magseis fairfield asa · this presentation (the “ presentation") has been preparedby magseis...

Magseis Fairfield ASA

Q1 201928th May 2019

The industry leader in ocean bottom seismic technology

This presentation (the “Presentation") has been prepared by Magseis Fairfield ASA (the“Company” or “Magseis Fairfield”).

The Presentation contains forward-looking information and statements relating to thebusiness, financial performance and results of the Company and/or industry andmarkets in which it operates. Forward-looking statements concern futurecircumstances and results and other statements that are not historical facts,sometimes identified by the words “aims”, “anticipates”, “believes”, “estimates”,“expects”, “foresees”, “intends”, “plans”, “predicts”, “projects”, “targets”, and similarexpressions. Any forward-looking statements and other information contained in thisPresentation, including assumptions, opinions and views of the Company or cited fromthird party sources are solely opinions and forecasts based on the currentexpectations, estimates and projections of the Company or assumptions based oninformation currently available to the Company, which are subject to risks,uncertainties and other factors that may cause actual events to differ materially fromany anticipated development.

Important factors may lead to actual profits, results and developments deviatingsubstantially from what has been expressed or implied in such statements. Althoughthe Company believes that its expectations and the Presentation are based uponreasonable assumptions, it can give no assurance that those expectations will beachieved or that the actual results will be as set out in the Presentation. The Companyassumes no obligation, except as required by law, to update any forward-lookingstatements or to conform these forward-looking statements to its actual results.

The Company makes no representation or warranty, expressed or implied, as to theaccuracy, reliability or completeness of the Presentation, and neither the Company norany of its directors, officers or employees shall be liable to you or to any other party forany losses incurred as a result of your or their use of, or reliance on, any informationcontained in the Presentation.

This Presentation does not constitute or form part of, and is not prepared or made inconnection with, an offer or invitation to sell, or any solicitation of any offer tosubscribe for or purchase any securities, and nothing contained herein shall form thebasis of any contract or commitment whatsoever. No reliance may be placed for anypurpose whatsoever on the information contained in this Presentation or on itscompleteness, accuracy or fairness. The information in this Presentation is subject toverification, completion and change. The contents of this Presentation have not beenindependently verified. The Company’s securities have not been and will not beregistered under the United States Securities Act of 1933, as amended (the “USSecurities Act”), and are offered and sold only outside the United States in accordancewith an exemption from registration provided by Regulation S under the US SecuritiesAct. This Presentation should not form the basis of any investment decision.

The Presentation speaks and reflects prevailing conditions and views as of the date ofthis presentation. It may be subject to corrections and change at any time withoutnotice except as required by law. The delivery of this Presentation or any furtherdiscussions of the Company with any recipient shall not, under any circumstances,create any implication that the Company assumes any obligation to update or correctthe information herein, nor any implication that there has been no change in the affairsof the Company since such date.

Disclaimer

2Source: Magseis Fairfield

AGENDA

3

Introduction

Financials

Operations

Business Strategy, Backlog and Market Outlook

Appendix

at a glance

4

• The combination of Magseis, Fairfield and WGP shaped the Industry leader in the Ocean Bottom Seismic market

• Largest player in a growing global USD 1bn+ market with improving visibility

• Leading edge technology - automated handling systems

• Largest nodal pool in the market – ability to scale

• Global reach - diverse customer base

• Asset light business model - flexible cost structure

Source: Magseis Fairfield

Highlights Q1 2019

5

• Revenue of USD 119.5m• EBITDA of USD 16.0m, including non-cash costs of USD 6.6m• Net loss of USD 6.5m

• Completed Malaysia survey – learnings operationalized• Completed deepwater GoM survey for new node customer with excellent

operational performance and data quality • Completed mobilization for Middle East start-up late January• Change of deployment platform for GoM surveys – in operation from end of Q1• Successful delivery of second shipment of MASS I nodes and handling systems

• Integration on track – benefits being realized• Revenue guidance of USD 500m and EBITDA of USD 100m in 2019• USD 453m already secured through Q1 revenue and current backlog


Financialperformance

OperationalPerformance and

Execution

Outlook

AGENDA

6

Financials

Introduction

Operations


Appendix

Q1 P&L – Revenue and EBITDA on track

7

120

16

28

11

91

5

77

0

10

20

30

40

50

60

70

80

90

100

110

120

130

Revenue EBITDA Revenue EBITDA Revenue EBITDA

EBITDA included non-cash costs of ~USD 7m, related to sale of existing MASS I node sales

Magseis Fairfield MASS I node sales Other

• Strong margins from delivery of second shipment of sold MASS I nodes

• Soft margins in data acquisition• Zero margin on USD 12m in revenue in Malaysia

• Mobilization ahead of contract start-up of large Middle East contract in late January

• Expensed USD 7.7m for change of deployment platform for deep water GoM projects - start-up of program with new vessels and ROVs at end of Q1

• Seasonally low activity and soft margins in reservoir monitoring/source• Main part of revenue recognized in Q2, Q3 and Q4

• Improving margins and market environment• Higher margins in recently signed contracts and current

contract negotiations

• Improving utilization going forward

• Improving revenue generation from reservoir monitoring/ source from Q2


USDm

Key financial figures

8

Profit and loss Q1 2019 Q1 2018 Full Year 2018Revenues 119.5 24.6 136.5Cost of sales 88.3 9.7 86.8EBITDA 16.0 10.4 23.0EBIT -2.7 6.6 3.1Net profit (loss) -6.5 5.7 -2.8Basic earnings (loss), weighted avg. shares -0.04 0.08 -0.04

Financial positionTotal assets 587 165 527Total liabilities 260 27 194Total equity 327 138 334Equity ratio 55.7 % 83.5 % 63.3 %

Cash flowNet cash flow from operating activities -1.9 -6.2 13.7

Key figures, USD million

• EBIT USD -2.7m after total depreciation & amortization of USD 18.8m• Equipment regular depreciation of USD 10.8m• IFRS 16 lease depreciation of USD 4.0m• Intangibles (PPA) amortization of USD 4.0m

-5

0

5

10

15

20

25

EBITDA Non-cash costsMASS I node

sales

Increased NetWorkingCapital

Otheradjustments to

CFFO, net

CFFO

EBITDA to Net Cash Flow from Operations – main items (USDm)


• Net cash flow from operating activities: USD -1.9m

• Net Working Capital increase of USD 24.3m in Q1, mainly reflecting increased receivables from higher billable revenue that will be collected as they fall due

AGENDA

9

Operations

Financials

Introduction


Appendix

10

Integration on track - benefits being realized

• Moved to common sales, commercialization and bid process – sales objectives being realized

• Standardizing vendor management, leveraging purchasing and service providers

• Optimizing back-office systems and processes

• Moving from three business systems to one global system

• Combined and harmonized QHSE and administrative policies, procedures and systems

• Moving to a common technology platform


Malaysia Survey Completed

11

• Operation finalized early April

• Improved operational performance and source issues resolved in Q1

• Good performance from second ROV vessel entered into operation in January

• Project loss covered by provisions in Q4’18

• Lesson learned - corrective actions implemented and operationalized

Customer quote: “….considering the challenges we faced, I cannot be more impressed with the way Magseis have handled this project, and so offer you firstly my congratulations for completing a difficult job with an amazing level of persistence and tenacity….”

Efficient delivery of MASS I nodes and MASS modular handling systems

12

• Shipment by air carrier

• Delivered 3,000 nodes in the second batch in Q1-19 for large Middle East project

• Adding to a delivery of 4,500 nodes in Q4-18

• On track for delivery of remaining 8,500 nodes and two handling systems over the coming two quarters


Sale of MASS I nodes and modular handling systems Financial effects

13

• Total contract revenue of ~USD 150 million• Q4-18: USD 41m• Q1-19: USD 28m• Remaining: ~USD 80m

• Total expected EBITDA of ~USD 50 million• Q4-18: USD 19m• Q1-19: USD 11m• Remaining: ~USD 20m

• Total expected “Cash EBITDA” of ~USD 89 million

• Q4-18: USD 39m• Q1-19: USD 18m• Remaining: ~USD 32m

0

10

20

30

40

50

60

70

80

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100

Q4-18"Cash EBITDA"*

Q1-19"Cash EBITDA"

Remaining"Cash EBITDA"

Total"Cash EBITDA"

Non-cash costs

EBITDA

Illustration of «Cash EBITDA» from MASS I node sales, USDm


* Q4-18 EBITDA and “Cash EBITDA” have been adjusted upwards from previous illustrations, to reflect actual SG&A resources used as well as the actual distribution of inventory expenditure for new (cash costs) and used (non-cash cost) equipment over time.

Start-up of large Middle East survey in late January

• 15,000 Z700 nodes – the largest OBS node fleet ever deployed on a single project

• Rigged and mobilized two new high-capacity NHV’s - Normand Tonjer / MAC Pegasus in preparation for operation

• Baseline survey in preparation for future 4D monitoring from 2021 and beyond

• Very active field: • Congested infrastructure with constant

simultaneous operations; platforms, diving, pipelines, construction, etc.

• International border

Successful delivery of deepwater project in Q1 Gulf of Mexico (GoM)

15

• Utilizing MASS I nodes, MASS Mini handling system and ROV deployment system

• Mobilizing in 2 days and 8 hours, de-mobilizing in 5 hours

• Great performance on all systems

• Solid data recovery and data quality

• Building customer loyalty through execution


Work commenced on the world’slargest deepwater OBS survey

16

• Started working on four-month MC-project in GoM at the end of the quarter

• New deployment platform with REM Saltire, Oceaneering ROVs and new High-speed loader (HSL)

• Five vessels in action with >200 offshore staff at any time; one node handling vessel, three source vessels and one support vessel

• 2nd sparse node survey ever acquired – both by MagseisFairfield

• 3,100 square kilometres survey utilizing Magseis Fairfield’s ZXPLR deepwater nodes

• Challenging environment, with 18 surface obstructions and hundreds of seabed constructions

• Currently on schedule for early August finish


3 100 km2

New two months Letter of Intent securedfor the GoM ZXPLR Crew I, announced on 22 May

17

• Fifth contract booked with the new deployment platform

• Back-to-back contracts; ZXPLR Crew I is continuously booked through April 2020

• Returning customer - building loyalty through execution


AGENDA


Financials

Operations

Introduction

Appendix

19

2019 revenue guidance of USD 500 million

330

388

Q1 revenue

47 500

453 Gap to close

0

100

200

300

400

500

2019 backlog per Nov'18

2019 backlog per Q4report

2019 backlog andrevenue per Q1 report

2019 revenue guidance

Data Acquisition

System sales/lease

Reservoir Monitoring/Near field exploration

Multi-client

Estimated revenue split 2019


Strengthening market momentumShift to OBS accelerating – demand/supply tightening

20

• Available capacity of 6 survey months in Q4-19 for existing and new crews

• Six ongoing addressable tenders with start in Q4 for a total 18 survey months

• Two ongoing addressable tenders for 2020 – for a total 7 survey months

• Significant amount of announced but not yet tendered activity


Data

qua

lity

1960s ~1990 2005-10 Today

Source: Magseis

Exploration Field Development and IOR

Narrow Azimuth Multi Azimuth Wide Azimuth Full Azimuth

3D streamer OBS

Building our business

21

BUSINESS MODELKEY GOALS BY 2020

• Operational excellence• Client focus• Maintain and add customer

retention and loyalty• Technology champion in

nodes, systems and source

• Asset light and modular business model

• Focus on total system efficiency• Robotics and automation• Deployment via cable, rope and ROV • Diversified revenue model

• Investing in capacity• 6-8 parallel crews• Contract acquisition and MC• Equipment lease, sales and services• Leading edge reservoir monitoring

and source technology


22

The industry leader in

Ocean Bottom Seismic (OBS) technology

• Largest player in a growing USD 1 billion+ annual market• Global reach with broad customer base including the top-tier E&Ps• Leading market position with 30,000+ node pool and scale advantages • Asset light business model offers further scalability

APPENDIX

23

Income StatementBalance Sheet

Cash Flow Statement

24

Income Statement(unaudited)

Revenue: USD 119.5m• MASS I node sales: USD 28.1m

• Magseis legacy other projects: USD 33.8m

• Fairfield/WGP: USD 57.6 million

Cost of sales: USD 88.3• Mass I node sales: USD 16.7m


• Fairfield/WGP: USD 45.7m

EBITDA: USD 16.0m• Mass I node sales: USD 10.9m


• Fairfield/WGP legacy: USD 2.9m

in thousands of USD Q1 2019 Q1 2018 Full year 2018(unaudited) (unaudited) (audited)

REVENUE AND OTHER INCOMERevenue 119 502 24 564 136 477Total revenue and other income 119 502 24 564 136 477

OPERATING EXPENSESCost of sales 88 293 9 691 86 764Research and development expenses 640 560 3 995Selling, general and administrative costs and other expense 14 532 3 942 22 705Depreciation 14 797 3 561 19 097Amortisation 3 958 191 839Impairment 0 0 0Total operating expenses 122 220 17 946 133 400

OPERATING PROFIT (LOSS) -2 718 6 618 3 077

FINANCIAL INCOME AND EXPENSESFinance income 1 058 2 2 628Finance costs -3 177 -193 -5 058Net finance costs -2 119 -191 -2 430

NET PROFIT (LOSS) BEFORE TAX -4 837 6 427 647

Income tax expense 1 642 760 3 468

NET PROFIT (LOSS) -6 480 5 667 -2 821

Basic earnings (loss) per weighted avg. shares (in USD) -0.04 0.08 -0.04Diluted earnings (loss) per weighted avg. shares (in USD) -0.04 0.08 -0.04

OTHER COMPREHENSIVE INCOMEOther comprehensiv income 0 0 0

Total comprehensive income (loss) for the period -6 480 5 667 -2 821


25

Balance Sheet(unaudited)

Goodwill & Intangible assets• Preliminary purchase price allocation related to the

Fairfield acquisition include USD 71 million allocated to technology and customer assets. Remaining value is recorded as goodwill

IFRS 16:• Established total right-of-use-asset of USD 38.5m and

corresponding lease liability in January 2019• USD 20.6m current and USD 17.9m non-current

obligations

Equity:• Equity ratio of 55.8%• Equity ratio of 59.3% adjusting for lease liability

in thousands of USD YTD 2019 YTD 2018 YE 2018(unaudited) (unaudited) (audited)

ASSETSNon-current assetsGoodwill 93 731 93 731Equipment 153 810 80 968 148 598Multi-client library 0 0 0Other intangible assets 76 332 5 142 80 280Total non-current assets 323 873 86 110 322 609

Current assetsCash and cash equivalents 50 006 44 597 68 110Trade receivables 130 960 24 900 75 335Other current assets 82 307 9 425 61 256Total current assets 263 273 78 921 204 701

TOTAL ASSETS 587 146 165 032 527 310

EQUITY AND LIABILITIESShareholders' equityShare capital 1 166 545 1 166Share premium 382 155 178 508 382 152Other equity 3 257 3 201 3 244Retained earnings -54 344 -39 377 -47 864Currency translation reserve -5 124 -5 124 -5 124TOTAL EQUITY 327 109 137 754 333 573

LIABILITIESNon-current liabilitiesObligation under finance lease 17 863 0 0Other non-current financial liabilities 51 512 12 855 50 846Total non-current liabilities 69 375 12 855 50 846

Current liabilitiesTrade payables 66 971 4 978 48 037Current tax payable 2 828 1 473 1 855Current portion of obligations, finance lease and loan 38 891 2 963 27 301Other current liabilities 81 973 5 010 65 698Total current liabilities 190 662 14 424 142 891

TOTAL LIABILITIES 260 037 27 278 193 737

TOTAL EQUITY AND LIABILITIES 587 146 165 032 527 310Source: Magseis Fairfield

26

Cash Flow(unaudited)

Net cash from operating activities: USD -1.9m

+ Net cash flow effect, MASS I node sales of ~USD 17.5m

- Negative NWC development of USD 24.3m, mainly reflecting increased trade receivables will be collected as they fall due

Net cash used in investing activities: USD -4.8m

Net cash from financing activities: USD -11.4m

Net change in cash and cash equiv.: USD -18.1m

Cash and cash equivalents: USD 50.0m

in thousands of USD YTD 2019 YTD 2018 Full YR 2018(unaudited) (unaudited) (audited)

Cash flows from operating activitiesProfit / (Loss) before tax -4 837 6 427 647Adjustment for:Income tax and withholding tax paid -456 -334 -2 904Depreciation and amortisation 18 755 3 752 19 936Share based payments expense 13 -82 -40Interest expense and other financial items 2 574 302 1 523Interest income -286 -2 -492Cost of sales of nodes, non cash effect 6 599 0 9 221

Working capital adjustments:(Increase) / decrease in current assets -59 468 -15 078 -43 033Increase / (decrease) in trade and other payables and accruals 35 208 -1 111 29 313Net cash from operating activities -1 899 -6 243 13 732Cash flow used in investing activitiesInterest received 286 2 182Acquisition of equipment and prepayments -4 970 -14 854 -34 402Prepaid seimic equipment -135 0 637Investment in sudsidaries Fairfield and WGP 0 0 -163 263Net cash used in investing activities -4 819 -14 852 -196 845Cash flows from financing activitiesProceeds from loan 0 27 50 027Payment of finance lease obligation and loan -9 600 -937 -4 033Proceeds from issue of share capital 4 38 580 183 823Expenses related to issue of share capital -1 -1 451 -7 597Interest paid -1 790 -302 -772Net cash from financing activities -11 387 35 917 221 447

Net change in cash and cash equivalents -18 104 14 821 38 335Cash and cash equivalents at 1 January 68 110 29 776 29 776Cash and cash equivalents at period end 50 006 44 597 68 110


magseis fairfield asa · this presentation (the “ presentation") has been preparedby magseis...

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