Electromagnetic Geoservices ASA

Earnings Release • May 3, 2018

FIRST QUARTER 2018 RESULTS.

Oslo, 3 May 2018 CEO Christiaan Vermeijden, CFO Hege A. Veiseth

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.

Comprehensive refinancing approved, seasonally weak quarter

Operations

• Completed multi-client surveys in Indonesia
• Expanded the library in the Barents Sea

Financials

• Revenues of USD 4.3 million
• EBITDA of negative USD 6.4 million
• Rights issue of up to USD 12.5 million approved
• Fully underwritten convertible bond issue of USD 32.5 million approved

Market

• Increase in oil price supportive of future growth
• Positive development regarding opportunities outside Norway
• Caution required as no significant change to backlog recorded

Financial review

All 2017 financial figures in this presentation are restated applying IFRS 15

First quarter performance

•	Revenues
	•	USD 4.3 million

• New revenue recognition standard implemented
• EBITDA
• Negative USD 6.4 million
• Vessel utilisation of 37%
• Two vessels on charter
• Pre-funded multi-client surveys in Indonesia
• Multi-client survey in the Barents Sea

8 4 0 2 4 6 8 10 12 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Revenues Contact sales Multi-client revenues 4 11 11 -8 -6 -4 -2 0 2 4 6 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 0.4 EBITDA -6 -6 -6 1 2 5

Key financial metrics Quarterly development (USD million)

Operational costs

Quarterly operational cost base* development (USD million)

Comments

• Operational costs base in Q1 18 of USD 12.4 million
• Comparable to Q1 last year
• Cost control
  • Cost control focus continues
  • Target the 2018 cost base around USD 50 million, subject to operational activity

Capitalisation of multi-client and JIP test costs

• Other operational expenses
• Employee expenses
• Charter hire, fuel and crew expenses

*Cost base is defined as Operational costs (charter hire etc, employee expenses, other operating expenses) plus MC investments, less provision for onerous contract, restructuring charges and other extraordinary items

Decrease in free cash in Q1

• Net decrease in free cash of USD 4.7 million to USD 11.8 million
• Trade receivables decreased by USD 7.6 million to USD 3.5 million
• USD 0.6 million in interest-payment on interest bearing debt of USD 33.5 million
• Total investments of USD 1.9 million

Multi-client book value of USD 14.6 million

Multi-client library – NBV (USD million) Comments

• Reduction of book value from USD 17.3 million previous quarter to USD 16.3 million
• Investments of USD 1.7 million
• Indonesia and Barents Sea
• Amortisation of USD 2.7 million
• Straight-line amortisation

Comprehensive refinancing

• Gross proceeds of up to USD 12.5 million

• USD 10 million underwritten
• Subscription price of NOK 2.45 per share
• Up to 39.5 million new shares
• Net proceeds to be used for general corporate purposes
• Proceeds expected on or around 15 May

Rights issue Convertible bond issue

• Fully underwritten convertible bond with nominal amount of USD 32.5 million
• Conversion price of USD 0.42677
• Reduced cash covenant
• USD 2.5 million vs. USD 10 million
• New maturity
• 2023 vs. 2019
• Net proceeds to be used to call the existing NOK 246 million bond

Operations, Market and Outlook

Hardware, Imaging & Interpretation improvements

Are there more CSEM anomalies hiding here?

Grane: Revisiting 2003 data

2003 MVO Plot Interpretation Method 2018 Imaging and well correlation

Represents CSEM Data and the «bump» between the purple lines is the EM anomaly over the Grane field

Inverted 2003 CSEM data. High temperature color represent CSEM anomalies matching Grane field outline

Applying CSEM in the North Sea

4C seismic (Diskos)

4C seismic (Diskos), with CSEM

OBC seismic shows the shale-sand contrast and the Heimdal sands can be imaged. Traditional streamer seismic struggles to show the Heimdal sands.

The same OBC seismic section, now with CSEM data. Charge, seal and volume potential is resolved by combining two independent data sets.

Operations and selection of current opportunities

Market update | Continued limited visibility

• Strategic data acquisition programs in Norway will keep the Atlantic Guardian busy through Q2 2018

• Prospects being developed outside of Norway to keep the vessels utilized during Q3 and Q4 2018
• Market expected to be more balanced between multi-client and proprietary in 2018
• Backlog remains under pressure
• The Company expects market fundamentals to improve going into Q3/Q4 2018 with an oil price around or above USD 70 per barrel.

Comments Order backlog - limited earnings visibility

Comprehensive refinancing approved, seasonally weak quarter

Operations

• Completed multi-client surveys in Indonesia
• Expanded the library in the Barents Sea

Financials

• Revenues of USD 4.3 million
• EBITDA of negative USD 6.4 million
• Rights issue of up to USD 12.5 million approved
• Fully underwritten convertible bond issue of USD 32.5 million approved

Market

• Increase in oil price supportive of future growth
• Positive development regarding opportunities outside Norway
• Caution required as no significant change to backlog recorded

Questions?

Consolidated Income Statement

	Q1 2018	Q1 2017	2017
Amounts in USD 1 000	Unaudited	Unaudited	Unaudited
		Restated*	Restated*
Operating revenues
Contract sales	114	701	2,583
Multi-client pre-funding	2,540	1,075	11,295
Multi-client late sales	963	2,386	19,132
Other revenue	679	0	886
Total revenues	4,296	4,162	33,896
Operating expenses
Charter hire, fuel and crew expenses	4,296	2,766	7,655
Employee expenses	5,085	5,172	16,964
Depreciation and ordinary amortisation	2,122	1,407	6,779
Multi-client amortisation	2,717	2,292	10,345
Impairment of long-term assets	0	0	3,626
Other operating expenses	1,324	1,682	6,334
Total operating expenses	15,545	13,319	51,703
Operating profit/ (loss)	-11,248	-9,157	-17,807
Financial income and expenses
Interest income	9 2	1 4	193
Interest expense	-1,228	-1,053	-4,088
Net gains/(losses) of financial assets and liabilities	2,126	1,026	2,143
Net foreign currency income/(loss)	-1,795	-1,016	-3,292
Net financial items	-805	-1,029	-5,043
Income/ (loss) before income taxes	-12,054	-10,185	-22,850
Income tax expense	3	3 3	356
Income/ (loss) for the period	-12,056	-10,219	-23,206

* See Accounting principles under Notes

Consolidated Statement of Financial Position

	31 March 2018	31 March 2017	31 December 2017
Amounts in USD 1 000	Unaudited	Unaudited	Unaudited
		Restated*	Restated*
ASSETS
Non-current assets
Multi-client library	16,309	21,643	17,317
Other intangible assets	1,717	2,399	1,559
Property, plant and equipment	34,578	12,874	36,281
Assets under construction	2,782	28,353	3,112
Restricted cash	3,510	3,706	3,524
Total non-current assets	58,896	68,974	61,793
Current assets
Spare parts, fuel, anchors and batteries	7,148	7,565	7,200
Trade receivables	3,521	3,336	11,075
Other receivables	7,219	6,337	5,957
Cash and cash equivalents	11,812	12,995	16,548
Restricted cash	3,616	1,074	2,997
Total current assets	33,315	31,307	43,778
Total assets	92,211	100,282	105,571

	31 March 2018	31 March 2017 31 December 2017
Amounts in USD 1 000	Unaudited	Unaudited	Unaudited
		Restated*	Restated*
EQUITY
Capital and reserves attributable to equity holders
Share capital, share premium and other paid-in equity	336,784	319,272	336,764
Other reserves	-1,591	-1,615	-1,617
Retained earnings	-320,817	-295,774	-308,761
Total equity	14,375	21,884	26,386
LIABILITIES
Non-current liabilities
Provisions	20,333	19,645	20,670
Financial liabilities	572	4,479	2,993
Borrowings	32,241	29,042	30,288
Total non-current liabilities	53,146	53,166	53,950
Current liabilities
Trade payables	5,824	4,850	6,882
Current tax liabilities	6,158	5,841	6,299
Other short term liabilities	11,405	11,258	11,763
Borrowings	1,302	3,285	290
Total current liabilities	24,690	25,234	25,234
Total liabilities	77,836	78,399	79,184
Total equity and liabilities	92,211	100,282	105,571

Largest shareholders as of 2 May

#	Shareholder	Shares	Holding
1	SIEM INVESTMENTS INC.	21 869 450	23.92
2	PERESTROIKA AS	20 560 847	22.49
3	MORGAN STANLEY & CO. LLC	18 074 938	19.77
4	BÆKKELAGET HOLDING AS	3 010 000	3.29
5	SPORTSMAGASINET AS	2 575 001	2.82
6	ROSENFONN INVEST AS	1 500 000	1.64
7	NHO - P665AK JP MORGAN CHASE BANK	902 932	0.99
8	DNB NAVIGATOR (II)	711 279	0.99
9	STATOIL PENSJON	701 458	0.77
10	NORDNET LIVSFORSIKRING	541 766	0.59
11	KRISTIAN FALNES AS	400 000	0.44
11	HAAV HOLDING AS	400 000	0.44
13	MILGIS STIFTELSEN	360 000	0.39
14	JACKWITZ, SVEIN-ERIK	351 832	0.38
15	ØVERLAND, JARLE	340 000	0.37
15	J&J INVESTMENT AS	340 000	0.37
16	NORDEA BANK AB CLIENTS ACCOUNT	314 097	0.34
17	RAGE, PER EGIL	306 500	0.34
18	RYGG JAN WIGGO	300 000	0.33
19	VESTVIK PRESERVERING AS	290 746	0.32