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Electromagnetic Geoservices ASA

Investor Presentation Feb 5, 2015

3587_rns_2015-02-05_c77661c9-959c-4550-96c7-81c98534362d.pdf

Investor Presentation

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FOURTH QUARTER 2014 RESULTS.

Oslo, 5 February 2015,CEO Bjarte Bruheim and CFO Svein Knudsen

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 andstatements 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 couldcause 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. AlthoughElectromagnetic Geoservices ASA believes that its expectations and the information in this Report were based uponreasonable 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.

EMGS today

  • • Strong financial position
  • •Flexible and asset-light business model
  • • Revenue-generating assets
  • •4 vessels in operation
  • •4 growing multi-client libraries
  • • Proven technology 3D platform
  • •Full-azimuth 3D EM
  • • JIP for next generation EM equipment with Shell and Statoil to further expand the market
  • • Changed and invested in strengthened sales organisationtailored to meet exploration needs

EMGS revenue-generating assets – MC libraries

EMGS revenue-generating assets – Fleet

EMGS after 3D EM introduction - a sustainable business

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Improvements to commercial model

Sales organisation strengthened and tailored to meet exploration needs

  • •Sales force located close to NOCs
  • • Geographic deployment of sales force:
  • Houston
  • Oslo
  • Kuala Lumpur
  • Mexico
  • Brazil
  • India

Positive development in new customers.

Fourth quarter overview

Operational highlights fourth quarter 2014

  • •Contracts for BOA Thalassa in Malaysia, Thailand and Myanmar
  • •Large contract with BG Group for EM Leader in Uruguay
  • •First sale from multi-client library in Foz do Amazonas in Brazil
  • •Record-high multi-client sales from the Barents Sea library
  • • Commenced new 3D EM multi-client campaign and expanded partnership with TGS in Barents Sea
  • •New and improved charter agreement for EM Leader

Financial highlights

Key figures Q4

  • •Revenues of USD 52.5 million
  • •EBITDA of USD 18.6 million
  • •Net income of USD 15.1 million

Cost flexibility

  • •Cost control
  • •Option to reduce fleet by 25%

Key figures 2014

  • •Revenues of USD 198.0 million
  • •EBITDA of USD 61.0 million
  • •Net income of USD 27.9 million

Revenuesand revenues/costs per vessel month (USD Million)

Vessel utilisation Q4

Capital Structure

Balance sheet as at 31.12.14 (USD million)

  • • Cash at USD 26.6 million, down from USD 42.5 million end of previous quarter
    • Trade receivables increased by USD 24.1 million to USD 65.5 million
    • Trade payables decreased by USD 1.2 million to USD 13.4 million
  • • Bond loan affected by weakening of NOK
  • -Reduced by USD 6.6 million Q4, booked as financial income
  • • Financing strengthened
  • • Signed term-sheet for revolving credit facility USD 10 million

Multi-client increasingly important part of business

2012: USD 201 million

Contract: USD 176 millionMulti-client: USD 25 million

2013: USD 145 million

Contract: USD 111 millionMulti-client: USD 33 million

2014: USD 198 million

Contract: USD 137 millionMulti-client: USD 60 million

Profitable multi-client investments

Market and outlook

How to increase the discovery rate

Why do we fail in finding hydrocarbons?

  • • Low discovery rate today
  • • 8/9 of 10 exploration wells fail to find commercial levels of hydrocarbons
  • • Two main reasons for failure
  • •Lack of seal: 45%
  • •Lack of charge: 30%
  • • Why?
  • • Lack of technology/ measurements to provide information about the seal & charge

Arbitrary seismic profile from Wisting and the surrounding area

Contract opportunities

  • • Expect to keep one vessel in Asia and one in South-Atlantic in 2015
  • •Opening up of Mexican shelf expected to increase activity
  • • Continue to have a strategic focus on national oil companies (NOCs)
  • •Selected IOCs targeted and important for adoption

Multi-client projects

  • •Continue to invest in key multi-client libraries
  • •MC projects increase visibility in vessel schedule
  • •Expand collaboration with seismic companies

Summary

  • • Strong financial positioned and well positioned to meet a challenging business environment, but also act onopportunities
  • • EMGS products well positioned to help oil companiesmanage through cycle, cut cost and increase efficiency of E&P
  • •Multi-client important part of the business model
  • • Success criteria for 2015
  • •Continue to develop relationship with the NOCs
  • •Add new IOCs to the customer portfolio
  • •Participate in the opening of the Mexican market
  • •Open new basins for multi-client
  • •Sale of integrated products – 3D EM and seismic

Questions?

Appendix

Income statement

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Electromagnetics in the E&P workflow

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