Electromagnetic Geoservices ASA

Earnings Release • Feb 6, 2020

COMPANY UPDATE AND Q4 2019 RESULTS

Oslo, 6th of February 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.

Q4 2019 Highlights

Operational highlights

• Completed USD 24 million proprietary acquisition in South East Asia
• Safe and efficient operations in Mexico (Pemex contract)
• Backlog at end Q4 of USD 58.0 million, whereof USD 14.3 million is firm

Financial highlights

• Revenues of USD 37.2 million
• EBITDA of USD 24.8 million
• Adjusted EBITDA of USD 20.9 million
• Payment delay in connection with on-going acquisition contract continues

Subsequent events

• Call-off (work order) for additional USD 3.4 million acquisition work
• Discussions, modelling and survey-planning for additional acquisition work under existing multi-year contract on-going

Operations, Market and Outlook

2019 lookback

• Strong financial performance and return to profitability
  • Revenue of USD 89.4 million (unaudited)
  • Adjusted EBITDA USD 33.3 million (unaudited)
  • Net income USD 15 million (unaudited)
  • 2019 compared to past years: revenue (8th), net income (2nd)
• Awarded 4th and 7th largest EM acquisition contracts ever
  • Pemex USD 73 million
  • Petronas USD 24 million
• Full year Multi-Client revenue of USD 26 million, including:
  • USD 8 million Equinor agreement in Q1
  • USD 8 million agreement in Q4
• Acquired data offshore Borneo, Suriname, Mexico and in the Barents Sea and the Norwegian Sea

Revenue Net income

Vessel Update and Backlog

2020 vessel opportunities

Canada

• Planning and preparing for potential proprietary contract

Mexico

• Large campaign for Pemex ongoing
• Permitting Multi-Client campaign

Africa

• Contract with BP in Mauritania & Senegal
• Campaign in Namibia including proprietary contract for Nabirm and likely Multi -Client project

Norway

• Secured prefunding for Martin Linge area Multi -Client project

Fourth quarter 2019 performance I Increase in revenues and EBITDA

• Revenues
  • USD 37.2 million
  • Proprietary work in South East Asia and Mexico
  • Late sales and uplift settlement
• Vessel utilisation of 80%
  • Two vessels on charter
• EBITDA
  • USD 24.8 million
  • Adjusted EBITDA* of USD 20.9 million

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

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 1

0 2 -1

Key financial metrics Quarterly development (USD million)

-5

0

5

Operational costs

Quarterly operational cost base* development (USD million)

Comments

• Operational costs base in Q4 19 of USD 16.3 million
  • USD 1 million higher than Q3 2019
    • Legal fees related to Brazilian Municipal Service Tax (ISS) claim (USD 0.6 million)
    • Withholding taxes (USD 0.8 million)
• Cost control
  • Continued focus on cost optimisation

Capitalised multi-client expenses

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

*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

10

Increase in free cash in Q4 2019

Quarterly free cash development (USD million) Comments

• Net increase in free cash of USD 16.0 million to USD 19.7 million
  • Trade receivables increased by USD 3.5 million to USD 23.5 million
    • Continued delays in some of the payments under on-going contract
  • Adjusted EBITDA of USD 20.9 million
  • USD 1.7 million interest income related to Brazilian ISS verdict

Summary

• Strong 4th quarter with revenues of USD 37.2 million and adjusted EBITDA of USD 20.9 million
• Full year revenue of USD 89.4 million (unaudited)
• Cash position continues to be adversely affected by delayed payments, but standing at USD 19.7 million at end of year.
• Order backlog at end of Q4 of USD 58 million, of which USD 14 million is firm