Trading Update

Trading Update

SeaEnergy PLC (AIM: SEA) ("SeaEnergy" or the "Company"), the innovation-led offshore energy services business, announces a trading update in advance of its Annual General Meeting to be held at Stifel's offices, 150 Cheapside, at 3pm on June 3rd 2015.

Overview

The continuing weakness in oil prices is affecting activity levels across the oil and gas services sector. We anticipated that low oil prices would be most challenging in more mature basins, such as the North Sea, where costs are higher, and accelerated our internationalisation strategy in response to these pressures. This strategy has enabled us to identify a number of specific opportunities which are expected to contribute to revenue in 2015.

However, we are now seeing some planned R2S projects being delayed into later 2015 or 2016, and now anticipate R2S Visual Asset Management revenues for the full year to be broadly comparable to 2014. Now part of the consulting division, Max and Co has also been affected by project deferrals and budget freezes. On a more positive note, Forensic is outperforming its budget, and is seeing strong growth of licensing activity, especially in North America.

SeaEnergy does not now expect to achieve the overall levels of turnover it previously anticipated, but expects to achieve broadly comparable performance to 2014, despite the serious downturn in oil and gas activity levels.

R2S

SeaEnergy's R2S Visual Asset Management software/service remains the financial mainstay of the business. Our internationalisation strategy is beginning to bear fruit, with work already completed in the US, Mexico and Canada and specific opportunities in Ghana, Iraq, Indonesia, Australia, Malaysia, being actively pursued in addition to the North Sea.

SeaEnergy has now completed the significant contract for a global supermajor offshore Canada, to which we announced in January. This project has attracted very positive feedback and we are pursuing further opportunities both in Canada and elsewhere with this client.

However, the overall impact of the continuing weakness in oil price is triggering some project deferrals and budget freezes in our oil company clients; as a result we now expect our VAM revenue to be marginally below 2014, reflecting the unprecedented downturn in oil service activities around the world.

We continue to respond to oil price weakness by emphasising the very significant cost savings that can be realised through the use of R2S VAM technology and by making the case for R2S as a tool to plan decommissioning projects. We are also developing entry strategies for downstream oil and gas and for other industries where budgets have been less affected by oil price weakness.

SE Innovation

In 2014, SeaEnergy reorganised to fold the Max and Co design and communication and media agency and the Forensic activities into the consulting business. This has now been branded as SE Innovation, and is already developing new products to support the VAM side of the business as well as driving forward its core businesses.

Max and Co like R2S VAM has been affected by the general slowdown in work from oil and gas clients, although it is now developing new revenue sectors, to diversify away from this sector. It has already secured and delivered work in the architecture sector, and is bidding for projects in food and drink as well.

The Forensic division is ahead of expectations for the year, as sales of software licences are very strong, particularly in North America, and the division is pursuing additional growth opportunities in that area.

Marine

SeaEnergy Ship Management (SEASM) continues to manage three vessels for Go Offshore (Asia) Pte Ltd. Having decided to withdraw from tendering for offshore wind maintenance vessels, we have concluded that SEASM is non-core for the Group, and we are now reviewing exit strategies from ship management.

Legacy assets

The legacy assets, comprising the holding in Lansdowne Oil & Gas plc and various royalty instruments, remain non-core, and it remains our intention to exit these when the time is right. We note that Lansdowne has announced a strategic review of its business, and are remaining alert to opportunities this may present to achieve an exit for SeaEnergy.

Innovation

Despite the challenging business environment, innovation remains at the heart of SeaEnergy's business. We have been developing new products, using internal resources and focussing on keeping costs to a minimum, and are seeing strong appetite for these amongst our clients.

During 2015, we have been shortlisted for the Business Quarterly innovation award and for the Press and Journal Gold Award for "Innovation in the Future". It is very rewarding to achieve recognition for our innovative software, services and culture, and we continue to work hard in this area to maintain competitive advantage and the quality of service to our clients.

Outlook

Although current conditions are challenging, SeaEnergy expects to achieve operating performance before any non-recurring items broadly comparable with 2014. Our international expansion, focussed on R2S Visual Asset Management and associated consulting services, is accelerating and is expected to generate significant growth in revenue and earnings into the future.