PGS to Convert 4C Crew to Streamer Vessel Operations

Petroleum Geo-Services has decided to convert its current 4C Ocean Bottom Crew operation, including the vessels Ocean Explorer and Falcon, to towed streamer vessels. The third vessel used in this operation, Bergen Surveyor, is on a short term lease and will be returned to its owners. The conversion is expected to start around year end 2005. No personnel reductions are expected.

This move will add one more 6 streamer 3D vessel (Ocean Explorer) and a 2D vessel (Falcon) to PGS' streamer fleet, increasing PGS' streamer capacity and flexibility in the strengthening streamer market. PGS expects the conversion to improve EBIT and operating cash flow by more than $10 million annually compared to continued 4C operation, when completed. The conversion will require a one time investment (CAPEX) of approximately $16 million mostly relating to streamers and depreciation / write off of 4C equipment of approximately $6 million. PGS intends to retain a presence in the 4C market in the form of employee know-how and technology allowing for a future re-entry to the market.

PGS President and CEO Svein Rennemo stated the following regarding this strategic move:

``By converting these vessels we will take advantage of the substantial improvement in the towed streamer seismic segment and further enhance EBIT and cash flow from early 2006. At the same time we retain our competence in the 4C segment for a later re-entry.''