Results - spectrumgeo.com · Cash and cash equivalents at start of period 9,260 3,002 2,719 16,988 Cash and cash equivalents at end of period 8,364 2,719 8,364 2,719 SPECTRUM GROUP.

4th Quarter and full year 2014

Results Unaudited

February 13th 2015

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

2014 Earnings Release issued by Spectrum February 13th 2015.

• Brazil MC3D acquisition completed in Q4

• Two 2D surveys completed acquisition in Q4

• Brazil and Uruguay

• Permits and prefunding secured for projects in Q1-15

Q4 2014 Highlights

Q4-14 Q4-13 Change

Net Revenue MUSD 48 MUSD 39 24%

EBITDA MUSD 42 MUSD 27 56%

EBIT MUSD 17 MUSD 8 100%

0

20

40

60

80

100

120

140

160

2010 2011 2012 2013 2014

Q4

Q3

Q2

Q1

0

20

40

60

80

100

120

140

160

180

200

2010 2011 2012 2013 2014

Q4

Q3

Q2

Q1

Full Year 2014 Highlights

Net Revenue

MUSD

EBITDA

MUSD

FY-14 FY-13 Change

Net Revenue MUSD 183 MUSD 143 28%

EBITDA MUSD 150 MUSD 105 44%

EBIT MUSD 53 MUSD 42 27%

The Spectrum Board will propose a dividend of NOK 1 /share for 2014

Q4 and Full Year 2014 Highlights

Q4-14 Q4-13 FY-14 FY-13

Operational Cash Flow MUSD 30.5 MUSD 13.8 MUSD 128.2 MUSD 78.6

MC Investment MUSD 30.4 MUSD 13.5 MUSD 113.3 MUSD 85.2

CAGR MC investment

2011-2014 28%

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Rolling MC Net revenue 4 quarter / Rolling MC Investment

114 21

46

2014 Net revenue MUSD 181

42

1

5

Q4 Net revenue MUSD 48

Q4 and Full Year 2014 MC Revenue by Region

Q4 - changes in large shareholders

Per December 31st, 2014, the Largest Shareholders were:

• The Private Equity funds, Altor Invest 1 and 2 30,3%

• Spencer Trading Inc. 10,7%

• Gross Management AS, Ferncliff Listed DAI AS 9,7%

• The Norwegian State Pension Fund 4,6%

Financials

Q4 and FY 2014 Income Statement

Quarter Quarter 12 months 12 months

ended ended ended ended

(USD 1000) 31.12.14 31.12.13 31.12.14 31.12.13

Total operating revenue 65,520 47,040 39% 251,972 162,001 56%

Revenue share (17,656) (8,520) (68,674) (18,978)

Net revenue 47,864 38,519 24% 183,298 143,023 28%

Amortisation of multi-client library (24,873) (17,871) (94,414) (59,886)

Operating expenses (6,750) (10,784) -37% (32,852) (34,553) -5%

Cost of stock options (25) (743) (1,254) (3,810)

Share of profit/(loss) of joint ventures 1,170 - 1,170 -

Depreciation (745) (807) -8% (3,153) (3,131) 1%

EBIT 16,641 8,315 100% 52,795 41,642 27%

Net Financial items (39) 6,015 1,859 1,264

Profit / (loss) before tax 16,603 14,329 16% 54,654 42,906 27%

Earnings per share 0.28 0.27 0.90 0.72 25%

Diluted earnings per share 0.24 0.24 0.79 0.62 29%

Change

in %

Spectrum Group

Change

in %

Multi-Client – NBV & Investments

• Q4 2014 MC investments MUSD 30 (Prefunding of 99%)

• 2014 MC investments MUSD 113 (Prefunding of 98%)

• Amortization Q4 2014 52.3% (Q4 2013: 47.2%)

• Amortization FY 2014 52.2% (FY 2013: 42.6%)

0

50

100

150

2011 FY 2012 FY Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14

54

76

2036

16 13 18

3827 30

57

87 86

108 116 112 111125 126 131

MUSD

Investment Closing Quarterly NBV

Rolling Earnings & Net Sales / Book

Value of MC library

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

EBITDA 4 quarter rolling /book value of MC library rolling

EBIT 4 quarter rolling / bookvalue of MC library rolling

MC Net revenue 4 quarterrolling / book value of MClibrary rolling

Investment per Vintage Net Book Value (NBV) as % of original investment per financial year vs. allowed

Maximum NBV

57.5

51.3

85.9

44.4

101.8

9% 17%

47%

42%

58%

12%

33%

56%

82%

100%

0

20

40

60

80

100

120

2011 2012 2013 2014 Work in progress

MUSD

Original Investment % Actual NBV % Max allowed NBV

Balance Sheet – Key Figures Assets 31.12.14 30.09.14 31.12.13

(USD 1000) (Unaudited) (Unaudited) (Audited)

MC Library 131,266 125,735 112,400

Other Intangible Assets 15,434 19,431 19,996

Tangible Assets 5,868 5,181 4,713

Receivables 90,448 58,332 56,484

Cash and Equivalents 8,364 9,260 2,719

Total Assets 251,379 217,938 196,313

Equity and Liabilities 31.12.14 30.09.14 31.12.13

(USD 1000) (Unaudited) (Unaudited) (Audited)

Equity 174,267 161,842 138,041

Long Term Liabilities 2,066 1,101 766

Current Liabilities 75,045 54,994 57,506

Total Equity and Liabilities 251,379 217,938 196,313

SPECTRUM GROUP

Q4 2014 Cash Flow Statement

Quarter Quarter 12 months 12 months

Cashflow ended ended ended ended

(USD 1000) 31.12.14 31.12.13 31.12.14 31.12.13

Cash flows from operating activities:

Profit / (Loss) before tax 16,603 14,329 54,654 42,905

Income taxes paid (1,184) (2,681) (12,878) (15,315)

Depreciation and amortisation 25,617 18,678 97,567 63,017

Other financial items inclusive share options (1,261) (5,081) (2,173) (80)

Working capital changes (9,232) (11,408) (9,000) (11,955)

Net cash flow from operating activities 30,543 13,838 128,170 78,571

Cash flows from investing activities:

Investment in multi-client library (30,404) (13,487) (113,280) (85,200)

Investment in other assets (1,396) (451) (3,866) (4,372)

Net cash flow from investing activities (31,800) (13,938) (117,305) (89,572)

Cash flows from financing activities:

Issued share capital 0 0 268 2,075

Repayment of capital and dividends 0 0 (5,306) (4,145)

Net of borrowings including interest 463 25 110 (50)

Net cash flow from financing activities 463 25 (4,928) (2,120)

Net change in cash and cash equivalents (794) (75) 5,937 (13,137)

Net foreign exchange diff (unrealised) (102) (208) (292) (1,131)

Cash and cash equivalents at start of period 9,260 3,002 2,719 16,988

Cash and cash equivalents at end of period 8,364 2,719 8,364 2,719

SPECTRUM GROUP

Operations

Areas of High Interest

Relevant Licensing activities

Croatia - block awards ongoing

Lebanon - 1st round on hold

Peru - round expected in 2015

Brazil - 13th round expected H2 2015

Gabon - blocks awarded

Namibia - open door

Madagascar - round expected in 2015

Norway - 23rd round in 2015

Ireland - round ongoing

• Brazil, Amazonas MC3D

• Project in partnership with CGG

• 11,330 sqkm BroadSeisTM acquired

• 6,000 sqkm over open acreage

• High quality fast track products allow

prefunders to meet exploration timeline

• Supported by industry funding

• Brazil, Sergipe-Alagoas MC2D

• 26,000 km MC2D data

• Final products available Q1 2015

• Data on trend with recent Petrobras

deepwater light oil discoveries

• Considered a prime area for inclusion in the

next offshore bid round

• Supported by industry funding

Surveys in Q4 3D survey outline

• Uruguay, Deepwater recon MC2D

• 3,600 km MC2D data

• Infill of Phase 1 data (blue lines)

• Covering the Oriental del Plata and Pelotas

basins

• Anticipating the 3rd licensing round in 2015

• Supported by industry funding

Surveys in Q4

Ongoing MC2D projects in Q1

• Australia, Rocket MC2D phase 1

• 4,200 km MC2D (red lines)

• Data over the South Carnarvon and North

Perth Basins

• Final products available Q3 2015

• Supported by industry funding

• Brazil, Pelotas phase 2

• 12,000 km MC2D (red lines)

• Complementing 7,500 km phase 1 data and

12,000 km reprocessed data

• Anticipating the 3rd licensing round in 2015

• Final products available Q3 2015

• Supported by industry funding

Outlook

Outlook

• Spectrum is asset light and the company has no long term vessel charter

• The business model is adaptable to changing oil price regime

• Spectrum has no debt and no financial gearing

• Overdraft and revolving facility of MNOK 180 secured (approx. MUSD 24)

• Spectrum has the organization in place and the people to make a

difference

• To oil companies

• To Governments

• To cooperation partners

Spectrum is in position to capture business opportunities

Outlook, License round activity 2015

Timing Country Comment

H1-2015 Norway Ongoing

Ongoing Gabon Negotiations ongoing

H1-2015 Croatia Second Offshore round

H1-2015 Madagascar New province

H2-2015 Brazil License round 13

Ongoing Namibia Open door policy

On hold Lebanon Poltical standstill

H2-2015 Barbados License round

H1-2015 Peru License round

H1-2015 Uruguay Deep water License round

H2-2015 US East

Coast

Opening of new area for 5 year plan

H1-2015 Mexico License round

Large license round acreage on offer in 2015

Outlook

• Spectrum is well positioned for license rounds in 2015-2016

• Spectrum aims to maintain MC investment at a similar level to 2014

• Spectrum will carefully consider all MC investments in 2015

• The investment portfolio criteria will be focused on quality of the

investments and risk evaluation

• The project pipeline is significant, but prefunding is key for project

realization