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