PGS ASA — Investor Presentation 2010

Sep 16, 2010

PGS

Barclays Capital CEO Energy-Power Conference

Jon Erik Reinhardsen, CEO and President

New York, September 16, 2010

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PGS

Cautionary Statement

• 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 uncertainties and risks which are disclosed in PGS Annual Report 2009
• This presentation must be read in conjunction with the Company's financial statements

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PGS

Leading Marine Geophysical Company

Marine Contract
Marine market leadership

MultiClient
Diverse MultiClient library

Operations
Productivity leadership

Data Processing & Technology
Technology differentiation

New Ventures
New product lines

Client focus • Global presence • Innovation leadership

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PCS

Financial Summary – Continuing Business

Revenues

Adjusted EBITDA

EBIT

Cash flow from operations

*Excluding impairments of USD 0.5 million in Q1 10, USD 2.4 million in Q4, USD 52.4 million in Q3, USD 48.2 million in Q2 and USD 50.6 million in Q1 2009. Adjusted EBITDA, when used by the Company, means income before income tax expense (benefit) less, currency exchange gain (loss), other financial expense, other financial income, interest expense, income (loss) from associated companies, impairments of long-lived assets and depreciation and amortization.

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PCS

Strong Capital Discipline and Debt Reduction

• Net debt reduced by USD 607 million since Q2 2008
• Leverage ratio test in Credit Facility amended
• MultiClient investments not to be deducted from EBITDA to the extent covered by pre-funding
• Debt repayment in Q2
• USD 100 million voluntary prepayment of Term loan B
• 8.28% Notes (USD 33.9 million) redeemed

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PGS

Robust Financing at Attractive Terms

Long term Interest Bearing Debt	Balance as of June 30, 2010	Total Credit Line	Financial Covenants
USD 600 million Term Loan (“TLB”), Libor + 175 basis points, due 2015	USD 470.5 million		Incurrence test: total leverage ratio < 3.25:1 in 2010, and 3.00:1 thereafter
Revolving credit facility (“RCF”), Libor + 150 basis points, due 2012	USD 0 million*	USD 350 million	Maintenance covenant: total leverage ratio < 3.00 in 2010, and 2.75:1 thereafter
USD 400 million convertible bond due 2012, coupon of 2.7% with strike NOK 216.19	USD 313.6 million**

• Plus USD 4.7 million for bid/performance bonds
  ** USD 344.5 million of nominal value outstanding after repurchase

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PCS

Expectations of Increased E&P Spending

SEB ENSKILDA

Equity Research

Oil Services

Global

12th Annual E&P Survey

August 2010

Please note: the statement at the rear of this report contains details of investment banking services recently provided by SEB Enskilda which could be considered relevant to the subject matter of this report.

Oil Companies' E&P Budgets

Too much caution on aftermath of Macondo

• E&P spending survey suggests 10% growth in 2010 and also for 2011.
  A combination of higher economic growth, growing oil demand and oil prices well above the oil companies have increased their investment banking. Based on our annual E&P spending for 2010. For the same significantly more than the same, we believe the accident in O&P is the most commonly encountered oil companies' E&P spending. This represents the largest oil company in the world, with an average of 10% growth in 2010 and an average of 1.1% growth in 2011.
• 

Pareto Securities

Equity Research

Industry Overview

The Original E&P Spending Survey

James D. Crandell
1.212.526.4865
jim.crandell@barcap.com
BCI, New York

Américas
Energy & Power
Oil Services & Drilling

James C. West
1.212.526.8796
james.west1@barcap.com
BCI, New York

Continued spending growth above $70

This year's E&P survey confirms the positive trend in spending; up 9% in 2010 and a further 10% increase indicated in 2011. Planning prices average USD 71/bbl for 2010 and 2011. The average hurdle rate is at USD 55/bbl that coupled with our oil price view support spending and a positive outlook for the sector.

Solid spending growth seen in 2010 and 2011

We have conducted our annual survey among 22 oil companies covering issues including spending, planning prices, costs and seismic activity. Key takeaways include:

• E&P spending is expected to increase 9% in 2010 and 10% in 2011.

Investment Conclusion

☑ "The Original E&P Spending Survey" is a semiannual product, initiated by this author at another firm in 1982. The survey attempts to include every meaningful spender on exploration and production throughout the world. It is by far the largest, most comprehensive survey of its kind, in our opinion, and encompasses integrated oil companies, independents, and national oil companies worldwide. We have gone to great lengths to obtain accurate budget information from these companies.

Summary

☑ Worldwide exploration and production expenditures are forecast to rise by 12% globally in 2010 to $447 billion from $400 billion in 2009 as estimated by the 427 companies in the Barclays Capital Original E&P Spending Survey.

☑ E&P expenditures are estimated to rise by 18% in the U.S. to $85 billion, by 9% internationally to $335 billion and by 28% in Canada to $27 billion. This compares with our December survey, which indicated increases of 12% in the U.S., 10.5% internationally, and 23% in Canada.

☑ The average commodity prices on which companies are basing their 2010 budgets have increased to $73.56 per barrel for oil (up 5% from the burley, France, and the December survey) and declined to $4.65 for natural gas (down 11% from the U.S. and Canada in December).

☑ Growth in E&P expenditures is anticipated to continue in 2011 by well over half of companies surveyed, with 37% indicating spending would be up 20% or more, 16% saying they expect to raise spending by 10-20% and 7% expecting more modest increases of 1-10%.

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PC's

Modest Risk to E&P Estimates with Potential Upside

• On the back of higher oil futures in '10 vs. '09 the planning price has increased accordingly
• Risk to E&P spending estimates are about the same as last year
• Positive E&P spending outlook heightens threshold for increased spending to USD 80 from USD 75 in 2009
• Spending will stay robust above USD 50
• Spending development lags the oil price by 6-18 months

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PGS

Long Term Demand Keeps up with Supply Increase

Total Marine 3D volume in '000 sq.km

Expected Supply Increase

• Annualized growth in sq.km 2006-2010 of 10.5%
• Accounting for increased HD3D activity underlying streamer demand is higher
• Annualized growth in streamer capacity 2006-2010 of 10.7%
• From 2006-2012 it is 8.7%

2010 capacity additions put temporary pressure on pricing

Source: PGS Internal Estimate July 2010. The "Current expectations July 2010" are derived from announcements made regarding stacking/scrapping and anticipation of capacity that will be laid off. The graph shows 3D streamers, and the growth figures are compared from Q4 one year to Q4 the next year.

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PGS

Marine Seismic Bidding Activity

• Decreasing gap between Active Tenders and All Sales Leads
• Clients are quicker to award work
• Positive customer sentiment
• Directly awarded contracts and extensions are not reflected in graph
• Strong interest for GeoStreamer® with pricing premium

Source: PGS Internal Estimate as of end August 2010. Value of Active Tenders and All Sales Leads are the sum of each tender and sales lead with a probability weight and represents Marine 3D contract seismic only. -10-

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PGS

Solid Order Book

• Order book of USD 499 million
• Deliberate move to longer contract order book
• Marine contract order book increased by ~USD 70 million from Q1 2010
• Temporary reduction in order book for DP and pre-funding revenue
• Includes OptoSeis
• Vessel booking visibility of approximately 6 months
• New industry capacity continues to put pressure on pricing

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Achieving price premium on GeoStreamer® capacity

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PGS

Ramforms Sustain Long-term Competitive Advantage

1992 - 1996

1998 - 1999

2007 - 2009

Competition

PGS

More streamers, longer streamers and denser streamers
Operational and cost efficiency are key success factors

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PGS

Favorably Positioned on the Industry Cost Curve

• PGS’ position on industry cost curve has improved as Ramform Explorer has been upgraded
• PGS fleet is positioned to generate the industry’s best margins

Source: The cash cost curve is based on PGS’ internal estimates and typical number of streamer towed. The graph shows all seismic vessels in the market, both existing and new-builds. The Ramform S-class is incorporated with 14 streamers and the V-class with 12 streamers.

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PGS

New Acquisition with GeoStreamer® Defines New Prospects

GeoStreamer® data

Conventional data

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PGS

GeoStreamer® Efficiency - Always Better

Weather downtime (hours) for period 15th April – 19th June 2009

	Dual-sensor	Conventional
Weather standby	62 hrs	405 hrs

Red bars: Ocean Explorer, 6 conventional streamers at 8 meter tow depth
Blue bars: Atlantic Explorer, 6 GeoStreamer® at 15 meter tow depth

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PGS

Towards
50%

Geostreamer® Capacity

Current GeoStreamer® operations

• 3D
• Atlantic Explorer (6 streamers*)
• Ramform Challenger (10 streamers*)
• Ramform Valiant (12 streamers*)
• Ramform Explorer (end July) (10 streamers*)
• 2D
• Beaufort Explorer
• Harrier Explorer

Planned GeoStreamer® rollout

• Additional 3D vessels
• Ramform Viking or similar scheduled for GeoStreamer® upgrade Q1 2011
• One more upgrade planned for 2011
• Further upgrades at a pace of 1 to 2 vessels per year

• All vessels equipped with GeoStreamer® around 2013

• In exploration mode with 100 meter streamer separation

Strong demand drives GeoStreamer® rollout

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PGS

Commercial Breakthrough PGS Fiber-optic Technology

• Reservoir Monitoring in Brazil's deepwater Jubarte field for Petrobras
• Provide and install its OptoSeis(TM) fiber-optic system
• Perform seismic acquisition and data processing

• 4D4C seismic to map the flow of fluids in Brazil's deep water reservoirs

• Shell and PGS develop game-changing Fiber-Optic Seismic System

• Lower-cost, lighter-weight ultra-high channel count to improve search for oil and gas on land
• Shell to use optical sensing system - based on PGS's existing fiber-optic technology - for onshore exploration and reservoir monitoring
• Lowering of system weight is crucial during field operations

OptoSeis gives richer data - increasing recovery factor

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PGS

PGS hyperBeam: 300 Squirm in Three Minutes

• Integrated, real time Velocity Model building solution
• Handles complex velocities (VTI, TTI) and geometries (WAZ, MAZ)
• Complete solution:
• Real time decision making workflow
• Real time imaging ahead of drill bit
• Moving depth imaging from processing to interpretation
• Customer benefits:
• Faster and more informed decisions
• More prospects with same resources
• Reduced drilling risk
• Reduced cycle time

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PGS

Positioned for Market Recovery

• High oil price continue to point to strong and increasing sector capex spending
• Industry capacity still increasing, but at a slower rate in '11 and '12
• GeoStreamer® maintains technological leadership
• Geographically diverse MultiClient library paying off
• Balance sheet remains robust
• H2 improving through better utilization, lower yard time, higher pre-funding and stronger effect from GeoStreamer®

The most cost effective fleet in the industry

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PGS Value Drivers

• Focused Marine seismic company
• Productivity & scale
• Best-in-class vessel portfolio
• Leading 3D MultiClient library return
• Technology differentiator
• Unparalleled investments in quality and operations
• GeoStreamer® the seismic game changer
• Leading edge Data Processing capabilities
• Fiber-optic breakthrough
• Strong operational record
• Proactive financial management
• Value creation through the cycle

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Competitively Positioned – Robust Performance Through the Cycle