PGS ASA

Earnings Release • Oct 27, 2016

Third Quarter 2016 Results

Earnings Presentation

• This presentation contains forward looking information
• Forward looking information is based on management assumptions and analyses
• 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 third quarter 2016 results and the disclosures therein

Robust MultiClient Performance

• EBITDA of USD 112.7 million
• Industry leading MultiClient performance:
• Total MultiClient revenues of USD 147.5 million
• Pre-funding level of 134%
• MultiClient accounted for 66% of revenues in Q3 2016
• Liquidity reserve of USD 417.3 million
• On track to deliver approx. USD 120 million cash cost reductions in 2016

MultiClient sales positively impacted by a higher oil price and improved cash flow among oil companies

Financial Summary

*EBITDA, when used by the Company, means EBIT excluding other charges/(income), impairment and loss/gain on sale of long-term assets and depreciation and amortization. **Excluding impairment and loss on sale of long-term assets and other charges/(income

Order Book

*As of October 25, 2016, based on 7 active vessels and excluding cold-stacked vessels.

Financials

Unaudited Third Quarter 2016 Results

Consolidated Statement of Profit and Loss Summary

	Q3	Q3	Percent		Nine months Nine months Percent
USD million (except per share data)	2016	2015	change	2016	2015	change
Revenues	224.1	225.7	-1 %	610.2	732.6	-17 %
EBITDA*	112.7	115.3	-2 %	260.2	368.0	-29 %
Operating profit (loss) EBIT ex impairment and other charges	(5.4)	9.1	-159 %	(71.9)	38.7	-286 %
Operating profit (loss) EBIT	(11.5)	(62.7)		(87.8)	(97.5)
Net financial items	(12.7)	(17.8)		(56.1)	(50.9)
Income (loss) before income tax expense	(24.2)	(80.5)		(143.9)	(148.4)
Income tax expense (benefit)	4.8	29.5		(6.2)	44.9
Net income (loss) to equity holders	(29.0)	(110.0)		(137.7)	(193.3)
EPS basic	(\$0.12)	(\$0.51)		(\$0.58)	(\$0.90)
EBITDA margin*	50.3 %	51.1 %		42.6 %	50.2 %
EBIT margin ex impairment and other charges	-2.4 %	4.0 %		-11.8 %	5.3 %
• Robust MultiClient performance main contributor to good Q3 2016 results – Revenue decline versus Q3 2015 owing to weaker contract and external imaging revenues
• Impairments and other charges of USD 6.1 million in Q3 2016 – USD 9.2 million of impairments relating to the MultiClient library – USD 3.1 million credit from reduced provision for onerous contracts

• Robust MultiClient performance main contributor to good Q3 2016 results
• Revenue decline versus Q3 2015 owing to weaker contract and external imaging revenues
• Impairments and other charges of USD 6.1 million in Q3 2016
  • USD 9.2 million of impairments relating to the MultiClient library

*EBITDA, when used by the Company, means EBIT excluding other charges/(income), impairment and loss/gain on sale of long-term assets and depreciation and amortization.

-7- The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited third quarter 2016 results, released on October 27, 2016.

Q3 2016 Operational Highlights

• Total MultiClient revenues of USD 147.5 million
• Pre-funding revenues of USD 84.3 million
• Pre-funding level of 134% on USD 63.0 million of MultiClient cash investment
• Late sales revenues of USD 63.2 million
• Marine contract revenues of USD 54.2 million reflecting continued low pricing, but with seasonal uptick for North Atlantic region

MultiClient Revenues per Region

Pre-funding and Late Sales Revenues Combined

• Pre-funding revenues were highest in Europe and North America
• Late sales revenues were highest in Europe and South America
• Resilient MultiClient performance

MultiClient Vintage Distribution

^• MultiClient library book value of USD 682.1 million as of September 30, 2016

• Moderate net book value for surveys completed 2011-2015
• Q3 2016 amortization rate of 58%
• USD 9.2 million of survey specific impairments in Q3
• 2016 amortization expense estimated to be approx. USD 300 million

Key Operational Numbers
		2016			2015
USD million	Q 3	Q 2	Q 1	Q 4	Q 3	Q2	Q1
Contract revenues	54.2	69.9	59.2	43.5	77.3	84.4	68.8
MultiClient Pre-funding	84.3	47.2	59.9	98.0	83.8	112.0	86.6
MultiClient Late sales	63.2	46.0	65.3	67.5	36.6	33.5	56.7
Imaging	16.0	17.9	16.6	18.2	21.7	23.5	30.3
Other	6.4	2.1	2.1	2.2	6.3	2.4	8.7
Total Revenues	224.1	183.0	203.1	229.3	225.7	255.8	251.1
Operating cost	(111.4)	(114.2)	(124.6)	(112.8)	(110.4)	(130.7)	(123.5)
EBITDA*	112.7	68.8	78.6	116.5	115.3	125.1	127.5
Depreciation	(31.9)	(42.1)	(40.7)	(37.6)	(27.4)	(34.5)	(41.6)
MultiClient amortization	(86.2)	(62.9)	(68.1)	(101.8)	(78.7)	(74.6)	(72.5)
Impairment and loss on sale of long-term assets	(9.2)	(4.2)		(274.9)	(65.3)	(56.9)	0.0
Other charges/income	3.1	(4.2)	(1.4)	(35.1)	(6.5)	(4.7)	(2.7)
EBIT	(11.5)	(44.6)	(31.6)	(332.9)	(62.7)	(45.7)	10.9
CAPEX, whether paid or not	(19.0)	(51.9)	(108.9)	(41.7)	(17.0)	(63.3)	(41.5)
Cash investment in MultiClient	(63.0)	(41.8)	(48.3)	(70.2)	(95.5)	(73.6)	(64.0)
Order book	190	230	204	240	245	259	394

**EBITDA, when used by the Company, means EBIT excluding other charges/(income), impairment and loss/gain on sale of long-term assets and depreciation and amortization.

The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited Third quarter 2016 results released on October 27, 2016.

• 78% active vessel time in Q3 2016
• Expect approx. 40% of the active vessel time in 2016 to be MultiClient work
• Q4 2016 utilization lower than Q3
• Increased standby time
• Ramform Vanguard likely warm stacked for the full quarter
• Steaming expected to be higher

Group Cost* Focus Delivers Results

• Sequential increase of gross cash cost in Q3 as earlier indicated
• Primarily due to a larger operating fleet in Q3 and higher project related cost

Full year gross cash cost expected to be approx. USD 675 million

*Gross cash costs are defined as the sum of reported net operating expenses (excluding depreciation, amortization, impairments and other charges/(income)) and the cash operating costs capitalized as investments in the MultiClient library as well as capitalized development costs.

Proactive Cost Reductions Continue in 2016

• Further significant cost reductions will bring 2016 gross cash cost down to approx. USD 675 million
• Incremental cost reduction from earlier guidance driven by further capacity adjustments and other cost initiatives
• Tight cost control continues
• Cost discipline a key priority

Consolidated Statements of Cash Flows Summary

	Q3	Q3	Nine months	Nine months
USD million	2016	2015	2016	2015
Cash provided by operating activities	80.4	71.3	256.2	366.7
Investment in MultiClient library	(63.0)	(95.5)	(153.1)	(233.1)
Capital expenditures	(10.9)	(13.8)	(192.3)	(116.7)
Other investing activities	(2.4)	(3.1)	(102.5)	54.4
Net cash flow before financing activities	4.1	(41.1)	(191.7)	71.3
Financing activities	23.4	65.8	187.4	(43.7)
Net increase (decr.) in cash and cash equiv.	27.6	24.7	(4.3)	27.6
Cash and cash equiv. at beginning of period	49.7	57.6	81.6	54.7
Cash and cash equiv. at end of period	77.3	82.3	77.3	82.3

• Cash flow from operating activities of USD 80.4 million in Q3 2016
• Y-o-Y increase is due to higher earnings, partially offset by increased working capital from sales late in the quarter which will benefit Q4 cash flow
• Limited new build capex in Q3 2016; final new build installment due in Q1 2017

Balance Sheet Key Numbers

	sep.30	jun.30	sep.30	December 31
USD million	2016	2016	2015	2015
Total assets	2 988.5	2 970.3	3 246.6	2 914.1
MultiClient Library	682.1	686.1	807.1	695.0
Shareholders' equity	1 285.7	1 350.3	1 693.0	1 463.7
Cash and cash equivalents (unrestricted)	77.3	49.7	82.3	81.6
Restricted cash	100.2	95.0	67.7	71.5
Liquidity reserve	417.3	429.7	492.3	556.6
Gross interest bearing debt	1 386.1	1 352.3	1 218.5	1 147.2
Net interest bearing debt	1 208.6	1 207.6	1 068.4	994.2

• Adequate liquidity reserve of USD 417.3 million
• Net interest bearing debt is sequentially flat in Q3 2016
• The increase YTD primarily relates to new build capex
• Total leverage ratio of 3.96:1 as of September 30, 2016, compared to 3:86:1 as of June 30, 2016
• Shareholders' equity at 43% of total assets

PGS Debt Structure

Long term Credit Lines and Interest Bearing Debt	Nominal Amount as of September 30, 2016	Total Credit Line	Financial Covenants
USD 400.0 million Term Loan ("TLB"), Libor (minimum 0.75%) + 250 basis points, due 2021	USD 390.0 million		None, but incurrence test: total leverage ratio ≤ 3.00x*
Revolving credit facility ("RCF"), due 2018 40% of applicable margin in commitment fee on undrawn amount Libor + margin of 200-325 bps + utilization fee	USD 160.0 million	USD 500.0 million	Maintenance covenant: total leverage ratio ≤ 5.50x, to Q1-2017, 5.00x Q2-17, 4.5x Q3-17, 3.25x Q4-17, thereafter reduced by 0.25x each quarter to 2.75x by Q2-18
Japanese ECF, 12 year with semi-annual installments. 50% fixed/ 50% floating interest rate	USD 386.1 million	USD 477.3 million	None, but incurrence test for loan 3&4: Total leverage ratio ≤ 3.00x and Interest coverage ratio ≥ 2.0x
December 2018 Senior Notes, coupon of 7.375% and callable from 2015 *Carve out for drawings under ECF and RCF	USD 450.0 million		None, but incurrence test: Interest coverage ratio ≥ 2.0x* -17-

Operational Update and Market Comments

Unaudited Third Quarter 2016 Results

Streamer Operations October 2016

Marine Seismic Market

• Fundamentals benefiting from a higher and more stable oil price
• Substantial improvement in oil companies' cash flow
• Increasing interest for MultiClient data
• Quarterly and regional variability is expected
• Contract market still characterized by low pricing
• Vessel utilization will be challenging over the coming winter

Market Activity

Source: PGS internal estimate as of end September 2016. Value of active tenders and sales leads are the sum of active tenders and sales leads with a probability weight and represents Marine 3D contract seismic only.

Marine Seismic Market Volume and Supply

• Industry expected to acquire approx. 340,000 sq.km of seismic in 2016
• Volume of seismic acquired will be higher in 2016 compared to 2010 and earlier
• Streamer capacity is currently approx. 40% lower than at the 2013 peak
• − Approx. 35% lower in 2017 summer season

PGS response – Focus on sales, operations, cost and cash flow discipline

Leading Marine Geophysical Company Ambition to be Number 1 in All Business Areas

Marine Contract

Marine market leadership 30%* of revenues YTD 2016

Marine Contract delivers exclusive seismic surveys to oil and gas exploration and production companies

MultiClient

Diverse MultiClient library 60%* of revenues YTD 2016

MultiClient initiates and manages seismic surveys which PGS acquires, processes, markets and sells to multiple customers on a non-exclusive basis

Operations

Productivity leadership

Operations supports Marine Contract and MultiClient with vessel resources and manages fleet renewal strategies

Imaging & Engineering

Technology differentiation 8%* of revenues YTD 2016

Imaging and Engineering processes seismic data acquired by PGS for its MultiClient library and for external clients on contract and manages research and development activities

• Using downturn to improve relative position
• Industry leading MultiClient performance

• Client feedback increasingly positive for Imaging capabilities and at par with industry best performance

• Strategy to increase MultiClient business from 2010 level

• Performance stabilization in a highly cyclical market
• MultiClient share of total market will continue to increase going forward
• PGS revenues dominated by MultiClient
• 66% of revenues in Q3 2016
• Most of EBITDA is generated by the MultiClient activities
• GeoStreamer, leading productivity and advanced, high quality imaging drives higher returns from library
• Retains flexibility to leverage a recovery in the marine contract market
• Marine contract player with differentiating productivity and technology

• Gross cash cost of approx. USD 675 million

– Of which approx. USD 200 million to be capitalized as MultiClient cash investments

• MultiClient cash investments of approx. USD 200 million

• Pre-funding level above 100%
• 40% of active 3D vessel time planned for MultiClient
• Capex of approx. USD 215 million
• Of which new build capex of approx. USD 165 million

In Conclusion: Competitively Positioned to Navigate Current Market Environment

• Industry leading MultiClient performance
• Improved cash flow
• Adequate liquidity position with flexibility to address debt maturities in time
• Substantial cost reductions continue
• Industry leading fleet with lowest cash cost per streamer
• Significantly improved Imaging performance and technology

Reaping the benefits of increased MultiClient focus

Thank you – Questions?

Appendix Building the Youngest and Most Productive Fleet in the Industry

High-end Conventional on Charter Sanco Swift - in operation 3x2 years option PGS Apollo - in operation 5 years option* Sanco Sword - cold stacked 3x2 years option

High-end Ramforms - Flexible Capacity

Ramform Vanguard - warm stacked

The Ultra High-end Ramforms

Ramform Hyperion Ramform Tethys Ramform Atlas Ramform Titan Ramform Sterling Ramform Sovereign

Ramform Valiant - cold stacked Ramform Viking - cold stacked

Ramform Challenger - cold stacked

Ramform Explorer - cold stacked

*With possibility to buy back after year 5 and 8

• Combination of chartered high capacity conventional 3D vessels and temporarily coldstacked first generation Ramform vessels:
• Improves fleet flexibility
• Chartered capacity with staggered expiry structure
• Gives a competitive edge in the current market
• Positions PGS well to take advantage of a market recovery

Significantly reduced capex requirement going forward

Appendix The PGS Fleet

The Ultra High-end Ramforms

Ramform Titan Ramform Atlas Ramform Tethys Ramform Hyperion Scheduled delivery Q1 2017

Ramform Sterling Ramform Sovereign

High-end Conventional on Charter

PGS Apollo

Sanco Swift

Sanco Sword - rigging postponed until ²⁰¹⁷ Sanco Spirit

2D/EM/Source

Atlantic Explorer

High-end Ramforms – Flexible Capacity

Ramform Explorer (cold stacked Q3 2015)

Ramform Challenger (cold stacked Q4 2015)

Ramform Valiant (cold stacked Q4 2015)

Ramform Viking (cold stacked Q4 2015)

(warm-stacked Q3 2016)

All vessels equipped with GeoStreamer youngest active fleet in the industry

Appendix Main Yard Stays* Q4 2016

Vessel	When	Expected Duration	Type of Yard Stay
Atlantic Explorer	November 2016	Approx. 14 days	Intermediate class
Ramform Sterling	October 2016	Approx. 14 days	Repair work and hydraulic upgrade of workboat handling system
Ramform Tethys	October 2016	10 days	Guarantee work

Appendix

Appendix

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Appendix

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