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PGS MARINE

PGS MARINE

State-of-the-art Fleet Efficiency and Productivity Leadership MultiClient Library GeoStreamer®

marine Revenues in USD million

2008 Strongest Performance in History

2 000

US GAAP

IFRS

1 500

1 000

500

  • 0

    2005

2006

2007

2008

In 2008 PGS business unit Marine achieved its best year ever.The markets for contract and MultiClient work were exceptionally strong and the Company capitalized on its ability to deliver quality data on time.The roll-out of GeoStreamer® was an important milestone in 2008.

marine Adjusted eBitdA in USD million

1 000

US GAAP

IFRS

800

600

400

200

  • 0

    2005

2006

2007

2008

PGS is one of the world's three largest marine seismic companies and owns the industry's largest international marine MultiClient library.

PGS' marine streamer fleet consists of:

  • 6 Ramform vessels capable of tow- ing up to 22 streamers

  • 5 classic streamer vessels capable of towing 4 to 8 streamers

  • 2 2D vessels

The PGS fleet is growing and the newest addition, Ramform Sovereign, was delivered in March 2008. It is a state-of-the-art, purpose built seismic vessel capable of towing up to 22 streamers.The second vessel in the Ramform S-class family, Ramform Sterling, is on schedule for delivery in June 2009.

After the acquisition of Arrow Seismic in 2007, PGS will gain access to two

new high-end 3D vessels.The first vessel, PGS Apollo, is scheduled for delivery in 2009 and the second, PGS Artemis, is scheduled for delivery in 2010.

PGS is acknowledged for its Ramform vessels which are an important com- petitive advantage for the Company. They have a delta shaped hull with a characteristic extreme maximum aft beam, twice the beam of a conven- tional vessel, allowing for efficient retrieval and deployment of stream- ers and air guns. Propulsion power is industry leading and the Ramform S-class has enough thrust to pull a 1.3 kilometer wide spread with streamer lengths of more than 8 kilometers. In 2008 the Ramform Sovereign set two industry records – simultaneous towing of 17 streamers and tow- ing the widest spread achieved by a single vessel (14 streamers with

PGS ANNUAL REVIEW 2008 12

100 meter separation = 1.3 kilometer wide spread). A Ramform and its full streamer spread is the world's largest man made moving object and it takes skilled and experienced people to operate such a machine.The acknowl- edged efficiency and productivity of the Ramform vessels makes the PGS fleet industry leading.

2008 HSe Performance Marine had a LostTime Incidents Frequency (LTIF) of 1.35 per million man hours in 2008, compared to a LTIF of 0.61 in 2007, and aTotal Record- able Case Frequency (TRCF) of 2.26 per million man hours, compared to 2.20 in 2007.This increase in incident frequency breaks a multi-year trend of steadily improving statistics. It is a trend which is recognized among other companies within our industry and also other parts of oilfield services activity.The main reasons for this are believed to be related to a dilution of personnel experience in an expanding business, combined with more strin- gent reporting procedures.To counter this trend, PGS has implemented enhanced induction training for new recruits along with awareness cam- paigns for the most common causes of accidents and has renewed its focus on HSE training throughout the Group.

2008 operational Performance The two largest revenue contributors are contract seismic, where data is acquired under exclusive contractual agreements with a customer, and MultiClient, where PGS itself invests in seismic surveys which are then marketed to multiple customers on a non-exclusive basis. Marine had rev-

PGS MARINE

GeoStreamer® is the first dual sensor streamer providing better resolution higher penetration and improved operational efficiency. During 2008 PGS acquired 30,000 line kilometers of 2D GeoStreamer® data with excellent results.

enues of USD 1,638.8 million in 2008, an increase of 29% compared to 2007. Revenues from contract seismic ac- quisition increased by 54%, compared to 2007 and ended at USD 1,065.0 million.The increase is due to more capacity allocated to contract seismic in 2008, a net increase in fleet capacity and improvement in the market for marine contract work. MultiClient revenues were USD 439.4 million, down 13% compared to 2007. Europe, Brazil and the Gulf of Mexico were the regions with the highest MultiClient revenue contributions in 2008.

Pre-funding as a percentage of cash investments in MultiClient data, excluding capitalized interest, decreased to 112% in 2008 com- pared to 143% in 2007. At the same time, capitalized cash investments in the MultiClient library, excluding capitalized interest, increased from USD 214.5 million in 2007 to 223.7 million in 2008. In 2008, the Com- pany used 80% of active vessel time to acquire contract seismic and 20% to acquire MultiClient seismic.This compares to approximately 64% and 36%, respectively, in 2007. Given the market outlook the Company expects to to invest less in MultiClient in 2009 compared to 2008.

At December 31, 2008, the order book for Marine and Data Processing was USD 871 million, compared to USD 843 million as of December 31, 2007.

Hd3d® HD3D® seismic is a premium seismic data product. HD3D® delivers the highest resolution, highest quality

3D data products to address a broad range of challenges, related both to exploration, detailed reservoir description, and time-lapse reservoir monitoring (4D).

PGS intends to grow and consolidate its HD3D® strengths by developing new technologies that further improve efficiencies and that fully exploit the potential value of properly sampled seismic data.

Roll-out of GeoStreamer® GeoStreamer® is a proprietary dual sensor streamer technology unique to PGS. Demand has surpassed all expectations and during 2008 the technology has been commercial- ized and widely accepted among oil companies. By year-end 2008, the Company operated four 2D vessels with GeoStreamer® and the first 3D vessel was equipped with GeoStream- er® in fourth quarter 2008. (See case on page 14 and 15 for more details).

market and market Position PGS Marine has a market share of approximately 28%, measured in acquired square kilometers of 3D seismic. Measured by number of streamers the market share is 22%, re- flecting the efficiency of the PGS fleet. The Company's main competitors are WesternGeco and CGGVeritas. Other established, but smaller players in the seismic market are Fugro with its Geoscience Division andTGS Nopec. Recent new entrants are Polarcus and Scan Geophysical. Additionally, there are several niche players such as Electromagnetic Geoservices, Off- shore Hydrocarbon Mapping, Seabird

PGS ANNUAL REVIEW 2008 13

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