Strictly Private and Confidential
S C A N
SCAN Geophysical ASA
Private Placement and Secondary Sale of Shares
May 2007
Solely for review in connection with the Private Placement of Shares – not for reproduction or distribution. The information contained herein
1
may be subject to change without prior notice. Please note that this is not an offering document.
S C A N
Disclaimer
This presentation has been produced by SCAN Geophysical ASA (the “Company” or “SCAN Geophysical”) with assistance from Pareto Securities ASA and DnB NOR Bank ASA, solely for
use at the presentation to investors held in connection with the proposed offering of shares by the Company and may not be reproduced or redistributed, in whole or in part, to any other
person. This presentation contains information obtained from third parties. Such information has been accurately reproduced and, as far as the Company is aware and able to ascertain from
the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading.
This document contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forwardlooking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, expects”, “predicts”, “intends”,
“projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar expressions. The forward-looking statements contained in this presentation, including assumptions,
opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual
events to differ materially from any anticipated development. None of the Company, Pareto Securities ASA or DnB NOR Bank ASA or any of their parent or subsidiary undertakings or any
such person’s officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any
responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation, except as
required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual results.
AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE
COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS
AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY’S BUSINESS, SEGMENTS,
DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND
BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS,
FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS.
SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY
VARY MATERIALLY FROM THOSE DESCRIBED IN THIS PRESENTATION. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR
CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION.
No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained
herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Company, Pareto Securities ASA or DnB NOR
Bank ASA or any of their parent or subsidiary undertakings or any such person’s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this
document.
By attending or receiving this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you
will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company’s business.
This presentation is confidential and is being communicated in the United Kingdom to persons who have professional experience in matters relating to investments falling within Article 19(5)
of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (such persons being referred to as “investment professionals"). This presentation is only directed at
qualified investors and investment professionals and other persons should not rely on or act upon this presentation or any of its contents. Any investment or investment activity to which this
communication relates is only available to and will only be engaged in with investment professionals. This presentation (or any part of it) is not to be reproduced, distributed, passed on, or
the contents otherwise divulged, directly or indirectly, to any other person (excluding an investment professional’s advisers) without the prior written consent of Pareto Securities ASA, DnB
NOR Bank ASA and the Company.
This presentation and the information contained herein do not constitute an offer of securities for sale in the United States and are not for publication or distribution to U.S. persons (within
the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)). The securities proposed to be offered in the Company have not been and will not be
registered under the Securities Act and may not be offered or sold in the United States or to U.S. persons except pursuant to an exemption from the registration requirements of the
Securities Act.
This presentation speaks as of 2 May 2007. Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances,
create any implication that there has been no change in the affairs of the Company since such date.
2
S C A N
Investment Case
•
An international seismic company with a modern, high quality fleet
–
–
–
–
•
Full scale data acquisition company - offering 2D, 3D, 4D and processing services
–
–
–
–
•
Streamer acquisition within 2D, 3D and 4D
High resolution capabilities with 10 streamers
Long offset with 10 km streamer capabilities
Multi-azimuth and wide azimuth capabilities
Expansion strategy
–
–
•
Streamer seismic since 2005
3 vessels in operation in Q3 2007
6 vessels in operation in Q3 2008
3 state of the art purpose built 8-10 streamer vessels with ultra high streamer capacity
Multi Client seismic
Shallow Water seismic
- has started recruitment of key employees with MC experience
- has developed a low cost concept based on OBC* – end 2008/09
Experienced and strong management
–
–
Strong management team with 250 years of seismic experience
Management controls approx. 20% of the shares, including share option program
*Ocean Bottom Cables
3
S C A N
Term Sheet and Use of Proceeds
•
•
Price range: NOK 26 – 32
Total # of shares offered: 18 mill.
–
–
New shares: 6-8 mill.
Existing shares: Up to 10 mill.
•
•
•
•
•
Total offering: NOK 468 – 576 mill.
Total # of shares post offering: 88 – 90
mill.*
–
–
•
•
Norvestor IV LP: 9.5 mill. shares
Lars Johan Frigstad through Loyd AS: 440.000
shares
Patrick Pitaud through Geolistic Inc.: 60.000
shares
Convertible bond: 7.5 mill. shares
Option program: 5.08 mill. shares allocated**
Pre money valuation: NOK 2,132 – 2,624
mill.
Minimum subscription and allotment
minimum NOK equivalent of EUR 50.000
•
Closing at 4 pm 11 May 2007, Oslo Time
–
•
•
•
•
The Board of SCAN reserve the right to
shorten or extend the closing date at any
time on its own discretion
Allocation on or about 14 May
Delivery vs. payment on or about 14 May
The listing to be decided at the Oslo Børs
board meeting on the 23 May
Use of proceeds
–
–
–
NOK 130 mill. capex seismic equipment
NOK 60 mill. in free cash (covenant related
to sale lease-back Ship Finance)
Exceeding amount for additional streamer
capacity***/other business opportunities
*A further 2-4 million shares will be offered in the retail tranche before the listing. Following that the total number of shares will be 92 mill.
**All options are in the money
***Current streamer investments for the new buildings based on 8 x 6 km streamer configuration – the vessels have potential capacity of 8 x 10 km
4
S C A N
SCAN’s Seismic Spectrum – Data Acquisition
Source
Recording
streamer
Air-gun
Nodes
OBC
Liquids (P-waves)
•
Existing business
–
–
•
2D and 3D seismic with streamers
4D seismic with streamers
2D
Expanding into
–
–
–
High resolution/wide azimuth/multi azimuth
Shallow Water Seismic (SWS)
2C/4C capabilities with SCAN’s Ocean Bottom Stations
3D
streamers
OBC
nodes
3D + time = 4D
Hydrophone
1
Geophones
2
2C
3
4
4C
5
S C A N
Overview of Seismic Acquisition
streamer
Deep water
SW
TZ
Land
6
S C A N
SCAN’s Streamer Strategy focuses on attractive Segments
2D
•
•
•
•
3D
Low-End 2D
High-End 2D
1 str x 6-8.000 m
1 str. x 9-12.000 m
Small-Size 3D
≤ 500 km2
3 str. x 4.500m+
Medium-Size 3D
≤ 1.000 km2
6 str. x 6.000m+
Large Survey 3D
≥ 1.000 km2
8 - 16 str. x 6.000m+
One vessel in the high-end 2D market with long offset and high shooting capacity
One vessel with operational flexibility within both high-end 2D and small size 3D
One vessel in the medium size 3D market with 4 streamers
Three new buildings for large size 3D surveys with long offset capacity (10 km)
7
S C A N
Value Chain Focus – Data Acquisition
OIL FIELD DEVELOPMENT – OIL COMPANIES
Exploration
Appraisal
Development
Production
SEISMIC SERVICES
Acquisition
Processing
Interpretation
Data Mgmt
Field Developm
PARTNERS
S
•
•
•
C
A N
SCAN is focused on efficient data acquisition services – high margins
Processing services offered through partners
SCAN’s services relate to both Exploration & Production budgets
8
Focus on Contracts Directly with Oil & Gas Companies
S C A N
•
Contracts directly with Oil companies (proprietary work)
–
–
–
•
Short term contracts 1-12 months
Stringent requirements to equipment, vessels, organisation and QHSE
Higher prices than for longer contracts and non-proprietary work
Contracts with other seismic companies (non-proprietary work)
–
–
–
Short term to long term contracts
Normally Multi Client work for the seismic company
Normally lower prices than for proprietary work
9
SCAN is expanding its Business Model
S C A N
•
Contract seismic
–
–
–
•
•
Fixed prices pr km² - or fixed rates pr day
No financial risk
No data ownership
Multi Client seismic (MC)
–
–
–
Production partly on own risk, depending on clients’ level of pre-funding
Ownership to the data
The data can be sold several times to different clients with significant higher upside potential
–
–
–
–
SCAN
SCAN
SCAN
SCAN
has personnel with MC experience and has started to build a dedicated team for MC
will define and plan MC projects during 2007, initially 2D projects
plans to use own or external vessel capacity for MC surveys during 2008
plans a minimum level of pre-funding of 50%+ for its projects
Shallow Water Seismic (SWS)
–
–
–
SCAN aims to become a world leading player within SWS, with first crew end 2008/2009
Marine seismic in between land & streamer coverage, from 1m water depth
Higher operational challenges and risks than for streamer operations - significant profit potential
10
Shallow Water Seismic – an additional Business Opportunity
S C A N
•
Over the past years SCAN has developed a concept
–
–
•
For efficient Shallow Water Seismic data acquisition
With improved cost flexibility and profitability
What is Shallow Water Seismic (SWS) ?
–
–
–
Marine seismic in between land & streamer coverage, from 1m water depth
Higher operational challenges and risks than for streamer operations - significant profit potential
Has so far represented a niche market - no efficient industrial standards have yet been set
•
SCAN aims to become a leading player
•
SCAN will set a new industrial standard
–
–
–
•
A new tailor-made ocean bottom cable (OBC)
Small purpose built seismic vessels
A full range 1-300m coverage
No CAPEX commitments needed before
start-up contracts are secured
Illustration from Sercel; the OBC to be used for SWS
11
S C A N
Key Administration – 250 years of Seismic Experience
President & CEO
Lars J. Frigstad
VP CFO
Tove Presterud
Fin. Controller
Jorunn Mørk
HR Manager
Bente Melcher
Legal Councel
Patrick Murphy
Accountant
Øyvind Thorsen
VP Sales&Market.
Kjell Karlsson
HR Assistant
Alexandra Bihr
Sales&Mark. Am.
Kevin Stiver
Office Manager
Monika Minge
Sales&Mark. FE
Jean-Y. Beninger
SVP & COO
Stephane Touche
VP QHSE
Arne Ottdal
VP Operations
Alf Hesthag
VP Technics
TBA
Accountant
Hedy Elaine Sveia
Accountant
Helena Stubberud
•
•
•
•
•
•
•
•
•
•
•
Lars Johan Frigstad
Stephane Touche
Arne Ottdal
Kjell Karlsson
Kevin Stiver
Jean-Yves Beninger
Alf Hesthag
Pål Slaatsveen
Keith Prior
Patrick Pitaud
Tove Presterud
Vessel Manager
Pål Slaatsveen
Technical Superv.
Keith Prior
QHSE Assistant
Ann Marte Moen
VP SWS
Patrick Pitaud
Crew Change/Log.
Ann Kristin Brekke
Op. Supervisor
René Wallach
Instrument Eng.
Jean F. Gauvin
Crewing
Victor Mironenko
Op. Supervisor
Tore Arstad
IT
Astrofarm
Crewing
Katerina Razina
Logistics Manager
TBA
Processing Eng.
Largeo (Moscow)
Positioning Eng.
Geograf
Purchasing Man.
Annette Ruud
Techn. Eng. SWS
Pierre Corre
- CEO
– ex PGS
- seismic experience: (13 years)
- COO
– ex CGG
(15 years)
- VP QHSE
– ex Seabird
(8 years +37mar)
- VP Sales & Marketing – ex Geco, PGS and CGG
(35 years)
- VP Sales & Mark. Am. – ex Geco, PGS and Veritas(CGG) (26 years)
- VP Sales & Mark. Asia – ex CGG
(22 years)
- VP Operations
– ex Geco and Fugro
(25 years)
- Vessel Manager
– ex Geco and PGS
(26 years)
- Technical Supervisor
– ex Western
(29 years)
- VP Shallow Water
– ex CGG
(30 years)
- CFO
– ex Telenor
(Telecom)
12
S C A N
Board of Directors – Experience & Entrepreneurship
• Trond Bjørnøy
- Partner Norvestor - former Chairman of PGS
• Heidi M. Petersen
- Director Rambøll Oil & Gas - Board Director of DnBNOR and Aker Kværner
• Nils Trulsvik
- CEO of InterOil - former Managing Director of Nopec
• Lars Grinde
- Partner Norvestor - former Board Director of PGS
• Ninette Banoun*
- Manager Gjensidige Forsikring - former Senior Gas Consultant TOTAL Norge
* Suggested as new Board Director on the Annual General Meeting on May 2, 2007
13
S C A N
SCAN has a modern and diversified Streamer Fleet
High-end 2D
M/V Geo Searcher
Small-Size 3D
M/V Scan Stigandi
Medium-Size 3D
M/V Scan Resolution
Large-size 3D
M/V Scan Finder
M/V Scan Hunter
M/V Scan Superior
Built
1982/2005
2002/2007
1983/2006
2008
Conversion
Conversion
Purpose built
Purpose built
3 x 6 km
4 x 6 km
8 x 10 km
12 km
12 km
12 km
TC 3 yrs + 3 x 1
TC 10 yrs + 10 x 1
TC 3 yrs + 3 x 1
Streamers 3D
2D
Charter
•
BB 12 yrs + purch. opt. y 6/10/12
Capacity range: High End 2D – Large Size 3D
–
–
–
All the new buildings will have the highest 8 streamer capacity in the market – long offset
Scan Stigandi the most modern 2D vessel in the market – high source/streamer capacity
Streamer capacity up to 380 km during 2008 – implying up to 9% market share
14
S C A N
The New Buildings – State of the Art – for the Future
•
Among the highest capacity in the market for 8 streamer vessels
–
–
–
–
Winch capacity of 10 km streamers on each winch
10 streamer capacity for high resolution seismic
Suitable for wide azimuth and multi azimuth acquisition
Purpose built design – with noise reduction
15
S C A N
Strong Project Management in Place for the New-Buildings
SCAN Geophysical ASA
- Stephane Touche
- Keith Prior
- Ship Finance (new vessel owner)
Polarkonsult
- Sigmund Sorensen (Project Manager - Norway/India)
- Frank Johnsen
(ABG Surat)
- Kishore Bedekar (ABG Surat)
- Thommessen (lawfirm - legal advice)
Surveyors
Hull - Machinery/Piping - Nautic - Electric - Automation
- V.Ships
(new ship manager)
SeaTech (Design Bureau, Singapore)
ABG Shipyard (Mumbai & Surat)
•
The project management improved at the ABG Shipyard
–
–
–
Delivery dates January 31, April 30 and July 31 (+ 45 days pending agreement with yard)
A professional Project Management team on site and in Norway
Ship Finance and V.Ships add substantial experience to the project team
16
S C A N
SCAN has achieved good Rates and high Productivity
•
Working for Pakistani authorities/GEMS Geo Searcher set production record with
–
–
–
•
Scan Resolution has achieved stable and good production
–
–
–
•
An average of 177 km production pr day during the survey
232 km production in 24 hours, touching maximum possible production
Production rates pr day in Q1 of USD 70,000
Working for Numhyd, TGS Nopec and Chevron since start-up in 2006
Production rates pr day in Q1 of USD 120,000
Production rates for 2007 and 2008 seems to be up to 10% higher
New buildings to be marketed from 3Q 2007
–
–
–
SCAN is experiencing that the new buildings already are attractive to oil companies
Revenues in 2008 is expected to be around USD 220,000 pr day in average
market rates for 2009 are expected to continue at this level
17
S C A N
SCAN has an attractive Backlog Schedule
2007
April
May
2008
June
July
Aug
Sept
Pakistan
E
Oct
Nov
Sri Lanka
Dec
SE Asia
Jan
Dry Dock
Feb
March
April
May
June
July
Aug
Sept
SE Asia
Geo Searcher
Carribean 3D
Scan Resolution
Carribean
2D
Conversion
Halifax,
Canada
Scan Stigandi
2 x Caribbean
2D
Transit
North S. 3D
North
Sea
Venezuela 3D
Caribbean 3D
Atlantic 2D & 3D
Building ABG India
Scan Superior
Building ABG India
Scan Finder
Building ABG India
Scan Profile
•
Large backlog with strong rates
•
New buildings to be marketed from 3Q 2007
–
SCAN is experiencing that the new buildings are highly attractive to oil companies
18
S C A N
SCAN operates in a broad geographical Range
North
Sea
GoM
West
Africa
Middle and
Far East
South
America
SCAN offices/representations
Main areas targeted for marketing and operations
19
S C A N
SCAN already accepted by the major Oil and Gas Companies
•
Since the start of its operations SCAN has already been awarded work by:
Numhyd a.r.l ‫نوميد‬
•
Due to its track record and QHSE level SCAN has been invited to submit tenders for:
20
S C A N
The new Demand Driver is Imaging
Source: Pareto Securities, Johns, Vito, Clark, Sarmiento. Multicomponent OBC (4C) prestack time imaging: Offshore Trinidad. SEG Abstracts, 2006
21
S C A N
The New Demand Driver is Imaging
•
The following are driving the oil & gas companies for better imaging:
–
–
•
For 3D streamer seismic there is a significant need for more streamer capacity:
–
–
–
–
–
•
Stressed reserves and production profiles
Limited access to new acreage
High resolution 3D
Longer streamers
4D
Wide Azimuth
Multi Azimuth
(SCAN
(SCAN
(SCAN
(SCAN
(SCAN
can
can
can
can
can
operate 10 streamers with reduced spread)
operate 10km streamers!)
operate 8-10 streamers)
operate 8-10 streamers)
operate 8-10 streamers)
The relationship streamers/demand will not be 1:1 – but probably more like 1:2
22
S C A N
New Fundamental and Structural Drivers
5%
4%
3%
2%
1%
0%
-1 %
-2 %
-3 %
-4 %
-5 %
140 %
Prod. Growth l.h.s.
RRRs r.h.s.
120 %
100 %
80 %
60 %
40 %
20 %
0%
2001
2002
2003
2004
2005
2006
•
Low reserve replacement ratio (RRR) fuels exploration
•
Drive for improved and new technologies to find more oil and exploit existing reserves
•
Limited access to oil-rich regions like Russia, Middle East etc. also requires better
technology in more accessable areas
Source: Pareto Securities, Offshore Research, PGS
Sample: Exxon, Shell, BP, Total, Chevron, NCS. Adjusted for TNK and Unocal acquisitions
23
S C A N
Total 3D Streamers* worldwide
600
Streamers worldwide
500
86% increase from 1999
400
300
200
100
0
1999
2000
2001
*6+ streamers 3D vessels
Source PGS, Pareto NY conference 07
2002
2003
2004
2005
2006
2007E 2008E 2009E
24
Total 3D Vessels worldwide
S C A N
70
19% increase from 1999
Vessels*
60
50
40
30
20
10
0
1999
2000
2001
*6+ streamers 3D vessels
Source PGS, Pareto NY conference 07
2002
2003
2004
2005
2006
2007E 2008E 2009E
25
S C A N
3D Market Balance is tight – Demand Surplus*
# vessels
# vessels
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
2006
2007E
Contract demand
2008E
2009E
Multi client
2010E
# vessels
*6+ streamers 3D vessels
Source: Pareto Securities, PGS, Pareto NY conference 07
The 2009-2010E number only include firm newbuilds, not options
26
SCAN is becoming a significant Player
S C A N
25
20
Total 3D/2D seismic fleet
15
10
5
Se
ab
ird
Ec
ho
E.
AV
E
W
SC
AN
SL
CO
Fu
gr
o
PG
S
G
W
CG
GV
e
rit
as
0
Source: Pareto Securities
27
S C A N
Investment Case
•
An international seismic company with a modern, high quality fleet
–
–
–
–
•
Full scale data acquisition company - offering 2D, 3D, 4D and processing services
–
–
–
–
•
Streamer acquisition within 2D, 3D and 4D
High resolution capabilities with 10 streamers
Long offset with 10 km streamer capabilities
Multi-azimuth and wide azimuth capabilities
Expansion strategy
–
–
•
Streamer seismic since 2005
3 vessels in operation in Q3 2007
6 vessels in operation in Q3 2008
3 state of the art purpose built 8-10 streamer vessels with ultra high streamer capacity
Multi Client seismic
Shallow Water seismic
- has started recruitment of key employees with MC experience
- has developed a low cost concept based on OBC* – end 2008/09
Experienced and strong management
–
–
Strong management team with 250 years of seismic experience
Management controls approx. 20% of the shares, including share option program
*Ocean Bottom Cables
28
S C A N
SCAN Geophysical ASA
Rådhusgaten 23
0158 Oslo
Norway
Tel: + 47 24 11 10 00
Fax: + 47 24 11 10 10
E-mail: mail@scangeo.com
29
S C A N
Risks
•
•
•
•
•
•
•
•
•
•
•
•
A number of risk factors may adversely affect the Company. Below is a brief summary of some of the most relevant risk factors. The risks described below
are not exhaustive, and other risks not discussed herein may also adversely affect the Company.
Economic, Political and Legal Risk: The Company is exposed to the economic cycle and macro economical fluctuations, since changes in the general
economic situation could affect demand for the Company’s services, fee levels and the value of Company’s assets. Changes in legislation and fiscal
framework governing the activities of the Company could have material impact on the Company’s operations and financial results. The Company may be
exposed to legal claims from authorities, customers or other third parties. No assurance can be given regarding the outcome of any such claim.
Operating Risks: There will always be operational risks involved in performing offshore seismic surveys. This includes among others un-expected failure or
damage to vessels and technical equipment. These risks may cause business interruptions, equipment damage, pollution and environmental damage.
Market Risk: The demand for the Company’s services, including offshore geophysical services, will depend on the conditions in the oil and gas industry, the
Company’s business will among others depend on the level of capital spending by oil and gas companies, such expenditures tending in the past to follow
trends in prices of oil and gas. The prices of oil and gas have fluctuated widely in recent years, and demand for exploration and production has historically
been volatile and closely linked to the prices of oil and gas.
Competition: The seismic industry is highly competitive, and the Company faces the free competition in the geophysical market. Although the Company
considers itself to be well positioned in the market, no assurance can be given with regard to future competition in this market.
Environmental Regulation: The Company’s operations are subject to numerous national and international environmental, health and safety regulations,
including, inter alia, requiring cleanup of environmental contamination, requirement of certification or licenses, health and safety regarding operation of
the vessels or otherwise relating to the protection of human health and the environment. Amendment, curtailing and/or modification of such existing
regulations, or the adoption of new regulations, may affect the operation results or financial conditions of the Company.
Volatility of Prices: Any investment in the Company’s Shares is associated with an element of risk, and the price of the Company’s Shares may be subject
to significant fluctuations caused by a number of factors, many of which may be outside the Company’s control and independent of its operational and
financial development.
Dependence on Key Personnel: The development and prospect of the Company are dependent on its access to technically qualified personnel, in particular
key management positions, geological specialisation, and sales and marketing. Currently, the seismic markets demand for personnel are increasing, and
there are certain risks associated with wage levels for qualified personnel in such market environments. The loss of senior management or key personnel
may have an adverse impact on the Company’s operating results and financial condition.
Currency and Liquidity Risks: The Company considers its exposure to exchange rate fluctuations and currency risk to be limited since all revenues and the
majority of its expenses are denominated in USD. Notwithstanding, fluctuating foreign exchange rates may affect the results of operations when costs are
incurred in currencies other than USD.
Enforceability of Civil Liabilities: The Company is a limited liability company organised under the laws of Norway. The directors of the Company and
executives and certain of the experts named herein, reside in Norway, France, Venezuela and other countries. As a result, it may not be possible for
investors to affect service of process in other jurisdictions upon such persons or the Company or to enforce judgments on such persons or the Company in
other jurisdictions.
Taxation Risks: The Company’s and/or its subsidiaries’ own activities will to a large extent be governed by the fiscal legislation of the jurisdictions where it
is operating, as its activities in most cases will be deemed to form a permanent establishment according to the tax laws of those countries. Thus, the
Company is exposed to a material risk regarding the correct application of the tax regulations as well as possible future changes in the tax legislation of
those relevant countries.
Other risks: For reasons relating to foreign securities laws or other factors, certain foreign investors/shareholders may not be able to participate in a new
issuance of shares or other securities. If such shareholders are unable to participate in future offerings, the shareholders’ percentage shareholding may
face dilution as a result.
30
S C A N
SCAN History
• 08/2005
– Started first streamer vessel “Geo Searcher”
• 10/2005
– Norvestor new main shareholder – founding investor of PGS
• 06/2006
– Purchased 3 high capacity 8-10 streamer vessels new-builds
• 06/2006
– Completed a share issue of USD 50 mill. at NOK 13 pr share
• 07/2006
– Listed on the Norwegian OTC list, traded at NOK 13,50
• 07/2006
– “Scan Resolution” commenced 3D operation with 4 streamers
• 07/2006
– Purchased “SCAN Stigandi” to be a 3 streamer 3D vessel
• 10/2006
– USD 30 mill. sub.ord. convertible bond issue at 7% and conv. at NOK 27
• 03/2007
– Sale lease back transaction of USD 210 mill. with Ship Finance
• 05/2007
– Private placement
• 05/2007
– IPO and planned listing in Oslo
31
S C A N
Shareholder Structure and total # Shares
SHAREHOLDER
NORVESTOR IV L.P.
JONATAN AS
LOYD AS
PARETO AKSJE NORGE
MAWELLA PTE. LTD.
CREDIT SUISSE SECURI SPECIAL CUSTODY A/C
UGCON LTD
BEAR STEARNS PRIVATE
PARETO AKTIV
BEAR STEARNS SECURIT A/C CLEARING ACCOUNT
MUSLIK AS
BANK OF NEW YORK, BR BNY GCM CLIENT ACCOU
GEOLISTIC INC.
MILLENNIUM GEO-VENTU
NORDEA BANK PLC FINL CLIENTS ACC
JKL-HOLDING AS
GOLDMAN SACHS INTERN EQUITY NONTREATY CUS
BEAR STEARNS SECURIT A/C CUSTOMER SAFE KE
BRUHEIM BJARTE
LA MANI AS
TOTAL 20 LARGEST
OTHERS
TOTAL # SHARES
SHARES
29 084 900
8 588 930
8 341 200
4 110 000
3 715 500
3 023 000
1 876 600
1 868 600
1 829 100
1 530 200
1 401 800
1 377 594
1 150 300
1 121 800
974 000
937 500
864 106
800 000
745 600
658 468
73 999 198
7 946 002
81 945 200
%
35,5 %
10,5 %
10,2 %
5,0 %
4,5 %
3,7 %
2,3 %
2,3 %
2,2 %
1,9 %
1,7 %
1,7 %
1,4 %
1,4 %
1,2 %
1,1 %
1,1 %
1,0 %
0,9 %
0,8 %
90,3 %
9,7 %
100,0 %
•
•
•
SCAN has in addition
issued a convertible
bond of NOK 202.5
million convertible
into 7.5 mill. shares at
NOK 27 per share
The company has an
option program to
management and
employees on a total
of 6.95 mill. options
whereof 5.08 mill.
options have been
allocated
The total number of
shares including the
convertible bond and
the allocated options
are 88,895,200
32
The global Seismic Market
S C A N
1400
8 000
Total MC Investments*
Total Seismic Revenue*
7 000
1200
6 000
1000
5 000
800
4 000
600
2 000
400
1 000
200
•
•
2007E
2006
2005
2004
2003
0
2002
2008E
2007E
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0
2001
3 000
The seismic market has returned since the doldrums entering this decade
MC investments is also seeing a sharp recovery. This will absorb a lot of tonnage
Companies: CGGVeritas, WG, PGS and TGS
Source Pareto Research, PGS, Pareto NY conference 07
All seismic segments
33
S C A N
Income Statement
Figures in NOK
Q1 2007
Q1 2006
2006
2005
Revenues
Sales revenue
Other revenues
Total revenues
101 574 785
621 127
102 195 912
24 828 586
24 828 586
172 910 236
600 338
173 510 574
28 904 524
28 904 524
58 312 945
16 764 909
12 298 530
6 551 112
93 927 496
18 885 632
3 294 602
6 607 130
2 457 929
31 245 293
135 911 963
25 305 308
19 323 908
39 789 937
220 331 116
33 055 123
1 319 949
8 659 960
14 474 775
57 509 807
8 268 416
(6 416 707)
(46 820 542)
(28 605 283)
7 410 968
(7 533 156)
(122 188)
116 409
(225 924)
(109 515)
11 648 638
(3 348 655)
8 299 983
185 993
(2 452 150)
(2 266 157)
-
-
-
-
Profit/loss before tax
8 146 228
(6 526 222)
(38 520 559)
(30 871 441)
Tax on profit
2 767 692
(1 827 342)
639 136
(9 111 791)
Profit/loss for the year
5 378 536
(4 698 880)
(39 159 695)
(21 759 650)
(0,10)
(0,10)
(0,94)
(0,94)
(116)
(116)
Operating expenses
Vessel Operating costs
Payroll costs
General & Administration costs
Depreciations and writedowns
Total operating expenses
Operations profit/loss
Financial revenues and expenses
Financial revenues
Financial expenses
Total financial items
Share of profit from associated companies
Earnings per share:
Ordinary
Diluted
0,07
0,06
34
S C A N
Balance Sheet
Figures in NOK
ASSETS
Fixed assets
Deferred tax asset
Tangible fixed assets
Vessels under construction
Investment in associated companies
Prepayments
Total fixed assets
1Q 2007
17 275 384
234 384 660
79 413 001
505 000
278 542 471
610 120 517
Current assets
Stock
Accounts receivable and other
receivables
Cash and cash equivalents
Total current assets
190 170 924
284 714 945
Total assets
894 835 461
12 221 280
82 322 740
2006 Figures in NOK
1Q 2007
2006
81 945 200
292 007 019
27 888 567
81 945 200
292 779 900
27 245 520
5 378 536
407 219 322
401 970 620
236 694 737
236 694 737
229 671 710
229 671 710
759 603 275 Short-term liabilities
Short-term interest-bearing liabilities
Tax payable
Trade creditors and other short-term liab.
41 829 637
206 144 617
2 331 148
44 978 775
2 331 138
80 651 032
Total short-term liabilities
250 305 402
127 960 945
Total liabilities
487 000 139
357 632 655
Total equity and liabilities
894 219 462
35
759 603 275
15 301 268
239 011 332
71 508 966
505 000
175 003 082
501 329 648
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Other called-up and fully paid share
capital
Retained earnings
Total equity
LIABILITIES
5 699 690 Long-term liabilities
54 930 349 Loans
Total long-term liabilities
197 643 588
258 273 627
S C A N
Cash Flow
Figures in NOK
Cash flow from operating activities
Profit/loss before tax
Taxes paid during period
Profit/loss on sale of fixed assets
Ordinary depreciations
Writedowns of fixed assets
Effect of expenses and conversions for share options
Changes in stocks
Changes in accounts receivable
Changes in trade creditors
Changes in other liabilities (receivables)
Net cash flow from operating activities
1Q 2007
1Q 2006
8 148 734
162 743
12 298 530
3 993 411
(6 521 590)
(27 557 640)
125 493 586
(733 582)
116 017 774
(5 142 580)
2006
2005
(4 387 007)
(38 520 559)
(6 948 861)
(600 338)
37 874 057
1 915 880
3 144 337
(4 158 468)
(26 736 872)
53 367 189
(8 854 569)
10 481 796
(30 871 439)
4 415 991
10 058 784
(1 541 222)
(6 378 035)
12 361 619
3 968 135
(7 986 167)
(119 115 283)
(119 115 283)
(10 164 420)
(10 164 420)
7 174 725
(434 039 170)
(505 000)
(427 369 445)
(112 281 424)
(112 281 424)
Cash flow from financing activities
Payments on new long-term liabilities
Payments on new short-term liabilities
Repayment of long-term liabilities
Payment of equity
Net cash flow from financing activities
5 657 802
(10 032 957)
(4 375 155)
7 597 972
25 987 540
33 585 512
236 806 419
28 275 026
(3 376 883)
331 759 589
593 464 151
42 708 473
97 959 501
140 667 974
Net cash flow for the period
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
(7 472 664)
197 643 588
190 170 924
19 034 085
21 067 086
40 101 171
176 576 502
21 067 086
197 643 588
20 400 383
666 703
21 067 086
Which consists of
Bank deposits etc.
190 170 924
40 101 171
197 643 588
21 067 086
Cash flow from investment activities
Payments for sales of fixed assets
Payments/ advance payments for purchase of fixed assets
Payments for purchases of shares and units in other companies
Net cash flow from investment activities
6 607 130
1 383 642
(443 638)
(13 909 730)
7 118 169
36