Following the end of acquisition work under the two-year contract in the Americas, as announced to the market on 20 February 2020, the recent sharp oil price decline and the uncertainty created by the global Covid-19 pandemic, with associated impact on the global economy and, in particular, on oil company investment decisions, Electromagnetic Geoservices ASA ("EMGS" or the "Company") has experienced a rapid deterioration in the Company’s backlog for 2020.
The board of directors and management of the Company have evaluated all possible measures to preserve and maximise shareholder value and safeguard the interest of the Company’s other stakeholders in this situation.
Based on this review, the Company has resolved to immediately start the transition to a low-cost set-up. The purpose of this low-cost set-up will be to preserve sufficient liquidity by reducing cash-burn to a minimum, until the Company can benefit from and scale up to meet an expected future increase in oil company investments.
To be able to achieve a sufficiently low cost level, the Company will, amongst other initiatives:
* Redeliver the Petrel Explorer at the end of the current fixed charter period, and cold stack the Atlantic Guardian as soon as practicable possible.
* Terminate all employees and consultants with the exception of a skeleton crew which will continue to service the multi-client late sales and consulting market and form the basis for a future scale-up.
EMGS will continue to deliver under all the Company’s existing and ongoing customer contracts as planned, honouring the Company’s obligations under these contracts.
Even with these decisive actions, no guarantees can be given that the Company will be able to preserve sufficient liquidity. Continued operation will thus not only be dependent on the timely and successful implementation of the above measures, but also that the Company is able to identify and implement other material cost reduction measures, including by reducing the interest bearing debt and non-interest bearing liabilities.
Additional details will be provided in due course.
Anders Eimstad, EMGS Interim Chief Financial Officer, +47 948 25 836