PGS ASA

Earnings Release • Jul 19, 2018

Petroleum Geo-Services ASA: Second Quarter and First Half 2018 Results - CORRECTION

Petroleum Geo-Services ASA: Second Quarter and First Half 2018 Results - CORRECTION

CORRECTION: in the table below Net income (loss) to equity holders should be

$10.4 million, not $(10.4) million. Everything else is unchanged.

Progressing as Planned

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 Q2 2018

* As Reported revenues of $239.7 million and EBIT of $30.5 million, according

to IFRS

* Segment Revenues of $199.4 million, compared to $240.5 million in Q2 2017

* Segment EBITDA of $136.0 million, compared to $112.5 million in Q2 2017

* Segment EBIT of $13.6 million, compared to a loss of $8.7 million in Q2 2017

* Segment MultiClient pre-funding revenues of $94.0 million with a

corresponding pre-funding level of 116%, compared to $50.2 million and 115%

in Q2 2017

* Segment MultiClient late sales revenues of $68.7 million, compared to $77.4

million in Q2 2017

* Cash flow from operations of $121.7 million, compared to $49.4 million in Q2

2017

* Total Leverage Ratio, as defined in the Company's Credit Facility, of 2.83:1

"Most of our active 3D vessel capacity was allocated to MultiClient in the

quarter and pre-funding revenues dominated the sales mix. MultiClient late sales

did not benefit materially from any license rounds, but the quarter still

demonstrates a continuance of the strong trend from the two previous quarters.

Year-to-date late sales are up more than 30% compared to 2017.

We have generated a larger pipeline of new MultiClient projects and expect to

increase our MultiClient cash investment to approximately $300 million this

year, with an active 3D vessel capacity allocation to MultiClient of

approximately 65% and an unchanged pre-funding requirement.

Our contract activities in Q2 related mainly to completion of surveys we

commenced in Q1, offshore West Africa. The marine contract market is improving,

but still challenging, and it is encouraging that our estimate of the total

value of bids and leads for contract work is at its highest level for more than

three years.

The visibility of Q4 fleet utilization is strengthening. However, our reported

order book remains low at quarter end, as we are in the final phase of

formalizing projects. With the ongoing bid activities and our MultiClient plans,

we expect that we will achieve acceptable utilization of the vessels we plan to

operate in Q4.

Our cost reductions are progressing as planned and for the first time in two and

a half years we are reporting positive EBIT. We are on track to be cash flow

positive after debt servicing this 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 the 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 the 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 $300 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 $50 million.

The order book totaled $187 million at June 30, 2018 (including $138 million

relating to MultiClient), compared to $211 million at March 31, 2018 and $248

million at June 30, 2017. The Company operated eight 3D vessels in Q2 2018.

(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 | Six months |December 31,|

|Consolidated Key Financial | June 30, | ended | |

|Figures | | June 30, | |

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

|share data) |   |   |   |   |   |

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

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

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

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

|Revenues | 239.7| 240.5| 441.0| 395.3| 838.8|

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

|EBIT | 30.5| (17.4)| 23.2|(111.1)| (383.6)|

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

|Income (loss) before income tax | 14.8| (37.5)| (14.7)|(140.5)| (468.1)|

|expense | | | | | |

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

|Net income (loss) to equity | 10.4| (32.2)| (29.2)|(138.7)| (523.4)|

|holders | | | | | |

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

|Basic earnings per share ($ per | 0.03| (0.10)| (0.09)| (0.42)| (1.55)|

|share) | | | | | |

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

|Net cash provided by operating | 121.7| 49.4| 195.1| 79.4| 281.8|

|activities | | | | | |

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

|Cash Investment in MultiClient | 81.3| 43.8| 135.0| 77.4| 213.4|

|library | | | | | |

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

|Capital expenditures (whether | 8.3| 12.9| 12.3| 114.5| 154.5|

|paid or not) | | | | | |

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

|Total assets |2,386.3|2,860.1|2,386.3|2,860.1| 2,482.4|

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

|Cash and cash equivalents | 24.4| 53.3| 24.4| 53.3| 47.3|

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

|Net interest bearing debt |1,145,3|1,126.2|1,145.3|1,126.2| 1,139.4|

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

|  |  |  |  |  |  |

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

|Segment Reporting: |  |  |  |  |  |

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

|Segment Revenues | 199.4| 240.5| 397.2| 395.3| 838.8|

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

|Segment EBITDA | 136.0| 112.5| 228.4| 142.6| 374.1|

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

|Segment EBIT ex. impairments and | 13.6| (8.7)| (9.1)| (92.2)| (147.1)|

|other charges, net | | | | | |

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

A complete version of the Q2 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.