As previously disclosed, PGS Production AS and the license owners have as a result of the extension of the field's life, been in discussions relative to modifying the contract structure for the Petrojarl Varg FPSO which is producing the Varg field. These discussions have not yet been concluded. Meanwhile, the license owners have notified PGS that effective May 29, 2004, they will compensate PGS Production based on a fixed day rate of $220,000 rather than the previous tariff structure, unless or until a revised compensation structure has been agreed.
Further, PGS' wholly-owned subsidiary, Pertra AS, has extended its drilling contract with Mærsk Contractors for one additional injection well in the Varg field. The well will be drilled in direct continuation with the current drilling program, keeping the Mærsk Giant on contract until late September 2004.
On June 3, 2004, the Varg field started production from the third new production well since Pertra took over as operator in 2002. Current production on the field is in excess of 25,000 barrels of oil per day.
The field did, however, experience some technical problems with two production wells during April and May, reducing production to an average of 19,000 barrels of oil per day for these two months. The problems are expected to be solved during the month of June.
The Varg field is located in Production License 038 (Block 15/12) in the Norwegian sector of the North Sea. Pertra AS is the operator of Production License 038 with 70% interest while co-venturer Petoro AS holds the remaining 30%.
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Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic- and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units (FPSOs). PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit www.pgs.com.
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The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on various assumptions made by the Company which are beyond its control and certain additional risks and uncertainties as disclosed by the Company in its filings with the Securities and Exchange Commission. As a result of these factors, actual events may differ materially from those indicated in or implied by such forward-looking statements.
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