Magseis ASA Q3 2016

11 November 2016

Large scale, efficient and cost effectiveSetting new standards within the seismic industry

Towards $ 25k/km2

• Magseis well positioned to secure new contracts

• New contract wins neccessitate additional crew capacity and funding

Highlights third quarter 2016

• Client very pleased with data quality• Very good cooperation with BGP and Saudi Aramco• Production according to plan and excellent HSE performance

• Conversion to second generation seismic node electronics

• Write-down of old generation seismic nodes

• Full scale test of deep water deployment system

• Ongoing tenders with contract value close to USD 200M

• Market expected to double in size in 2017

Excellent operational performance for Saudi-Aramco in the Red Sea

Technology development towards $ 25 k/km2

Strong increase in tender activity

Further contract wins will trigger growth

2

KEY FIGURES Q3 2016

Source: Magseis

13.1REVENUE

3.0EBITDA

-8.8NET INCOME

13.5CASH BALANCE

$ MILLION

$ MILLION $ MILLION

$ MILLION $ MILLION

13.1

38.9

3.0

REVENUE

Q3 2016

REVENUE

YTD2016

EBITDA

YTD2016

EBITDA

Q32016

3

3.0

This is Magseis

OCEAN BOTTOM SEISMIC (OBS) PRODUCT DEVELOPMENT& MANUFACTURING

OSLO - BERGEN - STOCKHOLM SINGAPORE - BRAZIL

• Industry leading ocean bottom seismic company

• Start of operations Oct 2013

• One vessel in operations

• 81 employees

• Listed on Oslo Axess

Ticker

Shares outstanding

Market cap (NOKm)

Equity Ratio – Q3 16

MSEIS

37.818,014

459

56.1%

4

Seismic acquisition

ONE core proprietary technology -> Multiple applications

Miniaturised node sensors Handling system

ROV deployment

5

Cable deployment

67

• Technology well established

• Have completed >1000 sq.km. of high-endOBS acquisition

• More than 110 000 4-component sensor capsules deployed

• Building reputation for very high-quality data

• Established as the lowest-cost supplier in the industry

Source: Magseis operating close to FPSO at Captain Field

Now established as a leading OBS provider

Qualified (2013):

Qualified (2015/16):

Ongoing (2016):

Aramco Red Sea project

8Source: Magseis. Operating together with BGP in the Red Sea

Operational highlights• Second survey in the Middle East

• Complex survey design

• Rolling spread across challenging seabed conditions

• Record amount of cable in operation (350km)

• Long-life node electronics introduced

• Excellent cooperation with BGP and Aramco

Strategically important reference for further work world wide

Deepwater pilot test successfully completed

• Joint developent project with Shell to develop a technology to allow for highly efficient and accurate 4D acquistion in water depths > 1500 metres

• R&D work ongoing for > 2 years

• Successfull, full-scale pilot test completed during Q3 in > 1200 metres water depth

• Significant industry interest

• Target commercial operations by 2018

Third quarter 2016 results - Comprehensive income

9

• Revenue• USD 13.1M from two months of production on Aramco’s S-78

project

• Cost of sales• Reflects 2 months (Aug/Sep) of full prodution• Costs for July capitalised as part of mobilisation (USD 3.7M)• Capitalised costs amortised based on expected duration of pilot

(USD 2.0M)

• Research and development• Capitalised all expenses related to the

Deep water R&D project (USD 1.9M) and development of MASS III

• Depreciation• Capitalised Depreciation from mobilisation amortised based on

expected duration of pilot survey (USD 0.6M)

• Amortisation and Impairment• USD 6.7M mainly related to conversion of G1 to G2 seismic node

technology

• Finance• Primarily interest accrued related to BGP pre-funding

• Tax• USD 1.4M relates to withholding tax Saudi Arabia

In USD thousands Q3 2016(unaudited)

YTD 2016(unaudited)

Q3 2015(unaudited)

YTD 2015(unaudited)

Third quarter 2016 results- Balance sheet at 30 September

10

• Equipment and intangibles • Additions of USD 5.5M • Write down of USD 6.7M

• Trade receivables primarily Aramco• August and September production (paid in October)• Low level in Q3 15 reflects MC project that quarter

• Other current assets:• Primarily capitalised mobilisation costs

• Equity ratio of 56.1%• Debt covenants at 30%

• Non-current liabilities• Senior debt drawn down from Export Credit Norway and Innovation

Norway• Shell Deep Water R&D funding: USD 4.7M (contingent liability)

• Other current liabilities– Short-term debt BGP USD 8.3M– Current portion of long-term debt USD 2.5 M– Accruals for vessel operational costs USD 5.4M

In USD thousands YTD 2016(unaudited)

YTD 2015(unaudited)

YE 2015(audited)

Third quarter 2016 results - Cash flow

11

In USD thousands Q3 2016(unaudited)

YTD 2016(unaudited)

Q3 2015(unaudited)

YTD 2015(unaudited)

• Cash flow from operations• Variance from EBITDA resulting from:

• Increase in Working Capital from start of Red Sea survey• Capitalised/Amortised costs• WHT paid in Malaysia

• Cash from investments• Relates to remaining investments for the Saudi Aramco Red Sea

survey (USD 3.7M) and Deep water R&D project (USD 1.8M)

• Cash flow from financing • Draw-down of debt from Export Credit Norway and Innovation

Norway (USD 9.1M) • Financing from Shell under Deepwater R&D agreement (USD 0.4M)

Current backlog and vessel schedule• Saudi Aramco’s S-78 together with BGP:

– Pilot running through April 2017– 12 months extension option

• Tender activity has increased significantly over past 6 months– North West Europe– South America– APAC

• Several strong leads for increased activity in 2017-2018

Source: Magseis

Firm

Lead

Yard/transit

11

Increased activity expected in all key regions

Source: Magseis/Arkwright

OBS Market returning to growth

13Source: Magseis

OBS market growth 2005 – 2017E

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e

109

180 190

318283

608577 602

613

823

750

790

390

4,4

5,86,2

7,4

6,15,7

6,6

8,08,3

7,3

4,4

3,3 3,3

4,2

0

2

4

6

8

10

12

14

0

200

400

600

800

100 0

120 0

Total Seismic market in BUSDOBS market (excluding low-end)

OBSMARKET

Summary and outlook

14

•Production according to plan in the Red Sea

•Tender activity accellerating

•New contract awards will trigger capacity growth

•2016E EBITDA: USD 7-10M

Magseis ASA

Q & ATowards $ 25k/km2

Large scale, efficient and cost effectiveSetting new standards within the seismic industry