DnB NOR Markets Oil, Offshore and Shipping Conference - PGS

DnB NOR Markets Oil, Offshore and Shipping
Conference
Jon Erik Reinhardsen, President & CEO
Oslo, 2 March 2011

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 Annual Report
2009
• This presentation must be read in conjunction with the
Company’s financial statements
-2-

Leading Marine Geophysical Company
Marine
Contract
t
MultiClient
Operations
Data Processing
& Technology
Marine market
leadership
Diverse
MultiClient
library
Productivity
leadership
Technology
differentiation
Client focus ● Global presence ● Innovation leadership
-3-

Financial Summary
USD million
400
300
200
100
391
Revenues
361
294 304
296
259
215
364
USD million
200
150
100
50
206
154
170
EBITDA
142
99
71
131
162
-
-
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
USD
million
150
100
50
155
81
105
EBIT*
45
35
52
45
USD million
250 Cash flow from operations
208
200
164 159
145
150
116
100
64 61
50
104
0
5
0
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
Graphs show numbers for PGS continuing business.
*Excluding reversal of impairment of USD 1.3 million in Q4 2010 and excluding impairments of USD 79.9 million in Q3 2010, USD 0.5 million in Q1 2010, USD
2.4 million in Q4, USD 52.4 million in Q3, USD 48.2 million in Q2 and USD 50.6 million in Q1 2009.
EBITDA, when used by the Company, means income before income tax expense (benefit) less, currency exchange gain (loss), other financial
expense, other financial income, interest expense, income (loss) from associated companies, impairments of long-lived assets and depreciation and
amortization.
-4-

Strongest Balance Sheet in PGS History
Quarter ended December 31
USD million 2010 2009
Total assets 3 001.5 2 929.4
MultiClient Library 310.8 293.2
Shareholders' equity 1 721.8 1 449.0
Cash and cash equiv. 432.6 126.0
Restricted cash 71.2 18.0
Liquidity reserve 777.9 472.0
Gross interest bearing debt * 790.2 918.0
Net interest bearing debt 286.4 774.0
*Includes capital lease agreements
• Net interest bearing debt materially reduced
• Substantial liquidity reserve and financial headroom
The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited
fourth quarter 2010 results released on February 17, 2010.
-5-

PGS – Differentiation Through Innovation
• High Density 3D (HD3D) has become PGS’ main market
– Predominantly the less cyclical Production Seismic (HD4D) segment
– HD3D takes 65% of PGS’ streamer capacity in 2010
– HD3D constitutes ~70% of the order book
– Delivers optimum value from the Ramform vessels
– Delivers maximum potential from the GeoSteamer® technology
– Is the fastest growing and most sustainable seismic segment
– Takes the most benefit out of the newly launched data processing
technologies
• MultiClient increasingly differentiates using GeoStreamer technology
• Launching Ramform W-class
– Optimum for the HD3D market
– Increases GeoStreamer productivity further
– Improves operational efficiency
• Launching GeoSource
– Perfect for GeoStreamer imaging
-6-

Drivers for the HD3D Market
• Exploration: The age of easy oil is over
– Deeper water, deeper targets, more complex geology, harsher
environment
– Requires increased use of HD3D seismic for data quality and productivity
• Enhanced Oil Recovery
– Getting the most out of producing fields
– Requires improved pixel density in the image (High Density)
– Requires repetitive and comparable surveys through life of field
• GeoStreamer allows PGS to explore frontier acreage in remote
locations with harsh weather conditions more efficiently
• GeoStreamer in combination with Wide- and Multi Azimuth acquisition
is unique for exploring more complex reservoirs at deeper targets
-7-

Marine Contract Market Outlook
Greenland and
Barents Sea:
Demand for 3D
exploration seismic
North Sea: Stable
4D market,
moving towards
higher quality data
Mediterranean:
Positive attitude
due to recent
discoveries,
growing
GoM: Will revert
to normality
West
Africa:
Maintaining
its position
Brazil: A new
era following
sub-salt
discoveries, in
addition
expecting
significant
growth in 4D
Asia Pacific:
Huge long
term potential
The seismic market will benefit from higher E&P spending growth
-8-

Potential Growth Drivers:
High Demand for Seismic Offshore Brazil
• Recent discoveries trigger need for HD3D in
Brazilian basins
• Growing need dfor 4D and dLife of fField seismic
i
over producing fields
– Petrobras being key client
– Jubarte optoSeis contract
• PGS entered Brazil in 1995
• PGS library constitutes t approximately 45% of all
3D data acquired in Brazil
• PGS has the largest privately owned data
processing center in South America
• Brazil is ~15% of PGS 2010 revenues
• First 3D GeoStreamer survey in Brazil will
commence in Q1 2011
-9-

Potential Growth Drivers:
Gulf of Mexico Market will Recover
• Proven prospectivity
• Over the last three years approximately 10-
15% of 3D capacity has on average
operated in GoM
• After Macondo most of capacity was moved
out of GoM and absorbed elsewhere with
limited price pressure
Tiber discovery
• News from US Department of the Interior
provides positive sentiment for industry to
gradually return to normal
• GeoStreamer’s unique low frequency
attributes coupled with Full Waveform
Inversion (FWI) can provide significant ifi uplift
vs. present Wide Azimuth solutions
-10-

Solid Order Book
USD million
1000
800
600
400
• Order book of USD 584
million
– Almost all capacity for H1
2010 booked
– Booking for Q3 is firming up
– Customer demand for
GeoStreamer continues to
increase
200
0
• Vessel booking visibility
above 6 months
Marine order book (including DP)
OptoSeis
Achieving GeoStreamer price premium
-11-

Stable Bidding Activity
USD million
3 500
3 000
2 500
2 000
1 500
1 000
500
-
• Stable bidding activity
– Strong interest for
GeoStreamer with pricing
premium
– Prices for conventional
surveys still under
pressure, on par with Q4
2010
Active Tenders
All Sales Leads (Including Active Tenders)
-12-

Capacity Increase Tapering Off
700
600
# of streamers
500
400
300
200
100
• Expected capacity increases
– 7% increase in 2011
– 10% increase in 2012
– 3% increase in 2013 and 2014
0
Q1
06
Q3
06
Q1
07
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Total 3D volume in '000 sq.km
Q3
12
Q1
13
Q3
13
Q1
14
Q3
14
• E&P spending surveys indicate
continued growth in demandd
350
300
250
200
150
100
• PGS’ fleet well positioned for
growth ahead
– Boosted by delivery of the first
Ramform W-class in 2013
50
0
2006 2007 2008 2009 2010
-13-

Continuously Ahead of Competition
1992 - 1996 1998 - 1999 2007 - 2009 2012 - 2014
Competition
4 – 6 streamers 6 – 8 streamers 8 - 12 streamers 10 - 14 streamers
10 - 14 streamers
PGS
8 & 12 streamers 16 - 18 streamers 22 streamers 24 streamers
Improved safety and cost efficiency
More streamers, longer streamers and wider & denser streamer
spreads
HD3D market growth and GeoStreamer demand

PGS Ordering W-Class Ramforms
• Taking full advantage of GeoStreamer
Conventional vessels
• Reduce exposure to a cyclical seismic
market by focusing on a more
sustainable HD4D proposition
Ramform S-Class
• Strengthen PGS’ favorable position on
the industry cash cost curve
• Fleet renewal and expansion program
on a continous basis
Ramform W-Class
Leadership in Safety, Productivity and Quality
-15-

Ramforms Have the Lead in a Growing HD3D Segment
ity in HD3D segme ent
% activ
70
60
50
40
30
20
10
0
• HD3D has grown significantly
over the last 4 years
– Both in absolute size and in share
of total activity
• In 2010, HD3D was around 30%
of total market in sq.km. and
significantly more in terms of
revenue
• The Ramform fleet has
consistently captured a large
share of the HD3D segment
– In 2011 Ramform capacity will be
approximately 75% of PGS total
2003 2004 2005 2006 2007 2008 2009 2010
• HD3D market is less cyclical l than
Ramform HD3D as % of total activity exploration seismic and with more
attractive margins
rest of industry HD3D as % of total activity
-16-

Favorably Positioned on the Industry Cost Curve
Excluding GeoStreamer productivity effect
ative cash cost ef
Rela
eamer per day
fficiency per stre
█ PGS Ramform Vessels █ Other PGS vessels Decomissioned vessels
PGS fleet is positioned to generate the industry’s best margins
Source: The cash cost curve is based on PGS’ internal estimates and typical number of streamer towed, and excludes GeoStreamer productivity effect. The
graph shows all seismic vessels in the market, both existing and new-builds. The Ramform W-Class is incorporated with 15 streamers, S-class with 14
streamers and the V-class with 12 streamers. -17-

Favorably Positioned on the HD3D Industry Cost Curve
Excluding GeoStreamer productivity effect
ative cash cost ef
Rela
eamer per day
fficiency per stre
█ PGS Ramform Vessels █ Other PGS vessels Decommissioned vessels
PGS fleet is well positioned to take advantage of a growing and more sustainable
HD3D market
Source: The cash cost curve is based on PGS’ internal estimates and typical number of streamer towed, and excludes GeoStreamer productivity effect. The
graph shows all seismic vessels in the market, both existing and new-builds. The Ramform W-Class is incorporated with 20 streamers, S-class with 18
streamers and the V-class with 16 streamers. -18-

Ramforms Setting new Standards in Productivity
• S-class:
– 17 x 3600m str. length x 50m sep.
• Largest number of streamers ever
towed
– 12 x 6000m str. length x 120m sep. p
• Widest tow ever
– 14 x 8100m str. length x 50m sep.
• Largest deployment ever
• 2 year operation
• V-class:
– First 17 streamer job scheduled for
North Sea season 2011
Ramform S- and V-class tow 16 streamers frequently
-19-

GeoStreamer – Always Better
• Accelerated GeoStreamer rollout PGS offers more customers the
GeoStreamer advantages: More signal, less noise, broader bandwidth,
higher h productivity
it
New
Prospect
Sandstone
GeoStreamer data
Conventional data
-20-

On Track Towards Full GeoStreamer Deployment
Current GeoStreamer
operations
•3D
•2D
– Atlantic Explorer
(6 streamers*)
– Ramform Challenger
(10 streamers*)
– Ramform Valiant
(12 streamers*)
– Ramform Explorer
(10 streamers*)
– Sanco Spirit
– Harrier Explorer
Planned GeoStreamer
rollout
• Additional 3D vessels
– Ramform Viking will get
GeoStreamer in Q1 2011
– PGS Apollo scheduled for
GeoStreamer upgrade in Q2
2011
– Further upgrades at a pace of
1 to 2 vessels per year
– All vessels equipped with
GeoStreamer around 2013
* In exploration mode with 100 meter streamer separation
Strong demand drives GeoStreamer rollout
-21-

PGS MultiClient Value Proposition
• An up-to-date library with coverage in all major hydrocarbon provinces
• Geology, geophysics and reservoir expertise combined with flexible and
unique business models
• Strongly differentiating technologies, including GeoStreamer, HD3D
fleet and high-end imaging
• Local presence and network
• Increased MultiClient focus to enhance value creation
-22-

Data Processing &Technology: Building Momentum
• Data processing growth
– GeoStreamer proprietary processing
– Best-in-class imaging i tools
– Ultrafast velocity model building with
hyperBeam
• Commitment to technology development
over the cycle
• Efficiency leadership in marine acquisition
• Towed EM: a step change in efficiency
• GeoStreamer sets new standard
throughout the seismic value chain
• GeoSource: pushing seismic resolution
even further
-23-

PGS Value Drivers
• Focused Marine seismic company
• Productivity & scale
– Launching Ramform W-Class
• Leading edge Data Processing capabilities
• Strong operational record
• Technology differentiators
– GeoStreamer
– Launching GeoSource
– Fiber-optic breakthrough
– Towed EM - game changer
• Proactive financial management
– Value creation through the cycle
– Introducing dividend
Strong underlying demand fundamentals – Unique position to
benefit from demand for advanced seismic
Competitively Positioned – Performance Through the Cycle
-24-