A CLEARER IMAGE PETROLEUM GEO-SERVICES ASA

Transcription

1 A CLEARER IMAGE MARINE DATA PROCESSING & TECHNOLOGY ONSHORE PETROLEUM GEO-SERVICES ASA CAPITAL MARKETS DAY 2006 OSLO NEW YORK

2 PGS Agenda Capital Markets Day 08:30 Introduction Svein Rennemo, CEO 08:45 Marine Rune Eng, Group President Marine 09:30 DP and Technology Sverre Strandenes, Group President DP and Technology 10:00 Break 10:15 Onshore Eric Wersich, Group President Onshore 10:45 Financials Gottfred Langseth, CFO 11:15 Concluding remarks and Q&A Svein Rennemo, CEO 11:45 Lunch Cautionary Statement This presentation contains forward looking information Forward looking information is based on management assumptions and analyses Actual experience may differ, and those differences may be material Forward looking information is subject to uncertainties and risks which are disclosed in PGS SEC filings

3 A Clearer Image Svein Rennemo, CEO PGS Capital Markets Day December 2006 Focusing on Geophysical Services October 2006 PGS announces plans for share repurchases of up to 10% of share capital September 2006 PGS announces plans for new large MC survey in GoM, new build program for eighth Ramform June 2006 Demerger of Petrojarl completed. PGS becomes a focused and dedicated geophysical company March 2006 PGS announces new build program for seventh Ramform December 2005 Full refinancing completed -4-2

4 Reducing Debt 9 Months September USD million Petrojarl Operations Sources Debt repayment Capex MC Uses EGM December 13, 2006, in relation to proposed share buy back program of up to 10% of the share capital Creating Shareholder Value PGS 133% Veritas DGC 120% CGG 101% TGS-Nopec 52% Schlumberger 41% -5- PGS including a selling price of NOK 70 for demerged Petrojarl. Share price development since December 30, 2005 to December 1,

5 Key Strengths Leading pure play seismic services company Marine market leader Best-in-class vessel portfolio with global lead in productivity Largest 3D MC library Global capabilities in Onshore State of the art technology leadership in HD3D seismic Strong operational record Strong financial position Strong underlying fundamentals for seismic medium term Increased Oil Demand Low Reserve Replacement Ambitious Production Targets Positive Long Term Market Prospects Low Reserve Replacement For broad group 1) of oil and gas companies production fell 1.2% in 2005, unchanged first half 2006 Growth targets from same companies 5.7% p.a. for next three to seven years Reserve replacement only 78% in 2005, expected to be 76% in 2006 Increased E&P Spending E&P spending expected up 1) 32% in % in % in 2008 Seismic Technology in Demand Reservoir understanding and monitoring for Mature producing basins Exploration for new resources, on- and offshore unexplored basins, deep water and deep targets NOCs more proactive and represent significant client segment OilCo`s demand more competence and integrated solutions E&P spending must increase to meet production targets and increase reserve replacement 1) Source: Enskilda Securities Survey August

6 Guidance for 2007 Marine Contract EBIT margin expected to increase substantially to around 50% Margin impacted by industry wide cost inflation and increased R&D expenditures as previously disclosed Multi-client revenues expected to be somewhat higher than 2006 Multi-client investments planned to approximately double Capital expenditures planned at approximately USD 200 million Onshore Revenues and operating profit expected to be approximately in line with 2006 Planned multi-client investments of approximately USD 30 million Planned capital expenditures of USD million A Clearer Image A Strategy for Growth Seek acquisition and diversification opportunities No1 in Marine acquisition Accelerated multiclient investments Productivity Lead --Technology Edge --Customer Focus Invest in new technology Segment focused growth in DP Regionally focused growth in Onshore

7 ..and Organized for Executing it Onshore contract acquisition Multi-client Marine contract acquisition Multi-client Data Processing Technology Development Commercialization Eric Wersich Group President Onshore Rune Eng Group President Marine Sverre Strandenes Group President DP and Technology Gottfred Langseth CFO Svein Rennemo CEO

8 Marine Rune Eng, Group President Marine PGS Capital Markets Day December 2006 Key Themes Contract Seismic Multi-client library Specialized acquisition techniques The New Ramform -14-7

9 Contract Seismic Oil price Growth Targets E&P Spending Oil companies need more specialized seismic HSE Marine Sep-06 LTIF TRCF Lost time incidents and recordable cases decreased and sustained at low levels HSE performance continues to hold strong focus for both seismic operators and customers September 30, 2006, numbers show last 12 months LTIF Lost time incident frequency TRCF Total recordable incident frequency

10 Marine Global Operations 1,000 Employees 17 Offices 12 seismic vessels USD million 1) Source: PGS Internal Estimate November 2006, Active Tenders and All Sales Leads 3D Contract Seismic only. 2) Source: PGS Internal Estimate November 2006, Includes both multi-client and contract seismic -18-1,600 1,400 1,200 1, Jul- 02 Historical High Bidding Activity and Strong Visibility Marine Seismic Acquisition Jan- 03 Jul- 03 Jan- 04 Jul- 04 Jan- 05 Jul- 05 Jan- 06 Jul- 06 Tendering activity 1) remains high Number of Days Active Tenders All Sales Leads (Including Active Tenders) Historical strong industry visibility 2) 0 Feb- 04 May- 04 Aug- 04 Nov- 04 Feb- 05 May- 05 Aug- 05 Nov- 05 Feb- 06 May Aug- 06 Weighted Average Backlog Major Contractors in days per vessel 9

11 Marine Seismic Acquisition Capacity on the Rise E 2009E Total Streamers Worldwide (Usual Configuration) Total Vessels Worldwide Total streamers used expected up ~30% in 2007 over 2006 ~20% in 2008 over 2007 ~10% in 2009 over 2008 PGS streamer upgrade program focused on high end capacity PGS streamer count expected up ~5% in 2007 over 2006 ~10% in 2008 over 2007 ~10% in 2009 over 2008 PGS is increasing capacity below industry average emphasizing quality of assets Seismic Demand Expected to Outstrip Supply in 2007 Demand for contract and multi-client seismic in 2007 is expected to be approximately 10-20% higher than available supply Sqkm ('000) Total available capacity in E 2007E Strong underlying fundamentals for seismic medium term Increased Oil Demand Low Reserve Replacement Ambitious Production Targets Source: PGS Internal Estimate November 2006 Total Streamers Worldwide and Total Vessels Worldwide are estimates of 6+ streamers 3D vessels to 2006 shows activity in contract and multi-client market measured in 000 square kilometer shows estimated demand for contract and multi-client seismic

12 Increased Multi-client Investments MC investments (USD million) 1,200 1, E 2007E Company A Company B Company C Company D PGS Increased multi-client investments further reinforce tightness in contract market MC investments increase ~70% in 2006 versus 2005 for seismic industry MC investments expected to grow further in 2007 PGS MC investments expected to approximately double both in 2006 and ) Source: Company reports and guidance given Supported by Rising Multi-client Seismic Demand Exploration spending expected to increase more than production spending Oil companies will spend more on multi-client seismic PGS expects to use approximately 25% of active vessel time on MC in

13 Strength of PGS Multi-Client Library Largest International MC3D Library in the Industry NW Europe 79,500 USA Onshore 8,000 Gulf of Mexico 72,000 Brazil 72,600 Africa 50,000 Asia Pacific 57,000 Total: 339,100 sq. km A broad exposure to increased MC3D Data Demand MegaSurveys (not included) total 228,800 Sqkm Building and Enhancing World s Largest MC3D Library NorthSea Crystal GoM MC3D worldwide competitor share Others Investments have continued through 2006 in new surveys North Sea the MC3D resurgence continues Brazil new discoveries rekindle interest Gulf of Mexico PGS is back, with Crystal Lebanon 1st MC3D in eastern Mediterranean Lebanon Company C PGS Company A Company B PGS has acquired a 339,100 sq. km MC3D library worldwide (excludes MegaSurveys) PGS library is being continuously improved by reprocessing West of Britain Project UK Central North Sea DW Gulf of Mexico DW Niger Delta

14 PGS Re-enters the Gulf of Mexico Crystal, new multi-client survey in Gulf of Mexico 9,345 square kilometers First phase of survey available to industry in Q Located offshore Louisiana and Texas High pre-funding and prospectivity BP primary financial and technical partner Acquired with Wide Azimuth Streamer Technology Ramform Viking and 2 source vessels MegaSurveys Basin Wide MC3D Coverage PGS expands unique North Sea MegaSurvey concept worldwide Australia 36,000 sq. km Africa Congo Basin & Niger Delta: 23,000 sq. km in Phases I North Sea 170,000 sq. km

15 Gaining Strategic Positions in Under-Explored Basins During 2006 PGS aims to obtain strategic positions in under-explored basins Cyprus DW Côte d Ivoire MC2D is then acquired as a precursor to MC3D Caspian Russian JV South Makassar Karpinsky Ridge, Russia HDV Norway Rising Demand for Specialized Acquisition Techniques Undiscovered resources harder to find Access to acreage is competitive and restricted Source: BP Statistical Review of World Energy June 2006 Oil companies need more specialised seismic

16 The Growth Platform Wide Azimuth Towed Streamer Source Vessel 1 Source Vessel 2 Receiver Vessel Receiver Vessel Near Crossline Pass WATS Data Mad Dog Narrow Azimuth Data WATS Data Far Crossline Pass -29- Ref. Scott Michell, et.al. Wide Azimuth Streamer Imaging of Mad Dog SEG Courtesy BP 15

17 Multi-Azimuth Acquisition A true 3D solution Some projects involve up to 6 Azimuths The New Ramform - Third Generation 8th Ramform vessel ordered Total cost approximately USD 170 million Delivery expected Q Steel work on hull for Ramform 7, named Ramform Sovereign, currently ongoing at Aker Yards Tulcea (Romania) Delivery expected in Q The most productive vessel in the industry Enhances PGS leading position in advanced seismic acquisition HD3D, wide- and multi-azimuth

18 The New Ramform - Third Generation 7% higher acquisition speed 14% higher transit speed 25% longer endurance 6% higher fuel efficiency Higher reel capacity Capable of towing 22 streamers Faster deployment/retrieval than any other vessel Ramform fleet gives PGS a distinct productivity leadership Summary The Growth Platform PGS showing the way in HSE&Q Build on Ramform acquisition platform Building world class crews People is truly a differentiator PGS has experienced people who perform and deliver Increased multi-client investments Leverage the world s biggest MC library Re-processing MegaSurvey Renewal of library in prospective areas Re-entry to Gulf of Mexico to capture lease roll Market Leader in Marine Seismic

19 Data Processing and Technology Sverre Strandenes, Group President DP and Technology PGS Capital Markets Day December 2006 Key Themes Raising the Bar Data Processing Key element of our business We will lift DP to top tier position within 2010 Technology & R&D More resources in R&D to support our business goals More focused R&D Commercialization & New Ventures Dedicated resources for faster commercialization of new technologies

20 What is Data Processing? Computer processing of acquired data to construct a 3D image of subsurface geology Involves a significant human element cannot be fully automated Extremely competitive & technology demanding Massive data volumes typical project duration ~6 months Key challenge: From Time to Depth DP Presence & Global Compute Resources (GCR) Onboard Processing High Capacity Network links: Houston, London, Perth and Oslo PGS GCR optimizes use of compute resources High quality job-flow optimization and resource scheduling > 500 TB high performance disks (64,000 ipods) > 22,000 TB online tape storage (2.8 million ipods) > 16,000 cpu s enough to support 2.4 million simultaneous web users performing online transactions -37- PGS total compute power would make up 6th largest -38- computer w.w. 8 Gb ipod Nano 19

21 Data Processing - Market and Ambitions Estimated share of DP contract market Company A Company B Company C PGS Estimated globa market (USD million) Total Depth PGS DP business too small to take advantage of economy of scale PGS aspires to take top tier position & double within 2010 Technology leadership within Depth, MAZ, WAZ and Multiple attenuation 1) PGS internal estimates The Importance of WAZ / MAZ and Depth Imaging Increasingly, new reservoirs are difficult to find and expensive to drill Accordingly, a clearer image is required from seismic data MAZ / WAZ / Depth Imaging provide a step change in quality and accuracy PGS has the industry s best acquisition platform for large, effective spreads

22 Data Processing Value Proposition Quality during acquisition Quality and timing of multiclient products Provide remote office local content Constitute the geophysical expertise Value of DP is captured through contract and multi-client business -41- Data Processing - Window for PGS Multi-Client 2006 Reprocessing Rejuvenating our multiclient library through reprocessing Gulf of Mexico example Using new technology Good return on investment Profit recorded in MC segment 2003 Vintage processing

23 Crystal Project, Wide Azimuth and Gulf of Mexico GoM - Technology drives opportunity Deep water GoM well costs ~USD 100 million Large reserves underneath thick, impenetrable salt BP spends > USD 2 billion/year and 40% of their global exploration budget inn GoM PGS leader in MAZ/WAZ BP & PGS pioneered MAZ/WAZ Crystal project: vehicle to enhance leadership position - DP essential Ramform the ultimate HD3D platform Acquisition and DP combined provide unbeatable product Improving Illumination of a Channel System Single Azimuth Conventional Data Six Azimuth HD3D Data Courtesy of BP

24 HD3D in Brazil - Quantum Leap Improved Resolution Conventional Data HD3D Data The Thrust of PGS Geoscience & Engineering MARINE TECHNOLOGY Tools and systems for seismic acquisition PROCESSING TECHNOLOGY Software and systems for processing seismic data GEOPHYSICAL RESEARCH Geophysical Knowledge & Support RESERVOIR Geology, Geophysics and Reservoir expertise More resources into R&D to support business goals More focused use of R&D resources Maintain and develop heart and pulse of PGS The Fleet More R&D within seismic processing technology Support for PGS Business Units within G&G and reservoir Prospect evaluation, exploration work for R&D in PGS authorities E Budget musd # employees 23

25 Reinforcing Leadership in Acquisition Efficiency Streamer technology Next-generation solid: steerable, longer Source technology Steerable & more flexible Operational efficiency Towing/handling Acquisition strategy Quality Control Automation Ultimate platform for HD3D Actively Steering Sources and Streamers Advantages steerable sources Better repeatability for 4D Better imaging (MAZ/WAZ advantage) Stable source geometry Advantages steerable streamers Faster deployment and retrieval Faster line turns (MAZ/WAZ advantage) Vessel testing and commercial deployment

26 Commercializing New Technology Fiber Optic 4C Permanent Monitoring Concept Cable based on all-optical hydrophone and all-optical 3- axis accelerometer No in-sea electronics Designed for water depths greater than 2000 meters Status development Unique, proprietary technology 800m cable tested GoM July 2006 together with major oil company 12 km commercial system under construction for deployment in 2007 Established facilities for large scale manufacturing Why We Will Succeed We are building on our innovation heritage We have the right size and structure to move fast and adopt quickly to a changing environment We have the right focus We have a strong technology platform

27 Onshore Eric Wersich, Group President Onshore PGS Capital Markets Day December 2006 Key Themes Successful expansion in 2006 Markets and technology Growth platforms Market outlook and growth focus

28 HSE Onshore A Leader Sep-06 LTIF TRCF Lost time incidents and recordable cases decreased and sustained at low levels Industry leader in environmental stewardship LTIF Lost time incident frequency TRCF Total recordable incident frequency September 30, 2006, numbers show last 12 months Successful Geographic Expansion and Growth in 2006 Alaska - One crew Canada - One crew USA Three crews Libya Three crews Mexico - One crew Nigeria One crew Delivering a significant improvement in financial performance

29 Expanding Strong Core Expertise Maintaining Flexible Local Content Total Onshore Headcount Distribution Local Offices Local project specific personell 750 1,750 Field Crews 586 Permanent Hemisphere SGA Operation Support Local offices Flat and efficient organization Field crew -55- North American Market Continues to be Very Active PGS currently at three permanent US crews and one seasonal crew in both of Canada and Alaska One dedicated to multi-client Capacity utilization has allowed margins to increase Plan to add a crew in 2007 Alaska market reactivation Recent focus on upgrading old 3D volumes on producing fields New exploration by new players Offices Active Crew HD3D Acknowledged as superior data quality

30 North American Multi-Client Key Creek North 3D 504 sq. mi. Foothills 2D 503 lin. mi. Wyoming 2 Surveys 330 sq. mi. Oklahoma 2600 sq. mi. East Texas sq. mi. New Acquisition Gulf Coast - 55 sq. mi HD3D Technology Proven and Established PGS Onshore multi-client 3D Library HD3D survey growth by year High trace density p-wave recording with wide azimuths and small bin sizes Total 3D volume (sq.mile) 4,000 3,500 3,000 2,500 2,000 1,500 1, E HD3D Conventional 3D Benefits Better structural and stratigraphic imaging Improved quality for AVO/AVA Successful applications in Saudi Arabia, Oklahoma, Kansas, Alaska, Wyoming, Bangladesh and Mexico Interest is increasing Clients beginning to ask for it, i.e. pull rather than push Responsible for 2 to 3 crewyears work per year

31 Successful Multi-Client Approach The Oklahoma Case HD3D Shows a Clearer Image Traces (sq km) 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 0 HD3D Conventional Conventional Wichita Mountain Front continues to produce good revenue and opportunities for growth BIA permits & Superior data quality via HD3D are PGS advantages Excellent pre-funding levels in the last 2 years HD3D 30

32 Eastern Hemisphere Active Market continues to grow North Africa very active and growing Middle East stable East Africa showing signs of pending growth Success with desert Vibroseis in Libya 3 long term crews operating Strong position in active market PGS established as premier provider TZ/OBC Loss making project in Nigeria expected to be completed in Q4 06 TZ Transition zone Latin America - Onshore Well Positioned Base market Mexico Successful operations maintaining an ongoing PGS presence in down cycle Increased activity foreseen in 2007 Opportunity markets with increased activity Peru Columbia Brazil Offices Active Crew Recording equipment rental Strong potential markets with low activity due to current political situation Venezuela Ecuador & Bolivia IOC Independent oil company

33 New Acquisition Technology Reviewing new systems being developed by all the major equipment manufacturers Field testing Firefly TM system in January 2007 Simultaneous HD3D and Digital MC3D program to be recorded Q The Growth Platform Onshore Expanding Developing Priorities Increased presence in key onshore regions Further build efficiency edge HD3D capabilities and successes Experience from 2006 growth Additional key operational personnel Additional differentiators G&G skills to assess risk/determine best MC Systems/resources to support larger business Consolidate the significant growth in 2006 Expand in North African/North American markets and Latin American reactivation Increase MC investments

34 Market Outlook for 2007 Alaska Activity has increased due to oil price. Oil pipeline only 50% utilized on North Slope. In addition to gas there is interest from new players in the Oil province in the Northern NPRA. Middle East Iraq & Iran off limits Kuwait activity delayed and fewer crews expected in Saudi SE Asia BGP & CNPC cover a corridor from Asia to Africa Sinopec & ZPEB entered SE Asia Key Growth Markets 2007 Alaska- Continued reactivation Lower 48 USA - Continued expansion in this very active market Mexico - Increased activity North Africa Consolidation and expansion in very active market South America favorable opportunities upcoming in known markets Canada Flat market with 2006 USA North Africa High oil & gas Continued strong interest by prices International oil companies in continue to North Africa especially Libya drive resource and Algeria. Activity in Egypt plays using slowly increasing seismic. Shortage of drill prospects Latin America West Africa Activity in key areas, Mexico, New activity in this strategic Peru, Columbia & Brazil. area but significant security Political situation slows activity concerns in Nigeria in Venezuela, Bolivia and Ecuador

35 PGS Onshore - Summary Delivering Operational expertise Strong established operation in Eastern Hemisphere Successful HD3D multiclient business model Focused market approach Consolidating and building on successful growth achieved in 2006 Financial discipline

36 Financials Gottfred Langseth, CFO PGS Capital Markets Day December 2006 Key Themes Earnings momentum and growth De-leveraging and financial profile Investments in improvements, capital assets and multi-client IFRS from 2007 Tax Currency and sensitivities

37 Key Points From Last Years Capital Markets Day Financial reporting issues Remediated material weaknesses by year-end 2005 and on plan to report on Sarbanes-Oxley 404 compliance as of December 31, 2006 Strengthened financial platform Net debt reduced to USD 268 million as of September 30, down 68% compared to net debt at beginning of 2006 Seeking transactions to improve structure Refinanced 2010 (and 2006) Senior Notes Demerged and listed Petrojarl as separate company Revenues (USD million) Revenues (USD million) 1,400 1,200 1, ,400 1,200 1, The Growth Platform Improved Revenues and Margins M Sep 06 30% 20% 10% 0% -10% -20% -30% -40% Strongly improved margins and revenues last two years Marine contract seismic main revenue contributor for PGS Capturing market strength very effectively Excellent position for future growth M Sep shows combined revenues and combined operating profit for Marine, Onshore and Corporate. For all years numbers exclude Petrojarl and Pertra, comparable with 12 months September 30, Operating margin Land multi-client Land contract Processing Marine multi-client Marine contract 36

38 Sources and Uses of Cash 9 Months ended September 30, USD million Petrojarl Operations Sources Debt repayment Capex MC Uses Debt reduced by 68% (USD 561 million) in 2007 through structural measures and strong operating cash flow Substantial Debt Reduction Net debt reduced by 75% since beginning 2004 Net debt (USD million) 1,200 1, , Financial strength to grow and develop core business Manage balance sheet to maintain reasonable debt portion of capital structure Targeting a BB rating which would correspond to USD million of gross debt, depending on market strength/visibility as well as capital commitments and plans 0 31-Dec Dec Dec Sep-06 Proposed EGM authorization to buy back up to 10% of share capital Up to 6 million shares (18 million after proposed 3 for 1 split) Share buy back program gives increased flexibility versus dividend program

39 Investment Priorities Multi-client Increased investment level to drive growth of MC segment, capitalize on strong demand and increase overall profitability Increase of 3D vessel allocation to MC segment (planned approximately 25% of available acquisition capacity in 2007) Increased re-processing investments Increased 2D acquisition Risk board review including focus on prospectivity and pre-funding Willingness to take risk, but risk weighted NPV to exceed alternative return on contract work Capex Strong focus on investments that increase capacity and efficiency of existing fleet and crew operations Long term capacity and technology choices founded on enhancing productivity lead Investments required to exceed weighted cost of capital based on robust long term market assumptions Capital Expenditures Capex (USD million) E 2007E Marine Onshore Corporate, Global Services, Reservoir New Ramforms Capex in 2006 estimated to be approximately USD million for Marine. New builds represents approximately USD 45 million USD million for Onshore Capex expected to be around USD 220 million in 2007 New builds represents approximately USD 95 million of 2007 capex Yard time expected to be affected by 10 year classing on two Ramforms in 2007 Capex exclude multi-client investments

40 Multi-client Investments and Pre-funding 250 MC Investments (USD million) E 2007E 56 Multi-client investments expected to be USD million in 2006 Multi-client investments expected to be USD million in 2007 MC pre-funding 180% 160% 140% 120% 100% 80% 60% 40% 44% 75% 73% 105% 101% 156% Pre-funding expected to stay at high level in 2007 (120 to 130%) 20% 0% M Sep E Multi-client investments and pre-funding for Marine and Onshore -77- Multi-Client Sales per Region Including pre-funding revenues 140 MC Revenues (USD million) Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Onshore (US) Asia Pacific Gulf of Mexico Brazil West Africa Europe Europe and Brazil contributing most on MC revenues so far in 2006, driven by very high pre-funding levels. Strong late-sales from GoM and West African libraries

41 Short-term EBIT Impact of Increased Multi-Client Investments Shift of 3D capacity from contract to multi-client Short term negative EBIT impact since more capacity used to invest in future earnings (revenues are recognized in later periods) Less than full cost is capitalized Prudent approach to amortization MC An investment in future earnings Example Contract versus Multi-client P&L Contract seismic Period 1 Period 2 Multi-client seismic Period 1 Period 2 Period 3 Revenues Pre-funding revenues 1) 45 Late sales Costs (60) - Amortization (27) (18) - MC costs, not capitalized 2) (15) Expensed costs related to late sale 3) (8) (8) EBIT 40 - EBIT PGS margin 40% PGS margin 7% 42% 82% Cash flow 4) Contract seismic Period 1 Period 2 Multi-client seismic Period 1 Period 2 Period 3 Cash flow 40 - Pre-funding revenues 45 Late sales Cash investments MC (45) MC costs, not capitalized (15) Expensed costs related to late sale (8) (8) Net cash flow (15) Total Contract seismic Multi-client seismic Period 1 Period 2 Period 3 Revenues 100 Agg. Revenues EBIT 40 Agg. EBIT EBIT margin 40% Agg. EBIT margin 7% 25% 44% Cash flow 40 Agg. Cash flow (15) ) Assumes pre-funding of 100% 2) Assumes 20-30% of full cost not capitalized, but expensed 3) Assumes expensed late sales costs are 15-20% of late sales 4) Excludes tax and financing

42 Example Contract versus Multi-client Revenues EBIT Contract Period 1 Contract Period 1 MC Period 1 MC Period 2 MC Period 3 MC Period 1 MC Period 2 MC Period Introducing IFRS Reporting in 2007 IFRS to be implemented from 2007 First IFRS Financials will be Q Comparable IFRS numbers for 2006 Reconciliation towards US GAAP Included in earnings release Extensive disclosures Separate transition document with quantification of effects planned for March

43 Main Expected Impact of Implementing IFRS Fresh-start reporting not allowed under IFRS PGS applied fresh-start reporting upon emergence from Chapter 11 Higher book value on seismic vessels and multi-client library under IFRS Utilization/recognition pre fresh-start deferred tax assets with valuation allowance will not be recorded as tax expense under IFRS (not booked against intangibles or directly to equity as under US GAAP) Research & Development IPRD expensed under US GAAP Development has to be capitalized under IFRS given certain criteria are satisfied Contingencies Lower threshold for recognizing under IFRS (50% vs 70%) UK Leases Interest Rate Differential considered to be derivative under IFRS (i.e. fair value measurement) Multi-client Currently considering capitalization and amortization policy, which may result in increased capitalization of cost and introduction of a lower rate amortization category IPRD In process research and development Directional Impact on Financial Statements Effect on Equity (opening Effect on Income Statement balance sheet) Property and equipment Positive Increased depreciation Multi-client Positive Several offsetting effects, but likely increased amortization Development Likely positive Temporarily positive Income Tax Neutral Decrease tax expense Pensions Negative (probably not significant) Contingencies, provisions Likely negative +/- +/- UK Leases Negative +/

44 Tax PGS has approximately USD 0.4 billion of deferred tax assets Primarily related to carry forward losses in Norway and UK Under US GAAP, full tax charge is recorded to earnings when prerestructuring tax assets are utilized Booked tax 14% in 2005 Booked tax 36% in 9M September 30, 2006 Provision for payable tax much lower, but increasing due to increased profitability and operation in countries were losses are not available Relates primarily to withholding taxes or taxes where PGS has no carry forward losses 8% in % in 9M September 30, 2006 Substantial tax benefits available -85- Foreign Exchange Cash receipts relating to operations Cash outflow relating to operating expenses USD NOK GBP Other USD NOK GBP Other On an annual basis a 10% strengthening of NOK vs USD equates approximately to a USD million cash currency loss a 10% strengthening of GBP vs USD equates approximately to a USD 4-8 million cash currency loss PGS current foreign exchange management policy calls for hedging of 45-75% of net operating cash flow exposure for the nearest 18 months. As of November 8, 2006 USD 232 million sold forward against NOK and GBP. These positions are re-valued to market value at balance sheet date. In addition, new build projects are hedged 100% (USD 175 million)

45 Sensitivity Analysis Yard One 3D vessel month (1% of capacity) extra at yard corresponds to a reduced EBIT of between USD million Contract versus multi-client One more 3D vessel month on multi-client versus contract corresponds to a reduced EBIT of approximately USD 4-5 million 1) in investment period Fuel price A 10% increase in fuel price will increase PGS cash cost with approximately USD 5 million/year Marine contract margin One percentage points increased marine contract EBIT margin approximates USD 7-8 million in increased EBIT/year 1) Assuming 100% pre-funding Managing the Cycle Net debt (USD million) 1,200 1, , PGS has reduced its debt by 75% since beginning of 2004 targeting BB -rating PGS adds on less capacity than competitors and with lowest unit cash cost 0 Unit Cash Cost $/sq km 31-Dec Dec Dec Sep-06 Ramform Productivity Leadership Marine Seismic Industry Cost Curve (Average survey size of > 500 km 2 ) Ramform class Seismic industry structure improves with CGG-Veritas merger Further consolidation of industry could be triggered in future periods 13% of the total seismic fleet streamer capacity will be above 25 years in Capacity ( 000 sq km) Source: PGS internal estimate, McKinsey

46 A Clearer Image Svein Rennemo PGS Capital Markets Day December 2006 Growth is about People & Execution 70 / 30 The People factor Vessels, capital and equipment Developing, retaining and recruiting talent

47 A Clearer Image A Strategy for Growth No1 in Marine acquisition Accelerated multiclient investments Productivity Lead --Technology Edge --Customer Focus Invest in new technology Segment focused growth in DP Regionally focused growth in Onshore -91- A Clearer Image A Strategy of Growth Marine Contract 3rd Generation No1 Ramform in Marine Productivity acquisition lead Raise HD3D penetration Marine MultiClient New MegaSurveys Accelerated multi- Adding client substantial investments new acreage Innovation & Technology Invest Fiber in optics new technology New Generation streamer technology DP Algorithms Productivity Lead --Technology Edge -Customer Focus Re-processing Onshore Expand in North Africa and DP Regionally in North American markets Technology leader in depth, focused growth in MAZ/WAZ, multiple Increase Onshore MC investments Segment attenuation focused Reactivation growth in DP in Arctic and Pursue acquisition Latin America opportunities

48 Guidance for 2007 Marine Contract EBIT margin expected to increase substantially to around 50% Margin impacted by industry wide cost inflation and increased R&D expenditures as previously disclosed Multi-client revenues expected to be somewhat higher than 2006 Multi-client investments planned to approximately double Capital expenditures planned at approximately USD 200 million Onshore Revenues and operating profit expected to be approximately in line with 2006 Planned multi-client investments of approximately USD 30 million Planned capital expenditures of USD million Key Strengths Leading pure play seismic services company Marine market leader Best-in-class vessel portfolio with global lead in productivity Largest 3D MC library Global capabilities in Onshore State of the art technology leadership in HD3D seismic Strong operational record Strong financial position Strong underlying fundamentals for seismic medium term Increased Oil Demand Low Reserve Replacement Ambitious Production Targets