PETROLEUM GEO-SERVICES ANNOUNCES THIRD QUARTER 2002 EARNINGS

 

         Geophysical responds well to a soft market with all vessels utilized

         Stable production operations, with Banff continuing to incur losses while Production Licence 038 (Varg field) producing higher volumes than expected

         Improved cash flow from operations

         Net Interest bearing debt remains flat

         Substantial recorded writedowns and unusual items totaling $1.2 billion

             - Extensive financial due diligence completed by the new Board of Directors

             - Adverse development 3rd quarter: softer geophysical market, lack of breakthrough on Banff renegotiation and restricted financial flexibility

             - Implication of USGAAP accounting standards

 

 

 

         Delivering significant cost reductions

         Identifying broader restructuring opportunities

         Maximizing cash flow from operations

         Solving disposition of non-core assets: Atlantis and Production Services

         Renegotiating the Banff contract

         Obtaining necessary waivers of certain financial covenant breaches from financial creditors

         Developing detailed five-year plan as basis for debt restructuring

 

 

The new Company CEO as of November 7, Svein Rennemo, states: "I am satisfied with our operational performance and with our capabilities to serve our customers. However, we are in a very serious financial situation and must turn every stone to improve our cash flow further. Costs must come down substantially. We must push for improved contract margins. At the same time we must solve the financial structure problems we are facing".

 

Oslo, Norway; November 27, 2002:  Petroleum Geo-Services ASA (NYSE: PGO; OSE: PGS) reported today third quarter earnings before non-operating items of $14.6 million, or $0.14 per share.  Net loss for the 2002 third quarter, which included several non-operating items, was ($1,060.7) million, or ($10.26) per share.  The non-operating gains and losses for the 2002 third quarter included the following pre-tax items: a $425.2 million impairment charge against the Ramform Banff ; $268.4 million in impairment charges against our multi-client library; a $140.1 million impairment charge against our Atlantis held-for-sale operations; and $4.5 million in operating income from held-for-sale operations; $56.2 million in impairment charges against seismic equipment and other geophysical assets; $21.2 million in forced amortization charges; $14.7 million in impairment charges against certain seismic and oil and gas investments (excluding the held-for-sale Atlantis operations); a $11.2 million non-cash provision for income taxes related to the significant exchange rate fluctuation between the Norwegian kroner and US dollar during the 2002 third quarter (and the resultant taxable gain associated with our dollar-denominated liabilities); $4.0 million in foreign exchange losses and $3.1 million, net in other unusual items. Additionally, on a year-to-date basis, we recognized a $185.9 million transitional impairment charge against goodwill as part of the cumulative effect of accounting change of our January 1, 2002 adoption of Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets."

 

The cash flow provided by operating activities for the quarter was $73.3 million compared to $31.8 million during third quarter 2001. Cash flow provided by operating activities for the nine months ended September 30, 2002 was $238.2 million compared to $90.5 million for the comparable period last year.