EMGS Short on Expected Contract Revenues

Based on preliminary accounts Electromagnetic Geoservices ASA (EMGS) expects revenues for the fourth quarter and full year 2013 of about USD 45 million and USD 145 million respectively. This is lower than guided by the Company in the third quarter report.

EMGS announced that it expected approximately USD 50 million in contract revenues for the fourth quarter. The main reason for the shortfall of contract revenues in the quarter is that the Atlantic Guardian was nearly 3 weeks delayed in the start-up in Mexico due to repair of a thruster. In addition, there has been very challenging operational conditions in Mexico, including tough weather and ultra-deep waters, which has resulted in higher than normal downtime on both Atlantic Guardian and BOA Galatea.

Multi-client revenues in the fourth quarter

During the fourth quarter, the Company has announced a total of USD 6.45 million in multi-client sales. In addition, about USD 3.4 million from the expansion of the cooperation with TGS will be booked as a reduction of the carrying value of the multi-client library.

EMGS will record about USD 1.3 million in revenue sharing (booked as reduction of the multi-client revenues) with TGS in the fourth quarter.

With reference to the sale to OMV, reported on the 4 December, about 80% of the blocks included in this sale have been selected by the customer. Thus, 80% of the revenues from this contract will be recognised in the fourth quarter.

Vessel utilisation and fleet allocation

EMGS defines “vessel utilisation” as the percentage of the vessel charter period spent on contracted or multi-client data acquisition.

Vessel utilisation for the fourth quarter 2013 came in at 50% compared with 84% for the fourth quarter 2012. This gives the company a total utilisation for the full year 2013 of 67%, compared to 76% for 2012.

In the fourth quarter of 2013, the company’s vessels were allocated 46% to contract and 4% to multi-client programmes, whereas the allocation was 44% and 40% respectively in the corresponding quarter last year.

EMGS recorded 11.1 vessel months this quarter, compared with 11.0 in the fourth quarter of 2012. The vessel EM Leader was chartered from 3 September to 3 December 2013 and thus contributes with 2.1 vessel months this quarter.

Vessel activity

The BOA Thalassa spent the first half of October to complete a regional, USD 50 million contract in Brunei, Asia. The vessel then had a yard stay of 14 days, which was the “5 year class renewal”. Thereafter, the vessel completed a contract in Malaysia. The vessel, currently waiting for environmental permits, is expected to head to North-West Australia around mid-January to start a new survey. The vessel’s utilisation for the fourth quarter was 37%.

The BOA Galatea spent the entire fourth quarter acquiring 3D EM data on the USD 99.8 million contract with PEMEX. The start-up of the contract in Mexico has however been challenging both due to harsh weather conditions and the ultra-deep waters. The technical down-time for the vessel (8.4%) for the quarter is therefore higher than normal. The vessel’s utilisation came in at 89% for the fourth quarter.

The Atlantic Guardian completed its multi-client programme in the Barents Sea in the beginning of the fourth quarter. The vessel then mobilised to Mexico, where the start-up was delayed by nearly 3 weeks of maritime down-time due to repair of a thruster. The vessel started operating on the PEMEX contract on 4 December. The vessel has had somewhat higher than normal down-time in December, mainly as a result of the mentioned operational conditions. The Atlantic Guardian’s utilisation for the quarter was 38%.

During the quarter, the EM Leader completed a survey in Angola. The vessel’s firm charter period expired on 3 December. The EM Leader had a utilization of 27%.

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Press Release, January 07, 2014