Annual Report 2011 - PGS

Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 21 - Other Long-Lived Assets
Other long-lived assets consist of the following:
December 31,
(In thousands of dollars) 2011 2010
Claims towards yard (NB’s 532 and 533) (Note 18) 9,518 14,904
Prepaid foreign income tax and withholding tax 6,671 1,696
Loan to associated company 3,243 3,132
Prepaid expenses and deposits 1,481 1,524
Warrants Geokinetics Inc. (Note 20) (a) 507 4,070
Fair value adjustment of firm commitments 298 ---
Unrealized gain forward exchange contracts (Note 26) --- 21
Other long-term receivables 2,269 1,898
Total 23,987 27,245
(a) PGS own $10 million in 40,000 preferred shares and 1,165,000 warrants in Geokinetics as of December 31, 2011 and 2010 (see Note 20). Based on the
Black-Scholes option price model, the warrants has been valued to $ 0.5 million and $ 4.1 million as of December 31, 2011, and 2010, respectively.
The remaining value has been allocated to the preferred shares and has been included as part of the investment in Geokinetics.
Note 22 - Goodwill
The Company tests goodwill annually for impairment or whenever there is an indication that goodwill might be impaired.
The carrying amount of goodwill of $139.9 million relates to the 2007 acquisitions of MTEM, AGS and Roxicon. Effective from
May 1, 2010 the Company changed its organization where Marine Contract and MultiClient were established as operating
segments. Accordingly goodwill was reallocated to these two segments based on the relative values.
A summary of goodwill allocated to individual cash-generating units for impairment testing is as follows:
December 31,
(In thousands of dollars) 2011 2010
Marine Contract 97,897 97,897
MultiClient 41,955 41,955
Total 139,852 139,852
Key assumptions used in the calculations of value in use are growth rates, revenues, EBITDA, operating profit, capital
expenditures and discount rates. The recoverable amounts are determined based on a value-in-use calculation using after tax
cash flow projections based upon financial projections approved by executive management and an after tax discount rate of
8.8% as of December 31, 2011 and 9.9% as of December 31, 2010. The nominal growth rate used to extrapolate cash flows
beyond the initial 5 years projection period as of December 31, 2011 and 2010 was 2.5%.
Hydrocarbons continue to be a primary source of global energy in virtually all countries. Seismic services continue to be
fundamental in the exploration for hydrocarbons. Countries with known or prospective hydrocarbons continue to have long term
exploration and development plans extending well into the future.
Management believes that any reasonably possible change in key assumptions underlying the calculations of the recoverable
amount of the Marine segment would not trigger any impairment as of December 31, 2011.
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