PGS ASA

Regulatory Filings • Jun 8, 2020

PGS ASA: Implementing Further Cost Measures

PGS ASA: Implementing Further Cost Measures

June 8, 2020: Oslo, Norway, PGS implements further cost reductions to bring

annual gross cash cost run-rate to approximately $400 million through staff

reductions, re-organization, consolidation of offices, re-negotiation of service

agreements and other cost measures.

The Covid-19 pandemic and related disruption in the oil market have caused

unprecedented challenges for the seismic industry and will temporarily cause a

significant reduction of activity levels. PGS is responding to this challenge by

further adjusting its cost base to the lower activity level while retaining its

core global capabilities and ability to scale up when demand resumes.

PGS has earlier announced stacking of three out of the eight 3D vessels operated

at the start of the year, and several other cost measures. The Company will now

take steps to address the lower market activity by further streamlining its

organization and reducing office-based personnel by approximately 40%, including

reductions already implemented.

In combination with other cost measures, this is expected to reduce the

Company's annual gross cash cost run rate to approximately $400 million compared

to approximately $600 million as guided at the start of 2020. The corresponding

gross cash costs for 2020 are estimated to be approximately $460 million,

excluding severance and other restructuring costs of approximately $30 million

expected to be recognized in Q2 and Q3 2020. The annual gross cash cost run rate

is based on operating five 3D vessels. The Company is prepared to adjust

operated vessel capacity and offshore crew levels further if required.

As part of streamlining of the organization, all commercial activities,

including the current New Ventures unit, will be combined into one business

unit, Sales & Services, which will be headed by Nathan Oliver. Berit Osnes who

currently leads New Ventures will take a key management role in Sales & Services

following re-organization. The new organization is expected to be implemented

August 1, 2020.

"The current market situation is very challenging for the seismic industry. We

are addressing the activity reduction and low visibility by adjusting operations

and cost. We will scale down our organization significantly while retaining our

core capabilities and scalability to be in position to take advantage of what we

believe will be an improving market following the current crisis.

PGS has a strong market position and a resilient operating model and

organization. I am proud of how our employees are responding to yet another

challenging period for the industry. The PGS workforce has demonstrated strong

commitment and ability to adapt during previous organizational restructures, and

I am confident we will see the same during the weeks and months to come," says

President & CEO Rune Olav Pedersen.

FOR DETAILS, CONTACT:

Bård Stenberg, SVP IR & Corporate Communication

Mobile:  +47 99 24 52 35

***

PGS ASA and its subsidiaries ("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 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. 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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