Capital Structure

Balance sheet as at 31.12.14 (USD million)

• Cash at USD 26.6 million, down from USD 42.5 million end of previous quarter
• Trade receivables increased by USD 24.1 million to USD 65.5 million
• Trade payables decreased by USD 1.2 million to USD 13.4 million
• Bond loan affected by weakening of NOK
• Reduced by USD 6.6 million Q4, booked as financial income
• Financing strengthened
• Signed term-sheet for revolving credit facility USD 10 million

Multi-client increasingly important part of business

2012: USD 201 million

Contract: USD 176 million Multi-client: USD 25 million

2013: USD 145 million

Contract: USD 111 million Multi-client: USD 33 million

2014: USD 198 million

Contract: USD 137 million Multi-client: USD 60 million

Profitable multi-client investments

Multi-client key figures by region

Market and outlook

How to increase the discovery rate

	Geology and seismic data	Elecromagnetic data
Reservoir	√
Trap	√
Seal		√
Charge	√	√
Commercial volume	√	√
	USD 32bn /4 years	USD 0.7 bn / 4 years

Why do we fail in finding hydrocarbons?

• Low discovery rate today
• 8/9 of 10 exploration wells fail to find commercial levels of hydrocarbons
• Two main reasons for failure
• Lack of seal: 45%
• Lack of charge: 30%
• Why?
• Lack of technology/ measurements to provide information about the seal & charge

Time & money spent

How seismic and EM data complements

Arbitrary seismic profile from Wisting and the surrounding area

EMGS prioritised multi-client basins going forward

Summary

• Strong financial positioned and well positioned to meet a challenging business environment, but also act on opportunities
• EMGS products well positioned to help oil companies manage through cycle, cut cost and increase efficiency of E&P
• Multi-client important part of the business model
• Success criteria for 2015
• Continue to develop relationship with the NOCs
• Add new IOCs to the customer portfolio
• Participate in the opening of the Mexican market
• Open new basins for multi-client
• Sale of integrated products 3D EM and seismic

Questions?

Appendix

Income statement

USD million	Quarter ending		Full year ending
	31.12.2014	31.12.2013	31.12.2014	31.12.2013
Contract sales	25.5	40.1	137.2	111.3
Multi-client sales	27.0	4.8	60.8	33.3
Total revenues	52.5	44.9	198.0	144.6
Charter hire, fuel and crew expenses	15.8	20.3	61.3	51.2
Employee expenses	12.7	12.9	55.2	54.3
Other operating expenses	5.4	5.1	20.5	21.5
EBITDA	18.6	6.5	61.0	17.5
Depreciation and ordinary amortisation	3.9	4.3	16.3	17.5
Multi-client amortisation and impairment	5.0	1.1	14.6	12.3
EBIT	9.7	1.1	30.1	(12.3)
Net financial items	5.4	0.3	3.1	(0.9)
Profit /(loss) before tax	15.2	1.4	33.2	(13.2)
Income tax expense	0.1	0.1	5.3	1.9
Net profit /(loss)	15.1	1.3	27.9	(15.1)

Financial position

USD million	Period ending
ASSETS	31.12.2014	31.12.2013
Goodwill	14.4	14.4
Deferred tax asset	3.0	3.2
Multi -client library	33.8	28.1
Other intangible assets	3.2	3.4
Property, plant and equipment	19.2	27.7
Assets under construction	31.2	19.2
Financial assets	4.8	-
Total non -current assets	109.6	96.0
Trade receivables	65.5	31.5
Other current assets	33.6	30.1
Cash and cash equivalents	25.2	55.3
Restricted cash	1.4	1.2
Total current assets	125.7	118.2
TOTAL ASSETS	235.3	214.2
EQUITY AND LIABILITIES
Total equity	128.2	102.2

Total non -current liabilities 60.2 67.3 Trade payables 13.4 15.9 Current tax liability 4.6 2.3 Other short term liabilities 27.3 26.3 Borrowings 1.7 0.1 Total current liabilities 46.9 44.7 TOTAL EQUITY AND LIABILITIES 235.3 214.2

Cash flow

USD million	Full year ending
	31.12.2014	31.12.2013
Net cash flow from operating activities	31.7	51.9
Net cash flow from investing activities	(59.5)	(45.3)
Net cash flow from financial activities	(2.3)	9.5
Net increase/(decrease) in cash	(30.1)	16.0

Largest shareholders (as of 4 February)

	Shareholder	Shares	Holding
1	SIEM INVESTMENTS INC	22 926 866	11.48 %
2	PERESTROIKA AS	17 889 449	9.46 %
3	Morgan Stanley & Co	18 576 200	9.30 %
4	ODIN OFFSHORE	9 651 299	4.83 %
5	VERDIPAPIRFONDET DNB	7 724 114	3.87 %
6	ODIN NORGE	7 272 410	3.64 %
7	CLEARSTREAM BANKING	5 424 645	2.72 %
8	SKAGEN VEKST	5 029 207	2.52 %
9	VERDIPAPIRFONDET DNB	4 916 670	2.46 %
10	STATOIL PENSJON C/O JP MORGAN CHASE	4 539 841	2.27 %
11	VPF NORDEA KAPITAL C/O JPMORGAN EUROPE	2 823 355	1.41 %
12	VPF NORDEA AVKASTNIN C/O JPMORGAN EUROPE	2 742 769	1.37 %
13	J.P. Morgan Chase Ba SPECIAL TREATY LEND	2 672 385	1.34 %
14	SUNDT AS	2 426 833	1.21 %
15	SYDBANK A/S S/A SYDINVEST	2 037 162	1.02 %

Market update end of fourth quarter

Order book (USD million)

Contract opportunities

• Expect to keep one vessel in Asia and one in South-Atlantic in 2015
• Opening up of Mexican shelf expected to increase activity
• Continue to have a strategic focus on national oil companies (NOCs)
• Selected IOCs targeted and important for adoption

Multi-client projects

• Continue to invest in key multi-client libraries
• MC projects increase visibility in vessel schedule
• Expand collaboration with seismic companies

Vessel charters and yard stays

	BOA Thalassa	BOA Galatea	Atlantic Guardian	EM Leader
Firm Charter	December 2015	July 2016	1 March 2016	8 December 2016
Options		1 x 1 year	3 x 1 year	2 x 1 year
Vessel owner	BOA Offshore	BOA Offshore	North Sea Shipping	Seatrans

Electromagnetics in the E&P workflow

Probability of Economic Success & Volumetrics