Petroleum Geo-Services ASA : Third Quarter 2015 Results

Proactive Management in an Uncertain Market

Highlights Q3 2015

• Revenues of $225.7 million, compared to $394.2 million in Q3 2014
• EBITDA of $115.3 million, compared to $181.7 million in Q3 2014
• EBIT, excluding impairments and other charges, of $9.1 million, compared to $77.3 million in Q3 2014
• Cash flow from operations of $71.3 million, compared to $230.7 million in Q3 2014
• MultiClient Pre-funding revenues of $83.8 million with a corresponding pre-funding level of 88%, compared to $55.4 million and 79% respectively in Q3 2014
• Cost reduction program ahead of plan
• Total Leverage Ratio requirement for Revolving Credit Facility increased  to 4.00:1 through Q1 2017, with no dividend to be paid for 2015
• Ramform Explorer and Challenger in process of being cold-stacked and Ramform Viking to be stacked end October
• Entered into attractive charter agreements for Sanco Swift and Sanco Sword, leading to cold-stacking of Ramform Vanguard and Ramform Valiant
• Agreement to postpone delivery of Ramform Hyperion to Q1 2017
• Full year EBITDA expected to be approximately $500 million

"MultiClient pre-funding revenues for the first three quarters were solid at $282.4 million, with a corresponding pre-funding level of 121% highlighting the attractiveness of our projects, and the reduced earnings volatility we get from our increased MultiClient focus.

Despite a sequential improvement in the marine contract EBIT margin, we experienced a further market deterioration over the summer, mainly driven by intense competition in preparation for the weaker winter season. Contract revenues and margin through Q4 and Q1 will be adversely impacted.

We have taken further steps to adapt to the current challenging market environment. We have negotiated an amendment to the financial covenants for our Revolving Credit Facility, creating significantly more headroom and preserving our strong liquidity reserve.  We continue to cut costs and reduce capital expenditures to optimize cash flow. With the cold-stacking of Ramform Viking and other initiatives taken in Q3, our estimated cost reduction for 2015 is now increased to approximately $320 million. We have implemented a significant reduction of 2015 CAPEX and further, benefiting 2016 CAPEX, agreed with the shipyard to postpone the delivery of Ramform Hyperion to Q1 2017, subject to approval from the ECA financing banks.

In order to position our fleet for the future and address the industry's vessel oversupply, we have entered into agreements to charter the two vessels Sanco Sword and Sanco Swift, both among the most competitive conventional vessels in the seismic industry."

Jon Erik Reinhardsen,
President and Chief Executive Officer

Outlook
The low oil price, reduced oil company spending and intense competition for work among seismic companies impact pricing and utilization negatively. PGS expects market uncertainty and low earnings visibility to continue well into 2016.

Based on the current operational projections and with reference to disclosed risk factors, PGS expects full year 2015 EBITDA to be approximately $500 million.  

MultiClient cash investments are expected to be approximately $285 million, with a pre-funding level above 100%.

Somewhat above 50% of active 3D capacity is expected to be used for MultiClient in 2015.

Capital expenditures are estimated to be approximately $175 million, of which approximately $130 million is for the new builds Ramform Tethys and Ramform Hyperion.

The order book totaled $245 million at September 30, 2015 (including $103 million of committed pre-funding on MultiClient projects), compared to $259 million at June 30, 2015 and $466 million at September 30, 2014. As of October 19, 2015 approximately 85% of available capacity (which excludes stacked vessels) for Q4 is booked, with corresponding numbers for Q1 2016, Q2 2016 and Q3 2016 being approximately 50%, 55% and 10%, respectively.

The complete Q3 2015 earnings release and presentation can be downloaded from www.newsweb.no and www.pgs.com.

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.