Magseis ASA Q4 2016

24 February 2017

Highlights

• Need for new capacity to capture growth opportunities

• Appointment of financial advisors to evaluate financing options

• Strong financial performance, Revenue of USD 20m and EBITDA of USD 5.5m• Very good technical performance in the Red Sea, completion mid -April

• More than USD 600m of contracts already awarded for 2017

• Several large projects announced/in pipeline for 2018

Best quarter to date

New contract won for ConocoPhillips

Marked increase in tender activity

Accellerating growth plans

• 4D monitoring survey, three months duration, 3000 nodes, multi year option

• First Smart Operation, mobile handling system, no Magseis operated vessels

2

KEY FIGURES Q4 2016

Source: Magseis

20.0REVENUE

5.5EBITDA

0.1NET INCOME

19.0CASH BALANCE

$ MILLION

$ MILLION $ MILLION

$ MILLION $ MILLION

20.0

58.9

5.5

REVENUE

Q4 2016

REVENUE

YTD2016

EBITDA

YTD2016

EBITDA

Q42016

8.5

3

Fourth quarter 2016 results- Key figures

• Solid underlying operational performance during Q4 (adjusted EBITDA of USD 8.5m)

• USD 1.2m in capitalised mobilisation costs amortised• USD 2.2m in late start compensation included in COGS

• Net loss for FY 2016 significantly impacted by• Impairment of USD 7.4m (G1 to G2 conversion)• Late start compensation • Low rates on Bokor project + long mobilisation for Red Sea

• Closing cash position of USD 19.0m and robust Equity ratio

• Net cash position of USD 2.7m

• Strong cash flow from operations during Q4• Negative FY 2016 cash flow from operations reflects

extraordinary low receivables at YE 2015

• Expected EBITDA for 2017 of > USD 20 million based on current run-rate

4Source: Magseis

OBS provides superior image quality - gaining market share over high-end streamer seismic

Streamer Seismic Ocean Bottom Seismic (OBS)

90%↓Market share

10%↑Market share

5

Marine Autonomous Seismic SystemMiniaturised node sensors

Handling system Applications

ROV deployment

Ultra deep water deployment

Cable deployment

6

Larger spread driving substantial cost reductions

100K$ per.km² 25K$ per.km²

201475km

2015150km

2016350km

2018>600kmCable length

Large spreads -rolling operations

Multiple patch deployment

7Source: Magseis

Established as a leading OBS provider

Solid customer baseProven track record Ongoing projects

• Completed >1,300 aq.km2

• More than 130,000 nodes deployed

• Excellent reputation for high quality data

• Strong QHSE culture

• Saudi Aramco’s S-78 project in the Red Sea

• Preparing for 4D survey for ConocoPhillips in North Sea

8Source: Magseis

Source: Magseis

Operational highlights• 9 months survey together with BGP for Saudi Aramco

• Second survey in the Middle East

• Complex survey design

• Rolling spread across very challenging seabed conditions

• Record amount of cable in operation (350 km)

• Long-life node electronics introduced

• Excellent cooperation with BGP and Aramco

Aramco Red Sea project

9

ConocoPhillips North Sea project

Contract highlights• 4D, full -azimuth survey over Eldfisk field • ROV and source vessels operated by ConocoPhillips • Magseis provides crew, nodes and handling• Potential for repeat work

High capacity, mobile ROV operation• Unlimited capacity of nodes• Modular handling system • Very strong interest from clients• Smart operations

MASS modular solution

10Source: Magseis

Strong market outlook

OBSMARKET

20202019201820172005 2016

2 250

2 000

1 575

1 500

1 250

1 000

750

500

250

0

Source: Magseis/Arkwright/Rystad Energy11

USD>600m

$ MILLION

Growth strategy- Towards $25K/km² Historical OBS surveysNo observed OBS survey

Source: Magseis/Rystad Energy

COM

PLEX

ITY

Reduced costs and maturity of technology

• Key Goals– Expand use of OBS through reducing costs > 50%

• Business model:– Operate large equipment spreads– Share pool of nodes across platforms – Build a flexible OPEX base

• By 2020:– Node pool of >30,000 nodes– 2-3 high capacity cable vessels– 2-3 modular ROV/Node Deployer systems

12

FIELD SIZE (mmboe)

Attractive economics for new, high-capacity vessel

Efficiency Economics

150km 400km

Sensors# of daysEfficiency

3,0001301.0

8,000851.6

Cable length

Current crew Cable vessel #2 Current crew

CAPEX EBITDA contribution1

13

Cable vessel #2

Source: Magseis

70

3045 >30

1) Based on 2017 EBITDA guidance for current crew less 2016 SG&A

Summary & Outlook

•Strong operational and financial performance

•Second crew will start operations June 2017

•Tender activity accelerating

•Engaged advisors to secure growth financing

14

20202019201820172005 2016

2 250

2 000

1 575

1 500

1 250

1 000

750

500

250

0

Larger spread driving cost reductions

Excellent operational performance Strong financial results

Strong market outlook

100K$ per.km² per.km²

201475km

2015150km

2016350km

2018>600km

Cable length

25K$15

Fourth quarter 2016 results- Comprehensive income

• Revenue• USD 20.0m from production on the Aramco S-78 project

• Cost of sales• Reflects full production in the quarter• Capitalised costs amortised based on expected duration

of pilot of USD 1.2m• Late start compensation of USD 2.2m

• Research and development• Capitalised all expenses related to the Deep water

R&D project (USD 0.2m) and development of MASS III

• Depreciation• Capitalised Depreciation from mobilisation amortised based on

expected duration of pilot survey (USD 0.4m)

• Amortisation and Impairment• USD 0.4m mainly related to improvement needed on

nodes damaged during Red Sea survey

• Finance • Primarily interest related to BGP pre -funding, GIEK and

Innovation Norway

• Tax• Relates to withholding tax and corporate in Saudi Arabia and

corporate tax in Singapore and Malaysia

In USD thousands Q4 2016(unaudited)

YTD 2016(unaudited)

Q4 2015(unaudited)

YTD 2015(audited)

16

Fourth quarter 2016 results- Balance sheet at 31 December

• Trade receivables primarily Aramco• December production (paid in 2017)

• Other current assets:• Primarily capitalised mobilisation costs

• Equity ratio of 56.6%• 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 6.2m (contingent liability)

• Current tax liabilities– Withholding tax and corporate tax Saudi Arabia– Corporate tax in Singapore and Malaysia

• Other current liabilities– Short-term debt BGP USD 5.2m– Current portion of long-term debt USD 2.6m– Accruals for vessel operational costs USD 5.4m

In USD thousands YE 2016(unaudited)

YE 2015(audited)

17

Fourth quarter 2016 results- Cash flow

In USD thousands Q4 2016(unaudited)

YTD 2016(unaudited)

Q4 2015(unaudited)

YTD 2015(audited)

18

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

• Favourable payment terms on receipts in Q4’16• (less) 10% withheld & accrued compensations• Non-cash costs in OPEX (amortised transit costs & provisions)• (less) reduced AP creditor position

• Cash from investments• Relates to investments for the Node Deepwater project

• Cash flow from financing • Instalments of USD 3.8m• Financing from Shell under Deepwater R&D agreement of USD 1.5m