PGS ASA

Investor Presentation • Apr 25, 2019

First Quarter 2019 Earnings Presentation

April 25, 2019

• This presentation contains forward looking information
• Forward looking information is based on management assumptions and analysis
• Actual experience may differ, and those differences may be material
• Forward looking information is subject to significant uncertainties and risks as they relate to events and/or circumstances in the future
• This presentation must be read in conjunction with the press release for the first quarter 2019 results and the disclosures therein

Q1 2019 Highlights: Weak Results – Full Year Intact

• Results reflect seasonal distribution of 2019 MultiClient investment
• Overweight of low prefunded surveys
• Will reverse in coming quarters
• 2019 prefunding expected in the upper half of 80-120%
• Strong order book increase
• More than 35% higher contract prices on booked 2019 capacity compared to average 2018

Prefunding Level Impacted by Overweight of Low Prefunded Surveys

• MultiClient offshore Angola with Ramform Sovereign Positioning for Angola's new licensing strategy commencing June 2019
• MultiClient offshore Malaysia/Sabah with Ramform Hyperion – 2019 exploration bid round closes late April, and PGS has sold well in surrounding areas
• MultiClient offshore Guinea with Ramform Atlas Planned for execution in 2019, was accelerated due to incident offshore Guyana

Financial Summary

*EBITDA, when used by the Company, means EBIT excluding Other charges, impairment and loss/gain on sale of long-term assets and depreciation and amortization as defined in Note 14 of the Q1 2019 earnings release. **Excluding impairments and Other charges.

Order Book

• Order book USD 238 million at March 31, 2019
• Vessel booking*
• Q2 19: 24 vessel months
• Q3 19: 20 vessel months
• Q4 19: 8 vessel months
• In the process of finalizing contracts with a minimum value of USD 60 million, which are included in vessel booking
• Visibility significantly improved
• Strong Q2/Q3 utilization expected

Financials

Unaudited First Quarter 2019 Results

Effects of IFRS 16

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At January 1, 2019 PGS recognized lease liabilities for all assets that were previously classified as operating leases

• A significant portion of lease costs are directly incurred while acquiring seismic, and as such are eligible for capitalization to the MultiClient library
• Adoption of IFRS 16 will for 2019 result in;
• A reduction in gross cash costs of ~USD 50 million
• A reduction of capitalized cash investment in MultiClient library ~USD 20 million (depending on vessel utilization)
• Lease costs previously recognized within gross cash costs will be replaced by depreciation of ~USD 40 million and interest expense of ~USD 15 million

Estimated lease liability based on existing agreements		Estimated January 1, 2019 Balance Sheet impact		Estimated 2019 P&L impact		Composition of January 1, 2019 lease liability
Date	Lease liability	Caption	Impact	Caption	Impact	GBP
1.1.2019	~\$238M	Property and equipment	+ ~\$202M	Red. gross cash costs	~\$50M	NOK
1.1.2020	~\$196M			Incr. depreciation	~\$40M	USD
1.1.2021	~\$151M	Accrued expenses	- ~\$27M	Incr. interest expense	~\$15M
1.1.2022	~\$115M	Short term debt	+ ~\$42M	Red. cash investment in	~\$20M
1.1.2023	~\$78M	Long term debt	+ ~\$196M	MC library
1.1.2024	~\$45M	Shareholders' equity	- ~\$9M	Incr. capitalization of depreciation	~\$16M
				Increased EBITDA	~\$30M	Vessels Offices/other

Consolidated Key Financial Figures

	Q1	Q1	Full year
USD million (except per share data)	2019	2018	2018
Profit and loss numbers Segment Reporting
Segment revenues	141.9	197.8	834.5
Segment EBITDA	66.6	92.3	515.9
Segment EBIT ex. Impairment and other charges, net	(29.3)	(22.7)	36.3
Profit and loss numbers As Reported		5
Revenues	129.3	201.3	874.3
EBIT	(42.5)	(7.3)	39.4
Net financial items	(22.0)	(22.3)	(87.3)
Income (loss) before income tax expense	(64.5)	(29.6)	(47.9)
Income tax expense	(0.6)	(10.4)	(40.0)
Net income (loss) to equity holders	(65.1)	(40.0)	(87.9)
Basic earnings per share (\$ per share)	(\$0.19)	(\$0.12)	(\$0.26)
Other key numbers
Net cash provided by operating activities	119.4	73.4	445.9
Cash Investment in MultiClient library	62.1	53.7	277.1
Capital expenditures (whether paid or not)	11.5	4.0	42.5
Total assets	2,497.6	2,501.9	2,384.8
Cash and cash equivalents	90.4	38.4	74.5
Net interest bearing debt	1,051.7	1,150.7	1,109.6
Net interest bearing debt, including lease liabilities following IFRS 16*	1,282.9

*Following implementation of IFRS 16, prior periods are not comparable to March 2019.

The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited first quarter 2019 results, released on April 25, 2019.

Q1 2019 Operational Highlights

• Total Segment MultiClient revenues of USD 90.9 million
• Overweight of low prefunded MultiClient projects
• Pre-funding level of 48% on USD 62.1 million of MultiClient cash investment
• Late sales: Limited Q1 triggering events but inside normal quarterly variations
• Contract revenues starting to benefit from higher 2019 pricing, but still impacted by some projects with seasonally weak price

Pre-funding and Late Sales Revenues Combined: Segment MultiClient Revenues per Region

• Asia Pacific the main contributor to prefunding revenues in Q1 2019
• Late sales revenues dominated by Europe and South America

Seismic Streamer 3D Fleet Activity in Streamer Months: Vessel Utilization*

• 67% active vessel time in Q1 2019
• Two (of eight) 3D vessels warm stacked
• Some idle time on other vessels
• High vessel utilization expected in Q2 and Q3
• ~50% of active vessel capacity scheduled for MultiClient in Q2

Group Cost* Focus Delivers Results

• Graph shows gross cash costs excluding the effect of steaming deferral
• Q1 2019 gross cash costs impacted by
• Implementation of IFRS 16
• Higher project specific cost for some surveys

Full year 2019 gross cash costs of ~USD 550 million

*Gross cash costs are defined as the sum of reported net operating expenses (excluding depreciation, amortization, impairments, deferred steaming and Other charges) and the cash operating costs capitalized as investments in the MultiClient library as well as capitalized development costs. Following the reorganization of PGS, effective January 1, 2018, more office facility and sales costs are classified as "Selling, general and administrative costs." -13-

Consolidated Statements of Cash Flows Summary

	Q1	Q1	Full year
USD million	2019	2018	2018
Cash provided by operating activities	119.4	73.4	445.9
Investment in MultiClient library	(62.1)	(53.7)	(277.1)
Capital expenditures	(9.7)	(14.1)	(48.0)
Other investing activities	38.8	(7.1)	(25.0)
Net cash flow before financing activities	86.4	(1.5)	95.8
Financing activities	(70.4)	(7.5)	(68.6)
Net increase (decr.) in cash and cash equiv.	16.0	(9.0)	27.2
Cash and cash equiv. at beginning of period	74.4	47.3	47.3
Cash and cash equiv. at end of period	90.4	38.3	74.4

• Working capital positively impacts cash flow from operations
• Received first 50% installment from sale Ramform Sterling
• Q1 net cash flow impact of USD 44.6 million after costs to relocate and make the vessel ready for delivery
• Incurred USD 7.1 million of CAPEX for reactivation Ramform Vanguard in Q1

	March 31	March 31	December 31
USD million	2019	2018	2018
Total assets	2,497.6	2,501.9	2,384.8
MultiClient Library	675.0	671.7	654.6
Shareholders' equity	643.5	767.2	721.8
Cash and cash equivalents (unrestricted)	90.4	38.4	74.5
Restricted cash	42.1	42.4	43.2
Liquidity reserve	205.4	233.4	159.5
Gross interest bearing debt*	1,184.2	1,231.5	1,227.3
Gross interest bearing debt, including lease liabilities following IFRS 16*	1,415.4
Net interest bearing debt*	1,051.7	1,150.7	1,109.6
Net interest bearing debt, including lease liabilities following IFRS 16*	1,282.9

• Net interest bearing debt (ex. lease liabilities) of USD 1,051.7 million
• Liquidity reserve of USD 205.4 million
• Total Leverage Ratio (as defined in credit agreement) of 2.85:1

Summary of Debt and Drawing Facilities

Long-term Credit Lines and Interest Bearing Debt Nominal Amount Total Credit Line Financial Covenants USD 400.0m TLB, due March 2021 Libor (minimum 0.75%) + 250 bps USD 380.0m None, but incurrence test: total leverage ratio ≤ 3.00x* Revolving credit facility ("RCF"), due September 2020 Libor + margin of 325-625 bps (linked to TLR) + utilization fee USD 235.0m USD 350.0m Maintenance covenant: total leverage ratio 3.25x Q1-19, thereafter reduced by 0.25x each quarter to 2.75x by Q3-19 Japanese ECF, 12 year with semiannual instalments. 50% fixed/ 50% floating interest rate USD 357.2m None, but incurrence test for loan 3&4: Total leverage ratio ≤ 3.00x* and Interest coverage ratio ≥ 2.0x* December 2020 Senior Notes, coupon of 7.375% USD 212.0m None, but incurrence test: Interest coverage ratio ≥ 2.0x*

Debt and facilities as of March 31, 2019:

Debt maturity profile:

Likely to refinance in 2019

• Positioned to execute on short notice

• Timing and structure dependent on market conditions/cost

• MultiClient revenues are increasingly dominant in revenue mix, resulting in higher quarterly earnings volatility

• Announcement on the 7th Norwegian working day after quarter end, will include:
• Vessel allocation
• Revenues
• May include additional information to the extent relevant or required
• Will be introduced from Q2 2019

Operational Update and Market Comments

Unaudited First Quarter 2019 Results

Streamer Operations April 2019

Update on Sale of Ramform Sterling to JOGMEC and Related Service Agreements

• Entered into service agreements of up to 10 years with annual renewals
• Ramform Sterling delivered in April 2019
• Sales price of ~USD 103 million, excluding streamers
• First (~50%) installment received in March 2019
• Second (~26%) installment received in April 2019
• Remaining amount to be paid in April 2020
• Ramform Vanguard reintroduced from May 2019 to maintain operated fleet size
• Reached agreement to buy back Shigen (Ramform Victory)
• Likely to initially be used as source vessel on existing projects

Seismic Market Outlook

• Significant cash flow generation among oil companies and an increase in E&P spending, including offshore spending, are expected to contribute to further recovery of the marine seismic market
• Contract seismic likely to benefit the most
• More than 35% higher prices on 2019 contract work booked to date vs. average rate in 2018
• Significant contract awards YTD
• Improves visibility
• Reduce sales leads/tenders values
• 2019 seismic volume expected to be approximately 10- 15% higher vs. 2018

^*Contract bids to go (in-house PGS) and estimated \$ value of bids + risk weighted leads as of April 12, 2019 Source to both graphs: PGS internal estimates

Significant Supply Reduction Since 2013 – No Material Short-term Increase

• 2019 capacity close to 50% lower than average capacity in 2013
• And inline with 2018 capacity
• Expect full utilization of industry capacity during summer season

• Group gross cash cost of ~USD 550* million, excluding deferred steaming

• MultiClient cash investments ~USD 250* million
• More than 50% of 2019 active 3D vessel time allocated to MultiClient

• Capital expenditures of ~USD 85 million

*Adoption of IFRS 16 from January 1, 2019 results in a reduction of gross cash cost of approximately USD 50 million compared to 2018, partially offset by a reduction in capitalized MultiClient cash investment expected to be approximately USD 20 million. See Note 16 of the Q1 2019 results earnings release for more details.

Summary

• Q1 results impacted by an overweight of low prefunded MultiClient surveys
• Full year prefunding level expected to be in the upper half of 80-120%
• Strong order book increase
• Booked contract prices significantly higher than average for 2018
• Seismic market is recovering
• Improving cash flow and increasing offshore CAPEX among oil companies
• Expected to continue in 2019

Taking leadership position through fully integrated offering

Thank You – Questions?

Appendix Main Yard Stays* Next Six Months

Vessel	When	Expected Duration	Type of Yard Stay
Apollo	Q3 2019	22 days	Main class
Ramform Hyperion	Q4 2019	14 days	Scrubber installation

*Yard stays are subject to changes.

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