PGS Files Annual Report on Form 20-F OSLO, Norway, May 10 /PRNewswire-FirstCall/ -- Petroleum Geo-Services ASA ("PGS" or the "Company") (OSE and NYSE: PGS) announced today that it has filed its Annual Report on Form 20-F for the year ended December 31, 2004 containing consolidated financial statements prepared in accordance with US GAAP. A copy of the Company's Form 20-F is on file with the U.S. Securities and Exchange Commission (SEC) and is available for viewing and/or downloading at http://www.sec.gov/ or at the Company's web site at http://www.pgs.com/ (select the link to "Investor Relations", "Financial Reports" then "SEC Filings"). As previously reported, the financial statements prepared in accordance with U.S. GAAP vary significantly from the financial statements prepared in accordance with Norwegian GAAP. The Company adopted fresh-start reporting effective November 1, 2003 for U.S. GAAP reporting purposes. Under fresh-start reporting, the Company recorded assets and liabilities at estimated fair values as of November 1, 2003, creating a large number of differences compared to the Norwegian GAAP financial statements which are on an historical cost basis. As previously reported, these differences, in the consolidated statement of operations for 2004, relates predominantly to the amortization of the multi-client library and other intangible assets, but also other effects of fresh-start. There are no material differences in net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities in the consolidated statement of cash flows. The tables below show the main differences in net income and shareholders' equity between the financial statements prepared in accordance with U.S. GAAP and those prepared in accordance with Norwegian GAAP. Due to fresh-start reporting there is a large number of differences and the tables and related comments that follow should not be considered a complete description of the differences. Net income (In millions of dollars) 2004 Net loss Norwegian GAAP (including minority interest) (54.3) GAAP differences by caption: - Revenues (a) (6.0) - Cost of sales, R&D and SG&A (b) 7.0 - Exploration costs (c) (16.3) - Depreciation and amortization (d) (41.4) - Other operating expenses, net/cost of reorganization 0.2 - Income (loss) from associated companies (4.6) - Interest expense 0.4 - Other financial items, net 0.3 - Income tax expense (e) (19.4) - Minority expense (0.6) Net loss in accordance with U.S. GAAP (134.7) Comments on main differences: (a) Revenues for 2004 reported in accordance with U.S. GAAP were lower principally because (1) upon adopting fresh-start reporting, some elements of deferred revenues were recorded at estimated fair value and (2) since under U.S. GAAP certain outstanding forward sales contracts for oil were recorded at fair value at December 31, 2004. (b) Cost of sales, R&D and SG&A for 2004 reported in accordance with U.S. GAAP were lower primarily since certain costs reported as cost of sales under Norwegian GAAP were presented as exploration cost under U.S. GAAP (ref. also (c)). (c) Exploration costs (which includes cost to explore for oil and natural gas) for 2004 are reported on a separate line in the statement of operations in accordance with U.S. GAAP, while these costs were included in cost of sales and depreciation and amortization under Norwegian GAAP (ref. also (b) and (d)). This difference only affects the classification in the statement of operations and has no effect on net income. (d) Depreciation and amortization for 2004 reported in accordance with U.S. GAAP was higher, as previously disclosed, mainly due to higher amortization of the multi-client library and amortization of several intangible assets recognized under fresh-start reporting. Higher amortization of the multi-client library was due to several factors, including higher book value of the library at the beginning of 2004 due to fresh-start reporting and higher minimum amortization caused by fresh-start minimum amortization profiles. Partially offsetting these effects, the costs related to a dry exploration well were included in depreciation and amortization under Norwegian GAAP while they were presented as part of exploration costs under U.S. GAAP (ref. also (c)). (e) Income tax expense for 2004 reported in accordance with U.S. GAAP was higher, mainly because (1) the provision for tax contingencies at January 1, 2004 was lower than under Norwegian GAAP and (2) realization of unrecognized tax assets generated before November 1, 2003 are recorded as a reduction of the carrying value of intangible assets under U.S. GAAP compared to a reduction of tax expense under Norwegian GAAP. Shareholders' equity (In millions of dollars) Dec. 31, 2004 Shareholders' equity Norwegian GAAP: 304.1 GAAP differences: - Property, plant and equipment (f) (33.3) - Multi-client library 4.1 - Oil and natural gas assets (g) 7.5 - Intangible and other long-lived assets (h) 38.6 - UK lease related liabilities (i) (63.4) - Accrual for pension liabilities (j) (20.1) - Deferred tax, long-term (6.7) - Other long-term liabilities (2.8) - Accrued expenses (2.6) - Taxes payable and short-term deferred tax (1.5) Shareholders' equity U.S. GAAP and minority interest 223.9 Comments on main differences: (f) Property, plant and equipment at December 31, 2004 in accordance with U.S. GAAP were lower mainly because, under fresh-start reporting, the estimated fair value of some of the contracts related to the FPSO fleet were recorded separately as intangible assets. Under Norwegian GAAP, when recording impairments on these assets in 2003, the contracts were included in the valuation of the FPSOs. (g) Oil and natural gas assets at December 31, 2004 in accordance with U.S. GAAP were higher mainly because, under fresh-start reporting, these were recorded at the estimated fair value. Offsetting this difference is the deferred income tax effect which approximated 78% of this difference. (h) Intangible and other long-lived assets at December 31, 2004 in accordance with U.S. GAAP were higher mainly because, under fresh-start reporting, several intangible assets were recorded at estimated fair value, including the fair value of some of the contracts related to the FPSO fleet. (i) Accrual for UK lease related liabilities at December 31, 2004 in accordance with U.S. GAAP were higher because, under fresh-start reporting, the Company calculated and recognized a liability for certain tax indemnities related to these leases and also recorded the interest rate differential related to the leases at estimated fair value. (j) Accrual for pension liabilities at December 31, 2004 in accordance with U.S. GAAP was higher because, under fresh-start reporting, the Company recorded the liabilities at estimated fair value. Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units (FPSOs). PGS operates on a worldwide basis with headquarters at Lysaker, Norway. For more information on Petroleum Geo-Services visit http://www.pgs.com/. The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 as disclosed by the Company in its filings with the Securities and Exchange Commission including the Company's most recent Annual Report on Form 20- F for the year ended December 31, 2004. As a result of these factors, actual events may differ materially from those indicated in or implied by such forward-looking statements. http://hugin.info/115/R/993565/150219.pdf FOR DETAILS, CONTACT: Ola Bosterud Sam R. Morrow Christopher Mollerlokken Phone: +47 6752 6400 US Investor Services, Renee Sixkiller, Phone: +1 281 679 2240 DATASOURCE: Petroleum Geo-Services ASA CONTACT: Ola Bosterud, Sam R. Morrow, Christopher Mollerlokken, +47-6752-6400, or U.S. Investor Services, Renee Sixkiller, +1-281-679-2240 Web site: http://www.pgs.com/ http://hugin.info/115/R/993565/150219.pdf

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