results - spectrum geo · this presentation should be read in conjunction with the 4th quarter ......
TRANSCRIPT
CAUTIONARY STATEMENT
This presentation contains both statements of historical fact and
forward looking information. Any forward looking information is based
on management assumptions and analysis and are subject to risks and
uncertainties that are difficult to predict as they relate to events and/or
circumstances in the future.
Actual results and events may differ materially from those expected or
projected in the forward looking statements. Spectrum undertakes no
responsibility or obligation to update or alter forward looking
statements.
This presentation should be read in conjunction with the 4th quarter
2017 Earnings Release issued by Spectrum February 9th 2018.
Q4 2017 Highlights
Q4-17 Q4-16 Change
Net Revenue MUSD 46 MUSD 35 33%
EBITDA MUSD 38 MUSD 29 30%
EBIT before impairment MUSD 19 MUSD 13 45%
EBIT MUSD (7) MUSD 0
• Late sales of MUSD 36
• Q4 2017 MC investments of MUSD 10, up from MUSD 7 in Q4 2016
• Operational cash flow of MUSD 16
• Net cash of MUSD 14 end of quarter up from MUSD 11 end Q3
Full Year 2017 Highlights
FY-17 FY-16 Change
Net Revenue MUSD 119 MUSD 87 37%
EBITDA MUSD 93 MUSD 63 46%
EBIT before impairment MUSD 10 MUSD (6)
EBIT MUSD (16) MUSD (19) 16%
• Late sale of MUSD 61
• 2017 MC investments of MUSD 82 with prefunding of 70%
• Additional MC investment of MUSD 48 on risk share basis with other contractors
• Late sale to book value 32% up from 26% FY 2016
• The Board will propose to the AGM a dividend of NOK 0.5 per share for 2017
Rolling MC Net Sales - Late Sale, Early Sale and Other Revenue 4 Quarter Rolling
57 6277 70
6376
6979 81
57 50 50 55 55 5361
62 71
94 111
92 69
42 26 28
3131
1925
42 49
57
3
3
34 3
33
3
1
0
20
40
60
80
100
120
140
160
180
200
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
MUSD
Late Sale Early Sale Other Revenue
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013
4Q
2013
1Q
2014
2Q
2014
3Q
2014
4Q
2014
1Q
2015
2Q
2015
3Q
2015
4Q
2015
1Q
2016
2Q
2016
3Q
2016
4Q
2016
Q12
017
Q22
017
Q32
017
Q42
017
Rolling MC Netrevenue 4quarter / RollingMC Investment
Q4 2017 and Full Year 2017 Highlights
Q4-17 Q4-16 FY-17 FY-16
Operational Cash Flow MUSD 16 MUSD 20 MUSD 102 MUSD 61
MC Investment MUSD 10 MUSD 7 MUSD 82 MUSD 51
Multi-Client investments impacted by the Fugro library acquisition
Q2 2015 – Q1 2016
Ratio
Q4 2017 and Full Year 2017 Highlights
Q4-17 Q4-16 FY-17 FY-16
Operational Cash Flow MUSD 16 MUSD 20 MUSD 102 MUSD 61
MC Investment MUSD 10 MUSD 7 MUSD 82 MUSD 51
Multi-Client investments impacted by the Fugro library acquisition
Q2 2015 – Q1 2016
0
50
100
150
200
250
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013
4Q
2013
1Q
2014
2Q
2014
3Q
2014
4Q
2014
1Q
2015
2Q
2015
3Q
2015
4Q
2015
1Q
2016
2Q
2016
3Q
2016
4Q
2016
Q12
017
Q22
017
Q32
017
Q42
017
Rolling MC Netrevenue 4quarter / RollingMC Investment
Rolling MCInvestment 4quarter
Rolling MC Netrevenue 4quarter
MUSD Ratio
Q4 2017 and Full Year 2017 MC Revenue by Region
Q4 2017 Net revenue MUSD 46 2017 Net revenue MUSD 119
2
9
10
25
11
11
54
43
North and SouthAmerica (NSA)
Africa, Mediterraneanand Middle-East (AME)
Northwest Europe(NWE)
Asia Pacific (AP)
Q4 2017 Income Statement
Quarter Quarter 12 months 12 months
ended ended ended ended
(USD 1000) 31.12.17 31.12.16 31.12.17 31.12.16
Net revenue 46,108 34,578 33 % 118,850 86,852 37 %
Amortisation of Multi-Client library (18,502) (15,627) (81,714) (67,391)
Impairment (25,598) (12,867) (25,598) (12,867)
Operating expenses (8,241) (5,698) 45 % (25,264) (24,276) 4 %
Cost of stock options (246) 103 (811) 571
Share of profit/(loss) of joint ventures (82) 1 (82) 132
Depreciation (324) (442) -27 % (1,418) (2,069) -31 %
EBIT (6,884) 48 (16,037) (19,048) 16 %
Net Financial items (1,064) 219 (2,456) (3,444)
Profit / (loss) before tax (7,948) 268 (18,493) (22,493) 18 %
Tax income / (expense) (6,282) 2,257 (8,350) 2,210
Net Profit / (Loss) to equity holders (14,231) 2,525 (26,843) (20,283) -32 %
Earnings per share (0.26) 0.05 (0.49) (0.38)
Diluted earnings per share (0.26) 0.04 (0.49) (0.38)
Spectrum Group
Change
in %
Change
in %
Multi-Client – NBV & Investments
• Q4 2017 MC investments MUSD 10 (Prefunding of 101%)
• Amortization Q4 2017 40%
0
50
100
150
200
250
2011FY
2012FY
2013FY
2014FY
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
5476 85
113
13
120
13 28 287 8 7
27 3114 10
5787
112131 129
233 231221 230
220 212193 198 205 202
169
MUSD
Investment Closing NBV
Rolling Earnings & Net Sales / Book
Value of MC library
-0.5
-
0.5
1.0
1.5
2.0
1Q
2012
2Q
20
12
3Q
20
12
4Q
20
12
1Q
20
13
2Q
20
13
3Q
2013
4Q
20
13
1Q
20
14
2Q
20
14
3Q
20
14
4Q
20
14
1Q
20
15
2Q
20
15
3Q
20
15
4Q
20
15
1Q
20
16
2Q
20
16
3Q
20
16
4Q
20
16
Q1
20
17
Q2
20
17
Q3
20
17
Q4
20
17
EBITDA 4 quarter rolling / bookvalue of MC library rolling
EBIT 4 quarter rolling / book valueof MC library rolling
MC Net revenue 4 quarter rolling /book value of MC library rolling
57.551.3
83.2
44.9
207.5
46.7
73.978.9
0% 0% 0% 4%
31%
27%
51%
66%
-
50
100
150
200
250
2011 2012 2013 2014 2015 2016 2017 WIP
MUSD
Investment NBV
Investment per Vintage Net Book Value (NBV) as % of original investment per financial year
Assets 31.12.17 30.09.17 31.12.16
(USD 1000) (Unaudited) (Unaudited) (Audited)
MC Library 169,408 201,648 192,721
Other Intangible Assets 16,292 16,806 19,951
Tangible Assets 4,025 3,708 4,138
Receivables 84,577 69,678 81,044
Cash and Equivalents 14,155 10,670 15,827
Total Assets 288,457 302,508 313,680
Equity and Liabilities 31.12.17 30.09.17 31.12.16
(USD 1000) (Unaudited) (Unaudited) (Audited)
Equity 157,024 171,113 181,845
Long Term Liabilities 49,741 49,935 27,923
Current Liabilities 81,696 81,462 103,914
Total Equity and Liabilities 288,457 302,508 313,680
Net secured interest bearing debt 10,945 16,430 26,729
SPECTRUM GROUP
Balance Sheet – Key Figures
Quarter Quarter 12 months 12 months
Cashflow ended ended ended ended
(USD 1000) 31.12.17 31.12.16 31.12.17 31.12.16
Cash flows from operating activities:
Profit / (Loss) before tax (7,948) 268 (18,493) (22,493)
Income taxes paid - - - (32)
Depreciation, amortisation and impairment 44,423 28,935 108,729 82,327
Other financial items inclusive share options 501 595 2,144 2,548
Working capital changes (20,903) (9,401) 7,020 (1,135)
Net cash flow from operating activities 16,073 20,396 99,400 61,215
Cash flows from investing activities:
Investment in multi-client library (10,219) (7,474) (82,359) (50,671)
Investment in other assets (576) - (969) (925)
Sale of assets - - 18 -
Net cash flow from investing activities (10,795) (7,474) (83,310) (51,596)
Cash flows from financing activities:
Issued share capital - - 1,399 -
Net of borrowings including interest (1,874) (3,631) (19,587) (17,469)
Net cash flow from financing activities (1,874) (3,631) (18,188) (17,469)
Net change in cash and cash equivalents 3,404 9,291 (2,098) (7,850)
Net foreign exchange diff (unrealised) 80 (1,114) 426 304
Cash and cash equivalents at start of period 10,670 7,649 15,827 23,373
Cash and cash equivalents at end of period 14,155 15,827 14,155 15,827
SPECTRUM GROUP
Cash flow – Key Figures
IFRS 15
IFRS 15 Revenue from Contracts with Customers is effective from 2018
• The seismic industry (and other industries) have for several years worked to keep
revenue recognition of early sales similar to current practice
• The current practice will not be allowed under IFRS 15. The practice will change
from recognition based on the percentage completion on the prefunded project to
recognition based on products delivered
• This will cause a significant delay in when revenue can be recognised, and
potentially very variable early sale recognition across the quarters
• Spectrum will continue to use percentage of completion based early sale in
internal reporting
• External reporting will also be supplemented with this information with
reconciliation to the reporting required by IFRS 15
Operations Summary
• Five surveys during Q4
• MC2D, Argentina Deepwater Phase 1
• MC2D, Argentina Malvinas Basin
• MC2D, Ceara Basin Phase 2 (completed in Q4)
• MC2D, Brazil Santos Campos Phase 3
• MC2D, Mozambique Regional
• Processing volumes
• 192,900 km of MC2D data
• 60,717 sq.km of MC3D data
Areas of High Interest
Relevant Licensing Activities
Australia - regular rounds
Norway - APA & 24th rounds
Uruguay - 3rd round open
Brazil - Round 15 & pre-salt round open
Mexico - round 3 open
Argentina - open H1 2018, closing Nov
Key Exploration Wells 2018
MC2D projects during Q4
• Argentina Deepwater Phase 1
• 38,000 km MC2D long offset broadband
acquisition, in partnership with BGP & COSL
• Northern half is a priority area for the 2018
round, BGP vessel diverted to Malvinas
Basin early November
• 14,000 km remaining, being acquired by
COSL
• Data will assist the ministry in placement of
license rounds
• Supported by industry
MC2D projects during Q4
• Argentina Malvinas Basin
• 14,500 km MC2D long offset
broadband acquisition, in
partnership with BGP
• Priority area for 2018 round,
acquisition started mid
November
• PSTM ready in Q2, ahead of
expected round closing in
November 2018
• Supported by industry
MC2D projects during Q4
• Brazil Ceara Basin Phase 2
• 4,000 km MC2D long offset broadband
acquistion, in partnership with BGP
• Covering Round 15 sectors, started mid
October, completed end November
• Products ready by end Q1, ahead of
expected round closing in May 2018
MC2D projects during Q4
• Brazil Santos Campos Phase 3
• 6,500 km MC2D long offset broadband
acquisition, in partnership with BGP
• Covering Round 16 sectors in a high
interest area
• Products ready in Q3, ahead of expected
round closing in H2 2018
MC2D projects during Q4
• Mozambique Regional Margin
• 19,000 km MC2D long offset broadband
acquisition, on behalf of INP and in
partnership with WesternGeco
• Integrated with existing 2013 seismic for
improved prospectivity mapping
• Covering open Acreage with proven
hydrocarbons
• WG partnership includes existing MC2D
data and new MC3D data acquisition
• Supported by industry
Q1 update - Ongoing Surveys
BGP Challenger
BGP Pioneer
COSL HYSY 720
BGP Explorer
• Four 2D Vessels and one 3D Vessel in Production
COSL HYSY 760
Q1 update - Ongoing Surveys
• Gabon North 3D survey
• 5,500 sq.km MC3D broadband survey
• Survey commenced early January
• Covering open shallow water blocks with a
proven hydrocarbon system, near ENI
discovery
• Depth migrated final products ready early
Q4 2018.
• Shallow water license rounds will be
coordinated with DGH upon availability of
data
Outlook
• Oil companies return to deep water exploration with several high impact
offshore discoveries over last 12 months
• Offshore exploration and developement cost has come down from level
around USD90/barrel to USD35/barrel on average
• Exploration budgets for 2018 are gradually improving helped by a
relative strong oil price
• Seismic is in demand for near field and frontier exploration drilling
Outlook
• The trough of the seismic market was in 2016
• Spectrum believes in a gradual recovery in the seismic market in 2018
and 2019
• Spectrum will have an active H1-2018 in terms of project activity
• High impact areas in 2018 are Brazil, Argentina, Gabon
• Spectrum expect Multi Client investments of MUSD 80-120 in 2018