Carbon Transition Q3 2022
9 November 2022
Disclaimer
- The information in this presentation has been prepared by Carbon Transition ASA (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.
- 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, forward-looking 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 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 not be reproduced or redistributed, in whole or in part, to any other person.
- This presentation has not been reviewed or approved by any regulatory authority or stock exchange. The (re)distribution of this presentation and/or any prospectus or other documentation into jurisdictions other than Norway may be restricted by law. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire any securities offered by any person in any jurisdiction in which such an offer or solicitation is unlawful. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. Persons into whose possession this presentation comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such restrictions.
- 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.
- The presentation and any purported liability in connection with it is subject to Norwegian law and is subject to the exclusive jurisdiction of the Norwegian courts.
Quarterly highlights
- First multi-client late sale of USD 1.6 million from Gulf of Suez survey
- o Significantly earlier than anticipated
- o Data processing recently completed
- Fair value of multi-client library USD 31.9 million
- Fair value of investments of USD 11.1 million
- o Includes new USD 2.0 million investment in Dolphin Drilling
- o Britishvolt secured near-term financing; longer-term financing under review
- Repurchased USD 0.5 million own shares
- Cash earnings of USD 1.2 million for the quarter
- Available liquid funds of USD 8.3 million*
- Net asset value NOK 1.97 per share
* Bank deposits, trade receivable, marketable securities less payable for repurchase of own shares
High-value seismic business Maximizing value of seismic operations
- Specialize in multi-client data for near-field exploration where production infrastructure is in place
- o E&P companies need high quality seismic data to unlock existing potential
- o In areas where resources can be developed with lower cost, environmental impact and emissions
- Asset-sale agreement with Magseis Fairfield for node deployment equipment
- o Up to USD 12.0 million revenue share arising from usage of the equipment
- o Floor payment USD 1.5 million
- o Improving market outlook
Seismic market observations
Significant improvement in market conditions
- EU energy security is emerging as a mega trend for North Sea E&P investments
- Licensing rounds, M&A, new entrants and increased drilling activity near existing infrastructure to support activity and multi-client revenues
- Mature and producing areas attract investment early in upcycles
- We are currently witnessing the largest ever investment cycle in the Middle-East, supporting our Egyptian asset
- Several drilling campaigns are under way in the Gulf of Suez and the Utsira area
Multi -client portfolio Norwegian North Sea – Utsira OBN
- Estimated fair value of USD 21.9 million
- Near-field survey located to the west of the Utsira high in the Norwegian North Sea
- Covers approximately 2,000 square kilometers of highly prospective acreage with high -definition 3D seismic ocean bottom node data
- The Utsira area holds several important fields, including Edvard Grieg, Ivar Aasen, Balder, Gina Krog, Gudrun and Johan Sverdrup, along with a number of undeveloped discoveries and prospects
- The data is being used by clients to reduce risk on exploration targets, optimize production, field development planning and improved understanding of the subsurface
Multi -client portfolio Egypt – Gulf of Suez
- Estimated fair value USD 9.9 million
- Inaugural late sale USD 1.6 million in Q3 2022
- Drilling campaigns underway
- Prolific petroleum basin
- o Exploration historically impeded by complex geology and presence of salt bodies
- o Multi -client data structured to address these issues
- Data acquired 2020 with support from Neptune Energy and Schlumberger (WesternGeco) and covers an area of approximately 300 square kilometers
- o Hybrid survey configuration, combining high density ocean bottom nodes with short 3D streamers for near -surface imaging
Investment in the quarter Dolphin Drilling
- Invested USD 2.0 million in Dolphin Drilling
- o The share price closed at NOK 11.85 per Q3 2022
- o Significant appreciation following quarter end
- Providing drilling services to the harsh environment and mid -water market for the oil and gas industry
- Completed equity private placement 5 September 2022
- o Raised USD 45 million to finance Special Periodic Survey and mobilization of Blackford rig, reactivation of Borgland rig and general corporate purposes
- Announced 12 -month contract for Blackford Dolphin in Nigeria; contract value estimated USD 96 million
- Need for energy supply and security will remain a focal point in the foreseeable future
- Listed on Euronext Growth 28 October 2022
Net asset value
Summary NAV per share review
|
USD
millions |
NOK per
share |
|
|
|
| Multi-client library |
31.9 |
1.47 |
| Financial assets |
3.0 |
0.14 |
| Legacy business |
34.9 |
1.61 |
| Investments |
11.1 |
0.51 |
| Net current liabilities |
(3.2) |
(0.15) |
| Net asset value |
42.8 |
1.97 |
Observations
- Legacy business represents largest share of NAV
- o Multi-client investments
- o Node equipment earn-out agreement
- Investment portfolio; focusing more broadly
- o Dolphin Drilling included this quarter
- o Investment portfolio down USD 1.4 million from previous quarter
- o Total initial investment USD 11.9 million
Comprehensive income
USD millions
| Comprehensive income |
Q3 2022 |
|
|
| Revenue |
1.6 |
| Changes in fair value of investments |
(3.4) |
| Cost of sale (non-cash reclass cost KUSD 150) |
(0.2) |
| Selling, general & administrative expenses |
(0.4) |
| Amortization of multi-client |
(1.4) |
| Operating profit (loss) |
(3.7) |
| Net financial expense (non-cash reclass income KUSD 150) |
(0.1) |
| Income tax (expense) |
0.0 |
| Profit (loss) for the period |
(3.8) |
Observations
- Frist Gulf of Suez late sales of USD 1.6 million
- Non-cash reduction in value of investments of USD 3.4 million
- Cost of sales mainly related to reclass of currency USD 150 thousand (non-cash one-off)
- Utsira amortization of USD 0.7 million and first quarter amortization Gulf of Suez of USD 0.7 million
- Net financial expense of USD 0.1 million after reclass of currency gain (non-cash one-off) of USD 150 thousand
- Cash earnings of USD 1.2 million
Financial position
USD millions
| ASSETS |
30.9.2022 |
|
|
| Multi-client library |
31.9 |
| Investments |
11.1 |
| Financial assets |
3.0 |
| Trade receivable |
1.6 |
| Other current assets |
0.1 |
| Cash and cash equivalents |
1.6 |
| Total assets |
49.3 |
| EQUITY AND LIABILITIES |
30.9.2022 |
| Equity |
42.8 |
| Taxes payables |
2.3 |
| Accounts payable |
0.1 |
| Other current liabilities |
4.2 |
| Total equity and liabilities |
49.3 |
Observations
- Utsira at USD 21.9 million, Gulf of Suez at USD 9.9 million
- NPV node equipment earnout financial assets of USD 3.0 million
- Trade receivable from multi-client late sales; collected subsequent to quarter end
- Taxes payable represents corporate taxes Egypt
- Other current liabilities
- o Egypt taxes of USD 3.9 million
Ratio analysis
- Equity ratio 86.8%
- Net asset value per share of NOK 1.97
- Available liquid funds of USD 8.3 million*
* Bank deposits, trade receivable, marketable securities less payable for repurchase of own shares
Cash flow
USD millions
| Cash flow |
Q3 2022 |
|
|
| Profit (loss) before tax |
(3.8) |
| Taxes paid |
(0.0) |
| Changes in fair value for investments |
3.4 |
| Amortization of multi-client |
1.4 |
| Interest expense |
0.0 |
| Other working capital changes |
0.4 |
| Cash flow from operating activities |
1.3 |
| Cash flow from investing activities |
(2.5) |
| Cash flow from financial activities |
(0.0) |
| Net change in cash |
(1.1) |
Observations
- Trade receivables of USD 1.6 million collected in Q4
- Investment in own shares of USD 0.5 million
- Invested in Dolphin Drilling AS of USD 2.0 million
Outlook
- Global uncertainty likely to result in continued volatility in energy prices
- Expect oil and gas prices to remain at historically high levels for foreseeable future
- o Attractive pricing will encourage capital expenditures
- o Reliable energy supply will remain a focal point and support capital investment
- o However, oil companies slow to implement new production plans; prudent to expect a lag effect
- General market volatility to remain high in light of economic outlook
- o More challenging financing markets
- o Concern for investment portfolio
- o Believe there is meaningful upside potential in financial investments to balance this
- Future multi-client late sales to increase cash balances and investable capital
- Continue to evaluate new investment opportunities in line with our broader strategic focus
- Will be considering share repurchases and/or dividends
Investing in a sustainable future
Askekroken 11 0277 Oslo Norway
carbn.no Copyright © 2021 Carbon Transition