DISCOVER MORE. RISK LESS. Creating value for customers and shareholders EMGS Capital Markets Day, 26 March 2014 Roar Bekker, CEO
EMGS VISION To make EM an integral and fully adopted part of the E&P workflow Our vision is to make EM as fully adopted as seismic to be used as a complementary technology. By providing EM data integrated with other subsurface…
UNIQUELY POSITIONED FOR GROWTH Growing the market Operational New customers excellence Increased Stable operations, adoption Technology and low downtime market leadership Scalable and Unique and proven flexible business…
GROWING. CREATING VALUE. THREE THEMES Technology Customer Value in application approach multi-client [Sett inn passende illustrasjon fra [Sett inn passende illustrasjon fra David Ns presentasjon] David Ns presentasjon]…
TRIGGERS FOR GROWTH Award of new long term contracts New customers New NOC commitments Increased revenue from repeat customers Sales process from push to pull Customer endorsements Proven drilling success stories Support…
WHAT CAN WE LEARN FROM THE SEISMIC INDUSTRY Full adoption of 3D seismic: 10-15 years Offshore seismic market revenues Early adoption: drill/drop only Lack of interpretation tools slowed adoption 3D exploration seismic main driver…
PLENTY ROOM FOR GROWTH IN A USDV10 BILLION MARKET Marine geophysical expenditure breakdown Electromagnetics (2%) Other data collection (3%) Outsourced interpretation and analysis (6%) G&G software IT support (4%) Proprietary…
AGENDA 09:00 09:20 Introduction Roar Bekker, CEO 09:20 09:40 Platform for growth Svein Knudsen, CFO 09.40 10:40 Technology application David Neser, COO and CTO 10:40 11:00 Break with refreshments 11:00 11:20 Customer approach Vincent…
EMGS MANAGEMENT TEAM CEO Roar Bekker EVP EVP Strategic Sales & CFO COO & CTO Development Marketing Svein David Ole Vincent Knudsen Neser Heggheim Vieugue President President Chief Legal Western Eastern VP Human VP…
PLATFORM FOR GROWTH Svein Knudsen, CFO
UNIQUELY POSITIONED FOR GROWTH Growing the market Operational New customers excellence Increased Stable operations, adoption Technology and low downtime market leadership Scalable and Unique and proven flexible business…
UNIQUE AND PROVEN TECHNOLOGY Technology considerably developed - 2D to 3D major step - Data quality improved - clearer images - Products developed to address spesific challenges - Proof of Concepts studies testing technology on…
CUSTOMERS VIEWS Buland et al. First Break 2011 Dirk Smit et al. Marelec 2011 For the Pemex 2010- 2012 campaign the prediction strength is 90%, which can be explained by the large datasets and state of the art technology…
UNPARALELLED MARKET LEADERSHIP Market leadership maintained Technology developed over a decade Strong patents Close customer relationships Operational experience increase every day - More than 700 surveys - In most basins…
FLEXIBLE CHARTER AGREEMENTS BOA Galatea Atlantic Guardian Firm charter: July 2015 Firm charter: March 2016 Options: 2 x 1 year Options: 3 x 1 year EM Leader BOA Thalassa Firm charter: 8 May 2014 Options: Optional Firm…
ASSET LIGHT - EQUIPMENT Current equipment sets 4 sets in operation Fifth set readily available Sixth set JIP with Shell & Statoil Full equipment set includes 150 receivers Dual source and handling system Processing capabilities…
MULTI-CLIENT ESTABLISHED PART OF BUSINESS MODEL - POSITIVE RETURN ON INVESTMENTS USD million 80 70 60 Investment Total revenue/project 50 Return on investment 40 30 20 10 4.0 2.0 1.3 0.2 - 2008 2010 2012 2013 18
SOLID FINANCIAL POSITION Balance sheet as at 31.12.13 (USD million) Year-end 2013 250 Cash at USD 56.5 million Interest bearing debt at USD 56.8 million 200 - NOK 350 million bond loan due June 2016 USD 56.8 million Multi-client…
STATUS ON 2014 REVENUE GUIDING Revenue guiding of more than USD 200 million Mix of contract and multi-client projects Backlog/ secured 2014 revenues per 25 March of USD 110 million Expected vessel schedule as of 25 March 2014 Q1…
UNIQUELY POSITIONED FOR GROWTH Growing the market Operational New customers excellence Increased Stable operations, adoption Technology and low downtime market leadership Scalable and Unique and proven flexible…
TECHNOLOGY APPLICATIONS David Neser, COO/CTO
OUTLINE Customer adoption and usage Customer revenue distribution Sensitivity analysis and survey design Electromagnetics in the E&P workflow Electromagnetics & seismic integration Probability of success (drilling)…
UNIQUELY POSITIONED FOR GROWTH Growing the market Operational New customers excellence Increased Stable operations, adoption Technology and low downtime market leadership Scalable and Create Unique and proven…
25 0 50 100 150 200 250 PEMEX USD million Petrobras Shell Petronas Rocksource Statoil TO CUSTOMERS Chevron Mrsk Saudi Aramco Centrica Nippon Chinnery OMV PNG Vanco Afren Accumulated revenue…
EM: CAPABILITY MATURITY 2007 2010 2013 2016 Core Expanding Addressable EM Acquisition Development Optimizing Market Core Expanding Addressable EM Imaging Development Optimizing Market Sales Pipeline: Evaluating…
SALES PIPELINE IMPROVED EASIER AND SHORTER Identify Assess EM Design Processing Budgetary Fine-tune Acquire 2 years ago imaging sensitivity to appropriate estimate survey data and objectives objectives survey intepretation…
CONTROLLED SOURCE EM SENSITIVITY PLOTS 1 2 3 28
CONTROLLED SOURCE EM SENSITIVITY PLOTS A B D C 29
CONTROLLED SOURCE EM SURVEY DESIGN
EM: CAPABILITY MATURITY 2007 2010 2013 2016 Core Expanding Addressable EM Acquisition Development Optimizing Market Core Expanding Addressable EM Imaging Development Optimizing Market Sales Pipeline: Evaluating…
ELECTROMAGNETICS IN THE E&P WORKFLOW Gravity Detailed Borehole 4D Magnetics 2D seismic data seismic Regional Lease 3D Production 2D seismic Sale seismic data Basin Frontier Exploration Development Production Abandonment…
ELECTROMAGNETICS IN THE E&P WORKFLOW Gravity Detailed Borehole 4D Magnetics 2D seismic data seismic Regional Lease 3D Production 2D seismic Sale seismic data Basin Frontier Exploration Development Production Abandonement…
RESERVOIR GEOLOGY Trap, reservoir, charge and seal Source: www.wikipedia.com 34
CSEM & SEISMIC INTEGRATION Low discovery rate today Trap 10% Reservoir 8/9 of every 10 exploration wells 15% Seal fail to find commercial levels of 45% hydrocarbons Charge 30% Two main reasons for failure Seal: 45% Charge:…
CSEM & SEISMIC INTEGRATION Low discovery rate today Trap 10% Reservoir 8/9 of every 10 exploration wells 15% Seal fail to find commercial levels of 45% hydrocarbons Charge 30% Two main reasons for failure Seal: 45% Charge:…
PROBABILITY OF SUCCESS Existing PoS updated by electromagnetic data, but qualified by: Updated PoS Data sensitivity Data quality Imaging robustness Interpretability Prior PoS 37
Prior to commitment BLOCK PROSPECTIVITY CONFIRMED WITH 3D EM - WISTING The Wisting Central wildcat well has opened a new shallow play in the region. This discovery also demonstrates the effectiveness of leading edge exploration…
VOLUME PREDICTION PERFORMANCE Source: Dr. Daniel Zweidler, Exploration Planning and Portfolio Manager, Americas, Royal Dutch Shell http://danielzweidler.com 39
VOLUMETRICS: WHY ARE AREA AND NET PAY SO VALUABLE Reserves Source: Peter R. Rose, Risk Analysis and Management of petroleum exploration ventures, 2001 Area and Net Pay (the Net Rock Volume) are typically the two main…
NET ROCK VOLUME The volume of reservoir rock containing hydrocarbons (ie Net Rock Volume) is the main driver to CSEM response. A CSEM result reduces the range of estimated reserves Net rock volume without CSEM Net rock volume CSEM…
WHERE DOES CSEM ADD THE MOST QUANTITATIVE VALUE 2D Seismic 3D Seismic CSEM Trap + + Reservoir + + Charge + + + Seal + Volumes + + 42
ELECTROMAGNETICS IN THE E&P WORKFLOW Changing Lease Sale Decisions: Changing Drilling Decisions: Barents Sea Example Gulf of Mexico Example Gravity Detailed Borehole 4D Magnetics 2D seismic data seismic Regional Lease 3D Production…
ELECTROMAGNETICS IN THE E&P WORKFLOW Changing Lease Sale Decisions: Changing Drilling Decisions: Barents Sea Example Gulf of Mexico Example Gravity Detailed Borehole 4D Magnetics 2D seismic data seismic Regional Lease 3D Production…
EMGS BARENTS SEA PROGRAM
TECHNOLOGY IN THE EXPLORATION DECISION-MAKING PROCESS Seismic EM Geophysical Geophysical Specialists Specialists Potential Fields Exploration Petrophysical Geophysical Technology Specialists Specialists Support…
EM TECHNOLOGY FOCUS 1: ROBUST CORE PRODUCT Seismic EM Geophysical Geophysical Specialists Specialists Potential Fields Exploration Petrophysical Geophysical Technology Specialists Specialists Support Asset Team…
EM TECHNOLOGY FOCUS 2: INTEGRATED/ JOINT PRODUCTS Seismic EM Geophysical Geophysical Specialists Specialists Potential Fields Exploration Petrophysical Geophysical Technology Specialists Specialists Support Asset Team…
TECHNOLOGY ADOPTION BOTTLENECK: USING EM DATA TO MAKE DECISIONS Seismic EM Geophysical Geophysical Specialists Specialists Potential Fields Exploration Petrophysical Geophysical Technology Specialists Specialists Support…
EMGS: EXPERTISE, WORKFLOWS AND SOFTWARE ALIGNED TO MEET EXPLORATION NEEDS OilCo Functions EMGS Expertise CSEM Geophysical EM Geophysicists group Consultancy, Training, Capacity Flexibility Asset Team Technical Advisors…
EMBEDDED CSEM ASSESSMENT SOFTWARE 2014 Software development Volumetric assessment software Probability of success software Updated PoS Prior PoS 51
SUMMARY Revenue growth potential is significant based upon customer revenue profile Key customers understand value and invest in CSEM heavily Technical sales support required to make clear the value proposition CSEM provides…
CUSTOMER APPROACH Vincent Vieugue, EVP Sales & Marketing
GROWING THE MARKET BY CHANGING OUR APPROACH TO CUSTOMERS USD million Accumulated revenue 2010-2013 250 Integration of EM in exploration Specific projects 200 Workflow and decision making Multi-Client processes. Long term…
PRIORITIES TO ACCELERATE GROWTH Geographic targeted strategy Align with Strategic customer account processes plan Customer Increase Salesteams awareness with aligned and competence knowledge 55
ADDRESS TARGETED MARKETS Exxon Mobil INTSOK Annual Report 2012 (Rystad Energy) Chevron Shell PetroChina Petrobras Pemex Petronas Statoil BP Targeted accounts Total ConocoPhillips Eni Lukoil Gazprom BG Group…
REINFORCE CUSTOMER ENGAGEMENT Implement strategic account plan targeting 6 IOCs and 8 NOCs Sales Major Account Manager Develop partnership with other services Technical Exploration companies (TGS, WesternGeco) EMGS Executive…
TAILORED APPROACH TO STRATEGIC ACCOUNTS EMGS Team Organisation Knowledge Major Account Top Management Manager relationship EMGS Executive Critical Site management sponsor Technical Awareness EM Gephysicists EM data…
INCREASE AWARENESS Market case Use multi-client approach to develop more relevant case studies and publications studies/ Increase exposure of successful story (GOM, Brazil, Barents,) publications Joint Papers with Major accounts…
PRIORITIES TO ACCELERATE GROWTH Geographic targeted strategy Align with Strategic Customer account processes plan Customer Increase Teams with awareness aligned and competence knowledge 61
VALUE IN MULTI-CLIENT David Hicks, President Western Hemisphere
MULTI-CLIENT BENEFIT TO BOTH CUSTOMERS AND EMGS Multi-client projects are crucial to increasing the adoption of EM technology Acquiring data in the best areas Good opportunities for cooperating with seismic players Integration of EM…
CURRENT MULTI-CLIENT REGIONS
BRAZIL CURRENT AND FUTURE Frontier exploration areas Active market EM Library over 15,000 km2 Foz do Amazonas basin Working closely with Spectrum Geophysical 65
THE GULF OF MEXICO Value of work with Pemex Unparalleled laboratory Daybreak MC Survey 160 blocks covering Alaminos Canyon (3,000 km2+) Both CSEM and MT for aiding seismic imaging Difficult area for imaging Lease sale Fall…
Wilcox wildcat drilling through May 2004 PERDIDO FOLD BELT 67
DEPTH PROGRESSION SEISMIC INTERPRETATION, SALT
PERDIDO TREND PLAY CONCEPTS 10 km Stratigraphic Structural Traps Traps Unconformities 5 km Data courtesy of ION Geophysical 69
STRUCTURAL IMAGING Keathley Canyon Seismic Imaging project with Schlumberger Opens up salt and other difficult to image provinces around globe (GOM, Angola, Brazil, India...) Structural Imaging as a new product line 70
EXAMPLE GOM Salt imaging using 3D CSEM data Client salt outline Feeder Weld Identify salt feeder Differentiate salt composition with respect to resistivity Identify connections between interpreted individual salt bodies…
DEPTH SLICE MOVIE 72
DEPTH PROGRESSION RESIDUAL SALT INTERPRETATION
BARENTS
BARENTS SEA - EM APPLICATION IN NCS LICENSING ROUNDS Nomination Nomination Hearing Announcement Application Awards results Identify areas Get pre-commitment Acquire and process data Clients use data in application work…
EMGS BARENTS SEA PROGRAM
HOOP AREA AND TGS Joint venture in 17 blocks with TGS 30% Investment Detailed seismic / EM integration 77
NEW OPPORTUNITIES
EAST CANADA MULTI-CLIENT PROGRAM 13,500 km2 multi-year, multi- client 3D EM campaign with NALCOR starting this summer Competitive advantage to subscribers exploring for the next high impact discovery Improving rock property…
MULTI-CLIENT NEW OPPORTUNITES Uruguay New bid round in 2015 Licensing of EM will count as working units for the exploratory work program commitment Use the integrated interpretation of seismic and 3D EM to more effectively…
PARTNERING FOR SUCCESS
JOINING THE CONVERSATION Finding commercial oil and gas deposits isnt getting any easier Seismic Integrating resistivity data with other traditional exploration tool sets is helping Partnering and getting closer to the seismic…
SUMMARY Multi-client library development is one of the key strategies for EMGS Long-term value for Company Leads integration and partnering approach Over 1B in seismic MC investment in 2014 current MC planned MC 83
SUMMARY & CLOSING REMARKS Roar Bekker, CEO
OUTLOOK Good contract coverage for 1H14 Strong prefunding expected for MC projects in Norway, US and Canada Increased upside from MC late sale as library Maintain full year 2014 revenue guiding of more than USD 200 million and…
EMGS: A UNIQUELY POSITIONED INVESTMENT CASE We have a unique platform for growth Stable operations an a scalable and flexible business model Our leading technology adds value EM and seismic have complementary attributes - the…
APPENDIX
EXECUTIVE MANAGEMENT TEAM Roar Bekker, CEO Svein Knudsen, CFO Schlumberger 1984-2007: PGS 1994-2005: Seismic operations, seismic VP Finance and Treasury processing, marketing and Joined EMGS in 2005 sales BSc in business and MsC…
EXECUTIVE MANAGEMENT TEAM Vincent Vieugue, EVP Sales & Marketing Ole Heggheim, EVP Strategic Development Roxar 2006-2013: Aker Yards ASA (renamed Vice President of Global to STX Europe ASA): Sales and Marketing CFO, EVP Business…
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