Magseis ASA
Investor Presentation
Private Placement of up to USD 7.6 million
6 May 2015
SOLELY FOR REVIEW IN CONNECTION WITH THE PRIVATE PLACEMENT OF SHARES – NOT FOR REPRODUCTION OR DISTRIBUTION. THE INFORMATION CONTAINED HEREIN MAY BE SUBJECT TO CHANGE WITHOUT PRIOR
NOTICE. PLEASE NOTE THAT THIS IS NOT AN OFFER DOCUMENT OR PROSPECTUS.THIS DOCUMENT MAY NOT BE DISTRIBUTED IN, OR TO ANY PERSON RESIDENT IN THE U.S., CANADA, AUSTRALIA OR JAPAN OR TO ANY
AMERICAN CITIZEN EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT OF 1933. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A
VIOLATION OF APPLICABLE SECURITIES LEGISLATION
Disclaimer
This Presentation has been produced by Magseis ASA (the “Company” or “Magseis”) with assistance from Arctic Securities AS ( “Arctic”) and Pareto Securities
AS (“Pareto”) solely for use at the presentation to investors held in connection with the Private Placement - Offering of shares by the Company and may not
be reproduced or redistributed, in whole or in part, to any other person. This presentation is strictly confidential and may not be reproduced or redistributed,
in whole or in part, to any other person. To the best of the knowledge of the Company and its board of directors, the information contained in this
Presentation is in all material respect in accordance with the facts as of the date hereof, and contains no material omissions likely to affect its import. This
Presentation contains information obtained from third parties. Such information has been accurately reproduced and, as far as the Company is aware and
able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be
inaccurate or misleading.
This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry
in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes
identified by the words “believes”, expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar
expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third
party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially
from any anticipated development. None of the Company, Arctic or Pareto or any of their parent or subsidiary undertakings or any such person’s officers or
employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any
responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company
assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual
results.
AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY
STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY’S
BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE
GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN
COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS.
SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS
MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS PRESENTATION. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION,
TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION.
Ownership of shares or bonds issued by the Company: Arctic and Pareto are acting as Joint Lead Managers and Bookrunners in connection with the private
placement and each holds zero shares in the Company. Further, employees of Arctic and Pareto hold 127.800 shares and zero shares respectively in the
Company.
2
Disclaimer (cont’d)
No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates,
targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and,
accordingly, none of the Company, Arctic or Pareto or any of their parent or subsidiary undertakings or any such person’s officers or employees accepts any
liability whatsoever arising directly or indirectly from the use of this document.
No legal, technical, operational or financial due diligence review of the Company has been conducted by the Company, Arctic or Pareto. By attending or
receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the
Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the
Company’s business.
This Presentation is confidential and is being communicated in the United Kingdom to persons who have professional experience, knowledge and expertise in
matters relating to investments and are "investment professionals" for the purposes of article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 and only in circumstances where, in accordance with section 86(1) of the Financial and Services Markets Act 2000 ("FSMA") the
requirement to provide an approved prospectus in accordance with the requirement under section 85 FSMA does not apply. Consequently, the Investor
understands that the Private Placement- Offering may be offered only to "qualified investors" for the purposes of sections 86(1) and 86(7) FSMA, or to limited
numbers of UK investors, or only where minima are placed on the consideration or denomination of securities that can be made available (all such persons
being referred to as "relevant persons"). This presentation is only directed at qualified investors and investment professionals and other persons should not
rely on or act upon this presentation or any of its contents. Any investment or investment activity to which this communication relates is only available to and
will only be engaged in with investment professionals. This Presentation (or any part of it) is not to be reproduced, distributed, passed on, or the contents
otherwise divulged, directly or indirectly, to any other person (excluding an investment professional’s advisers) without the prior written consent of Arctic,
Pareto or the Company.
IN RELATION TO THE UNITED STATES AND U.S. PERSONS, THIS PRESENTATION IS STRICTLY CONFIDENTIAL AND IS BEING FURNISHED SOLELY IN RELIANCE ON
APPLICABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE NOT AND
WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES, OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS, UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S.
SECURITIES ACT IS AVAILABLE. ACCORDINGLY, ANY OFFER OR SALE OF SHARES WILL ONLY BE OFFERED OR SOLD (I) WITHIN THE UNITED STATES, OR TO OR
FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS, ONLY TO QUALIFIED INSTITUTIONAL BUYERS (“QIBs”) IN PRIVATE PLACEMENT – OFFERING TRANSACTIONS
NOT INVOLVING A PUBLIC OFFERING AND (II) OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS IN ACCORDANCE WITH REGULATION S. ANY
PURCHASER OF SHARES IN THE UNITED STATES, OR TO OR FOR THE ACCOUNT OF U.S. PERSONS, WILL BE DEEMED TO HAVE MADE CERTAIN
REPRESENTATIONS AND ACKNOWLEDGEMENTS, INCLUDING WITHOUT LIMITATION THAT THE PURCHASER IS A QIB.
This Presentation speaks as of 6 May 2015. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients
shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date.
3
Risk factors
1.1 Business, operations and market risks
Dependence on charter contracts and employment of the Vessel
The Company’s contract backlog is limited and there is a risk that the Company will not be able to enter into new contracts in order to utilize the one vessel (the “Vessel”) currently used by the Company and any new charter
contracts may not be on terms satisfactory to the Company, all of which may have a negative effect on the Company’s operations and financial position.
Risk associated with material damage or total loss of Vessel
Currently, the Company only has access to the Vessel which is purpose made for the Company. Should the Vessel experience material damage, or should the Vessel be subject to a total loss, any alternative vessels or a
reconstruction of the Vessel may not be available or possible, may only be available or possible against a financially unacceptable cost, or may only be available or possible sometime in the distant future. As a consequence,
the operations of the Company may be suspended for a long time, which in turn would have a substantial negative effect on the Company’s financials and future prospects.
Risk associated with off-hire periods, upgrade and repairs of Vessel
Revenues and earnings in Q4 2014 were negatively affected as the Vessel underwent installations of new equipment. Going forward, the Company will from time to time incur upgrade and repair costs related to the Vessel (or
any other vessel which may be leased or owned by the Company), and off-hire periods relating to steaming or other circumstances. Such off-hire periods, upgrades and repairs may have a negative effect on revenues and
earnings, and may become more expensive and take longer to conclude than anticipated.
Risks related to low oil and gas prices
The Company’s customers are and will be involved in the offshore oil and gas industry, which is subject to volatile oil and gas prices. The prices of oil and gas are affected by a range of factors outside the control of the
Company. It is expected that a situation with prices for oil and gas on current levels will lead to a reduction in the activity by oil and gas companies which will have a direct effect on the demand for the Company’s services,
which in turn could have a material adverse effect on the Company’s earnings, cash flow and financial position.
Commercial disagreements and disputes
In the ordinary course of business the Company may from time to time be subject to contractual disputes, commercial disagreements etc. Charter contracts may give the customer both extension and early cancellation
options. Moreover, in case of short mobilization periods, there is a risk of late delivery and hence the Company may become liable towards the customer. Further, the quality of data produced by the self-developed OBSsystem and the time-range agreed between the Company and its counterparts is highly dependent on weather conditions, water quality and other factors that are beyond the Company’s control and may lead to negotiations
and disputes with the counterparts. The Company cannot predict with certainty the outcome or effect of such matters and any disputes could result in management being required to spend time and resources on the dispute
which should have been spent on the operations of the Company.
It should also be noted that contracts within the offshore sector are associated with considerable risks and responsibilities, including but not limited to health, safety and the environment. It may be that any liability following
from such responsibilities are not claimable under any insurance policies of the Company, which could have a material adverse effect on the Company’s financial position.
The fair value of the Company’s self-developed OBS-system may decrease and be subject to impairments
The fair value of the Company’s self-developed seismic equipment may decrease or increase depending on a number of factors, including general economic conditions, oil and gas prices, supply and demand (competition),
cost of new development etc. If the fair value of the Company’s seismic equipment declines, the Company may have to recognise impairments. As an example, the Company has recorded impairments for 2014 of
approximately USD 1.1 million. Future impairments may affect the Company’s ability to raise new financing required for future business and in general have a material adverse impact on the Company’ financial condition.
Risks related to competition
The Company operates in a global business which is highly competitive. Many competitors of the Company have significantly greater resources compared to the resources of the Company. The market in which the Company
operates is further subject to rapid and substantial technological change, and developments by others may render the technology and business models of the Company obsolete or non-competitive, which would have a
material adverse effect on the Company’s operations, financial condition and future prospects. It should be expected that competitors will continuously try to decrease the Company’s competitive advantages.
Intellectual Property Rights
The Company has developed a patent portfolio which is important to the Company’s operations and business. No assurances can be given that no third party claims that the patents (registered or pending) of the Company
violate such third party’s intellectual property rights. If such claims are made, the Company may have to allocate considerable resources to defend itself against such claim, which may have a material adverse effect on the
operations, business and financial condition of the Company. Any adverse outcome of such disputes could also have a material adverse effect on the operations, business and financial condition of the Company.
Dependence on key personnel
The Company’s success is dependent on the continued service and performance of its key personnel. The loss of service of any such personnel may have a material adverse impact on the Company’s operations and future
prospects.
4
Risk factors (cont’d)
Risk of war and terrorist attacks
The Company may operate in areas of the world where there is significant risk of war, armed conflicts or terrorist attacks. Such events could disrupt the operations of The Company and its customers, in which case evacuation
of personnel, termination of contracts, delays to operations or loss of personnel or assets may incur. This could have a material adverse effect on the Company’s business and results in the future.
1.2 Financial risks
Risk of not being able to obtain required financing
If the Company fails to renew or enter into a new charter contracts or if the financial condition of the Company for any other reason becomes distressed, the Company may need to raise additional equity and/or debt
financing to continue operations. No assurance can be given that the Company will succeed maintaining a comfortable cash reserve for future operations, and no assurances can be given that the Company will be able to raise
additional new equity and/or debt financing on attractive terms, or at all.
Currency exchange risks
The Company prepares its financial statements in USD. New tenders and contracts awarded with customers are usually in USD. However, due to significant fluctuations in the exchange rates between USD and other, main
currencies, the Company faces currency risk related to sales and purchases as customers who do not have USD as their functional currency may find it difficult to offer prices in USD that are attractive to the Company.
Funding of expansion and/or new equipment
Any expansion and investment by the Company related to increased number of crews, new vessels, new equipment or an increased number of employees may require separate financing. Such financing may not be available
or only available at unattractive terms, in which case it may not be possible for the Company to carry out an expansion which otherwise would have been in the interest of the Company and beneficial for the shareholders.
1.3 Risk factors relating to the Company’s shares
The price of the shares may fluctuate significantly
The trading price of the shares could fluctuate significantly in response to a number of factors beyond the Company's control. In recent years, the stock market has experienced extreme price and volume fluctuations. This
volatility has had a significant impact on the market price of securities issued by many companies, including companies in the same industry as that of the Company. Those changes may occur without regard to the operating
performance of these companies. The price of the Company's shares may therefore fluctuate based upon factors that have little or nothing to do with the Company business and its operations, and these fluctuations may
materially affect the price of the shares.
Future issuances of shares or other securities may dilute the holdings of shareholders and could materially affect the price of the shares
In the future, it is possible that the Company may decide to offer additional shares or other securities in order to finance new capital-intensive projects, or in connection with unanticipated liabilities or expenses or for any
other purposes. Any such additional offering could reduce the proportionate ownership and voting interests of holders of shares, as well as the earnings per share and the net asset value per share of the Company, and any
offering by the Company could have a material adverse effect on the market price of the shares.
Pre-emptive rights may not be available to all holders of shares
In accordance with Norwegian law, prior to issuance of any shares for consideration in cash, the Company must offer holders of then outstanding shares pre-emptive rights to subscribe and pay for a sufficient number of
shares in order to maintain their existing ownership percentages, unless these rights are waived at a general meeting of shareholders, or unless the Board waives such rights in accordance with an authorization granted by the
shareholders. These pre-emptive rights are generally transferrable during the subscription period for the related offering and may be quoted on Oslo Børs.
Holders of shares resident in the United States, and possibly shareholders in other jurisdictions as well, may not be able to receive, trade or exercise pre-emptive rights for shares unless a registration statement in the United
States (or similar registrations in other jurisdictions) under the U.S Securities Act is effective with respect to such rights or an exemption from the registration requirements is available. The Company is currently not subject to
any reporting requirements of the U.S. Securities and Exchange Act of 1934, as amended, or any other foreign jurisdiction reporting requirements, and currently has no intention to subject itself to such reporting. If holders in
the United States, or possibly shareholders in other jurisdictions, are not able to receive, trade or exercise pre-emptive rights granted in respect of their shares in any share issues by the Company, then they may not receive
the economic benefit of such rights. Any such rights may or may not be sold on behalf of such shareholders and such shareholders may or may not receive any profits from such sale, and any profit will under any circumstance
depend on the prevailing market prices for the pre-emptive rights. In addition, such shareholders’ proportionate shareholding in the Company will be diluted.
5
Risk factors (cont’d)
Investors may not be able to exercise their voting rights for shares registered in a nominee account
Beneficial owners of the shares that are registered in a nominee account (such as through brokers, dealers or other third parties) may not be able to vote for such shares unless their ownership is re-registered in their names
with the VPS prior to the Company's general meetings. The Company cannot guarantee that beneficial owners of the shares will receive the notice of a general meeting in time to instruct their nominees to either effect a reregistration of their shares or otherwise vote for their shares in the manner desired by such beneficial owners.
Investors in the United States may have difficulty enforcing any judgment obtained in the United States against the Company or its directors or executive officers in Norway
The Company is incorporated under the laws of the Kingdom of Norway, and all of its current directors and executive officers reside outside the United States. Furthermore, all or substantially all of the Company's assets and
all or substantially all of the assets of the Company's directors and executive officers are assumed to be located outside the United States. As a result, investors in the United States may be unable to effect service of process
on the Company or its directors and executive officers or enforce judgments obtained in the United States courts against the Company or such persons in the United States, including judgments predicated upon the civil
liability provisions of the federal securities laws of the United States. The Company has been advised by its Norwegian legal counsel that the United States and Norway do not currently have a treaty providing for reciprocal
recognition and enforcement of judgments (other than arbitral awards) in civil and commercial matters.
Transfer of shares is subject to restrictions under the securities laws of the United States and other jurisdictions
The shares of the Company have not been registered under the U.S. Securities Act or any state securities laws in the United States or any other jurisdiction outside of Norway and are not expected to be registered in the
future. As such, the shares may not be offered or sold except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable securities laws.
Shareholders outside of Norway are subject to exchange rate risk
The Company’s shares are priced in Norwegian kroner ("NOK"), the lawful currency of Norway, and any future payments of dividends on the shares or other distributions from the Company will be denominated in NOK.
Accordingly, any investor outside Norway is subject to adverse movements in the NOK against their local currency, as the foreign currency equivalent of any dividends paid on the shares or price received in connection with
any sale of the shares could be materially adversely affected.
Major shareholders may exert significant influence
As at the date of this Investor Presentation, certain shareholders, including, but not limited to, Westcon Group AS, Geo Innova AS, Anfar Invest AS and Gneis AS, control a significant percentage of the share capital. The
mentioned shareholders have entered into a shareholders’ agreement as described in the Company’s listing prospectus dated 4 June 2014, and it cannot be ruled out that these shareholders will still be able to exert significant
influence over the Company’s operations following the completion of the Private Placement. A concentration of ownership may have the effect of delaying, deterring or preventing a change of control of the Company that
could be economically beneficial to other shareholders. Further, the interests of shareholders exerting a significant influence over the Company may not in all matters be aligned with the interests of the Company and the
other shareholders of the Company.
1.4 Other risks
The Company is influenced in general by the economic situation in the market in which the Company operates. The global economy and the global financial markets have been characterized by substantial uncertainty and
problems of historical enormity since early 2007. A decrease, or the lack of improvement, in the global economy and problems relating to governmental treasuries, equity- and debt markets, the access to and cost of capital,
the general confidence by consumers, increased unemployment, increase in inflation and interest rates may have a grave and substantial negative effect on the Company’s business, revenue, financial position and equity. The
exact effects on the Company are very uncertain and not possible to describe in any precise manner as at the date of this Investor Presentation.
All prospective investors are requested to read the Company’s listing prospectus dated 4 June 2014 as well as all other subsequent financial reports and presentations and other press releases made by the Company.
6
Content
1.
2.
3.
4.
5.
Highlights
Market overview
Operational update
Financials
Summary and Q&A
7
Transaction summary
Transaction features
Background
• During the presentation of the Q4 2014 financials Magseis communicated an
intention to continue to grow the company
• Magseis is continuously contemplating to grow the amount of equipment
inventory on Artemis Athene and/or expanding with a second crew
• The rationale for the share issue is to start the production of equipment for a
contemplated crew #2. The equipment may also be used on the Artemis
Athene
Pre-subscribed private placement
• Substantial pre-commitments for applications in the Private Placement have
been received from a group of existing shareholders at a share price of NOK
22.00
Conditions for completion
• The Private Placement is subject to an authorization granted by the annual
general meeting (the “AGM”) to be held on or about 5 June 2015
• The pre-subscribing shareholders have undertaken to vote in favor of granting
the board such authorization
• The Private Placement is conditioned upon all necessary corporate
resolutions being validly made
Minimum application amount
• NOK equivalent of EUR 100,000
• Orders of less than EUR 100,000 for existing shareholders, and hence for less
than 150 investors, may be accepted
Transaction overview
•
•
•
•
Issuer: Magseis AS (organization number 994 547 852)
Number of shares pre transaction: 27,162,561*
Pre-money valuation: NOK 597,576,342
Offer Size:
–
•
•
Offer Price: NOK 22.00 per share
Application period:
–
–
–
•
•
Up to 2,716,256 shares corresponding to NOK 59.8 (USD 7.6) million in new equity
capital. Equivalent to 10% of pre-transaction shares
Start: 6 May 2015 at 16:30 hours (CET)
Close: 7 May 2015 at 08:00 hours (CET)
Conditional allocation: On or about 7 May 2015
Payment: On or about 8 June 2015 (after AGM approval)
Delivery and trading: On or about 11 June 2015
Use of proceeds:
• Additional investment in equipment
• General corporate purposes
Allocation criteria:
• The allotment will be made at the sole discretion of the Board
• The Board will focus on criteria such as (but not necessarily limited to),
timeliness of order, long-term domestic and int. leading investors,
shareholding in the Company, investor quality and quality of order
Managers:
Arctic Securities ASA and Pareto Securities AS
(Joint Lead Managers and Bookrunners)
*Excluding 1,727,520 outstanding options for management and employees
8
This is Magseis
•
Industry leading ocean bottom
seismic (OBS) company
•
Start of operations Oct 2013
Shares outstanding
27,162,561
•
One vessel in operations
Market cap (NOKm)
~650
•
77 employees
Book Equity – Q4 14 (USDm)
62.2
•
~NOK 500m in equity raised
•
Listed on Oslo Axess
Note: 1) Excludes Financial Lease for winch package
Source: Magseis
Ticker
Net Debt – Q4 14 (USDm)
MSEIS
(21.6)1
9
Q4 and annual results for 2014
Financial performance to date
• Revenue
USD mill.
56.6
– Q4 revenues of USD 11.8 million
– 2014 full-year revenues of USD 56.6 million
• EBITDA
– Q4 EBITDA of USD -1.2 million
– 2014 full-year EBITDA of USD 5.1 million
– 2014 full-year adjusted EBITDA of USD 6.8m
• Net income
– Q4 Net Income of USD -4.0 million
– 2014 full-year Net income of USD -5.4 million
– Significantly impacted by one-off charges
• Cash balance
– USD 21.6 million as per Q4 2014
– No interest-bearing debt
Source: Magseis
16.4
13.9
14.6
11.8
2.0
2.8
5.1
1.5
Rev. EBITDA Rev. EBITDA Rev. EBITDA Rev. EBITDA Rev. EBITDA
Q1 14
Q2 14
Q3 14
Q4 14
2014
10
Content
1.
2.
3.
4.
5.
Highlights
Market overview
Operational update
Financials
Summary and Q&A
11
Seabed Seismic Acquisition
P
PS
PP
12
Azimutal coverage - illumination
Narrow Azimuth
Multi Azimuth
Wide Azimuth
Full Azimuth
X
X
XX
X
X
13
Seabed seismic provides a step change in data quality
2006 Model Streamer data
2009 Model OBC data
• 4 component (4C) 3D
• Provides improved imaging and lithology
prediction from full azimuthal illumination
Notes:
Source:
1) Pre-Stack Depth Migration
Statoil
Streamer PSDM1)
OBC ST0623 - PS PSDM1)
• Data example from across Albatross field
• Illustrates value of S-waves
14
Rapidly growing market with limited # of suppliers
Seismic market
Share of OBS market capacity
Total seismic market (BUSD)
900
823
12
9%
800
Node based
700
10
608
600
577
602
8.0
6.3
9%
46 %
8.3
7.8
8
27 %
6.6
6.2
5.8
400
~42%
CAGR
415
7.4
500
6
5.7
318
300
613
9%
4.4
283
4
180
200
Cable based
190
407
109
2
~18%
CAGR
• OBS has grown rapidly during the past 10 years
• A limited number of service providers
• Autonomous node systems rapidly gaining market
share
100
0
0
2005
2006
3%
2007
2008
4%
Source: Magseis, Arkwright
2009
2010
11%
2011
2012
8%
2013
2014
11%
Share of total
seismic market:
15
Marine Autonomous Seismic System (MASS)
16
Miniaturized design for efficient handling and storage
Designed for automated handling
Designed for handling large numbers
17
To enable large receiver spreads
Small receiver coverage (ill.)
Large receiver coverage (ill.)
1
2km source
offset
2
Source line dir.
3
4
1
1
2
3
4
Required shooting: 216km2
Required shooting: 104km2
18
Capacity step-change will change market dynamics…
Current crew sizes (100-150km)
CABLE/REC vessel
OPEX: 100 k USD/day
SOURCE vessel
OPEX: 50 k USD/day
Next generation crews (>300km)
CABLE/REC vessel
OPEX: 100 k USD/day
SOURCE vessel
OPEX: 50 k USD/day
?
Source: Magseis estimates
19
…and enable OBS to compete with high-end streamer
Price comparison of seismic acquisition categories given typical survey size (USDk/km2)
Target price reduction through
larger crews and efficient systems
Key competing technologies for OBS
~40
~7
3D
Market
~330,000 km2
size:
~16
WAZ
~23,000 km2
4D: ~30
~100
200
~60
~40
~20
3D HD
~110,000 km2
FAZ
Current
OBS
~14,000 km2
~8,000 km2
MSEIS:
4D spec
MSEIS:
Regional sparse
Data quality
Source: Magseis, Arkwright
20
Move towards more advanced technologies with
enhanced data quality - OBS will be the next leap
«High end 3D as broadband technologies have rapidly gained share
over the last years. OBS will be the next generation seismic»
OBS
- major oil companies
Data quality
High end 3D
3D streamer
Ocean bottom cables
2D streamer
Ocean bottom nodes
Wide azimuth/ full azimuth
Magseis - MASS system
Broadband
Conventional 3D
Market maturity:
1960s
HD3D/ 4D
~1990
2005-10
Today
OBS
Market
split:
3D streamer
High end 3D
2D streamer
Source: Magseis, Arkwright
21
Content
1.
2.
3.
4.
5.
Highlights
Market overview
Operational update
Financials
Summary and Q&A
22
A very successful first year of operations completed
• Surveys successfully completed for
–
–
Statoil, Talisman, Hess and Lundin
Pilot survey for BGP and Saudi Aramco recently completed
•
•
•
•
Very good data quality
Unparalleled deployment accuracy
Established ability to work near complicated infrastructure
Work performed in extreme conditions, thus expanding the
traditional OBS weather window
• Contract with international oil major Chevron
Source: Magseis operating at South Arne Field (photo)
23
Recent operational milestones
Deep-water deployment
International expansion
• Fully-automated handling now in
place and working well
• Deployed MASS cable successfully at
> 1,000m water depth in Red Sea
• Established partnership with BGP for
work with Aramco in Red Sea
• Expected to increase speed
significantly
• Illustrates unique ability to provide
cost-effective deep-water OBS
• And reduce HSE exposure for the
crew
• Small investment needed to expand
Athene operating window (>1,500m)
• Representation now in place in
Malaysia, Indonesia, Mexico and
Brazil
Fully automated handling
Source: Magseis
• India and West-Africa in progress
24
Efficiency is continuing to increase with cable inventory
Development in relative cost position
Case study: S. Arne survey (25m spacing)
USD/km2
3.0x
2.5x
50% improvement
to date
2.0x
Cable length
75km
110km
3,000
3.0
81
1.0
4,500
2.0
62
1.3
1.5x
Larger equipment count
will increase efficiency further
1.0x
Sensors
# of swaths
# of days
Efficiency
0.5x
Survey configuration
-Albatross
Varg
Oseberg/Gullfaks INEX machine
More Equip.
• Significant improvements in efficiency since start-up
• Current efficiency fully on par with most relevant
competitors
Current capacity expansion would have delivered a 30%
increase in efficiency and reduced survey time by 20 days
• Further improvements now coming
Source: Magseis
25
A successful first year of operations completed,
positioned for ramp up
Key parameters for
performance & outlook
Comments
• Operational efficiency:
Target for Athene reached now that automated handling in place
• Financial performance:
Better utilization but lower effective dayrates vs. guidance
• Track-record:
Superior data quality and efficient surveys building list of satisfied clients
• Tendering activity:
Track-record and improved sales organization generating many leads
• Crew #2 capex:
Favourable terms for vessels, capex and opex level coming down
Achievement vs.
expectation
• Operational and financial characteristics of Magseis have been further de-risked during 2014
• Magseis is ready to ramp up capacity to drive scale allowing for cost reductions
26
Pilots undertaken will contribute to back-log
Recent pilot: Lundin – Barents Sea
Recent pilot: Saudi Aramco – Red Sea
Gotha
• 2D lines acquired over Gohta prospect (Lundin), Barents
Sea. Target to show OBS ability to image below gas
• 3D pilot for Saudi Aramco in Red Sea, significant plans for
OBS work in the region by Saudi Aramco and others
• Challenging seabed conditions should suit Magseis
Current order back-log
2014
Sep
Lundin: Gotha, MC
BGP/Saudi Aramco: (Red S.)
Vessel upgrade
Chevron: Captain Field
North Sea
MC North Sea/Barents S.
Middle East
Middle East
SE-Asia
Brazil
GoM MC
Source: Magseis
Oct
2015
Nov
Dec
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27
Strong tender activity in the market
• Magseis has mapped out a high number
of known prospects around the world
Europe
• A number of large projects planned for
2H 2015 and 1H 2016
Central
America
• Total yearly demand above current
market capacity
West
Africa
Source: Magseis
Asia
Pacific
(APAC)
South
America
• Even if some move out in time, there are
very few cost-effective high capacity
crews available
• Magseis is working on several specific
leads for 2H 2015
Middle
East
Region
Potential volume
Comment
600 km2
All 4D
GoM
3,000 km2
Large % MC
Latin America
3,000 km2
Standard
West Africa
2,000 km2
Standard
Middle East
1,500 km2
Standard
South East Asia
1,500 km2
Standard
Total
11,600 km2
North Sea
28
Content
1.
2.
3.
4.
5.
Highlights
Market overview
Operational update
Financials
Summary and Q&A
29
Q4 and annual results 2014
- Comprehensive income Q4 and full-year 2014
All figures in USD thousands
Revenue
Q4 14
Q4 13
YTD 14
YTD 13
• Revenue
11,760
12,239
56,606
12,239
9,969
9,885
39,217
9,885
Research and development
595
587
1,591
1,378
SG&A and other expenses
2,458
2,483
10,721
7,803
-1,262
-716
5,077
-6,827
2,037
1,844
7,607
1,981
83
0
1,119
0
-3,382
-2,560
-3,649
-8,808
566
257
1,181
-116
0
0
549
0
566
257
1,730
-116
EBT
-3,948
-2,817
-5,379
-8,692
Tax
0
0
0
0
-3,948
-2,817
-5,379
-8,692
0
-576
-1,155
-4,660
-3,948
-3,393
-6,534
-13,352
Cost of sales
EBITDA
Depreciation and amortisation
Impairment
EBIT
Net interest and fx (gain)/loss
Other finance cost
Net finance costs
Net incom e
Currency translation differences
Total com prehensive incom e
Source: Magseis
–
Lower than Q3 due to less favourable
rates and no revenue in the period 1423 December 14 when we installed new
handling equipment.
• Cost of sales
–
Higher than Q3 due to recognising a net
loss on MC project
• Research and development
–
Includes USD 1.2m in cost related to
deep water project
• SG&A
–
Strong USD/NOK also in Q4 which
reduces general SG&A
30
Q4 and annual results 2014
- Adjusted earnings Q4 and full-year 2014
Q4 2014
All figures in NUSD thousands
EBITDA
Actual
earnings
-1,262
Deep water R&D, not capitalised
Full year 2014
Adjust- Normalised Actual
-ments earnnings earnings
400
-862
5,077
Adjust- Normalised
-ments earnnings
1,770
400
1,200
Adjustment for maintenance days
0
150
Adjustment for IPO and conv loan costs
0
420
EBIT
-3,382
Adjustment EBITDA
Adjustment for impairment
EBT (profit before tax)
Adjustment EBIT
Adjustment fair value adj conversion loss
-3,948
483
-2,899
-3,649
2,806
400
1,770
83
1,036
483
-3,465
-5,379
3,355
483
2,806
0
549
6,847
• Deep water R&D
–
-843
Includes not capitalised R&D
costs which are reimbursed
by a project partner.
Reimbursement treated as
finance (BS) due to
agreement terms.
• Maintenance days
–
-2,024
Cost relating to Q4 13 was
recorded in Q2 14
• IPO and convertible loan cost
–
Includes OSE fee, bank and
legal fees etc.
• Convertible loan
–
Source: Magseis
Conversion trigged a fair
value adjustment cost due to
conversion price lower than
share price
31
Q4 and annual results 2014
- Financial position
All figures in USD thousands
YTD 14
YTD 13
Equipment and intangibles
48,285
39,548
Cash and cash equivalents
21,591
6,867
Other current assets
12,145
12,277
TOTAL ASSETS
82,021
58,692
237
186
Share premium
83,755
60,026
Other reserves
2,039
1,044
-18,487
-13,078
Currency translation reserve
-5,123
-3,968
TOTAL EQUITY
62,421
44,210
Obligation under finance lease
2,739
3,501
TC amortisation
1,369
1,867
TOTAL NON-CURRENT ASSETS
4,108
5,368
Trade payables
8,050
4,335
761
685
6,681
4,094
TOTAL CURRENT LIABILITIES
15,492
9,114
TOTAL LIABILITIES
19,600
14,482
TOTAL EQUITY AND LIABILITIES
82,021
58,692
Share capital
Retained earnings
Current portion of obligation under finance lease
Other current liabilities
Source: Magseis
• Other current assets
–
–
–
Receivable HESS 7.6m
Fuel and battery stock 2.0m
VAT & prepayments 2.5m
• Current liabilities
–
High due to payables and accruals related to
Athene 4500 upgrade
32
Q4 and annual results 2014
- Cash flow
All figures in USD thousands
YTD 14
YTD 13
Cash flow from operating activities
5,948
-7,169
Cash flow from investing activities
-13,359
-31,587
Cash flow from financing activities
23,290
3,997
Net change in cash and cash equivalents
Foreign exchange differences in the period
Cash balance at period end
15,879
-1,155
21,591
-34,759
-4,660
6,867
• Cash flow from operations
–
Variance from EBITDA mainly due to non-cash items and a net working capital decrease
• Cash flow investments
–
Mainly due to 4500 node upgrade on Athene
• Cash flow from finance
–
Consists of share issuance and convertible loan
Source: Magseis
33
Content
1.
2.
3.
4.
5.
Highlights
Market overview
Operational update
Financials
Summary and Q&A
34
Next step in strategic growth plan
• Upgrade of Artemis Athene to 150km of cable
(4,500 sensor unit) capacity underway
–
Total km of cable
500
Completion by Q1 2015
450
• Preparations for Crew # 2 well underway
–
6,000 sensor units / 300km, target 1H 16
–
Vessel identified and engineering well
underway
–
Estimated capex brought down by cost
reductions and USD/NOK rate to ~USD 40m
400
350
Crew #2
(300km)
300
250
200
150
• Growth strategy
–
Funded for current operations
–
Preparing for further growth - > may start
to produce equipment to bring down leadtime
Source: Magseis
100
50
Crew #1
(75 km)
Crew #1
(110 –
150km)
-2013
2015e
2016e
35
Summary investment case
• Clients extremely pleased with MASS data quality and performance
Very solid foundation
Positioned to handle
challenging short–term
market
Ready to accelerate when
market allows
Targeting paradigm shift for
seismic industry
• Strong improvement in productivity during 2014
• Severe cost cuts across the industry
• Focus on maximizing efficiency and operating window of Athene
• Extensive pipeline of upcoming projects with substantial scope
• Preparations for Crew #2 in place – significant client interest
• Crew #2 to bring acquisition costs down by 50-60%
• Cost-reduction allows for more OBS application, partially replacing towed
streamer seismic
36
Magseis ASA