PGS ASA

Investor Presentation • Jul 19, 2018

Second Quarter and First Half 2018 Results

Earnings Presentation

Cautionary Statement

• This presentation contains forward looking information
• Forward looking information is based on management assumptions and analysis
• 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 second quarter and first half 2018 results and the disclosures therein
• Petroleum Geo-Services ASA and its subsidiaries ("PGS" or "the Company") has implemented the new revenue recognition standard, IFRS 15, as the Company's external financial reporting method. This change impacts the timing of revenue recognition for MultiClient pre-funding revenues and related amortization. PGS will for internal management purposes continue to use the revenue recognition principles applied in previous periods, which are based on percentage of completion, and use this for numbers disclosed as Segment Reporting. See Note 15 of the Q2 and first half 2018 earnings release for definitions of terms. See Note 16 of the Q2 and first half 2018 earnings release for a description of the change in revenue recognition resulting from the implementation of IFRS 15. PGS will not restate prior periods

Q2 Highlights: Progressing as Planned

• Segment Revenues of USD 199.4 million
• EBITDA of USD 136.0 million
• Solid MultiClient performance:
• Total Segment MultiClient revenues of USD 162.7 million
• Late sales of USD 68.7 million, confirming strong sales trend
• Pre-funding revenues of USD 94.0 million
• Pre-funding level of 116%
• First positive EBIT in 2.5 years
• Marine contract market is improving, but still challenging
• Value of bids and leads at highest level in more than three years
• On track to be cash flow positive after debt servicing in 2018 -3-

Financial Summary

*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 as defined in Note 15 of the Q2 and first half 2018 earnings release. **Excluding impairments and Other charges.

Order Book

• Order book of USD 187 million by end Q2 2018 • 3D vessel booking next three quarters of 40 vessel months* – Q3: 23 vessel months – Q4: 12 vessel months – Q1 2019: 5 vessel months • In the final phase of formalizing projects, hence dollar value not reflected in order book by June 30 • Expect to achieve acceptable utilization in Q4 – Focus on vessel utilization and profitability for the core fleet before flexible capacity is considered

Financials

Unaudited Second Quarter and First Half 2018 Results

Consolidated Key Financial Figures

	Q 2	Q 2	1 H	1 H	Full year
USD million (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)
Net financial items	(15.7)	(20.1)	(38.0)	(29.4)	(84.5)
Income (loss) before income tax expense	14.8	(37.5)	(14.7)	(140.5)	(468.2)
Income tax expense	(4.4)	5.3	(14.5)	1.8	(55.2)
Net income (loss) to equity holders	10.4	(32.2)	(29.2)	(138.7)	(523.4)
Basic earnings per share (\$ per share)	\$0.03	(\$0.10)	(\$0.09)	(\$0.42)	(\$1.55)
Net cash provided by operating activities	121.7	49.4	195.1	79.4	281.8
Cash Investment in MultiClient library	81.3	43.8	135.0	77.4	213.4
Capital expenditures (whether paid or not)	8.3	12.9	12.3	114.5	154.5
Total assets	2,386.3	2,860.1	2,386.3	2,860.1	2,482.8
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. Impairment and other charges, net	13.6	(8.7)	(9.1)	(92.2)	(147.1)

* For definition of Segment Reporting numbers see Note 14 of the unaudited second quarter and first half 2018 results, released on July 19, 2018.

The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited second quarter and first half 2018 results, released on July 19, 2018.

Q2 2018 Operational Highlights

• Total Segment MultiClient revenues of USD 162.7 million, continuing the strong trend from previous two quarters
• Pre-funding revenues of USD 94.0 million
• Pre-funding level of 116% on USD 81.3 million of MultiClient cash investment
• Late sales revenues of USD 68.7 million
• Contract revenues of USD 29.7 million
• Low capacity allocation to contract

Pre-funding and Late Sales Revenues Combined: Segment MultiClient Revenues per Region

• Q2 2018 pre-funding revenues were well distributed across regions
• Late sales revenues were dominated by Europe

Key Operational Segment Reporting Numbers

	2018			2017
USD million	Q 2	Q 1	Q 4	Q3	Q 2	Q1
Contract revenues	29.7	44.5	40.5	43.5	95.9	61.4
MultiClient Pre-funding	94.0	58.6	107.7	101.8	50.2	39.7
MultiClient Late sales	68.7	83.5	70.5	47.8	77.4	39.3
Imaging	6.7	6.7	9.8	12.5	14.9	13.8
Other	0.3	4.6	7.4	2.0	2.1	0.6
Total Revenues	199.4	197.8	235.9	207.6	240.5	154.8
Operating cost	(63.4)	(105.5)	(113.1)	(99.0)	(127.9)	(124.7)
EBITDA*	136.0	92.3	122.8	108.6	112.5	30.1
MultiClient amortization	(104.6)	(76.3)	(121.6)	(153.6)	(80.5)	(70.6)
Depreciation and amortization of long-term assets (excl. MC library)	(17.8)	(38.7)	(39.9)	(27.1)	(42.9)	(44.5)
Impairment and loss on sale of long-term assets (excl. MC library)	0.0	0.0	(55.8)	(28.5)	(9.9)	0.0
EBIT	13.6	(22.7)	(94.5)	(100.6)	(20.8)	(85.0)
CAPEX, whether paid or not	(8.3)	(14.1)	(23.4)	(16.6)	(12.9)	(101.6)
Cash investment in MultiClient	(81.3)	(53.7)	(54.0)	(82.0)	(43.8)	(33.6)
Order book	187	211	135	167	248	340

* 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 as defined in Note 14 of the Q2 and first half 2018 earnings release. This information should be read in conjunction with the unaudited second quarter and first half 2018 results released on July 19, 2018.

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

• 74% active vessel time in Q2 2018
• Based on 8 vessels
• Low utilization primarily driven by relocation of vessels
• Expect better vessel utilization in Q3 with less steaming and idle time
• Approximately 65% of full year 2018 active 3D vessel capacity planned for MultiClient

2018 Cost Reductions Driven by Reorganization

• 2018 gross cash costs expected to be approximately USD 600 million
• The full year 2018 gross cash cost estimate is sensitive to changes in exchange rates and oil price and will also be impacted by changes in activity levels

Group Cost* Focus Delivers Results

• Q2 gross cash cost sequentially down in accordance with plan
• Cost reductions taking full effect
• Low production
• Q3 gross cash costs expected somewhat higher due to higher production
• Full year gross cost estimate based on six vessels in Q4

Full year 2018 expected to be approximately USD 600 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.

Following the reorganization of PGS, effective January 1, 2018, more office facility and sales costs are classified as "Selling, general and administrative costs." -13-

Consolidated Statements of Cash Flows Summary

	Q2	Q2	1H	1H	Full year
USD million	2018	2017	2018	2017	2017
Cash provided by operating activities	121.7	49.4	195.1	79.4	281.8
Investment in MultiClient library	(81.3)	(43.8)	(135.0)	(77.4)	(213.4)
Capital expenditures	(6.9)	(17.1)	(21.0)	(124.7)	(148.8)
Other investing activities	(7.4)	(3.7)	(14.5)	17.8	62.1
Net cash flow before financing activities	26.1	(15.2)	24.6	(104.9)	(18.3)
Financing activities	(40.1)	29.7	(47.5)	96.5	3.8
Net increase (decr.) in cash and cash equiv.	(14.0)	14.5	(22.8)	(8.4)	(14.4)
Cash and cash equiv. at beginning of period	38.4	38.8	47.3	61.7	61.7
Cash and cash equiv. at end of period	24.4	53.3	24.4	53.3	47.3

• Cash flow from operating activities of USD 121.7 million in Q2 2018
• Improvement from Q2 2017 driven by higher earnings and a better working capital development
• Impacted by USD 12.5 million payment of severance and other restructuring provisions made in Q4 2017 (USD 26.8 million year-to-date)
• Targeting positive cash flow after debt service in 2018¹

¹The financial target of being cash flow positive after debt service excludes payments relating to severance and other restructuring provisions made in Q4 2017 as well as drawings/repayments on the RCF.

Balance Sheet Key Numbers

	Jun 30	June 30	Opening balance	December 31
USD million	2018	2017	01.01.2018	2017
Total assets	2,386.3	2,860.1	2,567.6	2,482.8
MultiClient Library	661.0	606.7	668.0	512.3
Shareholders' equity	785.7	1,250.9	804.2	879.5
Cash and cash equivalents (unrestricted)	24.4	53.3	47.3	47.3
Restricted cash	44.1	111.5	43.3	43.3
Liquidity reserve	224.4	228.3	257.3	257.3
Gross interest bearing debt	1,213.9	1,290.1	1,229.5	1,229.5
Net interest bearing debt	1,145.3	1,126.2	1,139.4	1,139.4

• Liquidity reserve of USD 224.4 million
• Balance sheet restated January 1, 2018 due to IFRS 15
• Carrying value of MultiClient surveys in progress increased by USD 155.7 million
• Accrued revenues and other receivables decreased by USD 70.9 million, and deferred revenues increased by USD 160.1 million
• Shareholders' equity decreased by USD 75.3 million

Good Headroom to Maintenance Covenant

• Substantial reduction of Total Leverage Ratio ("TLR") during 2017 and first half 2018
• Significant headroom to required level
• TLR of 2.83:1 as of June 30, 2018, compared to 4.39:1 as of June 30, 2017
• Expect to be in compliance going forward

Summary of Debt and Drawing Facilities

Debt and facilities as of June 30, 2018: Debt maturity profile:

Long-term Credit Lines and Interest Bearing Debt	Nominal Amount	Total Credit Line	Financial Covenants
USD 400.0m TLB, due 2021 Libor (minimum 0.75%) + 250 bps	USD 383.0m		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 200.0m	USD 400.0m**	Maintenance covenant: total leverage ratio 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 392.9m		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 212.0m		None, but incurrence test: Interest coverage ratio ≥ 2.0x*
December 2018 Senior Notes, coupon of 7.375%	USD 26.0m		None

Operational Update and Market Comments

Unaudited Second Quarter and First Half 2018 Results

Streamer Operations July 2018

Marine Seismic Market Outlook

• Higher oil price, improved cash flow among oil companies and an exceptionally low oil and gas discovery rate are expected to benefit marine 3D seismic market fundamentals
• Strong MultiClient sales trend from last two quarters confirmed in Q2 2018
• Marine contract market
• Clear signs of improvement
• High number of leads and bid opportunities, but low order book
• Uncertainty remains regarding strength of market recovery

Seismic Market Activity

• Value of Sales Leads and Active Tenders is at its highest level for more than three years
• Recent increase is driven by West Africa

• Some bids for 2019 Europe season out significantly earlier than previous years

• Volume of acquired marine 3D seismic is expected to be somewhat higher in 2018 vs. 2017

• Better vessel utilization likely to compensate for less active capacity

Marine Seismic Supply

• Average streamer capacity in 2018 is close to 50% lower than 2013
• Flexible winter capacity causes supply swings
• Schlumberger's exit from the seismic acquisition market has reduced supply
• ‒ Likely to come back longer-term
• Low industry maintenance capex is causing the global streamer pool to shrink

Lower supply benefits market balance in 2018

• Group gross cash costs of ~USD 600 million

• Of which ~USD 300 million to be capitalized as MultiClient cash investments

• MultiClient cash investments ~USD 300 million

• ~65% of 2018 active 3D vessel time allocated to MultiClient

• Capital expenditures of ~USD 50 million

Q2 in Conclusion: On Track to be Cash Flow Positive after Debt Servicing

• High MultiClient activity with solid pre-funding revenues
• Good MultiClient late sales demonstrates a continuance of the strong trend from previous two quarters
• Marine contract market is improving, but still challenging
• First positive EBIT in 2.5 years
• Tight overall cost control remains a priority

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

	Nick car

Vessel	When	Expected Duration	Type of Yard Stay
Ramform Atlas	Q4 2018	10 days	Main class and technical yard
Sanco Atlantic	Q4 2018	22 days	Main class and technical yard

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