PGS ASA — Investor Presentation 2017

May 11, 2017

First Quarter 2017 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 first quarter 2017 results and the disclosures therein

Slow Start to 2017 Significant Order Book Increase

• Q1 2017 reflects a challenging winter season with low project demand and excess supply
• EBITDA USD 30.1 million
• Pre-funding level of 118%
• Completed USD 35 million subsequent offering
• Ramform Hyperion delivered
• Significant order book increase

Improved revenue visibility for 2017

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.

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Order Book

Financials Unaudited First Quarter 2017 results

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Consolidated Statement of Profit and Loss Summary

	Q1	Q1	Full year
USD million (except per share data)	2017	2016	2016
Revenues	154.8	203.1	764.3
EBITDA*	30.1	78.6	313.3
Operating profit (loss) EBIT ex impairment and other charges, net	(83.5)	(30.2)	(137.5)
Operating profit (loss) EBIT	(93.7)	(31.6)	(180.3)
Net financial items	(9.3)	(30.5)	(82.6)
Income (loss) before income tax expense	(103.0)	(62.2)	(262.8)
Income tax expense	(3.5)	5.1	(31.2)
Net income (loss) to equity holders	(106.5)	(57.1)	(293.9)
EPS basic	(\$0.32)	(\$0.24)	(\$1.21)
EBITDA margin*	19.4 %	38.7 %	41.0 %
EBIT margin ex impairment and other charges, net -53.9 % -14.9 % -18.0 %
• Revenue decline versus Q1 2016 due to lower MultiClient and Imaging revenues, somewhat offset by higher contract revenues
• Impairments and other charges, net, of USD 10.2 million in Q1 2017 – USD 1.4 million of impairments relating to the MultiClient library
– USD 8.8 million of other charges, net, primarily relating to provision for onerous contracts

• Revenue decline versus Q1 2016 due to lower MultiClient and Imaging revenues, somewhat offset by higher contract revenues
• Impairments and other charges, net, of USD 10.2 million in Q1 2017
• USD 1.4 million of impairments relating to the MultiClient library
• USD 8.8 million of other charges, net, primarily relating to provision for onerous

*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.

The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited first quarter 2017 results, released on May 11, 2017.

Q1 2017 Operational Highlights

• Total MultiClient revenues of USD 79.0 million
• Pre-funding revenues of USD 39.7 million
• Pre-funding level of 118% on USD 33.6 million of MultiClient cash investment
• Late sales revenues of USD 39.3 million
• Marine contract revenues of USD 61.4 million reflect a still challenging market environment with very low prices

MultiClient Revenues per Region

Pre-funding and Late Sales Revenues Combined

• Late sales revenues were dominated by Europe and South America
• Q1 pre-funding relatively low due to low MultiClient investment activity
• Gradual increase of well prefunded MultiClient projects through Q2 and Q3
• MultiClient revenues are expected to continue to see regional and quarterly fluctuations

MultiClient Vintage Distribution

• MultiClient library book value of USD 626.7 million as of March 31, 2017
• Down from USD 647.7 million in previous quarter
• Moderate net book value for surveys completed 2012-2015
• Q1 2017 amortization rate of 88%
• High due to low sales combined with straight-line amortization of completed surveys
• 2017 amortization expense expected to be in the range of USD 350-375 million

	2017		2016
USD million	Q1	Q4	Q 3	Q 2	Q 1
Contract revenues	61.4	29.3	54.2	69.9	59.2
MultiClient Pre-funding	39.7	50.9	84.3	47.2	59.9
MultiClient Late sales	39.3	52.4	63.2	46.0	65.3
Imaging	13.8	19.6	16.0	17.9	16.6
Other	0.6	1.9	6.4	2.1	2.1
Total Revenues	154.8	154.1	224.1	183.0	203.1
Operating cost	(124.7)	(101.0)	(111.4)	(114.2)	(124.6)
EBITDA*	30.1	53.1	112.7	68.8	78.6
MultiClient amortization and impairment	(70.6)	(97.6)	(86.2)	(62.9)	(68.1)
Depreciation and amortization of long-term assets (excl. MC library)	(44.5)	(42.0)	(31.9)	(42.1)	(40.7)
Impairment and loss on sale of long-term assets (excl. MC library)	-	(7.8)	(9.2)	(4.2)	-
Other charges, net	(8.8)	1.9	3.1	(4.2)	(1.4)
EBIT	(93.7)	(92.4)	(11.5)	(44.6)	(31.6)
CAPEX, whether paid or not	(101.6)	(28.7)	(19.0)	(51.9)	(108.9)
Cash investment in MultiClient	(33.6)	(47.8)	(63.0)	(41.8)	(48.3)
Order book	340	215	190	230	204

**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.

The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited First quarter 2017 results released on May 11, 2017.

Vessel Utilization* Seismic Streamer 3D Fleet Activity in Streamer Months

Group Cost* Focus Delivers Results

• Strong cost management
• Sequential cost increase primarily due to higher fleet utilization
• Quarterly cost will increse with Ramform Hyperion and Vanguard commencing operations in Q2

Full year gross cash cost expected to be approx. USD 700 million

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

Cost Discipline Remains a Key Priority in 2017

• 2016 gross cash cost more than 40% lower than in 2014
• 2017 cash cost of ~USD 700 million modest increase from structurally lower level mainly attributable to:
• More operated capacity with full year operation of Ramform Tethys and delivery of Ramform Hyperion
• Expected increase of fuel prices
• Tight cost control continues

*Estimate based on a stable USD against the blend of currencies in PGS cost base.

Consolidated Statements of Cash Flows Summary

	Q1	Q1	Full year
USD million	2017	2016	2016
Cash provided by operating activities	30.0	133.3	320.9
Investment in MultiClient library	(33.6)	(48.3)	(201.0)
Capital expenditures	(107.6)	(114.4)	(218.2)
Other investing activities	21.5	(97.3)	(109.5)
Net cash flow before financing activities	(89.7)	(126.7)	(207.8)
Financing activities	66.8	161.6	187.9
Net increase (decr.) in cash and cash equiv.	(22.9)	34.8	(19.9)
Cash and cash equiv. at beginning of period	61.7	81.6	81.6
Cash and cash equiv. at end of period	38.8	116.4	61.7

• Cash flow from operating activities of USD 30.0 million in Q1 2017
• Y-o-Y decrease is due to lower earnings and less contribution from working capital reduction than in Q1 2016
• New build capex of USD 86.9 million relating to the delivery of Ramform Hyperion

Balance Sheet Key Numbers

	March 31	March 31	December 31
USD million	2017	2016	2016
Total assets	2,824.3	3,029.2	2,817.0
MultiClient Library	626.7	692.8	647.7
Shareholders' equity	1,285.1	1,403.0	1,359.4
Cash and cash equivalents (unrestricted)	38.8	116.6	61.7
Restricted cash	111.6	89.3	101.0
Liquidity reserve	273.8	496.6	271.7
Gross interest bearing debt	1,242.7	1,326.8	1,191.4
Net interest bearing debt	1,093.2	1,120.9	1,029.7

• Liquidity reserve of USD 273.8 million
• Net interest bearing debt increased by USD 63.5 million primarily as a result of delivery of Ramform Hyperion
• Total leverage ratio of 4.88:1 as of March 31, 2017, compared to 3.94:1 as of December 31, 2016
• Shareholders' equity at 46% of total assets

-16- The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited first quarter 2017 results released on May 11, 2017.

Summary of Debt and Drawing Facilities

Long term Credit Lines and Interest Bearing Debt	Nominal Amount as of March 31, 2017	Total Credit Line	Financial Covenants
USD 400.0 million Term Loan ("TLB"), Libor (minimum 0.75%) + 250 basis points, due 2021	USD 388.0 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 165.0 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 451.7 million	USD 451.7 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%	USD 212.0 million		None, but incurrence test: Interest coverage ratio ≥ 2.0x*
December 2020 Senior Notes, coupon of 7.375%	USD 26.0 million		None

Operational Update and Market Comments

Unaudited First Quarter 2017 results

Streamer Operations May 2017

Marine Seismic Market

• Substantial improvement in oil companies' cash flow
• Contract market still challenging, but with pockets of opportunities
• 4D production markets
• Capacity constrained markets
• Industry more or less fully booked for Q2 and Q3
• Still limited visibility for the winter season

• Even though improved from 2016

• Currently low biding activity, but stable leads pipeline

• 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 MultiClient market share expected to increase

Source: PGS internal estimate as of end April 2017. 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

• Seismic acquisition volume expected to increase ~10% in 2017 compared to 2016, with downside risk due to:
• Low Q1 sq.km production
• Change in mix with more 4D requiring more capacity per sq.km
• Industry streamer capacity will increase during the summer season due to delivery of Ramform Hyperion and vessels coming back from warm-stack
• − 2017 summer season capacity approx. 35- 40% lower than 2013 peak
• − Warm stacking used by the industry for flexible capacity as long as streamers are available
• Global streamer pool continues to shrink

Improved market balance for Q2/Q3

• Oil companies investing more in producing fields and fields under development
• Number of production seismic (4D) projects will more than double in 2017 compared to 2016, and is expected to increase further in 2018
• PGS will do more than 50% of the global 4Ds for 2017
• 4D activity increasing in North Sea, West Africa and Brazil
• PGS well positioned in the 4D market

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
• 51% of revenues in Q1 2017
• 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

Achieved Y-o-Y Summer Season Price Increases Average Dayrate of Sold Marine Contract Projects

*Percentage of the active fleet allocated to contract and MultiClient, subject to changes in the vessel schedule..

• Group gross cash cost ~USD 700 million

– Of which USD 250-275 million to be capitalized as MultiClient cash investments

• MultiClient cash investments USD 250-275 million

• Pre-funding level of ~100%
• Active 3D vessel time planned for MultiClient of ~50%

• Capital expenditures of ~USD 150 million

– Including new build capex of ~USD 87 million

In Conclusion: Competitively Positioned to Navigate Current Market Environment

• Significant order book increase
• New build program completed
• Better positioned to generate free cash flow
• Adequate liquidity position
• Continuous focus on cost and capex
• Industry leading MultiClient performance

Visibility improved for 2017

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 Main Yard Stays* Next Six Months

Vessel	When	Expected Duration	Type of Yard Stay
PGS Apollo	July 2017	7 days	Intermediate classing and major engine overhaul
Ramform Hyperion	August 2017	5 days	Guarantee work

*Yard stays are subject to changes.

Appendix: Fleet Structure Provides Flexibility Through the Cycle

High-end Ramforms - Flexible Capacity

Ramform Vanguard - warm stacked 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

In operation Charter period Option period

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

Significantly reduced capex requirement going forward

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.

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