PGS ASA

Share Issue/Capital Change • Nov 22, 2016

Petroleum Geo-Services ASA: Intends to carry out a private placement of new ordinary shares for gross proceeds of approximately USD 225 million

Petroleum Geo-Services ASA: Intends to carry out a private placement of new ordinary shares for gross proceeds of approximately USD 225 million

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR

INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, HONG KONG OR JAPAN,

OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION

WOULD BE UNLAWFUL OR WOULD REQUIRE REGISTRATION OR OTHER MEASURES. THIS

ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED

HEREIN.

Petroleum Geo-Services ASA launches a private placement of new ordinary shares

for ~NOK 1.9 billion (~USD 225 million), an inter-conditional exchange offer of

its 7.375% Senior Notes due December 2018 for new senior notes due 2020 and

extension of the maturity of the revolving credit facility by two years to 2020

Petroleum Geo-Services ASA ("PGS" or the "Company") intends to carry out a

private placement of new ordinary shares for gross proceeds of ~NOK 1.9 billion

(~USD 225 million) (the "Private Placement"). Subject to completion of the

Private Placement and market conditions, the Company expects to carry out a

subsequent offering to existing eligible shareholders of the Company of ~NOK

300 million (USD 35 million).

The subscription price and number of shares to be issued in the Private

Placement will be determined through an accelerated book-building process. The

book-building period for the Private Placement will commence today, 22 November

2016, at 16:30 hours (CET) and close on 23 November 2016 at 08:00 hours (CET).

The Company may, however, at any time and for any reason decide to close or

extend the book-building period at its own discretion.

The minimum order amount and allocation in the Private Placement has been set to

the NOK equivalent of EUR 100,000,  provided that the Company's President & CEO

and his direct reports will be entitled to subscribe shares at lower amounts.

~NOK 425 million (~USD 50 million), representing 22.2% of the Private Placement,

has been pre-subscribed by Ferd AS, PGS' largest shareholder. Ferd AS will be

allocated a minimum number of new shares in the Private Placement, representing

its pro rata ownership of 10.09%. The Company's President & CEO and his direct

reports have pre-subscribed for 248,005 shares representing their pro rata

ownership of shares in the Company.

The Private Placement will be directed towards Norwegian and international

institutional and other professional investors (subject to applicable securities

laws).  In the United States, the Private Placement is directed only at

"qualified institutional buyers" as defined in Rule 144A under the U.S.

Securities Act of 1933, as amended.

The proceeds from the Private Placement will be used primarily to finance an

inter-conditional exchange offer (the "Exchange Offer") for the Company's

existing 7.375% Senior Notes due December 2018 (the "2018 Notes"). The Exchange

Offer is launched together with this Private Placement.

To maintain a robust financial position through the ongoing uncertainty, the

Company has established a financial plan which seeks to strengthen its liquidity

position even further by proactively addressing the December 2018 maturity of

the 2018 Notes, deleveraging the balance sheet and reducing interest costs.

Through the Exchange Offer, the Company is seeking to address the maturity of

the 2018 Notes, the cash consideration for which will be financed from a portion

of the proceeds raised in the Private Placement. The Exchange Offer is

conditional upon the closing of the Private Placement. In November 2016, the

Company has further agreed with the banks in the revolving credit facility

syndicate to extend a portion of its revolving credit facility currently due 18

September 2018 (the "RCF") until 18 September 2020. Subject to and upon

completion of the Private Placement and the Exchange Offer, the RCF will be

reduced from USD 500 million to USD 400 million. On 18 September 2018 the RCF

will be further reduced to USD 350 million. Finally the RCF refinancing includes

covenant reset to retain flexibility of liquidity reserve out to 2020 and no

change in security position for the RCF banks.

Pursuant to the Exchange Offer, holders of the 2018 Notes are offered to tender

their 2018 Notes for a combination of cash and new 7.375% Senior Notes due 2020

to be issued by the Company (the "New Notes"). Holders that elect to accept the

Exchange Offer during the early tender period will receive cash consideration at

95% of par for 50% of their holdings with the remaining 50% exchanged into New

Notes on a par basis. The New Notes will mature in December 2020, with a right

for the Company to call from 15 December 2017 at 103.688% of par, from 15

December 2018 at 101.844% of par and from 15 December 2019 at 100% of par, and

will contain restrictive covenants similar to the existing 2018 Notes in all

material respects. A total of 55.9% of the bonds have pre committed to tender

their 2018 Notes at time of this release. The tender process for the Exchange

Offer commences on the date hereof, and has an early tender date on or about 6

December 2016 and a final expiration date at 20 December 2016.

Only bondholders that accept the Exchange Offer before expiry of the early

tender deadline will be entitled to the full cash consideration of 95% of par

for 50% of their holdings, while bondholders accepting the Exchange Offer after

this deadline will receive a lower consideration as set out in the Exchange

Offer documentation. The early tender deadline is set to the 10(th) business

days after the launch of the Exchange Offer (6 December 2016).

The Exchange Offer is subject to a minimum participation of 90% of principal

amount of 2018 Notes. The Exchange Offer, the extension to the RCF and the

Private Placement are inter-conditional. Other customary conditions apply. The

full terms and conditions of the Exchange Offer are contained in an Exchange

Offer Memorandum dated 22 November 2016, available to eligible bondholders.

Completion of the Private Placement and issuance of the new shares thereunder is

subject to the fulfilment of the conditions for the transaction, including inter

alia approval by an extraordinary general meeting of the Company (the "EGM"),

expected to be held in approximately three weeks, and 90% acceptance of the

Exchange Offer at the time of the EGM. Subject to the pricing of the Private

Placement, the Company has agreed to a lock-up period, commencing on the date

hereof and continuing until 180 days after closing of the Private Placement, for

issuance of, among other things, equity securities, subject to customary

exemptions (including the subsequent offering referred to herein).

Notice of such meetings, required approvals and further details will be issued

in due course.

Further, subject to completion of the Private Placement and market conditions,

the Company's board of directors (the "Board of Directors") expects to propose

that the EGM authorises the Board of Directors to carry out a subsequent

offering of ~NOK 300 million (~USD 35 million) directed towards shareholders as

of close of business on 22 November, as registered in the Company's shareholder

register with the Norwegian Central Securities Depository (the "VPS") as of

close of business on 24 November 2016, who were not allocated shares in the

Private Placement, and are not resident in a jurisdiction where such offering

would be unlawful or, for jurisdictions other than Norway, would require any

prospectus filing, registration or similar action. Such existing shareholders

are expected to be granted non-transferable subscription rights that provide the

right to subscribe for and, upon subscription, be allocated new shares in the

subsequent offering. The subscription price in such subsequent offering will be

the same as in the Private Placement.

The new shares to be issued in the Private Placement will not be tradable before

they have been fully paid and registered with the VPS and a listing prospectus

for such shares has been approved by the Financial Supervisory Authority of

Norway and published. These events are expected to take place shortly after the

EGM. The new shares will when issued rank equal in all respects to the existing

shares of the Company.

In order to be able to complete the Private Placement, the Board of Directors

will propose to the EGM that the existing shareholders' preferential rights to

subscribe the new shares in the Private Placement are deviated from.  The Board

of Directors has considered alternative structures for the raising of new equity

in connection with the establishment of a financial plan for the Company. After

due considerations, the Board of Directors is of the view that the Private

Placement is in the best interests of the Company and its shareholders since the

Company, through the Private Placement, will be able to raise capital more

quickly, at a lower discount to the trading price and with significantly lower

transaction costs and transaction risk compared to a rights issue, and in a

manner that can be combined with the implementation of the Exchange Offer.

PGS has retained Barclays Bank PLC, DNB Markets, a part of DNB Bank ASA and

Nordea Markets, a part of Nordea Bank Norge ASA as Joint Bookrunners, and ABN

AMRO Bank NV as Co-Manager, for the Private Placement. The Private Placement

will be structured as an undocumented accelerated book-building process.

PGS has retained Arctic Securities AS, Barclays Bank PLC and J.P. Morgan

Securities LLC as Lead Deal Managers and ABN AMRO Securities (USA) LLC, DNB

Markets, a part of DNB Bank ASA, Nordea Bank Danmark A/S and The Royal Bank of

Scotland plc as Co-Managers for the Exchange Offer, directed towards holders of

the 2018 Notes (subject to applicable securities laws).

FOR DETAILS, CONTACT:

Bård Stenberg, VP IR & Corporate Communications: Phone: +47 67 51 43 16, Mobile:

+47 992 45 235

Gottfred Langseth EVP & CFO: Phone: +47 67 51 44 10, Mobile: +47 930 55 580

****

Petroleum Geo-Services ASA ("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.

For more information on PGS visit www.pgs.com.

****

This announcement does not constitute or form part of an offer for sale or

solicitation of an offer to purchase or subscribe for securities in the United

States or any other jurisdiction. The securities referred to herein have not

been and will not be registered under the U.S. Securities Act of 1933, as

amended (the "Securities Act"), and may not be offered or sold, directly or

indirectly, in the United States, absent registration under or an exemption

from, or in a transaction not subject to, the registration requirements of, the

Securities Act. No public offering of securities is being made in the United

States or in any other jurisdiction.

The offering of the securities referred to in this announcement will be made

pursuant to an exemption under the Prospectus Directive, as implemented in

Member States of the European Economic Area, from the requirement to produce a

prospectus for offers of securities.  This announcement does not constitute an

advertisement for the purposes of the Prospectus Directive.

This announcement does not constitute an offer to sell or the solicitation of an

offer to buy any securities, nor will there be any sale of securities referred

to in this announcement, in any jurisdiction, including the United States, in

which such offer, solicitation or sale would be unlawful prior to registration

or qualification under the securities laws of such jurisdiction.

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.

Barclays Bank PLC, DNB Markets, a part of DNB Bank ASA, Nordea Markets, a part

of Nordea Bank Norge ASA and ABN AMRO Bank N.V. (together, the "Managers") are

each acting exclusively for the Company and for no-one else in connection with

any transaction mentioned in this announcement and will not regard any other

person (whether or not a recipient of this announcement) as a client in relation

to any such transaction and will not be responsible to any other person for

providing the protections afforded to their respective clients, or for advising

any such person on the contents of this announcement or in connection with any

transaction referred to in this announcement. The contents of this announcement

have not been verified by the Managers.

Arctic Securities AS, Barclays Bank PLC,  J.P. Morgan Securities LLC, ABN AMRO

Securities (USA) LLC, DNB Markets, a part of DNB Bank ASA, Nordea Markets, a

part of Nordea Bank Danmark A/S and The Royal Bank of Scotland plc (together,

the "Dealer Managers") are each acting exclusively for the Company and for no-

one else in connection with any transaction mentioned in this announcement and

will not regard any other person (whether or not a recipient of this

announcement) as a client in relation to any such transaction and will not be

responsible to any other person for providing the protections afforded to their

respective clients, or for advising any such person on the contents of this

announcement or in connection with any transaction referred to in this

announcement. The contents of this announcement have not been verified by the

Dealer Managers.

No representation or warranty, express or implied, is given by or on behalf of

the Managers or the Dealer Managers or any of their respective subsidiaries,

affiliates, agents or advisers or any of such persons' affiliates, directors,

officers or employees or any other person as to the fairness, truth, accuracy,

completeness or verification of the information or the opinions contained in

this announcement (or whether any information has been omitted from the

announcement) or any other information relating to the Company, its subsidiaries

or associated companies, whether written, oral or in a visual or electronic

form, and howsoever transmitted or made available, and no liability is accepted

for any such information, omissions or opinions.

For a further description of other relevant risk factors we refer to our Annual

Report for 2015. 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.

This information is subject to the disclosure requirements pursuant to section

5 -12 of the Norwegian Securities Trading Act.