Petroleum Geo-Services ASA Unaudited Second Quarter 2007 Results

Another Record Breaking Quarter


OSLO, Norway, July 26, 2007 (PRIME NEWSWIRE) -- Petroleum Geo-Services ASA ("PGS" or the "Company") today announced its unaudited second quarter 2007 results under IFRS.


 * New record quarter: Operating profit of $131.0 million, up 39.9
   million (44%) compared to Q2 2006. Revenues of $355.9 million, up
   $45.5 million (15%)
 * Marine: Operating profit of $129.3 million in Q2 2007, up $39.9
   million (45%) from Q2 2006 mainly driven by improved contract
   margins
 * Onshore: Operating profit of $6.0 million in Q2 2007, down $0.4
   million (6%) from Q2 2006, negatively impacted relocation of crews
 * Acquisition of MTEM: Acquired MTEM Limited, accelerating PGS' entry
   in the high growth market for electromagnetic ("EM") services used
   to detect the presence of hydrocarbons
 * New streamer technology: PGS launched its Next Generation Streamer
   technology improving efficiency and providing higher quality seismic
   data
 * Significant cash return to shareholders: Extraordinary dividend of
   NOK 10 per share (approximately $300 million) was approved by
   shareholders at the Annual General Meeting June 15, 2007, and paid
   July 10. The Company further used $90.1 million to repurchase shares
   during first half 2007
 * Debt refinancing: Completed debt refinancing with a total aggregate
   facility of $950 million giving the Company financial flexibility to
   pursue its strategy of growth

Key figures (IFRS)(1)


 ---------------------------------------------------------------------
                       Quarter ended      Six months ended  Year ended
 (In millions of          June 30,            June 30,        Dec. 31,
  dollars,          --------------------------------------------------
  except per           2007      2006      2007      2006      2006
  share data)       Unaudited Unaudited Unaudited Unaudited  Unaudited
 ---------------------------------------------------------------------
 Revenues            $  355.9  $  310.4  $  708.4  $  621.4  $ 1,308.4
 ---------------------------------------------------------------------
 Operating profit/
  EBIT                  131.0      91.1     250.5     195.2      359.5
 ---------------------------------------------------------------------
 Income before
  income tax expense
  (benefit) and
  minority interests    128.9      80.7     246.9     169.4      310.9
 ---------------------------------------------------------------------
 Net income to equity
  holders                83.4      32.4     181.8     117.4      394.7
 ---------------------------------------------------------------------
 Basic earnings per
  share ($ per share)    0.47      0.18      1.02      0.65       2.19
 ---------------------------------------------------------------------
 Diluted earnings per
  share ($ per share)    0.47      0.18      1.02      0.65       2.19
 ---------------------------------------------------------------------
 Adjusted EBITDA (as
  defined)              199.2     144.4     383.8     278.7      614.3
 ---------------------------------------------------------------------
 Net cash provided by
  operating
  activities            185.3     118.0     302.6     190.7      575.8
 ---------------------------------------------------------------------
 Cash investment in
  multi-client
  library                78.6      23.5     136.3      33.7      120.7
 ---------------------------------------------------------------------
 Capital expenditures    45.5      37.8      79.8      57.3      165.4
 ---------------------------------------------------------------------
 Total assets (period
  end)                1,845.7   1,319.7   1,845.7   1,319.7    1,369.3
 ---------------------------------------------------------------------
 Cash and cash
  equivalents
 (period end)           179.8     140.5     179.8     140.5      124.0
 ---------------------------------------------------------------------
 Net interest bearing
  debt (period end)  $  483.2  $  488.5  $  483.2  $  488.5  $   195.5
 ---------------------------------------------------------------------

(1) Following the completion of the demerger and public offering of Petrojarl on June 29, 2006, the Key figures reflects, for all periods presented, a presentation of the operations of the Production segment and the gain from sale of Petrojarl shares, as discontinued operations.

Svein Rennemo, PGS President and Chief Executive Officer, commented:

"The second quarter was characterized by significant investments in attractive new multi-client seismic, further enhancing also future cash flows. We used 48% of our active vessel time acquiring new multi-client seismic with expected returns that compete favorably with the current strong marine contract seismic market.

"The strength in the marine contract seismic market continued with a high level of bidding activity indicating continued market strength also in 2008. We achieved a record high contract EBIT margin of 53% for the second quarter, in line with our guidance of a margin between 50% and 55% for full year 2007.

"As expected, Onshore was impacted by relocation of new crews in North Africa and lower seasonal activity in Alaska and Canada in the second quarter.

"I am very pleased that we are also making substantial progress in executing our strategy of growth and technology differentiation.

"The acquisition of the Scottish electromagnetic ("EM") technology company MTEM Limited in June will provide a quantum leap in our offering of EM services with a unique, breakthrough, cable-based EM-technology. PGS is the only player to offer a complete EM acquisition and processing technique both onshore and offshore.

"We are on track towards deploying the first 4C fiber-optic seismic monitoring system for a permanent seabed installation based on unique PGS technology in deepwater Gulf of Mexico for Chevron later this year.

"The launch of our Next Generation Streamer in June marks a step change in streamer technology. It is the only dual sensor towed marine streamer in the world and will provide enhanced resolution, better penetration and improved operational efficiency. We have already received several requests from oil companies wanting to use this technology."

Q2 Highlights

PGS group


 * Revenues of $355.9 million, up $45.5 million (15%) from Q2 2006
 * Operating profit of $131.0 million, up $39.9 million (44%) from Q2
   2006
 * Income before income tax expense of $128.9 million, up $48.2 million
   (60%) from Q2 2006
 * Net income to equity holders of $83.4 million, up $51.0 million
   (157%) from Q2 2006
 * Cash flow from operations of $185.3 million, up $67.3 million from
   Q2 2006
 * Cash investments in multi-client library of $78.6 million, up $55.1
   million from Q2 2006
 * Capital expenditures of $45.5 million, compared to $37.8 million in
   Q2 2006
 * Net interest bearing debt of $483.2 million at June 30, 2007, up
   $257.4 million in Q2, primarily due to the acquisition of MTEM
   Limited where PGS paid $251.4 million, net in cash in Q2
 * $40.9 million used to repurchase own shares in Q2

Marine


 * Total revenues of $290.0 million, up $41.3 million (17%) from Q2
   2006 despite using 42% less of active capacity to acquire contract
   seismic
 * Operating margin for Marine contract seismic was at an all time high
   level at around 53% compared to around 35% in Q2 2006
 * Contract seismic revenues of $141.0 million, down $2.2 million (2%)
   from Q2 2006. In Q2 2007, 52% of the active vessel time was used to
   acquire contract seismic, down from 90% in Q2 2006
 * Multi-client revenues of $132.6 million, up $42.1 million (47%) from
   Q2 2006 due to increased pre-funding revenues as a consequence of
   increased multi-client activity
 * Operating profit of $129.3 million, up $39.9 million (45%) from Q2
   2006
 * Capital expenditures of $37.4 million, up $1.6 million compared to
   Q2 2006
 * Order backlog at June 30, 2007 of $438 million compared to $533
   million at March 31, 2007. The backlog number includes $121 million
   of committed pre-funding on scheduled multi-client projects. The
   Company is in process of clarifying several significant Letters of
   Intent and significant contract awards, not included in the backlog
   as of end June, amounting to approximately $300 million

Onshore


 * Revenues of $66.5 million, up $4.3 million (7%) from Q2 2006
 * Operating profit of $6.0 million, down $0.4 million (6%) from Q2
   2006 primarily due to relocation of crews
 * Order backlog at June 30, 2007 of $105 million compared to $135
   million at March 31, 2007

Outlook 2007

Marine


 * Full year streamer contract EBIT margins are expected at around
   50-55%
 * Multi-client revenues are expected to be significantly higher than
   2006
 * Multi-client investments are expected to be approximately $200
   million
 * Capital expenditure is expected to be approximately $200 million

Onshore


 * Revenues and operating profit expected to be approximately in line
   with 2006
 * Multi-client investments are expected to be approximately $65
   million
 * Capital expenditure is expected to be in the range of $25-30 million

Second Quarter 2007: http://hugin.info/115/R/1142112/216055.pdf

Support tables IFRS: http://hugin.info/115/R/1142112/216056.pdf



            

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