PGS Announces Unaudited 2004 Fourth Quarter and Preliminary Full Year Results Under Norwegian GAAP

 | Source: PGS ASA PGS ASA

February 25, 2005: OSLO, NORWAY - Petroleum Geo-Services ASA ("PGS" or the "Company") (OSE and NYSE: PGS) announced today its unaudited 2004 fourth quarter and preliminary full year results under Norwegian generally accepted accounting principles ("Norwegian GAAP").
 
  • 2004 Cash flow post investment well above previous guidance
  • Strong multi-client late sales and improved contract sales drive Q4 revenue and Adjusted EBITDA improvement in Marine Geophysical
  • Substantial gain on the sale of  Pertra - leading to greater financial flexibility
    •  
    Key Norwegian GAAP figures as reported
     
     
    Quarter ended December 31,
    Years ended December 31,
     
     
    (In millions of dollars)
    2004
    Unaudited
    2003
    Unaudited
    2004
    Unaudited
    2003
    Audited
    (Restated)
    Revenue
    $ 300.8
    $ 269.6
    $ 1,131.1
    $ 1,120.7
    Operating profit (loss)
    (38.2)
    (514.9)
    96.5
    (645.3)
    Net income (loss)
    (49.3)
    (528.5)
    (52.1)
    (819.1)
    Adjusted EBITDA (A)
    94.5
    101.9
    433.8
    479.1
    Cash investment in multi-client (B)
    (4.0)
    (9.4)
    (41.7)
    (91.5)
    Capital expenditures (C)
    (42.1)
    (25.0)
    (145.6)
    (57.7)
    Cash Flow Post Investment
    (Defined as A+B+C)
     
    $   48.4
     
    $   67.5
     
    $   246.5
     
    $    329.9
     
    Key Norwegian GAAP figures excluding Pertra segment to be discontinued (Pro forma)
     
     
    Quarter ended December 31,
    Years ended December 31,
     
     
    (In millions of dollars)
    2004
    Unaudited
    2003
    Unaudited
    2004
    Unaudited
    2003
    Unaudited
    Revenue
    $ 294.0
    $  255.0
    $ 1,018.4
    $ 1,048.9
    Operating profit (loss)
    (3.9)
    (523.5)
    63.9
    (681.4)
    Adjusted EBITDA (A)
    100.4
    82.4
    353.4
    418.2
    Cash investment in multi-client (B)
    (4.0)
    (9.4)
    (41.7)
    (91.5)
    Capital expenditures (C)
    (19.9)
    (13.7)
    (61.6)
    (23.5)
    Cash Flow Post Investment
    (Defined as A+B+C)
     
    $   76.5
     
    $    59.3
     
    $    250.1
     
    $    303.2
     
     
    Svein Rennemo, PGS Chief Executive Officer, commented,
     
    "We delivered a Cash Flow Post Investment, excluding Pertra, for 2004 of $250 million, better than our earlier guidance of around $230 million, despite the negative impact from the labor conflict on the Norwegian Continental Shelf and the damaged main riser on the Varg field. Fourth quarter performance reflects improvement in our Marine Geophysical operations which benefited from the first stages of a market undergoing improvement. At the beginning of 2005 our order backlog is substantially improving both in amount and associated expected margins.
     
    The finalization of the re-audit of our historical U.S. GAAP financial statements and subsequent re-listing of our ADSs on the New York Stock Exchange in December mark important milestones in delivering our restructuring commitments and normalizing our communication with, and access to, capital markets.
     
    The agreement to sell Pertra marks PGS' exit from its successful E&P venture, which started in 2001. PGS was formed as an oil service company and with this exit from E&P, PGS will once again become fully focused on its oil service business with strategic focus on geophysics and floating production operations. We are credible  industry leaders in both these areas, with strong market share, client relationships and technological expertise. The main goal for 2005 is to improve the return on these assets.
     
    We expect to use a portion of our favorable cash position and the proceeds from the Pertra sale to reduce debt."
     
    Q4 Highlights
     
    PGS group
  • Revenues of $300.8 million, up $31.2 million (12%) compared to Q4 2003, driven by strong multi-client late sales and improved contract revenues in Marine Geophysical
  • Adjusted EBITDA, excluding Pertra, of $100.4 million, up $18.0 million (22%)
  • Operating loss of $38.2 million, impacted by significant Pertra loss and additional non-sales related amortization of the Marine and Onshore multi-client library of $22.3 million
  • Net loss of $49.3 million
  • Cash flow from operations, $42.6 million after interest payments of approximately $52 million. Net interest-bearing debt of $995.3 mill
    •  
     
     
    Marine Geophysical
  • Strong multi-client late sales totaling $91.5 million, twice Q4 2003 levels ($45.8 million), due to strong demand and realization of uplifts (success payments) from earlier license sales
  • Contract revenues at acceptable levels considering seasonally high level of vessel movements, $76.2 million compared to $70.0 million in Q4 2003
  • In keeping with the Company's conservative accounting policy for multi-client sales, recorded $19.4 million in additional non sales related amortization of the multi-client library related to minimum amortization and reduced or delayed forecasted sales for certain individual surveys
  • Strong order backlog improvement with year-end marine acquisition backlog of $170 million compared to $95 million at the end of Q3
    •  
    Onshore   
  • Low activity level due to reduction of Mexican activities as previously announced
  • Weak results primarily due to reduced activity and difficult weather conditions in North America
  • Order backlog at year-end at $66 million compared to $68 million at the end of Q3
    •  
    Production
  • Low revenues on Petrojarl Varg caused by production shut down from October 13 to October 26 due to labor conflict followed by damage to the main riser November 5, limiting production to a maximum of approximately 15,000 barrels per day
  • Increased production on Ramform Banff following development work on the Banff field and tie in of Kyle field well
  • Production on Petrojarl Foinaven increased from Q3 but declined year over year by natural field production decline
  • Lower production on Petrojarl I due to natural field production decline and impact of labor conflict from September 12 to October 29
    •  
    Pertra (To be discontinued operation effective January 1, 2005)
  • Operating loss of $34.3 million
  • Oil production negatively impacted by production shut down from October 13 to October 26, due to labor conflict followed by damage to the main riser November 5, limiting the Varg field production to a maximum of approximately 15,000 (or 10,500 for Pertra's 70% share) barrels per day
  • Dry "Villmink" exploration well charged to expense as depreciation charge - $11.4 million
  • Depreciation of capitalized development cost accelerated by approximately $11.8 million due to reduction on proved reserves (based on SEC guidelines).

    •
    Outlook Full Year 2005
     
  • Marine Geophysical
    • o        Increasing impact from Marine 3D market near full capacity utilization expected during 2005
    o        Multi-client late sales lower than 2004 due to limited reinvestment over the past three years and expected delay of Brazil 7th Round sales into 2006
    o        Cost levels impacted by increased fuel prices and depreciation of USD currency compared to 2004
     
  • Onshore
    • o        Onshore full year activity level at par with 2004, building on expected Q2 start-up of significant transition zone project in Eastern Hemisphere and contract awards for South America crews
     
  • Production
    • o        Total oil production from the four FPSO's expected to be in line with 2004, assuming Varg riser replaced in Q1.
    o        Increased operating cost as maintenance CAPEX is expensed and time since deployment of all FPSO's on their respective fields is increasing. In addition USD currency has depreciated compared to 2004
     
  • Pertra operations and estimated sales gain of approximately $140 million to be reported as discontinued operations effective January 1, 2005
    •  
    The financial information contained in this release is preliminary and unaudited and has been prepared in accordance with Norwegian GAAP to be consistent with financial information released in the first three quarters in 2004. The Company's primary basis of reporting is U.S. GAAP, and the Company expects to provide quarterly financial information for 2004 on a U.S. GAAP basis when the audit of the 2004 U.S. GAAP financial statements is competed, and return to using U.S. GAAP for its earnings releases effective with the first quarter 2005 report. The Company's financial statements based on U.S. GAAP could be materially different from the Company's financial statements based on Norwegian GAAP.
     
    The full report can be downloaded from the following link:

    Attachments

    Q4 2004