PGS ASA

Earnings Release • Jan 31, 2019

PGS: Fourth Quarter and Preliminary Full Year 2018 Results & CMD Presentation

PGS: Fourth Quarter and Preliminary Full Year 2018 Results & CMD Presentation

Note: PGS 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 14 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 2018

* As Reported revenues of $874.3 million and EBIT of $39.4million, according

to IFRS

* Segment Revenues of $834.5 million, compared to $838.8 million in 2017

* Segment EBITDA of $515.9 million, compared to $374.1 million in 2017

* Segment EBIT of $36.3 million, compared to a loss of $147.1 million in 2017

* Total Segment MultiClient revenues of $654.3 million, up 22% compared to

2017

* Record Segment MultiClient late sales revenues of $371.9 million, up 58%

compared to 2017

* Cash flow from operations of $445.9 million, compared to $281.8 million in

2017

* Total Leverage Ratio, as defined in the Company's Credit Facility, of 2.58:1

* In process of completing sale of Ramform Sterling to JOGMEC, including a

service agreement of up to 10 years with annual renewals

"We have continued to invest in the MultiClient library through the downturn. In

a gradually recovering market this has enabled us to deliver segment MultiClient

revenue growth of 22% and achieve the highest MultiClient late sales in PGS'

history.  Despite the oil price volatility in Q4 we experienced strong and

diverse customer interest for our data library securing record high quarterly

MultiClient late sales revenues of $163.6 million.

The contract market was still challenging in 2018. We achieved higher pricing

for contract work, compared to 2017, but were hurt by low vessel utilization,

particularly in Q4.

We have delivered a substantial cost reduction and achieved our main financial

target for 2018 of becoming cash flow positive after debt service*. I am proud

of all PGS employees delivering on this target in the first year of operating in

a new organization.

We expect the seismic market in 2019 to continue the improvement trend

experienced during 2018. In the contract market we experience higher activity,

improved visibility and better prices as we move into 2019. Revenue growth and

lower costs will position us to improve cash flow further this year."

Rune Olav Pedersen,

President and Chief Executive Officer

Outlook

PGS expects significant cash flow generation among clients and an increase in

exploration and production spending, including offshore spending, to contribute

to further recovery of the marine seismic market fundamentals going forward.

Contract seismic is likely the activity benefitting most from the improvement,

driven by more 4D acquisition and generally higher demand for new seismic data.

Based on current operational projections and with reference to disclosed risk

factors, PGS expects full year 2019 gross cash costs of approximately $550

million. This number takes into account an estimated approximately $50 million

reduction from the implementation of IFRS 16 in 2019. See Note 16 for a

description of the estimated effects from implementation of IFRS 16.

2019 MultiClient cash investments are expected to be approximately $250 million.

More than 50% of 2019 active 3D vessel time is expected to be allocated to

MultiClient acquisition.

Capital expenditure for 2019 is expected to be approximately $85 million, which

includes the reactivation of Ramform Vanguard.

The order book totaled $163 million at December 31, 2018 (including $59 million

relating to MultiClient). The order book was $144 million at September 30, 2018

and $135 million at December 31, 2017.

*The 2018 financial target of being cash flow positive after debt servicing is

measured as Segment revenues less: gross cash costs, capital expenditures (as

reported), taxes and interest paid, and scheduled repayment of debt.

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

|  |   |   |

|  |   |   |

|  | Quarter ended | Year ended |

|Consolidated Key Financial Figures | December 31, | December 31, |

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

| |   |   |   |   |

| | 2018 | 2017 | 2018 | 2017 |

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

|Profit and loss numbers Segment Reporting* |  |  |  |  |

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

|Segment Revenues | 245.2| 235.9| 834.5| 838.8|

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

|Segment EBITDA | 154.5| 122.8| 515.9| 374.1|

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

|Segment EBIT ex. Impairment and other charges,| 47.9| (24.5)| 36.3|(147.1)|

|net | | | | |

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

|  |  |  |  |  |

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

|Profit and loss numbers As Reported under IFRS|  |  |  |  |

|15: | | | | |

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

|Revenues | 269.8| 235.9| 874.3| 838.8|

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

|EBIT | 26.3|(159.2)| 39.4|(383.6)|

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

|Net financial items | (31.1)| (32.3)| (87.3)| (84.5)|

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

|Income (loss) before income tax expense | (4.8)|(191.5)| (47.9)|(468.1)|

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

|Income tax expense | (18.7)| (3.3)| (40.0)| (55.2)|

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

|Net income (loss) to equity holders | (23.5)|(194.8)| (87.9)|(523.4)|

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

|Basic earnings per share ($ per share) | (0.07)| (0.58)| (0.26)| (1.55)|

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

|  |  |  |  |  |

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

|Other key numbers As Reported: |  |  |  |  |

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

|Net cash provided by operating activities | 117.3| 84.3| 445.9| 281.8|

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

|Cash Investment in MultiClient library | 40.2| 54.0| 277.1| 213.4|

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

|Capital expenditures (whether paid or not) | 16.1| 23.4| 42.5| 154.5|

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

|Total assets |2,384.8|2,482.8|2,384.8|2,482.8|

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

|Cash and cash equivalents | 74.5| 47.3| 74.5| 47.3|

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

|Net interest bearing debt |1,112.8|1,139.4|1,112.8|1,139.4|

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

For the definition of Segment Reporting see Note 14 of the unaudited fourth

quarter and preliminary full year 2018 results, released on January 31, 2019.

A complete version of the Q4 and preliminary full year 2018 earnings release,

earnings presentation and CMD 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.