PGS Petroleum Geo Svcs Asa New

Highlights Q3 2017

• Rune Olav Pedersen appointed new President & CEO with effect from September 1, 2017
• Revenues of $207.6 million, compared to $224.1 million in Q3 2016
• EBITDA of $108.6 million, compared to $112.7 million in Q3 2016
• EBIT, excluding impairments and other charges, a loss of $30.4 million, compared to a loss of $5.4 million in Q3 2016
• Impairments and other charges of $82.9 million related to stacked vessels and specific MultiClient surveys, and in addition a write down of remaining deferred tax asset  
• MultiClient pre-funding revenues of $101.8 million with a corresponding pre-funding level of 124%, compared to $84.3 million and 134% in Q3 2016
• MultiClient late sales of $47.8 million, compared to $63.2 million in Q3 2016
• Cash flow from operations of $118.4 million, compared to $80.4 million in Q3 2016 
• Liquidity reserve of $224.2 million, compared to $417.3 million in Q3 2016

"Our MultiClient business continues to deliver solid revenues. The pre-funding level of 124% achieved in Q3 is driven by GeoStreamer MultiClient projects offshore Canada and in the North Sea. MultiClient late sales were satisfactory considering the impacts of Hurricane Harvey and that we did not benefit from any particular license rounds this quarter.

The improved pricing for marine contract projects in Q3 compared to last year was offset by a challenging project in Asia Pacific, resulting in unsatisfactory financial results for our marine contract activities in the quarter.

The order book decreased sequentially as a result of high production and low order intake, however the negative trend ceased in October and subsequent to quarter end we have secured several projects for execution in Q4 and Q1 2018.

We are taking measures to be able to deliver positive cash flow after debt service in the current challenging environment by implementing a centralized, simplified and streamlined organizational structure, combined with a reduced baseline for 3D capacity and improved flexibility for vessels and imaging. These initiatives will reduce our gross cash cost by at least $100 million in 2018, compared to our operating costs this year."
   

Rune Olav Pedersen,
President and Chief Executive Officer

Outlook
PGS expects the improved cash flow among clients, combined with growing limitations on streamer availability in the industry, to benefit marine 3D seismic market fundamentals longer-term. There is a risk that a market recovery will take some time. Increased seasonal variations will impact activity and pricing in the coming winter season.

Based on the current operational projections and with reference to disclosed risk factors, PGS expects full year 2017 gross cash cost to be below $700 million.

MultiClient cash investments are expected to approximate $225 million, with a pre-funding level above 100%.

Approximately 45% of the 2017 active 3D vessel time is expected to be allocated to MultiClient acquisition.

Capital expenditure for 2017 is expected to approximate $150 million, of which approximately $89 million relates to the delivery of Ramform Hyperion in Q1 2017.

The order book totaled $167 million at September 30, 2017 (including $115 million relating to MultiClient), compared to $248 million at June 30, 2017 and $190 million at September 30, 2016. Order intake improved in October and subsequent to 30 September the Company has received awards amounting to approximately $55 million.

A complete version of the Q3 2017 earnings release and presentation can be downloaded from www.newsweb.no and www.pgs.com.

Petroleum Geo-Services ("PGS" or "the Company") is a focused Marine geophysical company that provides a broad range of seismic and reservoir services, including acquisition, imaging, interpretation, and field evaluation. The Company's MultiClient data library is among the largest in the seismic industry, with modern 3D coverage in all significant offshore hydrocarbon provinces of the world. The Company operates on a worldwide basis with headquarters in Oslo, Norway.

PGS has a presence in 17 countries with regional centers in London, Houston and Kuala Lumpur. Our headquarters is in Oslo, Norway and the PGS share is listed on the Oslo stock exchange (OSE: PGS).

For more information on Petroleum Geo-Services visit www.pgs.com.

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The information included herein contains certain forward-looking statements that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and uncertainties. The Company is subject to a large number of risk factors including but not limited to the demand for seismic services, the demand for data from our multi-client data library, the attractiveness of our technology, unpredictable changes in governmental regulations affecting our markets and extreme weather conditions. For a further description of other relevant risk factors we refer to our Annual Report for 2016. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward-looking statements. The reservation is also made that inaccuracies or mistakes may occur in the information given above about current status of the Company or its business. Any reliance on the information above is at the risk of the reader, and PGS disclaims any and all liability in this respect.

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