PGS ASA

Earnings Release • Oct 18, 2018

Petroleum Geo-Services ASA: Third Quarter 2018 Results

Petroleum Geo-Services ASA: Third Quarter 2018 Results

Investing in MultiClient Growth

Note: Petroleum Geo-Services ASA and its subsidiaries ("PGS" or "the Company")

implemented the new revenue recognition standard, IFRS 15, as the Company's

external financial reporting method. This change, which took effect January

1(st) 2018, impacts the timing of revenue recognition for MultiClient pre-

funding revenues and related amortization. For internal management purposes PGS

continues to use the revenue recognition principles applied in previous years,

which are based on percentage of completion, and use this for numbers disclosed

as Segment Reporting. See Note 15 for definitions of terms discussed in this

report. See Note 16 for a description of the change in revenue recognition

resulting from the implementation of IFRS 15. PGS has not restated prior

periods.

Highlights Q3 2018

* As Reported revenues of $163.4 million and an EBIT loss of $10.4 million,

according to IFRS

* Segment Revenues of $192.1 million, compared to $207.6 million in Q3 2017

* Segment EBITDA of $132.8 million, compared to $108.6 million in Q3 2017

* Segment EBIT loss of $2.7 million, compared to a loss of $30.4 million in Q3

2017

* Segment MultiClient pre-funding revenues of $95.7 million with a

corresponding pre-funding level of 94%, compared to $101.8 million and 124%

in Q3 2017

* Segment MultiClient late sales revenues of $56.0 million, compared to $47.8

million in Q3 2017

* Cash flow from operations of $133.3 million, compared to $118.4 million in

Q3 2017

* Total Leverage Ratio, as defined in the Company's Credit Facility, of 2.75:1

"With a majority of our vessel capacity allocated to MultiClient in the third

quarter we invested more than $100 million in attractive MultiClient projects

and continued to expand our MultiClient data library. We believe we will harvest

from these investments in a strengthening market going forward. MultiClient late

sales did not benefit from any specific license rounds in the third quarter.

Going into the fourth quarter it is encouraging that our leads for MultiClient

late sales are better than for many years.

Contract revenues in the third quarter reflect a still challenging market.

However, the sentiment is improving and year-to-date we have achieved higher

contract prices and margins compared to last year.

Despite a large opportunity pipeline for acquisition surveys, the process of

formalizing projects and getting contracts signed has taken longer than

expected. We are not satisfied with how the order book has developed during the

quarter, ending at $144 million. We will operate six vessels during the winter

in accordance with our plan for the year, but we will incur idle time in Q4 due

to late commencement of some projects.

Looking beyond the near term challenge on vessel utilization our market view is

unchanged. We believe fundamentals are improving; with a Brent blend oil price

in excess of $80 per barrel the total value of bids and leads for contract work

at its highest level for more than 3.5 years and a strong increase in

MultiClient sales compared to last year."

Rune Olav Pedersen,

President and Chief Executive Officer

Outlook

PGS expects the higher oil price, improved cash flow among clients and an

exceptionally low oil and gas discovery rate to benefit marine seismic market

fundamentals going forward. The Company continues to plan its cost and capital

expenditures for 2018 to achieve positive cash flow post debt service(1).

Based on current operational projections and with reference to disclosed risk

factors, PGS expects full year 2018 gross cash costs of approximately $600

million.

2018 MultiClient cash investments are expected to be approximately $285 million.

Approximately 65% of 2018 active 3D vessel time is expected to be allocated to

MultiClient acquisition.

Capital expenditure for 2018 is expected to be approximately $40 million.

The order book totaled $144 million at September 30, 2018 (including $110

million relating to MultiClient), compared to $187 million at June 30, 2018 and

$167 million at September 30, 2017.

(1 )The financial target of being cash flow positive after debt servicing

excludes payments relating to severance and other restructuring provisions made

in Q4 2017 as well as drawings/repayments on the RCF.

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

|  |   |   |   |

|  |   |   | Year ended |

|  | Quarter ended | Nine months |December 31,|

|Consolidated Key Financial | September 30, | ended | |

|Figures | | September 30, | |

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

|share data) |   |   |   |   |   |

| | 2018 | 2017 | 2018 | 2017 | 2017 |

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

|Profit and loss numbers Segment |  |  |  |  |  |

|Reporting* | | | | | |

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

|Segment Revenues | 192.1| 207.6| 589.3| 602.9| 838.8|

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

|Segment EBITDA | 132.8| 108.6| 361.2| 251.3| 374.1|

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

|Segment EBIT ex. Impairment and | (2.7)| (30.4)| (11.7)|(122.6)| (147.1)|

|other charges, net | | | | | |

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

|  |  |  |  |  |  |

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

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

|Reported under IFRS 15: | | | | | |

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

|Revenues | 163.4| 207.6| 604.5| 602.9| 838.8|

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

|EBIT | (10.4)|(113.3)| 13.0|(224.4)| (383.6)|

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

|Income (loss) before income tax | (28.6)|(136.1)| (43.3)|(276.6)| (468.1)|

|expense | | | | | |

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

|Net income (loss) to equity | (35.4)|(189.9)| (64.4)|(328.6)| (523.4)|

|holders | | | | | |

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

|Basic earnings per share ($ per | (0.10)| (0.56)| (0.19)| (0.97)| (1.55)|

|share) | | | | | |

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

|  |  |  |  |  |  |

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

|Other key numbers: |  |  |  |  |  |

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

|Net cash provided by operating | 133.3| 118.4| 328.6| 197.8| 281.8|

|activities | | | | | |

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

|Cash Investment in MultiClient | 101.9| 82.0| 236.9| 159.4| 213.4|

|library | | | | | |

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

|Capital expenditures (whether | 14.1| 16.6| 26.4| 131.1| 154.5|

|paid or not) | | | | | |

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

|Total assets |2,397.2|2,644.3|2,397.2|2,644.3| 2,482.8|

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

|Cash and cash equivalents | 44.4| 24.2| 44.4| 24.2| 47.3|

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

|Net interest bearing debt |1,149,0|1,113.2|1,149.0|1,113.2| 1,139.4|

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

For the definition of Segment Reporting see Note 14 of the unaudited third

quarter 2018 results, released on October 18, 2018

A complete version of the Q3 2018 earnings release and presentation can be

downloaded from www.newsweb.no and www.pgs.com.

FOR DETAILS, CONTACT:

Bård Stenberg, SVP IR & Communication

Phone:  +47 67 51 43 16

Mobile:  +47 99 24 52 35

****

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 and the PGS share is listed on the Oslo stock exchange (OSE: PGS). For

more information on Petroleum Geo-Services visit 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 2017. 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.

This information is subject to the disclosure requirements pursuant to section

5 -12 of the Norwegian Securities Trading Act.