PGS ASA — Investor Presentation 2017

Sep 13, 2017

Pareto Securities Oil & Offshore Conference

Rune Olav Pedersen, President & CEO

Oslo, September 13, 2017

• 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 other financial statements and the disclosures therein

PGS Business Structure

Marine Contract

Marine market leadership

28%* of 2016 revenues

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

MultiClient

Diverse MultiClient library – Improving financial performance

62%* of 2016 revenues

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 – Rapidly becoming at par with industry best

9%* of 2016 revenues

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

Competitive Advantage The World's Best Seismic Fleet with Flawless Operation

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

Competitive Advantage Industry Leading MultiClient Performance

• Strategic priority since 2010 to increase weighting of the MultiClient business
• Brings greater stability to overall Group performance in a highly cyclical market
• MultiClient share of total market will continue to increase going forward
• Revenues currently dominated by MultiClient
• 52% of revenues in 1H 2017, will increase significantly in 2H
• Q2 2017 sales/investment of 2.9x
• Most of EBITDA is generated by 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

Competitive Advantage GeoStreamer and Enhanced Imaging Capabilities

GeoStreamer – PGS Business and Technology Platform

• Enhanced resolution, better depth imaging and improved operational efficiency
• Enables the best sub-surface image for reservoir understanding and well placement

Competitive Advantage Premium 4D Offering and Strong Market Share

Source: PGS internal estimates.

Financial Summary

EBIT** Cash Flow from Operations

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

Order Book

• Order book of USD 248 million by end Q2 2017
• Vessel booking*
• ~90% booked for Q3 2017
• ~45% booked for Q4 2017
• ~15% booked for Q1 2018
• ~5% booked for Q2 2018

^*As of September 12, 2017, based on 9 active vessels and excluding cold-stacked vessels. Vanguard cold stacked mid Q4.

Market Activity

• Encouraging leads development for 2018
• Seismic demand primarily driven by:
• Positioning for strategically important license rounds
• Seismic commitments in E&P licenses
• Significant increase in production seismic, especially in North Sea, West Africa and Brazil
• Overall relative MultiClient activity expected to continue to increase

Marine Seismic Market

• Substantial improvement in oil companies' cash flow
• Pockets of opportunity for Q2/Q3 contract pricing owing to more 4D production seismic and capacity constraints in some regional markets
• Outlook
• Currently low and competitive contract bidding activity for Q4
• Improved bid pipeline for Q1/Q2 2018

Substantial Cost Reductions Achieved

• 2016 gross cash cost more than 40% lower than in 2014
• 2017 gross cash cost expected to be below USD 700 million modest increase from structurally lower level in 2016 mainly attributable to:
• More operated capacity with full year operation of Ramform Tethys and delivery of Ramform Hyperion
• Some increase of fuel prices
• Further USD 50-60 million of gross cash cost reductions announced in Q2 2017 with effect from Q4 2017
• Cold-stack of Ramform Vanguard after North Sea season

Improving Competitive Position by Reducing Cost Base Further

• Substantial cost and CAPEX reductions delivered to address the weak market post 2013, but there is further potential
• Several cost and CAPEX initiatives
• Adjust capacity to market
• Increase operational and seasonal flexibility
• PGS organizational structure established in 2010 to position the Company for growth
• A simpler and more effective organizational structure
• Simplify and streamline organization to improve profitability and cash flow in a smaller and weaker market
• Position the Company for MultiClient taking a larger share of vessel capacity
• Adapt to a more centralized customer decision making process and less local content requirements
• Preserving PGS competitive advantages

Centralize – Simplify – Streamline

In Conclusion Navigating in a Challenging Market Environment

• Q4 seasonally challenging for the industry
• Improved bid pipeline for Q1 2018
• Industry leading MultiClient performance
• Well positioned in a growing 4D market
• Initiating streamlining of organization and further cost and CAPEX reductions to improve profitability and cash flow

Thank You – Questions?

COPYRIGHT

The presentation, including all text, data, photographs, drawings and images (the "Content") belongs to Petroleum Geo-Services ASA, and/or its subsidiaries ("PGS") and may be protected by Norwegian, U.S., and international copyright, trademark, intellectual property and other laws. Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior written permission by PGS and applicable acknowledgements. In the event of authorized reproduction, no trademark, copyright or other notice shall be altered or removed. © 2015 Petroleum Geo-Services ASA. All Rights Reserved.

Appendix Balance Sheet Key Numbers

	June 30	June 30	December 31
USD million	2017	2016	2016
Total assets	2,860.1	2,970.3	2,817.0
MultiClient Library	606.7	686.1	647.7
Shareholders' equity	1,250.9	1,350.3	1,359.4
Cash and cash equivalents (unrestricted)	53.3	49.7	61.7
Restricted cash	111.5	95.0	101.0
Liquidity reserve	228.3	429.7	271.7
Gross interest bearing debt	1,290.1	1,352.3	1,191.4
Net interest bearing debt	1,126.2	1,207.6	1,029.7

• Liquidity reserve of USD 228.3 million
• Drawings on the Revolving credit facility increased by USD 60 million in Q2 for working capital fluctuations, the Company expects to reduce drawing in Q3
• Total leverage ratio of 4.39:1 as of June 30, 2017, compared to 4.88:1 as of March 31, 2017
• Shareholders' equity at 44% of total assets

Appendix Consolidated Statements of Cash Flows Summary

	Q2	Q2	First half	First half	Full year
USD million	2017	2016	2017	2016	2016
Cash provided by operating activities	49.4	42.4	79.4	175.8	320.9
Investment in MultiClient library	(43.8)	(41.8)	(77.4)	(90.1)	(201.0)
Capital expenditures	(17.1)	(67.0)	(124.7)	(181.4)	(218.2)
Other investing activities	(3.7)	(2.9)	17.8	(100.2)	(109.5)
Net cash flow before financing activities	(15.2)	(69.3)	(104.9)	(195.9)	(207.8)
Financing activities	29.7	2.4	96.5	164.0	187.9
Net increase (decr.) in cash and cash equiv.	14.5	(66.9)	(8.4)	(31.9)	(19.9)
Cash and cash equiv. at beginning of period	38.8	116.6	61.7	81.6	81.6
Cash and cash equiv. at end of period	53.3	49.7	53.3	49.7	61.7

• Cash flow from operating activities of USD 49.4 million in Q2 2017
• Y-o-Y increase due to higher earnings, partially offset by a significant increase in accounts receivables as a result of high revenues in the second half of the quarter which will benefit cash flow in Q3 2017

Appendix Summary of Debt and Drawing Facilities

Long-term Credit Lines and Interest Bearing Debt	Nominal Amount as of June 30, 2017	Total Credit Line	Financial Covenants
USD 400.0 million Term Loan ("TLB"), Libor (minimum 0.75%) + 250 basis points, due 2021	USD 387.0 million		None, but incurrence test: total leverage ratio ≤ 3.00x*
Revolving credit facility ("RCF"), due 2020 Libor + margin of 325-625 bps (linked to TLR) + utilization fee	USD 225.0 million	USD 400.0** million	Maintenance covenant: total leverage ratio ≤ 5.50x, to Q2-2017, 5.25x Q3-17, 4.75x Q4-17, 4.25x Q1-18, thereafter reduced by 0.25x each quarter to 2.75x by Q3-19
Japanese ECF, 12 year with semi-annual instalments. 50% fixed/ 50% floating interest rate	USD 440.1 million		None, but incurrence test for loan 3&4: Total leverage ratio ≤ 3.00x and Interest coverage ratio ≥ 2.0x
December 2020 Senior Notes, coupon of 7.375%	USD 212.0 million		None, but incurrence test: Interest coverage ratio ≥ 2.0x*
December 2018 Senior Notes, coupon of 7.375%	USD 26.0 million		None

*Carve out for drawings under ECF and RCF **Reducing to USD 350 million in September 2018.

• PGS sold MultiClient data to more than 70 different clients world wide in Q2
• Distributed over 90 projects
• PGS high quality GeoStreamer MultiClient data library attracts strong client interest, generating industry leading sales performance

Appendix MultiClient Vintage Distribution

Appendix PGS Fleet Best Positioned on the Industry Cost Curve

• PGS retains lead on lowest cash cost per streamer
• Ramform vessels best positioned for both large, and streamer intensive (4D) surveys

Source: PGS internal estimates. The cash cost curve is based on typical number of streamer towed, and excludes GeoStreamer productivity effect. The graph shows all seismic vessels operating in the market. The Ramform Titan-class vessels are incorporated with 16 streamers, S-class with 14 streamers.

Redundancy

3 propellers, each with 2 motors - fully operational with 2 propellers.

2 engine rooms, each with 3 generators fully operational with 1 engine room.

All Weather

Widening the weather window and extending the seasons in northern and southern hemispheres without compromising HSEQ.

Fuel Capacity

Providing flexibility and endurance.

$Space = Flexibility$

Towing & Handling

24 reel and streamer capacity and back

deck automation provides flexibility.

rapid deployment and safe retrieval

Three times larger than modern conventional vessels, the Titans offer

a highly efficient work environment

with ample space for equipment.

maintenance and accommodation.

Power Additional power enables more in-sea and onboard equipment.

Performance Results

104m

Ramform Titan - Zero maritime downtime and only 2.7% seismic downtime to date. Total so.km acouired by Titan-class vessels is 89,712 sq. km

Records Rapid Deployment

16 streamers (each 8.1 km) safely deployed in just 73 hours.

Large Spread

13.75 sq. km fan spread with 18 streamers (each 7.05 km) x 100 m separation (130 m at tail end).

Fast Acquisition

Highest production 175 sq.km in a day (average for this survey = 139 sq. km/day).

Safety

HSEQ

Layout supports One Culture operations improving all aspects of HSEO.

Health Social zones, gym, stability rested crews perform better.

Environment Larger spreads and faster

Stable platform minimizes risk of fatigue, trips and falls. Space to work, redundancy in power and propulsion, 2 stern-launched workboats, back-deck automation.

Cost/Streamer

Ultra high capacity seismic vessels are more cost effective.

All Survey Types

Titan-class vessels cover all the bases from highly efficient reconnaissance exploration surveys to the detailed resolution required for 4D production seismic.

turnaround mean fewer Quality days on each job and leaves a smaller environmental footprint. DNV GL Clean Design - max S0x content of <2.5%. Reactive catalysts reduce NO_X emissions by 90% streamer and source steering.

Superior platform to deploy the best dualsensor technology - 100% GeoStreamer. Equipped with

$-22-$

More Measurements - Fewer Assumptions - Better Decisions

Dual Sensors

Prestack Deghosting - More Options

Complementary recordings facilitate deghosting by wavefield separation at all water depths.

Deghosting using dual-sensor measurements with their complementary ghost spectra eliminates frequency gaps, and provides access to separate wavefield components for advanced processes like PGS SWIM, FWI and Reflection Tomography.

PGS vessels 100% 4 Million GeoStreamer meters of active streamer

Broader Bandwidth - Sharper Boundaries

Rich low frequency content reduces sidelobe artifacts, providing clearer reservoir details.

Impedance from

Oil charged reservoir

Water wet sands.

GeoStreame

Impedance

om well log

De-risking with Precise Rock Properties

GeoStreamer prestack deghosting provides reliable attributes for better understanding of rock and fluid distribution. Improved attribute computations reduce uncertainty and enable more precise estimation of reserves.

Monitoring Reservoir Changes

Wavefield reconstruction enables high repeatability for both legacy surveys and future 4D monitoring independent of sea-state. This reveals more subtle production-related changes.

Proven in all Play Types

SUB-SALT Improved signal recovery and amplitude characterization.

SUB-BASALT Clearer sub-basalt imaging and intrabasalt layer definition.

CLASTICS Reliable reservoir properties without the need for well control.

CARBONATES Detailed mapping of internal structures and better porosity prediction.

INJECTITES Resolution of complicated geometries and identification of true geological impedance boundaries.

Experience that counts 450 OOO I acquired worldwide Aug 2016

PGSSWIM

Extending Illumination and Angular Diversity

GeoStreamer data and SWIM imaging

Separated Wavefield Imaging (SWIM) is an innovative depth-imaging technology that uses both up- and down-going wavefields, recorded by GeoStreamer® dual hydrophone and motion sensors.

source results in the survey area having increased source sampling and improved angular diversity and illumination.

SWIM + Survey Geometries

as super-wide tow. For narrow azimuth surveys in shallow water SWIM yields better sampled data in the angle domain. WIDE AZ IMUTH The extra subsurface

NARROW AZIMUTH TO WIDE TOW SWIM

enables the design and use of cost

effective acquisition geometries such

illumination of sea-surface reflections combined with Wide Azimuth (WAZ) acquisition facilitates the imaging of salt flanks and other steeply dipping structures.

Reduce Acquisition Footprint

Turning the receiver spread into virtual sources vs and receiver arrays reduces source sampling in the crossline direction from the distance between sail lines to that between streamers. Using SWIM in shallow water fills in gaps in near-surface coverage successfully reducing the acquisition footprint (AF).

Further Uses

SWIM has been successfully applied to seabed data such as ocean bottom node and cable recordings. SWIM can increase the shallow image area of the seabed and the underlying sediments by up to 700%.

IMPROVED MULTIPLE REMOVAL SWIM enables the generation

$\sqrt{V}$ of detailed shallow overburden images that are a requirement for some data-driven 3D SRME multiple removal methods.

REDUCING DRILLING RISK Superior illumination of the overburden using SWIM provides highresolution images suitable for shallow hazard work, helping to identify drilling risks.

ACQUISITION SOLUTIONS

RAMFORM + GEOSTREAMER = EFFICIENCY + QUALITY

The unique combination of GeoStreamer® technology and Ramform® vessels delivers a premium imaging product to locate and derisk your prospect

3D SpreadControl

• · Infill management · Efficient deployment & recovery
• · Improved 4D repeatability

· Efficient deployment & recovery

· Improved 4D repeatability

Source Steering

· Infill management

Continous Recording

• · Improved source sampling · Increased vessel speed
• · Flexible record length

REC

Define Challenge and Select Technology

Tailored acquisition geometries make it easier to solve imaging challenges. Subsurface complexity and geophysical objectives determine the acquisition and imaging solutions to produce the best quality images in the most effective way.

$\ast$

Multi

Azimuth

(MAZ)

Coverage Options

From single sail line to the ultimate full azimuth coverage. Target illumination increases with each additional pass and direction.

Single Vessel Survey:

Leading the Industry

m

FM

and

seismic

TOWED STREAMER

Reducing drilling risk

Hydrocarbon saturation

$EM +$ seismic $=$ reduced risk

Improved hydrocarbon saturation estimates

Resistivity

Hydrocarbon saturated rocks are typically highly resistive. Geologists access local resistivty data from well logs.

Sight & sound

Barents Sea

EM-response

Complementary data add new layers of comprehension: a bit like adding sight to sound. While seismic is the best measure of lithology, EM is more sensitive to changes in fluids

Drilling success with EM

Independent inversions

Seismic data can be inverted for velocity and for acoustic impedance. Inversion of EM data provides resistivity. Correlating all three improves drilling success

Havis 250 MMbor Wisting 132 MMboe Skrugard 286 MMboe Norvarg 189 MMboe Skavl 35 MMboe

Hanssen 15-56MMboe

Salina 38 MMboe

Mercury 6-12 MMboe

Atlantis minor gas

Apollo drv

Heilo dry

Wisting alt.dry

Darwin drv

Byrkje dry

Bonna drv

Eik drv

Goliat 238 MMbor

70%

SUCCESS

These wells all looked

7 of 10 had significant

hydrocarbon volumes.

good on seismic. Where

EM response was high (blue),

Operational 101

Towed streamer

up to 100 meters below surface

8700 meters long

Fast

EM data / day

Towed streamer acquisition produces high density 2D or 3D EM data fast.

The operation is very similar to seismic, making it easy to install, operate and even combine.

EM source

800 meters long

10 meters below surface

Flexible

Adding EM to seismic

Acquisition speed up Multipurpose EM can de-risk frontier to 200 sq. or line km prospects, reveal drilling hazards, or identify missed tail end production.

Northern Europe is the region with greatest EM coverage around the world show

Global

so far. but feasibility studies this technology has global notential

Sensitivity ~ 3km below mud

How and when

Improve ranking of prospects by adding 2D or 3D EM data to existing seismic data. Enhance EM resolution by using the seismic to guide the EM inversion

Acquire EM and 2D GeoStreamer data efficiently and simultaneously with the same vessel to plan new 3D seismic.

Towing speed

$4 - 5$ knots

Safety

Standard PGS towed streamer operations and equipment reduces risk

EM helps identify shallow gas drilling hazards.

Environment

Low environmental impact.

Fewer vessel days = lower emissions in both standalone and simultaneous acquisition modes.

Quality

May 2016

Towed streamer EM produces high density data and permits onboard QC and processing.