ION Geophysical Corporation Investor Presentation Brian Hanson, President and Chief Executive Officer Greg Heinlein, SVP & Chief Financial Officer March, 2012
Todays Discussion y Company Overview y Areas of Expertise & Recent Examples y Current Business Issues y Summary y Appendix: Financial Information 3
ION at a Glance y Technology company, driven to develop and apply proven, innovative technologies and services to help our clients find and produce hydrocarbons as safely and efficiently as possible y Founded in 1968 as Input/Output…
Global Footprint Headquarters Data Processing Centers Sales and Service Centers Learn more about ION locations here ResSCAN Programs BasinSPAN Programs 5
Seismic vs. E&P vs. IONs Served Market A 16-19 Billion Annual (Revenue) Industry, A 5-6.5 Billion Annual Market 600 B 16-19 B Exploration 16% 12% Data Library Sales…
Global Market Outlook Oil and Natural Gas Prices Expect oil prices to remain in the 80 - 100 Expect depressed natural gas prices to cause shift range, supporting continued frontier exploration in to liquids in North America.…
Global Market Outlook Geophysical Sector y Predicted increased E&P spending realized y Marine Towed Streamer: Seismic fleet expected to grow, with majority of new vessels 3D; expect streamer count and length to continue to…
Revenue Distribution by Product/Service Line TTM Ending 31-December 2011 100% = 454.6 Million Software YOY Growth 4% 38.2M New Venture Solutions YOY Growth 21% 98.3M YOY Decline (5%) 263.5M Data Processing YOY Decline…
ION Strategy Technology company Bring the whole of ION to bear to solve the toughest E&P challenges History of Innovation Cableless acquisition technology, digital sensors, streamer steering, command and control systems, reverse…
ION Strategy Participation by Business Unit Planning Acquisition Processing Interpretation Concept Systems Survey Design Software and Services Marine Acquisition Technologies ION (49%) Joint Venture with BGP (51%) Land…
ION Strategy Bringing the Whole of ION to Solve Industry Problems Planning Acquisition Processing Interpretation CHALLENGING ENVIRONMENTS: ARCTIC EXPLORATION Full-scope Project Management Survey planning and design, acquisition,…
Areas of Expertise & Recent Examples 13
Areas of Expertise Challenging Environments Arctic, Shallow/Obstructed Water, Transition Zone and Desert Complex Geologies Subsalt, Sub Basalt, Thrust Belt and Carbonates Unconventional Reservoirs Shales, Tight Gas, and Oil…
Unconventional Reservoirs Macro Challenges y Natural gas prices predicted to remain depressed due to an expanded shale gas resource base y Short-term shift in activity from gas to oil shales, but shale gas predicted to continue…
Unconventional Reservoirs ResSCANS y The ResSCANS Difference Rely on upfront geological, petrophysical, and rock physics analysis Establish what seismic attributes tie the geology and rock physics for a given shale play and…
Unconventional Reservoirs Optimizing Well Locations in the Niobrara y Challenge Gather data necessary to determine optimal well placement, despite narrow data acquisition time window caused by wildlife restrictions y Approach…
Unconventional Reservoirs Cost-Saving Completion Strategies in the Marcellus y Challenges SHALE PLAY ECONOMICS Better understand the variability in rock (Figures provided by client) properties OPERATING COSTS: Drilling: 4-8 million…
Current Business Issues 19
Current Business Issues GeoVenturesTM y Good performance due to portfolio of new venture activity in marine and recent shale plays Funded fully on a portfolio basis Leverage our high-quality GX Technology data processing…
Solutions Revenue vs Backlog Quarterly Trends 140 On average, Quarterly Backlog = 2.3x Quarterly Revenue (Data Processing + New Venture) 120 100 80 Millions 60 40 20 0 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410…
ION Data Library Investment Relative to Revenue Average Per Year FY06 - FY11 MCDL Revenue vs MCDL Investment 200 Strong Investments into 2012 175 150 125 Millions 100 75 50 25 0 FY'06 FY'07 FY'08 FY'09 FY'10…
ION Data Library Investment Relative to Revenue Average Per Quarter (06 11) Multi-Client Data Library Revenue vs. Average Investment 55 Actual Q4 2011 50 investment 45 2x average Q4 40 35 Millions 30 25 20 15 10 5 0…
Current Business Issues Data Processing (GX Technology) y Q4 10 had strong GOM sales due to Macondo spill, E&P shifted to data library that was not repeated as much in 2011. y Pioneered industry breakthroughs such as…
INOVA Geophysical Q4 2011 Financial Overview* FY10 vs FY11 Forecasted Revenues 180 Estimated Q4 revenues of 58 to 62 million with operating income of 5 to 8 million. 160 140 Revenue 39% ahead of the same period last year. 120…
Summary 26
Solid Momentum Heading into 2012 Expect the following assumptions for 2012: All business units to see year-over-year growth in 2012. or more of annual earnings in the front half of the year. Data processing business to benefit by…
Appendix: Financial Information y Selected Financial Highlights 29
Q4 2011 Highlights y ION delivers fourth quarter diluted EPS of 0.15 on net income of 23 million (excluding special items). y Consolidated revenues of 160 million for the fourth quarter consistent with the prior year period. y…
Financial Overview Year-over-Year Revenue Comparison Including Legacy Land Systems Excluding Legacy Land Systems 500 500 400 400 300 300 Millions Millions 200 200 100 100 - - 2010 2011 2010 2011 Solutions…
Solutions Segment Financial Overview Revenue by Type Multi-client Investments 300 175 150 M 150 125 130 M 250 Millions 100 75 200 50 25 150 - Millions 2010 2011 2012 100 Actual Investment 50 Solutions…
Software Segment Financial Overview Revenue by Type (GBP) % of Seismic Vessels with Orca 30 25 41% 20 59% 15 Millions 10 Orca-Permanent Other 5 Orca Vessel Conversion - 2011 2010 2011 2010 51 44 vessels…
Systems Segment Financial Overview Revenue by Type 180 160 140 120 Millions 100 80 60 40 20 - 2010 2011 Towed Streamer Equipment Other 34
Financial Overview Balance Sheet as of December 31, 2011 Capital Employed Financing 600 600 500 500 400 400 Millions Millions 300 176M 300 200 200 100 100 70M 99M 0 0 Cash & ST Investments Remaining Working…
Financial Overview Liquidity & LT Debt as of December 31, 2011 Liquidity of 170M LT Debt of 99M 6% 59% 41% 94% Undrawn Revolver Cash & ST Investments Term Loan Facility & Equipment Leases Revolver and Term A both…
Financial Overview Cash Flow Year Ended December 31, SUMMARIZED CASH FLOW 2011 2010 Cash from operations 135,307 181,490 Working capital (5,506) (48,050) Multi-client investment (143,782) (64,426) PP&E Capital…
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