1 MB - PGS
1 MB - PGS 1 MB - PGS
Petroleum Geo-Services ASA Petroleum Geo-Services ASA Lehman Brothers CEO Energy/Power Conference Gottfred Langseth, EVP & CFO New York, September 4, 2008
- Page 2 and 3: Cautionary Statement • This prese
- Page 4 and 5: Leading Geophysical Company Marine
- Page 6 and 7: PGS’ Advanced Seismic Acquisition
- Page 8 and 9: Marine Late August 2008 Streamer Op
- Page 10 and 11: Demand for Energy Will Increase Oil
- Page 12 and 13: Strong Expected Growth in E&P Spend
- Page 14 and 15: Record High Bidding Activity Marine
- Page 16 and 17: Ramform Advantage in Growing HD3D*
- Page 18 and 19: Ramform Vessels Sustain Long-term C
- Page 20 and 21: PGS’ Drivers of Productivity Mult
- Page 22 and 23: GeoStreamer® Gaining Momentum •
Petroleum Geo-Services ASA<br />
Petroleum Geo-Services ASA<br />
Lehman Brothers CEO Energy/Power Conference<br />
Gottfred Langseth, EVP & CFO<br />
New York, September 4, 2008
Cautionary Statement<br />
• This presentation contains forward looking information<br />
• Forward looking information is based on management<br />
assumptions and analyses<br />
• Actual experience may differ, and those differences may<br />
be material<br />
• Forward looking information is subject to significant<br />
uncertainties and risks as they relate to events and/or<br />
circumstances in the future<br />
-2-
Key Topics Covered<br />
• Key Facts About <strong>PGS</strong><br />
• Macro Drivers – and how they impact <strong>PGS</strong><br />
• Demand for HD3D* seismic<br />
• How <strong>PGS</strong> is positioned in the HD3D market<br />
• <strong>PGS</strong>’ technology differentiators<br />
• Summary<br />
*HD3D is defined as higher data density per unit area compared to conventional surveys.<br />
-3-
Leading Geophysical Company<br />
Marine<br />
Data Processing<br />
and Technology<br />
Onshore<br />
Marine market<br />
leadership<br />
Technology<br />
differentiation<br />
Regional highend<br />
focus<br />
• USD 1.27 billion in<br />
revenues in 2007 (~85%<br />
of total revenues)<br />
• 20 Data Processing<br />
centers world wide<br />
• USD ~75 million in<br />
technology spending<br />
-4-<br />
• USD 246 million in<br />
revenues in 2007 (~15%<br />
of total revenues)
Financial Summary<br />
Revenues<br />
Adjusted EBITDA<br />
USD million<br />
500<br />
450<br />
400<br />
350<br />
300<br />
250<br />
200<br />
150<br />
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08<br />
USD million<br />
275<br />
255<br />
235<br />
215<br />
195<br />
175<br />
155<br />
135<br />
115<br />
95<br />
75<br />
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08<br />
EBIT<br />
Cash Flow from Operations<br />
250<br />
*<br />
250<br />
200<br />
200<br />
USD million<br />
150<br />
100<br />
USD million<br />
150<br />
100<br />
50<br />
50<br />
0<br />
0<br />
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08<br />
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08<br />
*Gain from sale of Ramform Victory to METI.<br />
Adjusted EBITDA, when used by the Company, means income before income tax expense (benefit) less, other financial items, interest expense, interest<br />
income, income (loss) from associated companies, other operating (income) and depreciation and amortization.<br />
-5-
<strong>PGS</strong>’ Advanced Seismic Acquisition Capacity<br />
• Seven high capacity Ramforms<br />
– Six Ramforms in current operation<br />
– One Ramform new-build (delivery June 2009)<br />
• Two “Arrow” 3D new-builds<br />
– Scheduled for delivery July 2009 and late January 2010<br />
• Five “6-streamer” vessels<br />
• Seven 2D/source vessels<br />
– Four owned source/2D vessels<br />
– Three vessels chartered in on time charters<br />
• 8 – 12 Onshore crews<br />
– Approximately 80,000 channels<br />
– Capabilities in all terrains<br />
The acquisition of Arrrow Seismic also gave <strong>PGS</strong> control of two 3D vessels chartered to Fugro and CGGVeritas<br />
and two new-build 3D vessels on lease agreements to WesternGeco.<br />
-6-
Bringing Marine Productivity to the Next Level<br />
The new Ramform S-class<br />
• Ramform Sovereign commenced in operation<br />
March 31<br />
• The most productive vessel in the industry<br />
– Transit speed* +25%<br />
– Endurance* +50%<br />
– Fuel efficiency* +15%<br />
• The vessel performs extremely well, already set 2<br />
new industry records in:<br />
– Simultaneous towing of 17 streamers<br />
– Towing the widest spread ever done by a<br />
single vessel (14 streamers with 100 meters<br />
separation = 1,300m wide spread)<br />
• Ramform Sterling on plan to be delivered end<br />
June 2009<br />
* With Ramform V-class as benchmark<br />
-7-
Marine<br />
Late August 2008 Streamer Operation<br />
Falcon Explorer<br />
(Greenland)<br />
Atlantic Explorer<br />
Ocean Explorer<br />
(Barents Sea)<br />
Ramform Challenger<br />
Ramform Viking<br />
Ramform Sovereign<br />
Ramform Vanguard<br />
(North Sea)<br />
Akademik Fersman<br />
(Sakalin )<br />
Aquila Exlorer<br />
(Trinidad)<br />
Ramform Valiant<br />
(Brazil)<br />
Nordic Explorer<br />
(Cambodia )<br />
Harrier Explorer<br />
(to Cyprus)<br />
Ramform Explorer<br />
Pacific Explorer<br />
(Malaysia)<br />
Orient Explorer<br />
(Indonesia)<br />
-8-
Onshore<br />
Late August 2008 Worldwide Operations<br />
Alaska - 1 Crew<br />
Canada - 1 Crew<br />
US - 4 Crews<br />
Mexico - 1 Crew<br />
Morocco - 1 Crew<br />
Tunisia - 1 Crew<br />
Peru - 1 Crew<br />
Cambodia - 1 Crew<br />
Brazil - 1 Crew<br />
Seasonal markets<br />
Alaska<br />
Canada<br />
Active crew<br />
Unactive crew<br />
-9-
Demand for Energy Will Increase<br />
Oil Consumption per Capita (bbls)<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
• Per capita consumption of<br />
oil in large emerging<br />
economies is a fraction of<br />
the OECD average<br />
• There are 3 billion people in<br />
fast growing emerging<br />
economies<br />
0<br />
United<br />
States<br />
OECD<br />
Average<br />
Japan Germany China India<br />
• As standard of living<br />
improves demand for energy<br />
will increase<br />
Source: Simmons & Company International<br />
-10-
RRR on Slight Increase But Still Too Low<br />
Reserve Replacement Ratio<br />
• Higher E&P<br />
investments, oil price<br />
and technological<br />
advancements have<br />
allowed oilcompanies<br />
to book a slight<br />
increase in reservoir<br />
reserves<br />
• Higher E&P spending<br />
needed<br />
Source: SEB Enskilda’s Tenth Annual E&P Survey, the graph is based on comments from 25 IOCs.<br />
-11-<br />
-11-
Strong Expected Growth in E&P Spending<br />
• Spending<br />
expectations* for 2008<br />
have increased from<br />
125% above 1998<br />
levels last year to<br />
139% in this year<br />
• The corresponding<br />
number for 2009 is<br />
159%, revised up from<br />
138% in last year’s<br />
survey<br />
*According to SEB Enskilda’s Tenth Annual E&P Survey.<br />
Enskilda expect growth in total E&P spending in 2008, 2009 and 2010 to be 19%, 13% and 10% respectively.<br />
-12-
<strong>PGS</strong> Order Book at Record Level<br />
1200<br />
1000<br />
Order Book<br />
• Order book is now above<br />
USD 1 billion<br />
– Marine USD 968 million<br />
– Onshore USD 113 million<br />
USD million<br />
800<br />
600<br />
400<br />
200<br />
• Trend towards longer and<br />
multi-season contracts<br />
– Especially among NOCs<br />
0<br />
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08<br />
Marine<br />
Onshore<br />
-13-
Record High Bidding Activity<br />
Marine Seismic Acquisition<br />
3,500<br />
• Tendering activity * at<br />
record levels<br />
3,000<br />
USD million<br />
2,500<br />
2,000<br />
1,500<br />
1,000<br />
500<br />
-<br />
• Strong demand for high<br />
capacity vessels, less<br />
visibility for 6 streamer<br />
vessels<br />
feb.04<br />
jun.04<br />
okt.04<br />
feb.05<br />
jun.05<br />
okt.05<br />
feb.06<br />
jun.06<br />
okt.06<br />
feb.07<br />
jun.07<br />
okt.07<br />
feb.08<br />
jun.08<br />
Active Tenders<br />
All Sales Leads (Including Active Tenders)<br />
* Source: <strong>PGS</strong> internal estimate as of July 2008, Active Tenders and All Sales Leads 3D Contract Seismic only.<br />
-14-
Increasing Demand for Advanced Seismic<br />
HD3D total sqkm acquired<br />
120<br />
100<br />
80<br />
60<br />
40<br />
20<br />
40<br />
35<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
HD3D as %age of total activity in sqkm<br />
• The HD3D* segment has<br />
grown significantly over the last<br />
3 years, both in absolute size<br />
and in share of total activity<br />
• In 2009 we expect HD3D will<br />
be over 40% of the total market<br />
in sqkm terms, and significantly<br />
more in terms of revenue and<br />
production capacity<br />
0<br />
2003 2004 2005 2006 2007 2008E<br />
0<br />
HD3D Sqkm '000<br />
HD3D as % or total activity in sqkm<br />
*HD3D is defined as higher data density per unit area compared to conventional surveys.<br />
Source: <strong>PGS</strong> internal estimate.<br />
-15-
Ramform Advantage in Growing HD3D* Market<br />
60<br />
• In 2009, Ramform streamer<br />
capacity will be approximately<br />
75% of <strong>PGS</strong> total<br />
% activity in HD3D segment<br />
50<br />
40<br />
30<br />
20<br />
10<br />
• The Ramform fleet has<br />
consistently captured a large<br />
share of the HD3D segment<br />
• 80% of <strong>PGS</strong>’ work awarded** for<br />
2009 is HD3D<br />
0<br />
2003 2004 2005 2006 2007 2008E<br />
rest of industry HD3D as % of total activity<br />
Ramform HD3D as % of total activity<br />
• 50% of Ramform capacity** is<br />
sold in 2009<br />
*HD3D is defined as higher data density per unit area compared to conventional surveys.<br />
**By end Q2 2008.<br />
Source: <strong>PGS</strong> internal estimate.<br />
-16-
Favourably Positioned on the Industry Cost Curve<br />
Streamer count<br />
1-400<br />
401-500 501-600<br />
Ramform Sovereign<br />
Ramform Sterling<br />
Ramform Valiant<br />
Ramform Viking<br />
Ramform Vanguard<br />
Ramform Challenger<br />
Arrow Newbuild 3<br />
Arrow Newbuild 4<br />
Ramform Explorer<br />
Pacific Explorer<br />
Atlantic Explorer<br />
Nordic Explorer<br />
Ocean Explorer<br />
Orient Explorer<br />
Laurentian<br />
• <strong>PGS</strong>’ fleet is well positioned to generate high margins in a strong Marine<br />
seismic market<br />
• Adding quality assets and emphasising efficiency<br />
Source: The cash cost curve is based on <strong>PGS</strong>’ internal estimates and highest number of streamer towed. The graph shows all seismic vessels in<br />
the market, both existing and new-builds announced until end Q1 2008.<br />
-17-<br />
Relative cost efficiency per streamer per day
Ramform Vessels Sustain Long-term Competitive Advantage<br />
1992 - 1996<br />
1998 - 1999 2007 - 2009<br />
Competition<br />
<strong>PGS</strong><br />
4 – 6 streamers<br />
Matches vessels built 10+ years later<br />
6 – 8 streamers 8 - 12 streamers<br />
Matches vessels built 10+ years later<br />
8 & 12 streamers 16 - 18 streamers 22 streamers<br />
Matches vessels built 10+ years later<br />
More streamers, longer streamers and denser streamers.<br />
Operational and cost efficiency are key success factors<br />
-18-
Marine Seismic Acquisition Capacity is Increasing<br />
• Total streamers used expected<br />
to rise<br />
– ~15% in 2008 over 2007<br />
700<br />
58% capacity<br />
increase from 2005<br />
to end 2008<br />
80<br />
– ~25% in 2009 over 2008<br />
– ~20% in 2010 over 2009<br />
600<br />
70<br />
Streamers<br />
500<br />
400<br />
300<br />
200<br />
100<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
Vessels<br />
• <strong>PGS</strong> streamer count expected<br />
to rise<br />
– ~2% in 2008 over 2007*<br />
0<br />
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E<br />
0<br />
– ~15% in 2009 over 2008*<br />
Total Streamers Worldwide (Usual Configuration)<br />
Total Vessels Worldwide<br />
– ~20% in 2010 over 2009*<br />
Higher E&P spending and more complex surveys absorbs capacity increase<br />
* Excluding Ramform Victory<br />
Source: <strong>PGS</strong> Internal Estimate July 2008<br />
Total Streamers Worldwide and Total Vessels Worldwide are estimates of 6+ streamers 3D vessels<br />
-19-
<strong>PGS</strong>’ Drivers of Productivity<br />
Multitow –<br />
Reducing drag<br />
increasing survey<br />
speed.<br />
Source monitoring – Reducing<br />
downtime of source operations.<br />
Integrated Acoustic<br />
Positioning<br />
Cable cleaner –<br />
Reducing<br />
downtime in<br />
areas with<br />
barnacles.<br />
Improved foil fairing<br />
technology – Reducing<br />
drag and increasing<br />
reliability.<br />
Deflector<br />
steering<br />
system –<br />
Increasing<br />
speed in<br />
turns.<br />
2007 2008<br />
Ramform Sovereign<br />
Unmanned vehicles –<br />
Improving efficiency and<br />
safety.<br />
2009<br />
GeoStream<br />
er® – 3D A<br />
Step<br />
Change<br />
Source QC<br />
program –<br />
Detecting<br />
faulty guns,<br />
directivity<br />
variations.<br />
Lateral<br />
Streamer<br />
Steering<br />
Gun steering system – Improving 4D<br />
quality and efficiency.<br />
Onboard real<br />
time<br />
optimization<br />
of turns.<br />
Super Slim<br />
GeoStreamer ®<br />
New Front Stretch<br />
Less Noise<br />
Less Tension<br />
-20-<br />
Front end depth control –<br />
Improving the weather window and<br />
handling safety.
GeoStreamer®: Industrialization on Schedule<br />
Launch EAGE<br />
June 2007<br />
TCA with<br />
Shell<br />
Aquila equipped with<br />
12 km GeoStreamer® –<br />
Two additional<br />
Test lines GoM Atlantic Explorer 6 streamer vessels<br />
MC2D Trinidad 6x6 km spread during 2009<br />
Q4<br />
2008 2009<br />
Field Trials<br />
North Sea<br />
First commercial job<br />
NW Australia<br />
Akademik Fersman<br />
Harrier equipped<br />
With 8 km<br />
GeoStreamer®<br />
MC2D Cyprus<br />
Various exclusive<br />
testlines Med<br />
Laurentian<br />
Southern Explorer<br />
8 km GeoStreamer®<br />
• Robust system delivering improved<br />
efficiency – not one day of weather<br />
downtime in Australia<br />
• Seismic bandwith dramatically<br />
enhanced<br />
• Massive client interest<br />
• Large number of leads for direct<br />
awards<br />
• Further development of technology<br />
ongoing<br />
-21-
GeoStreamer® Gaining Momentum<br />
• First 3D GeoStreamer® job sold with<br />
uplift in revenues compared to a<br />
conventional job<br />
• Plan to introduce GeoStreamer® on 6<br />
streamer vessels first<br />
• One 2D GeoStreamer® vessel<br />
operational in each region by year end<br />
GeoStreamer® combines two different sensors yielding<br />
enhanced resolution and better penetration as well as<br />
improved efficiency due to deeper tow<br />
-22-
<strong>PGS</strong> Value Drivers<br />
-23-<br />
• Focused integrated seismic<br />
company<br />
• Positioned for growth<br />
• Productivity & scale<br />
– Best-in-class vessel portfolio<br />
– Largest 3D MC library<br />
• Technology differentiator<br />
– Unparallelled investments in quality<br />
and operations<br />
– Strong technology pipeline<br />
• Strong operational record<br />
• Proactive, countercyclical financial<br />
management<br />
– Value creation through the cycle<br />
Strong underlying demand fundamentals – Unique position to<br />
benefit from increasing demand for advanced seismic