PGS ASA

Earnings Release • Apr 26, 2018

Petroleum Geo-Services ASA: First Quarter 2018 Results

Petroleum Geo-Services ASA: First Quarter 2018 Results

A Good Start for Achieving Positive 2018 Cash Flow

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

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

external financial reporting method. This change impacts the timing of revenue

recognition for MultiClient pre-funding revenues and related amortization. PGS

will for internal management purposes continue to use the revenue recognition

principles applied in previous periods, 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 will not restate prior periods.

Highlights Q1 2018

* As Reported revenues of $201.3 million and EBIT loss of $7.3 million,

according to IFRS

* Segment Revenues of $197.8 million, compared to $154.8 million in Q1 2017

* Segment EBITDA of $92.3 million, compared to $30.1 million in Q1 2017

* Segment EBIT, a loss of $22.7 million, compared to a loss of $83.5 million

in Q1 2017

* Segment MultiClient pre-funding revenues of $58.6 million with a

corresponding pre-funding level of 109%, compared to $39.7 million and 118%

in Q1 2017

* Segment MultiClient late sales revenues of $83.5 million, compared to $39.3

million in Q1 2017

* Cash flow from operations of $73.4 million, compared to $30.0 million in Q1

2017

* Total Leverage Ratio, as defined in the Company's Credit Facility, below

3.0:1

"The favorable geographical spread of our MultiClient library and our well

positioned surveys, combined with improving market sentiment contributed to

solid MultiClient late sales revenues in the quarter. MultiClient pre-funding

revenues were dominated by new data acquisition in Brazil and West Africa, and

we achieved a pre-funding level of 109%, within our targeted range. With a

capitalized MultiClient cash investment of $53.7 million, our segment sales-to-

investment ratio was more than 2.6 times.

All our contract activities in the quarter were offshore West Africa, and we

expect to continue to operate some of our vessels in this region in the coming

quarters. The marine contract market is still challenging and was, as expected,

seasonally weak also this winter. We expect pricing for contract work to be

higher during the summer season compared to what we have achieved this winter.

This was our first quarter operating under the new organizational structure, and

I am pleased to see that we do so with success. Revenue generation is ahead of

plan, while our Q1 gross cash cost was impacted by higher activity level and the

fact that some cost reductions have gradually taken effect during the quarter.

Our full year 2018 cost guidance is adjusted to reflect the impact of a weaker

USD, higher fuel prices and changes to our project schedule. The first quarter

results and our progress to date reaffirm our confidence in being on track to be

cash flow positive after debt service this year."

Rune Olav Pedersen,

President and Chief Executive Officer

Outlook

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

unsustainable reserve replacement ratios to benefit marine seismic market

fundamentals going forward. While the Company expects market sentiment to

improve during 2018, there remains a risk that a market recovery will take some

time. The Company continues to plan its cost and capital expenditures for 2018

to achieve a positive cash flow post debt service.

Based on the current operational projections and with reference to disclosed

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

million.

2018 MultiClient cash investments are expected to be approximately $2750

million.

Approximately 60% of the 2018 active 3D vessel time is expected to be allocated

to MultiClient acquisition.

Capital expenditure for 2018 is expected to be approximately $50 million.

The order book totaled $211 million at March 31, 2018 (including $161 million

relating to MultiClient), compared to $135 million at December 31, 2017 and $340

million at March 31, 2017. The Company has mobilized both of the two flexible

winter capacity vessels to the market and plan to operate eight 3D vessels

during the summer season 2018.

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

|  |   |   |

|  |   | Year ended |

|  | Quarter ended |December 31,|

|Consolidated Key Financial Figures | March 31, | |

|(In USD millions, except per share data) +-------+-------+------------+

| |   |   |   |

| | 2018 | 2017 | 2017 |

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

|As Reported under IFRS 15: |  |  |  |

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

|Revenues | 201.3| 154.8| 838.8|

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

|EBIT | (7.3)| (93.7)| (383.6)|

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

|Income (loss) before income tax expense | (29.6)|(103.0)| (468.1)|

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

|Net income (loss) to equity holders | (40.0)|(106.5)| (523.4)|

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

|Basic earnings per share ($ per share) | (0.12)| (0.32)| (1.55)|

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

|Net cash provided by operating activities | 73.4| 30.0| 281.8|

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

|Cash Investment in MultiClient library | 53.7| 33.6| 213.4|

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

|Capital expenditures (whether paid or not) | 4.0| 101.6| 154.5|

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

|Total assets |2,501.9|2,824.3| 2,482.4|

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

|Cash and cash equivalents | 38.4| 38.8| 47.3|

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

|Net interest bearing debt |1,150,9|1,093.2| 1,139.4|

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

|  |  |  |  |

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

|Segment Reporting: |  |  |  |

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

|Segment Revenues | 197.8| 154.8| 838.8|

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

|Segment EBITDA | 92.3| 30.1| 374.1|

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

|Segment EBIT ex. impairments and other charges, | (22.7)| (83.5)| (147.1)|

|net | | | |

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

A complete version of the Q1 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.