PGS ASA

Earnings Release • Jul 27, 2017

Petroleum Geo-Services ASA: Second Quarter and First Half 2017 Results

Petroleum Geo-Services ASA: Second Quarter and First Half 2017 Results

Strong MultiClient Sales

Further Cost Reductions Initiated

Highlights Q2 2017

* Revenues of $240.5 million, compared to $183.0 million in Q2 2016

* EBITDA of $112.5 million, compared to $68.8 million in Q2 2016

* EBIT, excluding impairments and other charges, a loss of $8.7 million,

compared to a loss of $36.2 million in Q2 2016

* MultiClient pre-funding revenues of $50.2 million with a corresponding pre-

funding level of 115%, compared to $47.2 million and 113% in Q2 2016

* MultiClient late sales of $77.4 million, compared to $46.0 million in Q2

2016

* Cash flow from operations of $49.4 million, compared to $42.4 million in Q2

2016, with higher working capital from revenue increase in the second half

of Q2 expected to benefit Q3

* Liquidity reserve of $228.3 million, compared to $273.8 million in Q1 2017

and $429.7 million in Q2 2016

* Initiated capacity adjustment and other cost initiatives with estimated $50-

60 million annual run rate cash cost saving from Q4

* Commenced large MultiClient campaigns offshore East Canada with solid pre-

funding

* The Board of Directors is working according to the planned timeline for

appointment of a new CEO. Announcement is expected early autumn

"The robust MultiClient late sales performance in Q2 was primarily driven by a

diverse customer base in Europe and South America buying from our high quality

GeoStreamer data library. The MultiClient acquisition activity focused on the

North Sea and the Mediterranean. We experienced solid client interest, which

combined with low unit cost from our high productivity Ramform vessels led to a

pre-funding level of 115%. Our Marine contract revenues increased significantly

in the quarter. We allocated a majority of the capacity to contract work and

were, with strong operations, able to realize improved prices compared to last

year.

The order book decreased sequentially primarily in the marine contract segment

as expected, but is still higher than at the same time last year. In preparation

for the coming winter season where there is uncertainty relating to especially

Q4, we are planning to cold-stack the Ramform Vanguard after the North Sea

season. The capacity adjustment and further cost reduction initiatives will

result in annual run rate cash cost savings of $50-60 million with effect from

Q4.

The first half of 2017 has played out in accordance with our expectations and

within the scenarios we envisaged when we refinanced in Q4 2016. The successful

refinancing combined with a significantly lower cost base make PGS well

positioned to benefit from future market opportunities."

Jon Erik Reinhardsen,

President and Chief Executive Officer

Outlook

PGS expects the improved cash flow among clients, combined with growing

limitations on streamer availability in the industry, to benefit marine 3D

seismic market fundamentals going forward. Increased seasonal variations will

impact activity in the coming winter season. The Company expects the volume of

marine 3D seismic acquired by the industry in 2017 to be in line with the volume

acquired in 2016, but with a mix more focused on smaller and more capacity

intensive 4D production monitoring surveys and more MultiClient 3D projects.

Based on the current operational projections and with reference to disclosed

risk factors, PGS expects full year 2017 gross cash cost to be below $700

million.

MultiClient cash investments are expected to be approximately $250 million, with

a pre-funding level of approximately 100%.

Approximately 50% of the 2017 active 3D vessel time is expected to be allocated

to MultiClient acquisition.

Capital expenditure for 2017 is expected to be approximately $150 million, of

which approximately $89 million relates to Ramform Hyperion which was delivered

in Q1 2017.

The order book totaled $248 million at June 30, 2017 (including $182 million

relating to MultiClient), compared to $340 million at March 31, 2017 and $230

million at June 30, 2016.

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

|  |   |   |   |

|  |   |   | Year ended |

|  | Quarter ended | Six months |December 31,|

|Key Financial Figures | June 30, | ended | |

|(In USD millions, except per | | June 30, | |

|share data) +-------+-------+-------+-------+------------+

| |   |   |   |   |   |

| | 2017 | 2016 | 2017 | 2016 | 2016 |

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

|Revenues | 240.5| 183.0| 395.3| 386.1| 764.3|

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

|EBITDA | 112.5| 68.8| 142.6| 147.5| 313.3|

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

|EBIT ex. impairment and other | (8.7)| (36.2)| (92.2)| (66.3)| (137.5)|

|charges, net | | | | | |

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

|EBIT as reported | (17.4)| (44.6)|(111.1)| (76.1)| (180.3)|

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

|Income (loss) before income tax | (37.5)| (57.7)|(140.5)|(119.6)| (262.8)|

|expense | | | | | |

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

|Net income (loss) to equity | (32.2)| (51.8)|(138.7)|(108.7)| (293.9)|

|holders | | | | | |

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

|Basic earnings per share ($ per | (0.10)| (0.22)| (0.42)| (0.46)| (1.21)|

|share) | | | | | |

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

|Net cash provided by operating | 49.4| 42.4| 79.4| 175.8| 320.9|

|activities | | | | | |

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

|Cash investment in MultiClient | 43.8| 41.8| 77.4| 90.1| 201.0|

|library | | | | | |

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

|Capital expenditures (whether | 12.9| 51.9| 114.5| 160.9| 208.6|

|paid or not) | | | | | |

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

|Total assets |2,860.1|2,970.3|2,860.1|2,970.3| 2,817.0|

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

|Cash and cash equivalents | 53.3| 49.7| 53.3| 49.7| 61.7|

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

|Net interest bearing debt |1,126.2|1,207.6|1,126.2|1,207.6| 1,029.7|

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

A complete version of the Q2 2017 earnings release and presentation can be

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

FOR DETAILS, CONTACT:

Bård Stenberg, VP IR & Corporate Communications

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.

PGS has a presence in 17 countries with regional centers in London, Houston and

Kuala Lumpur. Our headquarters is 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 2016. 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.