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October 26, 2017: Oslo, Norway, Petroleum Geo-Services ASA ("PGS" or "the Company") announces a new centralized, simplified and streamlined organization, which builds on the two business areas: Sales & Services and Operations & Technology.
Over the last years fundamentals in the seismic industry have changed significantly. The market is smaller, weaker and more uncertain than before, and the MultiClient share of acquisition has increased considerably. At the same time the world has become more digital and clients have centralized their decision making process. The new PGS organization addresses these changes.
Further the Company's vessel capacity will be more flexible. Going forward PGS intends to operate a fleet of eight vessels, of which two will be used selectively to address demand swings and market seasonality. The cost base for the Company will be reduced to a baseline of six vessels, while the flexible capacity will be managed and crewed by a combination of regular and temporary employees.
"This downturn has been longer and lower than anyone anticipated. We think the worst is behind us, but I cannot bet the Company on a market recovery. We need to change what we can control ourselves. The reorganization, combined with more flexible vessel capacity makes us better positioned to address the current market environment and improve cash flow and profitability," says Rune Olav Pedersen, President & CEO of PGS.
PGS expects the overall gross cash cost for the Company to be reduced by at least $100 million in 2018, which should be sufficient to deliver positive cash flow after debt servicing next year, assuming a similar market in 2018 as in 2017.
Fewer business areas will result in a reduction of the executive management team, from six to four. Sverre Strandenes, currently EVP MultiClient, will be EVP and responsible for Sales & Services, while Per Arild Reksnes, currently EVP Operations, will be EVP and lead Operations & Technology. Gottfred Langseth will continue as EVP & CFO.
Sales & Services will contain three departments: Sales, New Ventures and Imaging. Sales will promote and sell all products and services through a coordinated customer and marketing approach. New Ventures will be responsible for building new MultiClient programs worldwide and evaluate other cash generating opportunities across the PGS product lines, including strategic positioning in new basins. Imaging is producing the final seismic data to internal and external customers. Imaging will become more closely integrated with all of PGS business activities. The external focus will be on the high-end markets.
Operations & Technology will include the following six departments: Project Planning & Bidding, Project Delivery, Maritime, Technical, Operations Geophysics and Geoscience & Engineering. Project Planning & Bidding will plan and calculate all acquisition surveys and prepare bids for proprietary work. Project Delivery will be responsible for execution of all seismic acquisition projects. Maritime, Technical, and Operations Geophysics will jointly manage and operate our vessels, seismic equipment and technology. Geoscience & Engineering develops new technologies that improve operational efficiency and imaging quality.
The Company plans to implement the new structure by year-end 2017. Restructuring cost is estimated to be approximately $40 - 50 million and is expected to be recorded mainly in Q4 2017.
For details, contact:Bård Stenberg, VP IR & Corporate Communications Mobile: +47 992 45 235
Petroleum Geo-Services ("PGS" or "the Company") is a focused Marine geophysical company that provides a broad range of seismic and reservoir services, including acquisition, imaging, interpretation, and field evaluation. The Company's MultiClient data library is among the largest in the seismic industry, with modern 3D coverage in all significant offshore hydrocarbon provinces of the world. The Company operates on a worldwide basis with headquarters in Oslo, Norway.PGS has a presence in 17 countries with regional centers in London, Houston and Kuala Lumpur. The headquarters is in Oslo, Norway and the PGS share is listed on the Oslo stock exchange (OSE: PGS).For more information on Petroleum Geo-Services visit www.pgs.com.
****The information included herein contains certain forward-looking statements that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and uncertainties. The Company is subject to a large number of risk factors including but not limited to the demand for seismic services, the demand for data from our multi-client data library, the attractiveness of our technology, unpredictable changes in governmental regulations affecting our markets and extreme weather conditions. For a further description of other relevant risk factors we refer to our Annual Report for 2016. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward-looking statements. The reservation is also made that inaccuracies or mistakes may occur in the information given above about current status of the Company or its business. Any reliance on the information above is at the risk of the reader, and PGS disclaims any and all liability in this respect.
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