Electromagnetic Geoservices ASA

Regulatory Filings • Mar 27, 2020

EMGS initiates transition to low-cost set-up

EMGS initiates transition to low-cost set-up

Following the end of acquisition work under the two-year contract in the

Americas, as announced to the market on 20 February 2020, the recent sharp oil

price decline and the uncertainty created by the global Covid-19 pandemic, with

associated impact on the global economy and, in particular, on oil company

investment decisions, Electromagnetic Geoservices ASA ("EMGS" or the "Company")

has experienced a rapid deterioration in the Company's backlog for 2020.

The board of directors and management of the Company have evaluated all possible

measures to preserve and maximise shareholder value and safeguard the interest

of the Company's other stakeholders in this situation.

Based on this review, the Company has resolved to immediately start the

transition to a low-cost set-up. The purpose of this low-cost set-up will be to

preserve sufficient liquidity by reducing cash-burn to a minimum, until the

Company can benefit from and scale up to meet an expected future increase in oil

company investments.

To be able to achieve a sufficiently low cost level, the Company will, amongst

other initiatives:

* Redeliver the Petrel Explorer at the end of the current fixed charter period,

and cold stack the Atlantic Guardian as soon as practicable possible.

* Terminate all employees and consultants with the exception of a skeleton crew

which will continue to service the multi-client late sales and consulting market

and form the basis for a future scale-up.

EMGS will continue to deliver under all the Company's existing and ongoing

customer contracts as planned, honouring the Company's obligations under these

contracts.

Even with these decisive actions, no guarantees can be given that the Company

will be able to preserve sufficient liquidity. Continued operation will thus not

only be dependent on the timely and successful implementation of the above

measures, but also that the Company is able to identify and implement other

material cost reduction measures, including by reducing the interest bearing

debt and non-interest bearing liabilities.

Additional details will be provided in due course.

Contact

Anders Eimstad, EMGS Interim Chief Financial Officer, +47 948 25 836

About EMGS

EMGS, the marine EM market leader, uses its proprietary electromagnetic (EM)

technology to support oil and gas companies in their search for offshore

hydrocarbons. EMGS supports each stage in the workflow, from survey design and

data acquisition to processing and interpretation. The Company's services enable

the integration of EM data with seismic and other geophysical and geological

information to give explorationists a clearer and more complete understanding of

the subsurface. This improves exploration efficiency and reduces risks and the

finding costs per barrel.

This information is subject to the disclosure requirements pursuant to Section

5-12 the Norwegian Securities Trading Act