Note: Petroleum Geo-Services ASA and its subsidiaries ("PGS" or "the Company") have 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 the percentage of completion, and use these for numbers disclosed as Segment Reporting. See Note 15 for definitions of terms discussed in this report. See Note 16 for a description of the change in revenue recognition resulting from the implementation of IFRS 15. PGS will not restate prior periods.

View results | View presentation | Conference calls

Highlights Q1 2018

• As Reported revenues of $201.3 million and EBIT loss of $7.3 million, according to IFRS
• Segment Revenues of $197.8 million, compared to $154.8 million in Q1 2017
• Segment EBITDA of $92.3 million, compared to $30.1 million in Q1 2017
• Segment EBIT, a loss of $22.7 million, compared to a loss of $83.5 million in Q1 2017
• Segment MultiClient pre-funding revenues of $58.6 million with a corresponding pre-funding level of 109%, compared to $39.7 million and 118% in Q1 2017
• Segment MultiClient late sales revenues of $83.5 million, compared to $39.3 million in Q1 2017
• Cash flow from operations of $73.4 million, compared to $30.0 million in Q1 2017 
• Total Leverage Ratio, as defined in the Company's Credit Facility, below 3.0:1

"The favorable geographical spread of our MultiClient library and our well positioned surveys, combined with improving market sentiment contributed to solid MultiClient late sales revenues in the quarter. MultiClient pre-funding revenues were dominated by new data acquisition in Brazil and West Africa, and we achieved a pre-funding level of 109%, within our targeted range. With a capitalized MultiClient cash investment of $53.7 million, our segment sales-to-investment ratio was more than 2.6 times.

All our contract activities in the quarter were offshore West Africa, and we expect to continue to operate some of our vessels in this region in the coming quarters. The marine contract market is still challenging and was, as expected, seasonally weak also this winter. We expect pricing for contract work to be higher during the summer season compared to what we have achieved this winter.

This was our first quarter operating under the new organizational structure, and I am pleased to see that we do so with success. Revenue generation is ahead of plan, while our Q1 gross cash cost was impacted by higher activity level and the fact that some cost reductions have gradually taken effect during the quarter. Our full year 2018 cost guidance is adjusted to reflect the impact of a weaker USD, higher fuel prices and changes to our project schedule. The first quarter results and our progress to date reaffirm our confidence in being on track to be cash flow positive after debt service this year."

Rune Olav Pedersen,
President and Chief Executive Officer

Outlook

PGS expects the higher oil price, improved cash flow among clients and unsustainable reserve replacement ratios to benefit marine seismic market fundamentals going forward. While the Company expects market sentiment to improve during 2018, there remains a risk that a market recovery will take some time. The Company continues to plan its cost and capital expenditures for 2018 to achieve a positive cash flow post debt service.

Based on the current operational projections and with reference to disclosed risk factors, PGS expects full-year 2018 gross cash cost of approximately $600 million.

2018 MultiClient cash investments are expected to be approximately $million.

Approximately 60% of the 2018 active 3D vessel time is expected to be allocated to MultiClient acquisition.

Capital expenditure for 2018 is expected to be approximately $50 million.

The order book totaled $211 million at March 31, 2018 (including $161 million relating to MultiClient), compared to $135 million at December 31, 2017 and $340 million at March 31, 2017. The Company has mobilized both of the two flexible winter capacity vessels to the market and plan to operate eight 3D vessels during the summer season 2018.

A complete version of the Q1 2018 earnings release and presentation can be downloaded from www.newsweb.no and www.pgs.com: View results | View presentation 

Contact us

Petroleum Geo-Services ("PGS" or "the Company") is a focused Marine geophysical company that provides a broad range of seismic and reservoir services, including acquisition, imaging, interpretation, and field evaluation. The Company's MultiClient data library is among the largest in the seismic industry, with modern 3D coverage in all significant offshore hydrocarbon provinces of the world. The Company operates on a worldwide basis with headquarters in Oslo, Norway and the PGS share is listed on the Oslo stock exchange (OSE: PGS). For more information on Petroleum Geo-Services visit www.pgs.com.

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The information included herein contains certain forward-looking statements that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and uncertainties. The Company is subject to a large number of risk factors including but not limited to the demand for seismic services, the demand for data from our multi-client data library, the attractiveness of our technology, unpredictable changes in governmental regulations affecting our markets and extreme weather conditions. For a further description of other relevant risk factors we refer to our Annual Report for 2017. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward-looking statements. The reservation is also made that inaccuracies or mistakes may occur in the information given above about current status of the Company or its business. Any reliance on the information above is at the risk of the reader, and PGS disclaims any and all liability in this respect.