Electromagnetic Geoservices ASA

Earnings Release • Jul 23, 2020

Q2 2020 RESULTS

Oslo, 23rd of May 2020

Bjørn Petter Lindhom, CEO Anders Eimstad, 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.

Q2 2020

Operational highlights

• Completed fully prefunded multi-client survey over the Martin Linge area
• Completed multi-client survey in the Liatårnet area
• Renegotiated the Atlantic Guardian charter party agreement
• Redelivered the Petrel Explorer

Financial highlights

• Revenues of USD 7.5 million
• EBITDA of USD 1.6 million
• Adjusted EBITDA of negative USD 2.0 million
• The new guarantee facility is now fully secured by pledged cash USD 7.3 million

Operations, Market and Outlook

Transition to low cost setup on schedule

• Based on constructive discussions with vessel owners we have renegotiated the Atlantic Guardian charter agreement
  • Substantially lower cold-stack rate for up to 12 months
  • Lower operational rate
  • 12 months extension of firm charter period
• Petrel Explorer demobilized and returned to Seabird end May
• In process of closing or hibernating all offices outside Norway (Kuala Lumpur, Houston, Rio de Janeiro, Mexico and Mumbai)
• Reducing full time employees from 125 in Q1 to less than 20 in Q4
• The guarantee facility related to the Pemex contract is now fully secured by pledged cash and interest expenses reduced accordingly

Market outlook and technology update

• CSEM market expected to remain challenging for the remainder of 2020
• EMGS working towards restarting data acquisition in 2021, first on the NCS and thereafter internationally
• Lead inventory remains intact, but most projects are being delayed
• Expect Norway's 25th licensing round and the APA licensing round to result in new acquisition opportunities
• Completed Tilted Transverse Isotropy module for the Gauss-Newton inversion code

Wells drilled this year with CSEM Multi-Client coverage

• 3 wells are drilled within CSEM MC coverage so far this year
• All 3 wells were targeting prospects without any CSEM anomalies, and all came in unsuccessful (dry)
  • Grind (6507/8-10S) Dry
  • Gabriel (35/10-5) Dry
  • Sandia 7321/8-2S Dry

5

Second quarter 2020 performance I Development in revenues and EBITDA

0 10 20 30 40 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Revenues Contact sales Multi-client revenues Adjusted EBITDA 37 11 14 27 8

Key financial metrics Quarterly development (USD million)

• Revenues
  • USD 7.5 million
  • USD 3.1 million prefunding
  • USD 1.9 million late sales
• Vessel utilisation of 23%
  • Two vessels on charter at begining of quarter
  • Petrel Explorer returnd upon expiry of charter party
• EBITDA
  • USD 1.6 million
  • Adjusted EBITDA* of negative USD 2.0 million

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

Operational costs

Quarterly operational cost base* development (USD million)

Comments

• Operational costs base in Q2 20 of USD 9.5 million
  • USD 2.6 million lower than Q1 20
    • Petrel Explorer redelivered end May
    • Atlantic Guardian cold stacked since early April
• Target operational cost base at the end of the year is less than USD 3.0 million

*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

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

Decrease in free cash in Q2 2020

Quarterly free cash development (USD million) Comments

• Net decrease in free cash of USD 6.2 million to USD 16.0 million
  • Trade receivables decreased by USD 7.7 million to USD 6.5 million
    • Continued delays in some of the payments under on-going contract for the quarter
  • USD 4.9 million deposited in the pledge account related to counter guarantee and other pledged account

Summary

• Cost reduction program on target and on schedule
• EMGS expects a quarterly operational cost base of USD 3 million in 2021 (with vessel in cold-stack)
• Challenging short to medium term financial outlook, but with significantly reduced cost base and increased flexibility in the long term