PGS ASA

Earnings Release • Oct 22, 2020

PGS ASA: Third Quarter 2020 Results

PGS ASA: Third Quarter 2020 Results

Actively Addressing a Challenging Market

Refinancing Progressing According to Plan

Takeaways Q3 2020

* Segment Revenues of $116.1 million, compared to $234.2 million in Q3 2019

* Segment EBITDA of $88.4 million, compared to $160.1 million in Q3 2019

* Segment EBIT (excluding impairments and other charges) of $0.5 million,

compared to $37.9 million in Q3 2019

* Segment MultiClient pre-funding revenues of $50.4 million, with a

corresponding pre-funding level of 89%, compared to $94.9 million and 125%,

respectively, in Q3 2019

* Cash flow from operations of $65.9 million, compared to $151.9 million in Q3

2019

* As reported revenues according to IFRS of $85.1 million and an EBIT loss of

$4.3 million, compared to $276.5 million and EBIT of $50.3 million,

respectively, in Q3 2019

* Completed reorganization reducing annual gross cash cost by more than 33% to

below $400 million

* Recognized $23.2 million of government grants relating to the Covid-19

pandemic

* Currently in default under loan agreements. Agreement with sufficient

majority of lenders to prevent acceleration and to implement extension of

maturities and debt amortization to September 2022 and beyond (see

description in Note 11 in the Condensed Interim Consolidated Financial

Statements)

"The widespread disruptions in the oil market and the significant reduction in

energy companies' 2020 budget continued to impact the seismic market in the

third quarter. Our vessel utilization ended at 71%, of which a large majority

was allocated to MultiClient. The standby time of 11% reflects the dramatic

reduction of activity levels and challenge of securing acquisition projects into

the winter season. However, we optimized vessel utilization from our integrated

service offering by being agnostic to whether seismic acquisition is done as a

contract job or a MultiClient project. We mix and match the two business models

to get the best commercial value. During the third quarter we secured and

executed on significant work programs originating from our portfolio of

MultiClient prospects.

In August we started working in our new organization after a comprehensive

reorganization to reduce cost and adapt to the disruptions caused by the Covid-

19 pandemic. Including the vessel capacity reductions implemented in the first

half of the year, our annualized gross cash cost is reduced from approximately

$600 million to below $400 million.

To preserve liquidity and secure business continuity we have over the last

months engaged and negotiated with our lenders. Towards the end of the quarter

we announced an agreement in principle with a majority of them on main terms. I

am pleased that we have now signed up with a sufficient majority of lenders and

will proceed to swiftly implement the agreement on a consensual basis if we

achieve 100% support from lenders. Alternatively the solution will be

implemented by using a UK scheme of arrangement, for which we have support from

the required super majority of lenders. No debt maturities and no scheduled debt

amortization until September 2022, together with our substantial cost

reductions, will improve our liquidity profile significantly and enable us to

maneuver through these challenging times.

Going into the fourth quarter all our vessels are preparing for their next jobs,

but we will incur some standby time. However, we expect higher revenues from

vessel operations going forward. We have an acceptable leads basket for

MultiClient data library sales and expect higher sales in the fourth quarter,

compared to the average of the previous three quarters."

Rune Olav Pedersen,

President and Chief Executive Officer

Outlook

The revised and significantly lower 2020 investment plans among energy companies

has significantly reduced demand for seismic services. A majority of the

reduction is postponements to 2021 and beyond, in order for the energy companies

to protect cash flow in a period where the Covid-19 pandemic has caused extreme

disruptions in the oil market.

PGS believes it will take time for seismic demand to get back to pre-Covid 19

levels. However, combining the effects of potential pent-up demand, a more

stable oil price through second half of 2020 and an expectation of higher oil

prices in 2021, PGS believes in increasing activity levels through 2021. Despite

the impacts of the Covid-19 crisis, energy consumption is expected to continue

to increase in the future with oil and gas continuing to play an important role

in the energy mix. Offshore reserves will be vital for future supply and support

the demand for marine seismic services. The expected future recovery of the

seismic industry is likely to benefit by the recent further industry capacity

reductions.

Based on current operational projections, with five 3D vessels operated for the

remaining part of 2020, and with reference to disclosed risk factors, PGS

expects full year 2020 gross cash costs to be below $450 million, excluding

severance and other restructuring costs of approximately $35 million.

2020 MultiClient cash investments are expected to be approximately $225 million.

Approximately 65% of 2020 active 3D vessel time is currently expected to be

allocated to MultiClient acquisition.

Capital expenditure for 2020 is expected to be below $40 million.

The order book totaled $160 million at September 30, 2020 (including $52 million

relating to MultiClient). The order book was $155 million at June 30, 2020 and

$336 million at September 30, 2019.

+------------------------------+-----------------+----------------+------------+

|  |   |   |   |

| | | | |

|  | Quarter ended | Year to date | Year ended |

| | September 30, | September 30, |December 31,|

|  +--------+--------+--------+-------+------------+

| | | | | | |

|Consolidated Key Financial | | | | | |

|Figures | | | | | |

|(In USD millions, except per |   |   |   |   |   |

|share data) | 2020 | 2019 | 2020 | 2019 | 2019 |

+------------------------------+--------+--------+--------+-------+------------+

|Profit and loss numbers | | | | | |

|Segment Reporting |  |  |  |  |  |

+------------------------------+--------+--------+--------+-------+------------+

|Segment Revenues | 116.1|   234.2| 423.1| 591.7| 880.1|

+------------------------------+--------+--------+--------+-------+------------+

|Segment EBITDA ex. other | | | | | |

|charges, net | 88.4|   160.1| 268.1| 362.0| 556.1|

+------------------------------+--------+--------+--------+-------+------------+

|Segment EBIT ex. impairment | | | | | |

|and other charges, net | 0.5|    37.9|  (8.3)| 26.3| 96.4|

+------------------------------+--------+--------+--------+-------+------------+

|  |  |  |  |  |  |

+------------------------------+--------+--------+--------+-------+------------+

|Profit and loss numbers As | | | | | |

|Reported |  |  |  |  |  |

+------------------------------+--------+--------+--------+-------+------------+

|Revenues | 85.1|  276.5| 304.3| 598.2| 930.8|

+------------------------------+--------+--------+--------+-------+------------+

|EBIT | (4.3)| 50.3| (166.6)| 0.4| 54.6|

+------------------------------+--------+--------+--------+-------+------------+

|Net financial items, other | (24.3)|  (12.9)|  (87.1)| (66.7)| (92.2)|

+------------------------------+--------+--------+--------+-------+------------+

|Income (loss) before income | | | | | |

|tax expense | (28.6)| 37.4| (253.7)| (66.3)| (37.6)|

+------------------------------+--------+--------+--------+-------+------------+

|Income tax expense | (4.0)|  (5.9)|  (7.6)| (16.3)| (34.1)|

+------------------------------+--------+--------+--------+-------+------------+

|Net income (loss) to equity | | | | | |

|holders | (32.6)| 31.5| (261.3)| (82.6)| (71.7)|

+------------------------------+--------+--------+--------+-------+------------+

|Basic earnings per share ($ | | | | | |

|per share) | (0.08)| 0.09|  (0.69)| (0.24)| (0.21)|

+------------------------------+--------+--------+--------+-------+------------+

|  |  |  |  |  |  |

+------------------------------+--------+--------+--------+-------+------------+

|Other key numbers As Reported | | | | | |

|by IFRS: |  |  |  |  |  |

+------------------------------+--------+--------+--------+-------+------------+

|Net cash provided by operating| | | | | |

|activities | 65.9| 151.9| 309.3| 379.5| 474.3|

+------------------------------+--------+--------+--------+-------+------------+

|Cash Investment in MultiClient| | | | | |

|library | 56.8| 75.7| 189.2| 203.5| 244.8|

+------------------------------+--------+--------+--------+-------+------------+

|Capital expenditures (whether | | | | | |

|paid or not) | 8.4| 10.7| 24.7| 41.4| 59.1|

+------------------------------+--------+--------+--------+-------+------------+

|Total assets | 2,137.8| 2,262.4| 2,137.8|2,262.4| 2,301.7|

+------------------------------+--------+--------+--------+-------+------------+

|Cash and cash equivalents | 193.7| 36.0| 193.7| 36.0| 40.6|

+------------------------------+--------+--------+--------+-------+------------+

|Net interest bearing debt | 919.7| 1,015.9| 919.7|1,015.9| 1,007.5|

+------------------------------+--------+--------+--------+-------+------------+

|Net interest bearing debt, | | | | | |

|including lease liabilities | | | | | |

|following IFRS 16 | 1,078.8| 1,220.3| 1,078.8|1,220.3| 1,204.6|

+------------------------------+--------+--------+--------+-------+------------+

A complete version of the Q3 2020 earnings release and presentation can be

downloaded from www.newsweb.no (http://www.newsweb.no) and www.pgs.com

(http://www.pgs.com).

The Q3 2020 audio cast can be accessed from this link:

https://channel.royalcast.com/webcast/hegnarmedia/20201022_1/

(https://eur04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fchannel.royal

cast.com%2Fwebcast%2Fhegnarmedia%2F20201022_1%2F&data=02%7C01%7CBard.Stenberg%40

pgs.com%7C46137275ccd64c570f0008d86450a99a%7C51d05d6147e9480b93b298dc84f1ed06%7C

1%7C0%7C637369644889106384&sdata=ewtvLFrWLDE37GeSDnOtqX1wutkd%2Bdw0lfqS7tkIYxw%3

D&reserved=0)

FOR DETAILS, CONTACT:

Bård Stenberg, SVP IR & Communication

Mobile:  +47 99 24 52 35

****

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 and the PGS share is listed

on the Oslo stock exchange (OSE: PGS). For more information on PGS visit

www.pgs.com (http://www.pgs.com).

****

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 2019 and the Q3 2020 earnings release. 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.