Electromagnetic Geoservices ASA (“EMGS” or the “Company”) is pleased to announce that the Company has received a letter of award from an undisclosed customer for a proprietary data acquisition survey in south-east Asia. The total contract value of the survey is estimated to be in excess of USD 20 million.
Based on the letter of award, the Company has started mobilisation of the BOA Thalassa.
Subject to final contract award, EMGS expects to commence the survey in the first quarter of 2019.
As described in the Company’s Q4 2018 report, EMGS is experiencing a challenging market and liquidity situation and there is consequently some uncertainty related to the Company’s ability to meet its obligations under the USD 2.5 million free cash covenant under the Company’s convertible bond loan and bank facilities. The Company’s ability to meet this obligation is dependent on securing sufficient additional backlog and / or late sales from the Company’s multi-client library. Should the Company not be able to do this, or be able to raise additional capital through other measures, the going concern assumption may no longer be valid.
The letter of award announced by the Company today marks an important step in securing such additional backlog. This alone is not sufficient to ensure the short-term revenue and cash flow needed by EMGS to be able to meet its obligations under the free cash covenant and continue operations. Therefore, the Company has implemented a number of cost cutting and other measures to address the liquidity situation, in addition to intensifying efforts to secure backlog and multi-client late sales, and obtain further financing.
Additional details will be announced in due course.
Hege Veiseth, CFO, +47 99 21 67 43