Electromagnetic Geoservices ASA

Investor Presentation • Aug 18, 2021

Q2 2021 RESULTS

Oslo, 19th August 2021

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 2021

Operational highlights

• Completed fully prefunded multi-client survey in Mexico
• Completed mobilisation to Southeast Asia for a proprietary survey

Financial highlights

• Revenues of USD 9.4 million
• EBITDA of USD 7.0 million
• Adjusted EBITDA of USD 4.6 million

Subsequent events

• Partial bond buy back with 25% discount
• MC late sales of USD 3.6 million

Operations, Market and Outlook

Operational Update

• Fully prefunded Mexico multi-client project completed
  • Approximately 5 weeks on survey location
  • Record-low technical and weather-related downtime
  • USD 7.2 million revenue recognized in 2nd Quarter
• Proprietary Southeast Asia project completed in August
  • Project was initiated at the end of June after a long transit from Mexico
  • Revenues from the project will be recognized in 3rd Quarter
• Atlantic Guardian in transit to Norway and the Utsira High fully prefunded multi-client project
  • Expected start-up is early 4th Quarter
  • Prefunding at approximately USD 3 million

Multi-Client Library

• EMGS global multi-client library

  • 100 000 km² 3D CSEM data, predominantly in Norway, Mexico, Brazil, USA, Canada, Uruguay and Indonesia

    • Current book value < USD 1.5 million
• EMGS will continue to invest in financially sound new multi-client projects and to harvest from previous investments
• H1 2021 multi-client revenues surpassing 2020 full year revenues
• Significant backlog of multi-client revenues to be recognized in Q3 and Q4.

Annual Multi-Client Revenue (kUSD)

Building a stronger company during the energy transition

• Servicing the Oil & Gas industry to remain the cornerstone of EMGS' business for many years to come
• The importance of efficient hydrocarbon exploration and exploitation will increase as the energy transition progresses
  • Main business is in reducing drilling risk and cost
  • CSEM field appraisal market emerging
  • 4D reservoir monitoring expected to follow

"Qualitative correlation with the well results approximately support the 80% published success rates."

Antony Price (TOTAL) et al, "Building Confidence in CSEM for Exploration – Benchmarking", SEG 2019

Correlation of CSEM with well results demonstrates that CSEM has about 80% success rate in predicting well results

Building a stronger company during the energy transition

• Carbon Capture Utilization and Storage (CCUS) industry is growing fast to help decarbonize hydrocarbon production and consumption
  • CSEM can be utilized to monitor the distribution of CO2 in the reservoir over time
• Marine minerals are needed in the electrification of the energy supply and infrastructure
  • Environmental impact study ongoing in Norway, with first license round expected in 2023-24
  • The most important distinguishing properties of marine mineral deposits are its electrical and magnetic properties
  • EMGS has the technology and experience needed to play a vital role in the emerging marine minerals industry

EMGS has already acquired two EM surveys together with the Norwegian University of Science and Technology (NTNU) to improve the understanding of the magmatic processes that lead to the formation of marine minerals at the spreading ridges.

Ref: Deep electrical imaging of the ultraslow-spreading Mohns Ridge – Nature magazine, Nature Publishing Group, 2019 , 567 , 379)

Second quarter 2021 performance I Development in revenues and EBITDA

• Revenues
  • USD 9.4 million total revenue
  • USD 8.0 million in multi-client revenue
• Vessel utilisation of 31%
  • Atlantic Guardian completed Mexico multi-client survey as well as mobilisation to proprietary survey in Southeast Asia
• EBITDA
  • USD 7.0 million
  • Adjusted EBITDA* of USD 4.6 million

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

Key financial metrics Quarterly development (USD million)

Adjusted EBITDA

Operational costs

Quarterly operational cost base* development (USD million)

Comments

• Operational costs base in Q2 21 of USD 4.9 million
  • USD 1.8 million higher than Q1 21
    • Other operational expenses and employee expenses remain low
    • Increased vessel and office lease expense as a result of the Atlantic Guardian being out of cold-stack for the entire quarter
    • Charter hire, fuel and crew expenses higher due to increased activity

*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

Increase in free cash in Q2 2021

Quarterly free cash development (USD million) Comments

• Net increase in free cash of USD 1.1 million to USD 13.2 million
  • Positive change in cash a result of USD 7.0 million EBITDA, with an adjusted EBITDA of USD 4.6 million
  • USD 0.5 million in interest payments on convertible bond
  • Trade receivables increased from USD 2.4 million to USD 3.9 million

Q & A

Please e-mail questions to: emgs@emgs.com