Marine Log

March 28, 2006

PGS to demerge FPSO business

Petroleum Geo-Services ASA (OSE:PGS) (NYSE:PGS) is to recommend to shareholders a separation of the company into two separately listed businesses.

Its floating production business will be demerged into a newly-formed entity named Petrojarl ASA. Its geophysical business will continue under the PGS name.

On completion of the demerger, each PGS shareholder will receive one share in Petrojarl for each share held in PGS and will thus hold separate investments in two listed companies:

PGS shares will have a primary listing in Oslo and its American Depository Shares will trade on New York Stock Exchange.

Petrojarl will be a focused FPSO company and is currently the second largest FPSO contractor world-wide in terms of revenues.

Petrojarl will seek to maintain its strong North Sea position while pursuing growth opportunities internationally through the planned Teekay Petrojarl Offshore joint venture.

Petrojarl's shares will be listed in Oslo.

The Petrojarl shares distributed to PGS shareholders, will constitute 80.01 percent of the total number of shares outstanding after completion of the demerger. PGS intends to sell up to the remaining 19.99 percent in an offering concurrently with the demerger, subject to market conditions.

The Board believes that the combined demerger and offering structure will efficiently position Petrojarl in the capital markets and enable it to take an active part in further growth in the FPSO market.

The listing of Petrojarl is planned for early July 2006. Petrojarl will have its headquarters in Trondheim, Norway. The CEO of Petrojarl will be Espen Klitzing, who currently heads the Production Business.