PGS Announces Unaudited 2004 Fourth Quarter and Preliminary Full Year Results Under Norwegian GAAP

PGS Announces Unaudited 2004 Fourth Quarter and Preliminary Full
Year Results Under Norwegian GAAP 


OSLO, Norway, Feb. 25  /PRNewswire-FirstCall/ -- Petroleum Geo-Services ASA
("PGS" or the "Company") (OSE and NYSE: PGS) announced today its unaudited 2004
fourth quarter and preliminary full year results under Norwegian generally
accepted accounting principles ("Norwegian GAAP").

   * 2004 Cash flow post investment well above previous guidance
   * Strong multi-client late sales and improved contract sales drive Q4
     revenue and Adjusted EBITDA improvement in Marine Geophysical
   * Substantial gain on the sale of Pertra -- leading to greater financial
     flexibility

  Key Norwegian GAAP figures as reported


   +-------------------------------------------------------------------+
   |                 | Quarter ended December |  Years ended December  |
   |                 |          31,           |          31,           |
   |-----------------+------------------------+------------------------|
   |                 |    2004    |   2003    |   2004    |    2003    |
   |                 | Unaudited  | Unaudited | Unaudited |  Audited   |
   | (In millions of |            |           |           | (Restated) |
   | dollars)        |            |           |           |            |
   |-----------------+------------+-----------+-----------+------------|
   | Revenue         |    $ 300.8 |   $ 269.6 | $ 1,131.1 |  $ 1,120.7 |
   |-----------------+------------+-----------+-----------+------------|
   | Operating       |     (38.2) |   (514.9) |      96.5 |    (645.3) |
   | profit (loss)   |            |           |           |            |
   |-----------------+------------+-----------+-----------+------------|
   | Net income      |     (49.3) |   (528.5) |    (52.1) |    (819.1) |
   | (loss)          |            |           |           |            |
   |-----------------+------------+-----------+-----------+------------|
   | Adjusted EBITDA |       94.5 |     101.9 |     433.8 |      479.1 |
   | (A)             |            |           |           |            |
   |-----------------+------------+-----------+-----------+------------|
   | Cash investment |      (4.0) |     (9.4) |    (41.7) |     (91.5) |
   | in multi-client |            |           |           |            |
   | (B)             |            |           |           |            |
   |-----------------+------------+-----------+-----------+------------|
   | Capital         |     (42.1) |    (25.0) |   (145.6) |     (57.7) |
   | expenditures    |            |           |           |            |
   | (C)             |            |           |           |            |
   |-----------------+------------+-----------+-----------+------------|
   | Cash Flow Post  |            |           |           |            |
   | Investment      |   $   48.4 |  $   67.5 | $   246.5 | $    329.9 |
   | (Defined as     |            |           |           |            |
   | A+B+C)          |            |           |           |            |
   +-------------------------------------------------------------------+




Key Norwegian GAAP figures excluding Pertra segment to be discontinued (Pro
forma)

   +-------------------------------------------------------------------+
   |                | Quarter ended December |  Years ended December   |
   |                |          31,           |           31,           |
   |----------------+------------------------+-------------------------|
   |                |    2004    |   2003    |    2004    |    2003    |
   |                | Unaudited  | Unaudited | Unaudited  | Unaudited  |
   | (In millions   |            |           |            |            |
   | of dollars)    |            |           |            |            |
   |----------------+------------+-----------+------------+------------|
   | Revenue        |    $ 294.0 |  $  255.0 |  $ 1,018.4 |  $ 1,048.9 |
   |----------------+------------+-----------+------------+------------|
   | Operating      |      (3.9) |   (523.5) |       63.9 |    (681.4) |
   | profit (loss)  |            |           |            |            |
   |----------------+------------+-----------+------------+------------|
   | Adjusted       |      100.4 |      82.4 |      353.4 |      418.2 |
   | EBITDA (A)     |            |           |            |            |
   |----------------+------------+-----------+------------+------------|
   | Cash           |      (4.0) |     (9.4) |     (41.7) |     (91.5) |
   | investment in  |            |           |            |            |
   | multi-client   |            |           |            |            |
   | (B)            |            |           |            |            |
   |----------------+------------+-----------+------------+------------|
   | Capital        |     (19.9) |    (13.7) |     (61.6) |     (23.5) |
   | expenditures   |            |           |            |            |
   | (C)            |            |           |            |            |
   |----------------+------------+-----------+------------+------------|
   | Cash Flow Post |            |           |            |            |
   | Investment     |   $   76.5 | $    59.3 | $    250.1 | $    303.2 |
   | (Defined as    |            |           |            |            |
   | A+B+C)         |            |           |            |            |
   +-------------------------------------------------------------------+

  Svein Rennemo, PGS Chief Executive Officer, commented,



"We delivered a Cash Flow Post Investment, excluding Pertra, for 2004 of $250
million, better than our earlier guidance of around $230 million, despite the
negative impact from the labor conflict on the Norwegian Continental Shelf and
the damaged main riser on the Varg field. Fourth quarter performance reflects
improvement in our Marine Geophysical operations which benefited from the first
stages of a market undergoing improvement. At the beginning of 2005 our order
backlog is substantially improving both in amount and associated expected
margins.

The finalization of the re-audit of our historical U.S. GAAP financial
statements and subsequent re-listing of our ADSs on the New York Stock Exchange
in December mark important milestones in delivering our restructuring
commitments and normalizing our communication with, and access to, capital
markets.

The agreement to sell Pertra marks PGS' exit from its successful E&P venture,
which started in 2001. PGS was formed as an oil service company and with this
exit from E&P, PGS will once again become fully focused on its oil service
business with strategic focus on geophysics and floating production operations.
We are credible industry leaders in both these areas, with strong market share,
client relationships and technological expertise. The main goal for 2005 is to
improve the return on these assets.

We expect to use a portion of our favorable cash position and the proceeds from
the Pertra sale to reduce debt."

  Q4 Highlights

  PGS group
   * Revenues of $300.8 million, up $31.2 million (12%) compared to Q4 2003,
     driven by strong multi-client late sales and improved contract revenues
     in Marine Geophysical
   * Adjusted EBITDA, excluding Pertra, of $100.4 million, up $18.0
     million (22%)
   * Operating loss of $38.2 million, impacted by significant Pertra loss
     and additional non-sales related amortization of the Marine and Onshore
     multi-client library of $22.3 million
   * Net loss of $49.3 million
   * Cash flow from operations, $42.6 million after interest payments of
     approximately $52 million. Net interest-bearing debt of $995.3 mill

  Marine Geophysical
   * Strong multi-client late sales totaling $91.5 million, twice Q4 2003
     levels ($45.8 million), due to strong demand and realization of uplifts
     (success payments) from earlier license sales
   * Contract revenues at acceptable levels considering seasonally high
     level of vessel movements, $76.2 million compared to $70.0 million
     in Q4 2003
   * In keeping with the Company's conservative accounting policy for
     multi-client sales, recorded $19.4 million in additional non sales
     related amortization of the multi-client library related to minimum
     amortization and reduced or delayed forecasted sales for certain
     individual surveys
   * Strong order backlog improvement with year-end marine acquisition
     backlog of $170 million compared to $95 million at the end of Q3

  Onshore
   * Low activity level due to reduction of Mexican activities as previously
     announced
   * Weak results primarily due to reduced activity and difficult weather
     conditions in North America
   * Order backlog at year-end at $66 million compared to $68 million at the
     end of Q3

  Production
   * Low revenues on Petrojarl Varg caused by production shut down from
     October 13 to October 26 due to labor conflict followed by damage to
     the main riser November 5, limiting production to a maximum of
     approximately 15,000 barrels per day
   * Increased production on Ramform Banff following development work on the
     Banff field and tie in of Kyle field well
   * Production on Petrojarl Foinaven increased from Q3 but declined year
     over year by natural field production decline
   * Lower production on Petrojarl I due to natural field production decline
     and impact of labor conflict from September 12 to October 29

  Pertra (To be discontinued operation effective January 1, 2005)
   * Operating loss of $34.3 million
   * Oil production negatively impacted by production shut down from
     October 13 to October 26, due to labor conflict followed by damage to
     the main riser November 5, limiting the Varg field production to a
     maximum of approximately 15,000 (or 10,500 for Pertra's 70% share)
     barrels per day
   * Dry "Villmink" exploration well charged to expense as depreciation
     charge -- $11.4 million
   * Depreciation of capitalized development cost accelerated by
     approximately $11.8 million due to reduction on proved reserves (based
     on SEC guidelines).

  Outlook Full Year 2005

   * Marine Geophysical
     -- Increasing impact from Marine 3D market near full capacity
        utilization expected during 2005
     -- Multi-client late sales lower than 2004 due to limited reinvestment
        over the past three years and expected delay of Brazil 7th Round
        sales into 2006
     -- Cost levels impacted by increased fuel prices and depreciation of
        USD currency compared to 2004

   * Onshore
     -- Onshore full year activity level at par with 2004, building on
        expected Q2 start-up of significant transition zone project in
        Eastern Hemisphere and contract awards for South America crews

   * Production
     -- Total oil production from the four FPSO's expected to be in line
        with 2004, assuming Varg riser replaced in Q1.
     -- Increased operating cost as maintenance CAPEX is expensed and time
        since deployment of all FPSO's on their respective fields is
        increasing. In addition USD currency has depreciated compared to
        2004

   * Pertra operations and estimated sales gain of approximately $140
     million to be reported as discontinued operations effective January 1,
     2005



The financial information contained in this release is preliminary and
unaudited and has been prepared in accordance with Norwegian GAAP to be
consistent with financial information released in the first three quarters in
2004. The Company's primary basis of reporting is U.S. GAAP, and the Company
expects to provide quarterly financial information for 2004 on a U.S. GAAP
basis when the audit of the 2004 U.S. GAAP financial statements is competed,
and return to using U.S. GAAP for its earnings releases effective with the
first quarter 2005 report. The Company's financial statements based on U.S.
GAAP could be materially different from the Company's financial statements
based on Norwegian GAAP.

  The full report can be downloaded from the following link:

  http://hugin.info/115/R/982302/146011.pdf

  FOR DETAILS, CONTACT:

   Ola Bosterud
   Sam R. Morrow
   Phone: [phone]

  US Investor Services: Renee Sixkiller, Phone: [phone]


DATASOURCE: Petroleum Geo-Services ASA



CONTACT:  Ola Bosterud or Sam R. Morrow, [phone]; Renee Sixkiller,

US Investor Services, [phone] 



Web site: http://www.pgs.com/

http://hugin.info/115/R/982302/146011.pdf 

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