Electromagnetic Geoservices ASA

Investor Presentation • Aug 21, 2014

ELECTROMAGNETIC GEOSERVICES ASA SECOND QUARTER 2014 RESULTS

CEO, Roar BekkerCFO, Svein Knudsen 21 August 2014

DISCLAIMER

This quarterly presentation includes and is based, inter alia, on forward-looking information andstatements that are subject to risks and uncertainties that could cause actual results to differ. Suchforward-looking information and statements are based on current expectations, estimates andprojections about global economic conditions, the economic conditions of the regions and industriesthat are major markets for Electromagnetic Geoservices ASA (EMGS) and its subsidiaries. Theseexpectations, estimates and projections are generally identifiable by statements containing words suchas "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 expectationsand the information in this Report were based upon reasonable assumptions at the time when theywere made, it can give no assurance that those expectations will be achieved or that the actual resultswill be as set out in this Report. Electromagnetic Geoservices ASA nor any other company within theEMGS 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 GeoservicesASA, 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 forwardlooking information or statements in the Report.

HIGHLIGHTS SECOND QUARTER 2014

Operational highlights

• • First major 3D EM multi-client survey in US Gulf of Mexico extended
• • Awarded multiple contracts with new and existing customers in Norway
• • Commenced joint 3D EM multi-client project in southeast Barents Sea with TGS
• • Partner agreements with ANCAP in Uruguay and Nalcor Energy in Canada

Financial highlights

• •Revenues of USD 42.5 million
• •EBITDA of USD 10.9 million

Outlook and guidance

• • 2014 revenue guiding of > USD 200 million maintained
• •Long-term outlook intact

FINANCIAL HIGHLIGHTS

Key figures Q2

• •Revenues of USD 42.5 million
• •EBITDA of USD 10.9 million
• •Net loss of USD 2.5 million

Key figures H1

• •Revenues of USD 103.8 million
• •EBITDA of USD 29.4 million
• •Net income of USD 5.8 million

VESSEL UTILISATION

• • Fleet utilisation at 75%
• Contract: 38%
• Multi-client: 37%
• • BOA Thalassa (74%)
• Completed contract in Morocco
• Number of smaller contracts in Norway
• • BOA Galatea (66%)
• Operating for Pemex till end of May
• 5 year class renewal
• • Atlantic Guardian (64%)Multi-client campaign in southeast Barents
• • EM Leader (95%)
• Daybreak project for full second quarter

MULTI-CLIENT PROJECTS

Multi-client Q2 highlights

• • Sales of USD 7.0 million
• USD 3.4 million late sales
• –USD 3.6 million pre-funding
• •Amortisation of USD 2.5 million
• • Impairment of USD 2.0 million related to Sunshine
• •Investments of USD 10.7 million
• •Net book value of USD 30.2 million

Daybreak project

• Pre-funding affected by deferred revenue and extended scope

Barents Sea project

• • Cash contribution from TGS to joint Barents Sea project of USD 4.0 million
• •Pre-funding agreed, not booked per 30.6

Multi-client investments and revenues, per vintage

CAPITAL STRUCTURE

Cash and working capital

• • Cash at USD 40.4 million, down from USD 47.1 million end of previous quarter
• • Trade receivables increased by USD 6.3 million to USD 48.1 million
• • Trade payables increased by USD 3.9 million to USD 20.1 million

MEXICO UPDATE

Opening of the Mexican continental shelf

• •CNH to manage annual licensing rounds
• • Round Zero:
• Pemex granted 83% of proven and probable reserves
• 21% of prospective resources assigned to Pemex
• Fiscal terms expected in November 2014
• • Round 1:
• Expected to include major deep-water areas
• Pemex will offer partnerships or farm-outs in 10 priority areas

Status on USD 100 million Pemex contract

• •Est. USD 19 million in backlog at 30 June
• •Possible extensions of 2 x USD 25 million
• •Expect to work for Pemex towards the end of 2014

EMGS opportunities

• •Establishing EM Centre of Excellence for Pemex in Mexico
• •New opportunities for shallow water and structural imaging
• •Establish multi-client market in Mexico
• •New players in areas where EM has a proven track-record

MULTI-CLIENT PROJECT IN THE US GULF OF MEXICO

Daybreak project

• •EMGS' first major MC project in the US
• •Multi-year program
• • 2014 program extended, covering approximately 156 blocks and 3,600 km²
• •Access to 2D seismic from TGS

US Gulf of Mexico important multi-client basin

• •Exposure to a wide range of companies
• •Large future potential, annual lease rounds

EAST CANADA MULTI-CLIENT PROGRAM

• • Agreement signed with Nalcor Energy* including financial support
• •Acquisition commenced on 25 July
• • Expect approximately 3 months, ~4,000 km² in 2014 and 13,500 km² in total
• • Calibrate survey to Flemish Pass Basin where recent major oil discoveries have been made by Statoil
• •First licencing round expected mid-2015
• • Currently soliciting additional partners for the program

*Nalcor Energy; the Provincial Energy Corporation of Newfoundland and Labrador

EM PREDICTIONS IN THE BARENTS SEA

• • All hydrocarbon bearing reservoirs drilled to date have been highly resistive
• • Wisting and Hanssen has been correctly predicted as high resistive reservoirs by EM and has opened up a new oil province
• • High resolution EM predicted discovery on Mercury – although classified a small noncommercial gas find

Hanssen

Wisting A

Wisting C

STRATEGIC AGREEMENT WITH NORTH ENERGY

Multi-client agreement of NOK 100 million (USD 16.1 million) in January 2014

• •Sale of Barents Sea EM data library – payment in convertible bond of NOK 75 million
• •Sale of consulting services, started in March, payment in cash

Convertible bond settled 19 August

• •Cash settlement of NOK 46.6 million
• •NOK 28.4 million converted into 6,851,463 shares, strike price NOK 4.1451 per share
• •Total holding after transaction of 11,851,463 shares, representing 9.96%

New contracts with North Energy in second quarter

• •North Energy executing on their strategy to include EM in the exploration workflow
• •Awarded several new contracts with North Energy during the quarter

VESSEL SCHEDULE

Expected vessel schedule as of 20 August 2014

MARKET UPDATE

Contract opportunities 2H 2014

• •Good progress on closing 1 major contract
• • Final stages of preparing long-term campaign in Asia
• •Strong leads in southern hemisphere

2015

• • Increased visibility for opportunities in southeast Asia
• •EM campaign planned for 1H15 in Uruguay
• • Opening up of Mexican shelf expected to increase activity
• • Continue to invest in key multi-client libraries and capitalize on existing investments
• • Improved adoption to generate further opportunities

Market sentiment

• Negative sentiment for exploration spending challenging

SUMMARY AND OUTLOOK

Second quarter results according to expectations

• • Well funded Investments in multi-client libraries in the US Gulf of Mexico, the Barents Sea and Canada
• •Awarded multiple new contracts in Norway
• • Important partner agreements with regulating authorities in Uruguay and Canada

Outlook

• • Maintain full year 2014 revenue guiding of >USD 200 million
• •Promising contract opportunities for 2H
• •Expect increased visibility into 2015

VESSEL CHARTERS AND YARD STAYS

	O B A T ha las sa	O Ga B A la tea	Gu At lan ic d ian t ar	E M Le de a r	E M Ex p res s
F irm C ha rte r	De be 2 0 1 5 ce m r	Ju ly 2 0 1 6	Ma h 1 2 0 1 6 rc	Ju ly 2 8 2 0 1 4	S d by in Be tan t rg en a E M G S. t to no co s
Op ion t s	1 x 1 y ea r	1 x 1 y ea r	3 x 1 y ea r	Op ion l 1-, 3-, 6- t a or 1 2-m h c ha t rte on rs i l Ma h t 9 2 0 1 5 un rc
Ya d s tay r s		Q / Q 4- 5 w ks 2 3 ee ~ 2 0 1 4: las 5 y ea r c s l ren ew a	Q 5 w ks in 4 2 0 1 4 ee ~		No l ica b le t a p p
Ve l o ss e wn er	B O A O f fs ho re	B O A O f fs ho re	No h Se S h ip ing rt a p	Se tra a ns	Se S h ip tra a ns Ma t na g em en

CONSOLIDATED INCOME STATEMENT

US D m illio n	Q U A R T E	R E N D I N G		H A L F Y E A R E N D I N G
	3 0. 0 6. 2 0 1 4	3 0. 0 6. 2 0 1 3	3 0. 0 6. 2 0 1 4	3 0. 0 6. 2 0 1 3
Co les ntr act sa	35 .5	29 .6	82 .0	49 .5
Mu lti-c lien ale t s s	7.0	14 .8	21 .8	26 .6
To tal re ve nu es	42 .5	44 .4	10 3.8	76 .1
Ch hir fue l an d c art er e, rew ex pe nse s	13 .9	11 .7	34 .5	22 .0
Em loy p ee ex pe nse s	12 .1	13 .6	27 .8	28 .4
Ot he tin r op era g ex pe nse s	5.6	5.9	10 .1	11 .3
EB ITD A	10 .9	13 .2	31 .4	14 .5
De cia tio nd ord ina ort isa tio pre n a ry am n	4.2	4.1	8.6	8.7
Mu lti-c lien t a rtis atio nd imp air nt mo n a me	4.5	7.1	7.8	9.9
EB IT	2.1	2.0	15 .0	( 4.1 )
Ne t fi nci al item na s	( 2.9 )	( 3.5 )	( 3.9 )	1.3
Pro fit / ( los s) be for e t ax	( 0.6 )	( 1.5 )	11 .1	( 2.8 )
Inc tax om e ex pe nse	1.9	0.1	5.3	1.4
Ne rof it / ( los s) t p	( 2.5 )	( 1.6 )	5.8	( ) 4.2

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

US D m illio n	QU AR	TE R E ND ING
AS SE TS	30. 06. 20 14	30. 06. 20 13
Go odw ill	14. 4	14. 2
De fer red tax set as	1.9	-
Mu lti-c lien t lib rary	30. 2	22. 8
Oth inta ible set er ng as s	2.5	4.6
Pro lan d e ipm ty, t an ent per p qu	21. 7	27. 4
Ass der tion ets nst un co ruc	26. 2	17. 1
Fin ial ets anc ass	3.7	-
To tal ent set no n-c urr as s	100 .6	86. 3
Tra de eiv abl rec es	48. 1	48. 6
Oth ent set er c urr as s	39. 5	41. 9
Ca sh and sh iva len ts ca equ	39. 6	44. 9
Re stri d c ash cte	0.8	1.3
To tal nt a ts cu rre sse	128 .0	136 .7
TO TA L A SS ET S	228 .7	223 .0
EQ UIT Y A ND LIA BIL ITIE S
To tal uity eq	110 .3	112 .9
To tal liab iliti ent no n-c urr es	69. 9	63. 8
Tra de abl pay es	20. 1	13. 2
Cu liab ility nt t rre ax	3.7	1.4
Oth hor t te liab ilitie er s rm s	21. 1	15. 9
Bo ing rrow s	3.5	15. 8
To tal liab iliti nt cu rre es	5 48.	46. 3
TO TA L E QU ITY AN D L IAB ILIT IES	228 .7	223 .0

CONSOLIDATED STATEMENT OF CASH FLOW

US D m illio n	H A L F Y E A R E N D I N G
	3 0. 0 6. 2 0 1 4	3 0. 0 6. 2 0 1 3
Ne h f low fro tin tiv itie t c as m op era g ac s	10 .1	8.2
h f fro inv tin tiv itie Ne t c low as m es g ac s	( ) 26 .8	( ) 29 .5
Ne h f low fro fin cia l a cti vit ies t c as m an	1.0	27 .0
Ne t in in sh cre as e ca	( 15 .7)	5.7

LARGEST SHAREHOLDERS (AS OF 20 AUGUST)

	S O H A R E H L D E R	S S H A R E	O G H L D I N
1	M O R G A N S T A N L E Y & C O	1 9 0 4 6 1 3 8	9. 3 % 5
2	S K A G E N G L O B A L	1 0 1 2 4 1 1 2	5. 0 7 %
3	O S S C M M E N T U M I N V E T M E N T I N	9 5 0 4 9 2 0	4. 7 6 %
4	O D I N O F F S H O R E	8 4 7 3 6 3 1	4. 2 4 %
5	V E R D I P A P I R F O N D E T D N B	7 5 4 5 3 8 3	3. 7 8 %
6	O O G D I N N R E	6 1 6 0 9 9 0	3. 0 8 %
7	F I D E L I T Y F U N D S	6 0 6 0 5 0 7	3. 0 3 %
8	P E R E S T R O I K A A S	6 0 0 0 0 0 0	3. 0 0 %
9	C L E A R S T R E A M B A N K I N G S. A.	6 9 9 0 2 5 5	2. 8 % 5
10	S K A G E N V E K S T	5 0 2 9 2 0 7	2. 5 2 %
11	V E R D I P A P I R F O N D E T D N B N O R G E ( I V )	4 9 5 6 8 0 4	2. 4 8 %
12	S T A T O I L P E N S J O N C / O J P M O R G A N C H A S E	3 7 5 5 3 6 2	1. 8 8 %
13	S G G O K A E N L B A L I I	3 1 7 1 3 3 3	1. 5 9 %
14	O V P F N R D E A K A P I T A L	2 8 1 5 6 5 5	1. 4 1 %
15	S / S Y D B A N K A	2 7 9 8 7 0 6	1. 4 0 %