##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 20-F/A

(Amendment No. 1)

o   REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF

THE SECURITIES EXCHANGE ACT OF 1934


OR

x   ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31,
2000


OR

o   TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934


For the transition period
from           to


Commission File Number: 1-14614

Petroleum Geo-Services ASA


(Exact name of registrant as specified in its
charter)


Kingdom of Norway

(Jurisdiction of incorporation or organization)


Strandveien 4, N-1366 Lysaker,
Norway

(Address of principal executive offices)


Securities registered or to be registered
pursuant to Section 12(b) of the Act:

|                                                                                          |  |                                          
|----------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of each class                                                                       |  | Name of each exchange on which registered
|                                                                                          |  |                                          
|American Depositary Shares, each representing
	one share of nominal value NOK 5 per share |  | New York Stock Exchange                  
|PGS Trust I 9 5/8% Trust Preferred
	Securities                                            |  | New York Stock Exchange                  

Securities
registered or to be registered pursuant to Section 12(g) of
the Act: None

Securities for
which there is a reporting obligation pursuant to
Section 15(d) of the Act: None

As of
December 31, 2000, the number of shares outstanding was
102,347,987.

Indicate by check
mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes þ          No o


Indicate by check
mark which financial statement item the registrant has elected
to follow.

Item 17 o          Item 18 þ



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TABLE OF CONTENTS



|                                                           |  |  |  |  |  |  |  | 
|---------------------------------------------------------- |  |  |  |  |  |  |  | 
|RESTATEMENT                                               
|U.S. DOLLAR PRESENTATIONS                                 
|FORWARD-LOOKING INFORMATION                               
|PART I                                                    
|ITEM 3. Key Information                                   
|ITEM 5. Operating and Financial Review and Prospects      
|PART III                                                  
|ITEM 18. Financial Statements                             
|SIGNATURES                                                
|REPORT OF INDEPENDENT ACCOUNTANTS                         
|CONSOLIDATED STATEMENTS OF OPERATIONS                     
|CONSOLIDATED BALANCE SHEETS                               
|CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                
|Consent of PricewaterhouseCoopers LLP                     



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RESTATEMENT

We hereby amend the following items of our Annual
Report on Form 20-F for the year ended December 31,
2000 as originally filed with the Securities and Exchange
Commission on June 16, 2001:



| |   |                                                                    
| | - | -------------------------------------------------------------------
| |  | Key Information  Selected
	Financial Data in Item 3 of Part I   
|
| |  | Operating and Financial Review and
	Prospects in Item 5 of Part I
|
| |  | Financial Statements in Item 18
	of Part III                     

This Form 20-F/ A is being filed to include
restated consolidated financial statements and related
disclosures as of December 31, 2000 and 1999 and for each
of the three years in the period ended December 31, 2000.

The restatement related to two different matters.
The first matter involved our accounting for agreements entered
into in 1998 and 1999 to hedge our exposure to Norwegian taxes
arising out of the conversion, for Norwegian tax purposes, of
our U.S. dollar denominated debt into Norwegian kroner.
Fluctuating exchange rates between the dollar and the kroner
result in unrealized translation gains and losses, which are
generally taxable or deductible currently for Norwegian tax
purposes. The hedging agreements, which we refer to as tax
equalization swap contracts, were designed to provide an
economic hedge against this exchange rate exposure. These tax
equalization swap contracts did not, however, qualify for hedge
accounting and should have been reflected in our financial
statements at fair value in each reporting period. In our
results of operations for the first nine months of 2001 as
previously announced, we included an unusual, non-cash charge
(net of tax) of $17.9 million to reflect the fair value of
these contracts as of January 1, 2001. We and our auditors
have now determined that the non-cash charge should have been
specifically applied in each of our fiscal years 2000, 1999 and
1998. The effect of this restatement was non-cash, net
adjustments to previously reported net income for fiscal years
2000, 1999 and 1998 of $2.8 million, ($17.5 million) and
($3.9 million), respectively.

The second matter involved our revenue
recognition policy for some types of volume seismic data
licensing arrangements. Historically, we recorded revenue for
these types of arrangements when we obtained a signed contract
that provided for a fixed price from our customer, the seismic
data was ready and available for use, and the collectibility of
the receivable was reasonably assured. In some of these
arrangements, the agreement permits the customer to select
seismic data over a defined period of time and, in some cases,
to pay the applicable license fees over a defined future period.
In other cases, the license fees are paid before the customer
selects the seismic data. Under the Securities and Exchange
Commissions Staff Accounting Bulletin (SAB)
No. 101, Revenue Recognition in Financial
Statements, which became effective January 1, 2000,
we and our auditors determined that the revenue associated with
these types of arrangements should be deferred until we have
entered into a license agreement for specific data with the
customer, which occurs after the execution of the initial volume
sales agreement. The effect of this restatement was non-cash,
net adjustments to previously reported net income for fiscal
year 2000 of ($4.6 million), including
($6.6 million) as the cumulative effect of the change in
accounting principle.

For purposes of this Form 20-F/ A, and in
accordance with Rule 12b-15 under the Securities Exchange
Act of 1934, each item of the annual report on Form 20-F as
originally filed on June 16, 2001 that was affected by the
restatement has been amended and restated in its entirety. No
attempt has been made in this Form 20-F/ A to modify or
update other disclosures as presented in the original
Form 20-F except as required to reflect the effects of the
restatement. In particular, and without limitation, under the
captions Operating and Financial Review and
Results  Industry Overview and Outlook and
 Financial Condition in Item 5, we
have provided information about the business environment
applicable to us, the business outlook and other forward-looking
information. This information has not

2



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been revised from the information provided in the
originally filed annual report on Form 20-F because it was
not affected by the restatement.





U.S. DOLLAR PRESENTATIONS

In this Form 20-F/A, references to
U.S. dollars and $ are to United
States dollars; references to NOK are to Norwegian
kroner; and references to British pounds and
£ are to British pounds sterling.




FORWARD-LOOKING INFORMATION

Some of the statements contained in this
Form 20-F/A are 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:



| |   |                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | address activities, events or developments that
	we expect, believe, anticipate or estimate will or may occur in
	the future   
|
| |  | are based on assumptions and analyses that we
	have made and that we believe were reasonable under the
	circumstances when made
|
| |  | are based on many assumptions, uncertainties and
	other factors, many of which are beyond our control                          

Any one of these assumptions, uncertainties or
other factors, or a combination of these assumptions,
uncertainties or other factors, could materially affect our
future results of operations, financial position, cash flows and
whether the forward-looking statements ultimately prove to be
accurate. These forward-looking statements are not guarantees of
our future performance, and our actual results, financial
position, cash flows and future developments may differ
materially from those projected in the forward-looking
statements. When considering these forward-looking statements,
you should keep in mind the risk factors and other cautionary
statements elsewhere in this Form 20-F/A and in the
originally filed annual report. We will not update these
statements unless the securities laws require us to do so.

3



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PART I






|        |                
|------- | ---------------
|ITEM 3. | Key Information

Selected Financial Data

We have presented below, on the basis of United
States generally accepted accounting principles, our selected
consolidated financial data for the five-year period ended
December 31, 2000. Independent accountants have audited our
consolidated financial statements for each of the
five years in the period ended December 31, 2000. From
these consolidated financial statements, we have derived the
financial data presented below for such periods and as of such
dates. You should read the financial data for the three-year
period ended December 31, 2000 and as of December 31,
2000 and 1999 in conjunction with, and the financial data are
qualified in their entirety by reference to, our consolidated
financial statements and notes included in Item 18 of this
Form 20-F/A. The financial data presented below as of and
for the years ended December 31, 2000, 1999 and 1998 and in
our consolidated financial statements and related notes included
in Item 18 of this Form 20-F/ A have been restated



| |   |                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to reflect fair value accounting for tax
	equalization swap contracts entered into in 1998 and 1999 to
	hedge our exposure to Norwegian taxes arising out of the
	conversion, for Norwegian tax purposes, of our U.S. dollar
	denominated debt into Norwegian kroner, and
|
| |  | to reflect the adoption of Staff Accounting
	Bulletin (SAB) No. 101, Revenue
	Recognition in Financial Statements, which became
	effective January 1, 2000, to our revenue recognition
	policy for some types of volume seismic data licensing
	arrangements.        

Please read Note 22 of the notes to our
consolidated financial statements for more information related
to the restatement.

We have presented EBITDA in the table to provide
additional information about us. Our management uses EBITDA as a
supplemental financial measurement in the evaluation of our
business. You should not consider EBITDA as an alternative to
net income, as an indicator of operating performance or as an
alternative to cash flows as a measure of liquidity.

4



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|                             |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |            |      | 
|---------------------------- | ------------------------------------------------------------------------------------------------------ | ------------------------------------- | - | ------------- | ----- | ------------- | - | ---------- | ----- | ---- | - | ---------- | ---- |  | - | ---------- | ---- |  | - | ---------- | ---- | 
|                             |                                                                                                        |                                      
|                             |                                                                                                        | Years ended December 31,             
|                             |                                                                                                        |                                      
|                             |                                                                                                        | 2000                                  |   | 1999          |       | 1998          |   | 1997(7)    |       | 1996
|                             |                                                                                                        |                                       |   |               |       |               |   |            |       |     
|                             |                                                                                                        |                                      
|                             |                                                                                                        | (In thousands, except for share data)
|                             |                                                                                                        | (As restated)                         |   | (As restated) |       | (As restated) |   |           
|STATEMENT OF OPERATIONS DATA |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | Revenue                                                                                                |                                       | $ | 913,482       |       |               | $ | 788,160    |       |      | $ | 761,762    |      |  | $ | 539,381    |      |  | $ | 451,258    |     
|                             | Cost of sales, including research and technology
	costs                                                |                                       |   | 430,704       |       |               |   | 348,919    |       |      |   | 251,155    |      |  |   | 181,520    |      |  |   | 158,884    |     
|                             | Depreciation and amortization                                                                          |                                       |   | 262,109       |       |               |   | 238,576    |       |      |   | 273,799    |      |  |   | 191,693    |      |  |   | 170,010    |     
|                             | Selling, general and administrative costs                                                              |                                       |   | 75,938        |       |               |   | 71,738     |       |      |   | 67,103     |      |  |   | 39,812     |      |  |   | 31,841     |     
|                             | Unusual items(1)                                                                                       |                                       |   | 365,780       |       |               |   | 89,855     |       |      |   | 25,737     |      |  |   |           |      |  |   |           |     
|                             |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | Total operating expenses                                                                               |                                       |   | 1,134,531     |       |               |   | 749,088    |       |      |   | 617,794    |      |  |   | 413,025    |      |  |   | 360,735    |     
|                             |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | Operating profit (loss)                                                                                |                                       |   | (221,049      | )     |               |   | 39,072     |       |      |   | 143,968    |      |  |   | 126,356    |      |  |   | 90,523     |     
|                             | Income (loss) from equity investments(2)                                                               |                                       |   | 61,151        |       |               |   | (4,935     | )     |      |   | 854        |      |  |   | 1,966      |      |  |   | 1,315      |     
|                             | Financial expense, net                                                                                 |                                       |   | (122,933      | )     |               |   | (95,969    | )     |      |   | (40,241    | )    |  |   | (24,665    | )    |  |   | (20,633    | )   
|                             | Other income (loss), net(3)                                                                            |                                       |   | (32,774       | )     |               |   | (9,144     | )     |      |   | 33,531     |      |  |   | 2,092      |      |  |   | 941        |     
|                             |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | Income (loss) before income taxes                                                                      |                                       |   | (315,605      | )     |               |   | (70,976    | )     |      |   | 138,112    |      |  |   | 105,749    |      |  |   | 72,146     |     
|                             | Provision (benefit) for income taxes(4)                                                                |                                       |   | (132,756      | )     |               |   | (57,137    | )     |      |   | 30,428     |      |  |   | 28,165     |      |  |   | 21,850     |     
|                             |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | Income (loss) before extraordinary charge and
	cumulative effect of accounting change(5)(6)            |                                       |   | (182,849      | )     |               |   | (13,839    | )     |      |   | 107,684    |      |  |   | 77,584     |      |  |   | 50,296     |     
|                             |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | Extraordinary charge, net of tax(5)                                                                    |                                       |   |              |       |               |   |           |       |      |   |           |      |  |   | (3,447     | )    |  |   |           |     
|                             | Cumulative effect of accounting change, net of
	tax(6)                                                 |                                       |   | (6,555        | )     |               |   | (19,977    | )     |      |   |           |      |  |   |           |      |  |   |           |     
|                             |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | Net income (loss)                                                                                      |                                       | $ | (189,404      | )     |               | $ | (33,816    | )     |      | $ | 107,684    |      |  | $ | 74,137     |      |  | $ | 50,296     |     
|                             |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | Income (loss) per share before extraordinary
	charge and cumulative effect of accounting change(5)(6): |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |            |     
|                             |                                                                                                        | Basic(7)                              |   | $             | (1.79 | )             |   | $          | (0.15 | )    |   | $          | 1.31 |  |   | $          | 1.20 |  |   | $          | 0.90 | 
|                             |                                                                                                        | Diluted(7)                            |   | $             | (1.79 | )             |   | $          | (0.15 | )    |   | $          | 1.27 |  |   | $          | 1.15 |  |   | $          | 0.88 | 
|                             | Net income (loss) per share:                                                                           |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |            |     
|                             |                                                                                                        | Basic(7)                              |   | $             | (1.86 | )             |   | $          | (0.36 | )    |   | $          | 1.31 |  |   | $          | 1.15 |  |   | $          | 0.90 | 
|                             |                                                                                                        | Diluted(7)                            |   | $             | (1.86 | )             |   | $          | (0.36 | )    |   | $          | 1.27 |  |   | $          | 1.10 |  |   | $          | 0.88 | 
|                             | Basic shares outstanding(7)                                                                            |                                       |   | 102,020,830   |       |               |   | 94,767,967 |       |      |   | 82,260,652 |      |  |   | 64,519,503 |      |  |   | 55,921,976 |     
|                             | Diluted shares outstanding(7)                                                                          |                                       |   | 102,020,830   |       |               |   | 94,767,967 |       |      |   | 84,794,836 |      |  |   | 67,358,004 |      |  |   | 56,963,730 |     
|BALANCE SHEET DATA           |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | Cash and cash equivalents                                                                              |                                       | $ | 145,215       |       |               | $ | 63,044     |       |      | $ | 53,273     |      |  | $ | 127,491    |      |  | $ | 125,250    |     
|                             | Multi-client library, net                                                                              |                                       |   | 854,899       |       |               |   | 816,423    |       |      |   | 553,415    |      |  |   | 325,181    |      |  |   | 236,258    |     
|                             | Total assets                                                                                           |                                       |   | 4,293,651     |       |               |   | 4,184,997  |       |      |   | 3,426,627  |      |  |   | 1,677,848  |      |  |   | 1,081,389  |     
|                             | Total long-term debt and capital lease obligations                                                     |                                       |   | 2,171,981     |       |               |   | 1,998,530  |       |      |   | 1,421,670  |      |  |   | 550,450    |      |  |   | 331,499    |     
|                             | Capital stock                                                                                          |                                       |   | 1,286,426     |       |               |   | 1,278,999  |       |      |   | 1,058,811  |      |  |   | 580,991    |      |  |   | 338,198    |     
|                             | Shareholders equity                                                                                   |                                       |   | 1,372,001     |       |               |   | 1,568,417  |       |      |   | 1,393,238  |      |  |   | 811,347    |      |  |   | 499,845    |     
|OTHER DATA                   |                                                                                                        |                                       |   |               |       |               |   |            |       |      |   |            |      |  |   |            |      |  |   |           
|                             | EBITDA(8)                                                                                              |                                       | $ | 406,840       |       |               | $ | 367,503    |       |      | $ | 443,504    |      |  | $ | 318,049    |      |  | $ | 260,533    |     
|                             | Cash flows from operating activities                                                                   |                                       |   | 175,523       |       |               |   | 200,678    |       |      |   | 274,656    |      |  |   | 228,686    |      |  |   | 212,406    |     
|                             | Capital expenditures                                                                                   |                                       |   | 126,883       |       |               |   | 667,869    |       |      |   | 521,630    |      |  |   | 468,872    |      |  |   | 172,910    |     
|                             | Investment in multi-client library                                                                     |                                       |   | 270,241       |       |               |   | 338,718    |       |      |   | 388,228    |      |  |   | 203,267    |      |  |   | 137,475    |     

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Unusual items for the year ended
	December 31, 2000 include the following impairment charges:
	$166.5 million related to the multi-client library,
	$148.8 million related to property, equipment and other
	assets, and $50.5 million related to loss contracts.
	Unusual items for the year ended December 31, 1999 include
	$74.0 million in restructuring charges and
	$15.9 million in asset impairments. Unusual items for the
	year ended December 31, 1998 include $22.7 million in
	asset impairments and $3.0 million in merger costs for the
	acquisition of Acadian Geophysical Services, Inc.
	(Acadian) in July 1998, which was accounted for as a
	pooling of interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(2) | Income from equity investments for the year ended
	December 31, 2000 includes a gain of $54.7 million
	associated with the sale of our share holdings in Spinnaker
	Exploration Company, which investment had been accounted for
	under the equity method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) | Other income (loss), net for the years ended
	December 31, 2000, 1999 and 1998 includes charges of
	$61.4 million, $32.8 million and $5.2 million,
	respectively, related to the fair value of tax equalization swap
	contracts. Amounts related to the fair value of these contracts
	include adjustments to restate our previously reported results
	of operations for those years. Please read Note 22 of the
	notes to our consolidated financial statements for more
	information related to the restatement. Other income (loss), net
	for the years ended December 31, 2000, 1999 and 1998 also
	includes $26.0 million, $19.1 million and
	$32.5 million, respectively, in UK lease gains.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(4) | Provision (benefit) for income taxes for the
	years ended December 31, 2000, 1999 and 1998 includes
	$50.3 million, $14.8 million and $1.5 million,
	respectively, of benefit related to tax equalization swap
	contracts. Amounts related to the fair value of these contracts
	include adjustments we have made to restate our previously
	reported results of operations for those years. Please read Note
	22 of the notes to our consolidated financial statements for
	more information related to the restatement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(5) | During March 1997, we prepaid our
	$30 million 7.12% senior notes due February 2004 and
	our $95 million 7.33% senior notes due February 2006.
	As a result, we incurred an extraordinary charge of
	$3.4 million, net of tax benefits of $1.3 million. The
	extraordinary charge consisted of a write-off of the associated
	debt issuance costs and the prepayment premium.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(6) | Effective January 1, 2000, we adopted SAB
	No. 101. Application of this SAB required that we defer
	revenue recognition on some types of volume seismic data
	licensing arrangements until we have entered into a license
	agreement for specific data with the customer. Accordingly, we
	recognized a charge to income of $6.6 million, net of tax
	benefits of $2.5 million, as the cumulative effect of the
	change in accounting principle. As a result of the application
	of SAB No. 101, $15.6 million of licensing
	arrangements has been deferred as of December 31, 2000 and
	will be recognized as revenue in the future as we enter into
	specific data license agreements. Effective January 1,
	1999, we adopted Statement of Position
	(SOP) 98-5, Reporting on the Costs of
	Start-up Activities. This SOP requires that the initial,
	one-time costs related to introducing new products and services,
	conducting business in new territories or commencing new
	operations be expensed as incurred. Accordingly, we have
	recognized a charge to income of $20.0 million, net of tax
	benefits of $8.1 million, for the year ended
	December 31, 1999 as the cumulative effect of the change in
	accounting principle.
|   
|(7) | We effected a stock split during June 1998. All
	share data have been restated to reflect this stock split and
	all 1997 information has been restated to reflect the
	acquisition of Acadian in July 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(8) | We define EBITDA for this purpose as operating
	profit before depreciation and amortization and unusual items.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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|        |                                              
|------- | ---------------------------------------------
|ITEM 5. | Operating and Financial Review and
	Prospects

You should read the discussion under this caption
in conjunction with our consolidated financial statements and
the related notes in Item 18 of this Form 20-F/A and
Key Information  Selected Financial Data
in Item 3 of this Form 20-F/A. This discussion is
based upon, and the financial statements have been prepared in
accordance with, United States generally accepted accounting
principles. The following information contains forward-looking
statements. You should refer to the section in this
Form 20-F/A captioned Forward-Looking
Information for cautionary statements relating to
forward-looking statements.

Restatement

As more fully described in Note 22 of the notes
to our consolidated financial statements included in Item 18 of
this Form 20-F/ A, the financial statements and related
disclosures as of December 31, 2000 and 1999 and for the
years ended December 31, 2000, 1999 and 1998 have been
restated



| |   |                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to reflect fair value accounting for tax
	equalization swap contracts entered into in 1998 and 1999 to
	hedge our exposure to Norwegian taxes arising out of the
	conversion, for Norwegian tax purposes, of our U.S. dollar
	denominated debt into Norwegian kroner, and
|
| |  | to reflect the adoption of SAB No. 101,
	which became effective January 1, 2000, to our revenue
	recognition policy for some types of volume seismic data
	licensing arrangements.                                                                                       

The effects of the restatement on the results of
operations included in our consolidated financial statements are
included below:

|                                                                               |  |                                       |           |               |  |             |           |               |  |             |         |               |  |   |         |   |  |   |         |  |  |   |         | 
|------------------------------------------------------------------------------ |  | ------------------------------------- | --------- | ------------- |  | ----------- | --------- | ------------- |  | ----------- | ------- | ------------- |  | - | ------- | - |  | - | ------- |  |  | - | ------- | 
|                                                                               |  |                                      
|                                                                               |  | Years ended December 31,             
|                                                                               |  |                                      
|                                                                               |  |                                       |           |               |  |            
|                                                                               |  | 2000                                  |           | 1999          |  | 1998       
|                                                                               |  |                                       |           |               |  |            
|                                                                               |  |                                       |           | As previously |  |             |           | As previously |  |             |         | As previously
|                                                                               |  | As restated                           |           | reported      |  | As restated |           | reported      |  | As restated |         | reported     
|                                                                               |  |                                       |           |               |  |             |           |               |  |             |         |              
|                                                                               |  |                                      
|                                                                               |  | (In thousands, except per share data)
|Revenue                                                                        |  | $                                     | 913,482   |               |  | $           | 906,233   |               |  | $           | 788,160 |               |  | $ | 788,160 |   |  | $ | 761,762 |  |  | $ | 761,762 | 
|Cost of sales                                                                  |  |                                       | 424,027   |               |  |             | 423,121   |               |  |             | 333,060 |               |  |   | 333,060 |   |  |   | 236,647 |  |  |   | 236,647 | 
|Depreciation and amortization                                                  |  |                                       | 262,109   |               |  |             | 258,484   |               |  |             | 238,576 |               |  |   | 238,576 |   |  |   | 273,799 |  |  |   | 273,799 | 
|Total operating expenses                                                       |  |                                       | 1,134,531 |               |  |             | 1,130,000 |               |  |             | 749,088 |               |  |   | 749,088 |   |  |   | 617,794 |  |  |   | 617,794 | 
|Operating profit (loss)                                                        |  |                                       | (221,049  | )             |  |             | (223,767  | )             |  |             | 39,072  |               |  |   | 39,072  |   |  |   | 143,968 |  |  |   | 143,968 | 
|Other income (loss), net                                                       |  |                                       | (32,774   | )             |  |             | 28,583    |               |  |             | (9,144  | )             |  |   | 23,650  |   |  |   | 33,531  |  |  |   | 38,966  | 
|Income (loss) before income taxes                                              |  |                                       | (315,605  | )             |  |             | (256,966  | )             |  |             | (70,976 | )             |  |   | (38,182 | ) |  |   | 138,112 |  |  |   | 143,547 | 
|Provision (benefit) for income taxes                                           |  |                                       | (132,756  | )             |  |             | (69,392   | )             |  |             | (57,137 | )             |  |   | (41,890 | ) |  |   | 30,428  |  |  |   | 31,950  | 
|Income (loss) before cumulative effect of
	accounting change                   |  |                                       | (182,849  | )             |  |             | (187,574  | )             |  |             | (13,839 | )             |  |   | 3,708   |   |  |   | 107,684 |  |  |   | 111,597 | 
|Cumulative effect of accounting change, net of tax                             |  |                                       | (6,555    | )             |  |             |          |               |  |             | (19,977 | )             |  |   | (19,977 | ) |  |   |        |  |  |   |        | 
|Net income (loss)                                                              |  |                                       | (189,404  | )             |  |             | (187,574  | )             |  |             | (33,816 | )             |  |   | (16,269 | ) |  |   | 107,684 |  |  |   | 111,597 | 
|Basic income (loss) per share before
	cumulative effect of accounting change   |  |                                       | (1.79     | )             |  |             | (1.84     | )             |  |             | (0.15   | )             |  |   | 0.04    |   |  |   | 1.31    |  |  |   | 1.36    | 
|Cumulative effect of accounting change                                         |  |                                       | (0.07     | )             |  |             |          |               |  |             | (0.21   | )             |  |   | (0.21   | ) |  |   |        |  |  |   |        | 
|Basic income (loss) per share                                                  |  |                                       | (1.86     | )             |  |             | (1.84     | )             |  |             | (0.36   | )             |  |   | (0.17   | ) |  |   | 1.31    |  |  |   | 1.36    | 
|Diluted income (loss) per share before
	cumulative effect of accounting change |  |                                       | (1.79     | )             |  |             | (1.84     | )             |  |             | (0.15   | )             |  |   | 0.04    |   |  |   | 1.27    |  |  |   | 1.32    | 
|Cumulative effect of accounting change                                         |  |                                       | (0.07     | )             |  |             |          |               |  |             | (0.21   | )             |  |   | (0.21   | ) |  |   |        |  |  |   |        | 
|Diluted income (loss) per share                                                |  |                                       | (1.86     | )             |  |             | (1.84     | )             |  |             | (0.36   | )             |  |   | (0.17   | ) |  |   | 1.27    |  |  |   | 1.32    | 

7



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##### Table of Contents



Overview

How We Categorize Our Business

Our services may be divided into two general
categories consisting of:



| |   |                                      
| | - | -------------------------------------
| |  | geophysical services, which includes:



| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | seismic data acquisition and processing                        
|
| |  | reservoir characterization, monitoring and
	consulting services



| |   |                                     
| | - | ------------------------------------
| |  | production services, which includes:



| |   |                                                                 
| | - | ----------------------------------------------------------------
| |  | floating production, storage and offloading
	(FPSO) operations
|
| |  | production management services                                  

Seasonality

Our geophysical services business has
historically reflected seasonality as a result of
weather-related factors. Our first and fourth quarters, in
particular, are generally negatively affected by adverse weather
conditions in the North Sea, which prevent full operation of
seismic crews and vessels. During such periods, we generally
repair our seismic vessels and relocate them to areas with more
favorable weather conditions to conduct seismic activities. On
the other hand, fourth quarter revenue has historically been
positively affected by end-of-year sales of multi-client data to
oil and gas companies. In addition, licensing activities and oil
and gas lease sales may affect quarterly operating results. Our
FPSO and our production management services generally do not
experience material seasonal fluctuations.

Industry Overview and Outlook

Overall oil and gas market conditions
deteriorated significantly in 1998 and the first half of 1999,
as oil prices decreased to close to $11 per barrel and
oilfield service activity declined to historic lows. During
2000, both oil and natural gas prices increased sharply to much
higher levels than in the previous few years. If sustained,
higher oil and gas prices generally result in increased demand
for geophysical services. However, capital expenditures on
seismic exploration activities by the oil and gas companies have
lagged behind the recovery in oil and gas prices. Consequently,
our level of geophysical services did not increase on an
equivalent basis to the increases in oil and gas prices.

The recovery in exploration and production
spending was negatively affected by continued caution among our
customers about the long-term hydrocarbon price environment and
by consolidation in the oil and gas industry generally.

At year end 2000, we recognized significant
impairment charges reflecting the slow industry recovery. During
1999, we undertook a number of restructuring efforts to adjust
our businesses to current and expected market conditions,
reducing our seismic acquisition capacity in both marine and
land operations and reducing a portion of our data processing
capacity. These adjustments to our operations resulted in a
reduction of our workforce. The financial impact of these
impairments and restructuring efforts are discussed further
below under the caption  Results of
Operations.

We continue to expect that higher oil and gas
prices will prompt greater oil and gas company spending on the
application of enhanced production techniques  such
as our PetroTracTM suite of advanced seismic
tools  to existing reservoirs. We expect these higher
prices  together with declining oil and gas reserves
and a declining portfolio of drilling prospects identified prior
to the 1999 industry downturn  to lead to increased
exploration offshore Brazil and West Africa and in the deepwater
Gulf of Mexico, some of the areas where we have focused our
recent multi-client activity. Additionally, we expect to benefit
from the future award of exploration and development licenses by
host countries in West Africa and the Asia Pacific region
through uplift fees due under previously executed multi-client
sales contracts.

8



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##### Table of Contents



We also expect to benefit generally, and through
our marine contract business specifically, from growing demand
for our high-density Ramform reservoir characterization services.


Accounting for Multi-Client Sales and Data
Library

We derive a substantial portion of our revenue
from marine seismic acquisition contracts performed on an
exclusive basis for our customers and from sales of multi-client
marine seismic data. Revenue from sales of multi-client data is
either (1) in the form of prefunding, defined as amounts
funded by customers prior to or during the acquisition phase and
recognized as revenue on a percentage-of-completion basis, or
(2) in the form of sales of data from our multi-client
library that are recognized as revenue we enter into a license
agreement for specific data with the customer. For multi-client
surveys, we typically obtain prefunding for a portion of the
costs of such surveys from a small number of oil and gas
companies that desire to obtain seismic data in the areas to be
covered by the surveys. As a result, we assume the risk that
future sales of such data may not ultimately cover the remaining
costs. We include the direct and indirect costs of acquiring and
processing multi-client data in our multi-client library and
charge such costs to operating expense based on a percentage of
current period multi-client revenue to total estimated
multi-client revenue. Our accounting policies also require us to
amortize these costs at minimum rates and to periodically
evaluate the library for impairment.

In determining the amortization rates applied to
surveys in our multi-client library, we consider expected future
multi-client sales and market developments as well as past
experience. These expectations include consideration of
geographic location, prospectivity, political risk, exploration
license periods and general economic conditions. Our ability to
recover costs included in the multi-client library through sales
of the data depends upon continued demand for the data and an
absence of technological changes or other developments that
would render the multi-client data obsolete or less valuable.

Results of Operations

2000 Compared with 1999

Revenue for the year ended December 31, 2000
totaled $913.5 million, an increase of approximately 16%
over revenue for the year ended December 31, 1999. The
production services group contributed $450.9 million of
2000 revenue versus $368.3 million for 1999. This 22%
increase in production services revenue in 2000 reflected seven
additional production months from the Petrojarl Varg
(which we acquired in July 1999) and an increase in the level of
third-party platform services provided by our Atlantic Power
group. These increases were partly offset by suspended
production operations on the Petrojarl Iand
Ramform Banff, as these FPSO systems underwent
significant upgrades during the fourth quarter of 2000.
Geophysical services revenue for year ended December 31,
2000 totaled $462.6 million and reflected an increase of
10%, or $42.8 million, from 1999 revenue. This increase was
attributable to the higher level of contract seismic activity
during the 2000 summer season. Multi-client seismic revenue for
2000 totaled $248.2 million, an increase of 2%, or
$6.0 million, from comparable 1999 revenue.

Cost of sales (including research and technology
costs) for the year ended December 31, 2000 increased by
$81.8 million, or 23%, as compared to the prior year. Cost
of sales as a percentage of revenue was 47% for the year ended
December 31, 2000 as compared to 44% for 1999. The increase
in cost of sales reflected the full year of production services
from the Petrojarl Varg and the increase in platform
services and geophysical contract seismic activity over the
year. The increase in the cost of sales as a percentage of
revenue primarily reflected continued low pricing for
geophysical services and an increase in the lower margin
platform services.

Depreciation and amortization for the year ended
December 31, 2000 increased by $23.5 million, or 10%,
as compared to the prior year. Depreciation and amortization
represented 29% and 30% of 2000 and 1999 revenue, respectively.
The increase in depreciation and amortization reflected the full
year of production services from the Petrojarl Varg and
the higher level of geophysical contract seismic services. The
average multi-client amortization rate during the year ended
December 31, 2000 was 57%, equal to the 1999 rate.

9



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Selling, general and administrative costs for the
year ended December 31, 2000 increased by
$4.2 million, or 6%, as compared to the prior year. This
increase was due in part to a gain for the year ended
December 31, 1999 from our production services group
related to resolution of a legal contingency. As a percentage of
revenue, these costs were relatively consistent at 8% and 9% for
the years ended December 31, 2000 and 1999, respectively.

Operating profit (before unusual items) for the
year ended December 31, 2000 was $144.7 million, 12%
higher than comparable operating profit for 1999. Operating
profit margin (before unusual items) for the year ended
December 31, 2000 remained consistent with the comparable
1999 margin at 16%.

Production services operating profit (before
unusual items) for the year ended December 31, 2000
increased by 48% ($33.6 million) over operating profit for
1999; operating profit margin (before unusual items) improved
from 19% for 1999 to 23% for 2000. The improved production
services operating profit resulted primarily from the additional
seven production months from the Petrojarl Varg and
greater production from the Petrojarl Foinaven.

Geophysical services operating profit (before
unusual items) for the year ended December 31, 2000
decreased by 30% ($17.9 million) from operating profit for
1999; operating profit margin (before unusual items) declined
from 14% for 1999 to 9% for 2000. Operating profit from the
geophysical services segment did not reflect the significant,
sustained rebound in oil and gas prices that occurred during
2000, as exploration and development spending by oil and gas
companies did not increase in tandem with the oil and gas price
increases. Additionally, the depressed oil and gas company
spending level resulted in lower prices for geophysical
services, and this reduced pricing also adversely affected our
operating profit. As a result of these market conditions, we
reviewed the carrying amounts of our assets and long-term
contract performance and recorded $365.8 million in unusual
items for the year ended December 31, 2000 that consisted
of: $166.5 million in impairment charges against our
multi-client library; $148.8 million in impairment charges
against property, equipment and other assets; and
$50.5 million in contract losses. Although primarily
related to the geophysical services segment, these charges
included $77.2 million related to the Ramform Banff
and other production assets. We believe that the upgrade of the
Ramform Banff, which commenced in the fourth quarter of
2000 and was completed in the first quarter of 2001, will
significantly improve uptime performance from this asset.

Income from equity investments for the year ended
December 31, 2000 included a $54.7 million gain
associated with the sale of our share holdings in Spinnaker
Exploration Company.

Net financial expense for the year ended
December 31, 2000 increased by 28% ($27.0 million)
over net financial expense for the year ended December 31,
1999. The increase in financial expense for 2000 was due to the
issuance in March 2000 of $225.0 million in senior
unsecured notes, five additional months of expense on our trust
preferred securities (issued in June 1999) and a higher average
level of indebtedness outstanding under our revolving bank
credit facility.

Other expense, net for the year ended
December 31, 2000 included a $28.6 million increase in
fair value expense associated with our tax equalization swap
contracts and $26.0 million in gains associated with UK
leases. For the year ended December 31, 1999, other
expense, net included $19.1 million in gains associated
with UK leases. We do not expect to recognize any significant
income or cash flows related to UK leases in future periods.

The $132.8 million income tax benefit
provided for the year ended December 31, 2000 consisted of
(1) a benefit of $10.2 million on the results of
continuing operations; (2) a net benefit of
$72.3 million associated with the $365.8 million in
unusual charges, the $26.0 million UK lease gain and the
$54.7 million gain on the Spinnaker sale; and (3) a
net benefit of $50.3 million related to tax equalization
swap contracts.

The cumulative effect of accounting change, net
of tax, was recorded as of January 1, 2000 and reflected
our adoption of the provisions of SAB No. 101. This
accounting change related to our accounting for some types of
volume seismic data licensing arrangements and included
adjustments to revenue

10



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##### Table of Contents



($22.8 million), amortization
($11.4 million) and commissions expense
($2.3 million). The aggregate $9.1 million cumulative
effect charge was reduced by a $2.5 million tax benefit.


1999 Compared with 1998

Revenue for the year ended December 31, 1999
totaled $788.2 million, an increase of approximately 3%
over revenue for the year ended December 31, 1998. The
production services group contributed $368.3 million of
1999 revenue versus $139.5 million for 1998. The increase
in production services revenue in 1999 resulted from the FPSO
operations acquired from Awilco ASA in May 1998; the
operations of Atlantic Power Group Limited acquired in August
1998; the Ramform Banff, which began production in
January 1999; and the Petrojarl Varg, which we acquired
in July 1999. Geophysical services revenue for 1999 totaled
$419.9 million, a decline of 33%, or $202.4 million,
from 1998. The significant decrease in exploration and
development spending by oil and gas companies and the resulting
depressed market for oilfield services during 1999 resulted in
lower multi-client and contract seismic sales revenue compared
to 1998 levels.

Cost of sales for the year ended
December 31, 1999 increased by $97.8 million, or 39%,
as compared to the prior year. Cost of sales as a percentage of
revenue was 44% in 1999 as compared to 33% in 1998. The increase
in cost of sales primarily reflected the expansion of our
production services, as noted above, partially offset by lower
overall costs in our geophysical services from our 1999 capacity
reductions and restructuring efforts.

Depreciation and amortization for the year ended
December 31, 1999 declined by $35.2 million, or 13%,
as compared to the prior year. Depreciation and amortization
represented 30% and 36% of 1999 and 1998 revenue, respectively.
The decrease in 1999 resulted primarily from reduced
multi-client seismic revenue in that year (although the overall
amortization rate remained consistent with that of 1998) and the
retirement of assets as part of our geophysical services
restructuring efforts. This decrease was partially offset by
(1) higher depreciation related to the Ramforms
Victory and Vanguard,which were delivered in 1999
and therefore not a part of 1998 operations, and (2) the
expansion of our production services, as noted above.

Selling, general and administrative costs for
1999 increased $4.6 million, or 7%, as compared to 1998.
This increase was primarily due to acquisitions and expanded
operations in our production services group, which was a part of
our operations for only a portion of 1998.

Unusual items for the year ended
December 31, 1999 totaled $89.9 million and included
$74.0 million in restructuring charges as well as
$15.9 million in asset impairments caused by market
conditions. During 1999, we experienced a significant decrease
in the demand for our geophysical services due to the low price
of oil during 1998 and the first half of 1999. As a result of
these reduced activity levels, we implemented various
restructuring efforts and recorded charges during the first and
third quarters related to these efforts, as summarized below:

|                                                                     |                                                    |               |                                 |              |      |              |   |         |      |              |   |      |      |  |   |      |      |  |   |   |   |  | 
|-------------------------------------------------------------------- | -------------------------------------------------- | ------------- | ------------------------------- | ------------ | ---- | ------------ | - | ------- | ---- | ------------ | - | ---- | ---- |  | - | ---- | ---- |  | - | - | - |  | 
|                                                                     |                                                    |               |                                 |              |      | Accrued      |   |         |      | Accrued     
|                                                                     |                                                    |               |                                 |              |      | balance at   |   | Amounts |      | balance at  
|                                                                     |                                                    |               |                                 | Amounts paid |      | December 31, |   | paid in |      | December 31,
|                                                                     |                                                    | Total charge  |                                 | in 1999      |      | 1999         |   | 2000    |      | 2000        
|                                                                     |                                                    |               |                                 |              |      |              |   |         |      |             
|                                                                     |                                                    |              
|                                                                     |                                                    | (in millions)
|Cash charges:                                                        |                                                    |               |                                 |              |      |              |   |         |      |              |   |      |      |  |   |      |      |  |   |  
|                                                                     | Severance for approximately 500 employees          |               | $                               | 12.7         |      |              | $ | 6.1     |      |              | $ | 6.6  |      |  | $ | 6.6  |      |  | $ |  |  
|                                                                     | Lease termination, derigging and other obligations |               |                                 | 38.7         |      |              |   | 28.0    |      |              |   | 10.7 |      |  |   | 10.7 |      |  |   |  |  
|                                                                     |                                                    |               |                                 |              |      |              |   |         |      |              |   |      |      |  |   |      |      |  |   |  
|                                                                     |                                                    | Cash charges  |                                 |              | 51.4 |              |   |         | 34.1 |              |   |      | 17.3 |  |   |      | 17.3 |  |   |   |  | 
|                                                                     |                                                    |               |                                 |              |      |              |   |         |      |              |   |      |      |  |   |      |      |  |   |  
|Non-cash charges-write-off and write-down of
	property and equipment |                                                    |               | 22.6                            |              |      |              |   |         |      |              |   |      |      |  |   |      |      |  |   |  
|                                                                     |                                                    |               |                                 |              |      |              |   |         |      |              |   |      |      |  |   |      |      |  |   |  
|                                                                     |                                                    |               | Total cash and non-cash charges |              | $    | 74.0         |   |         |      |              |   |      |      |  |   |      |      |  |   |   |   |  | 
|                                                                     |                                                    |               |                                 |              |      |              |   |         |      |              |   |      |      |  |   |      |      |  |   |  

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The employees whose employment was terminated
were primarily field and support personnel associated with
marine, transition zone and land seismic crews that we removed
from service, and employees within our data processing
operations. We terminated the employment of approximately
400 employees as of December 31, 1999 and of
approximately 100 additional employees during 2000. We based the
accrued charges on the positions eliminated, length of service
and any statutory or legal requirements applicable within the
country where the terminations occurred. We paid all of the
costs accrued at December 31, 1999 during 2000.

We accrued $38.7 million for costs to
(1) derig marine vessels removed from operations,
(2) settle contractual obligations associated with leased
vessels and equipment removed from service, and (3) reflect
other restructuring efforts.

The impairment of property and equipment
primarily consisted of (1) the write-down of geophysical
assets that were scrapped, disposed of or were not expected to
benefit future operations, and (2) the write-off of
leasehold improvements associated with leased vessels and
equipment removed from service. We also recognized
$15.9 million in impairment charges for software, equity
investment and other assets. Impairment charges were based on a
comparison of the assets carrying amounts to internal
estimates of the realizable fair market values.

All balances accrued at December 31, 1999
were paid out during the year ended December 31, 2000.

Net financial expense for the year ended
December 31, 1999 increased by $55.7 million as
compared to the prior year. The increase was primarily due to an
increase in outstanding debt during 1999, incurred primarily to
finance the delivery of the Ramforms Victory and
Vanguard and the acquisition of the Petrojarl Varg.

Other expense, net for the year ended
December 31, 1999 included a $27.4 million increase in
fair value expense associated with our tax equalization swap
contracts. In addition, other expense, net for the year ended
December 31, 1999 included $19.1 million in gains
associated with UK leases that we implemented on some of our
vessels and equipment. For 1998, other income, net included
$32.5 million in such gains.

An income tax benefit was provided on the current
income from operations as a result of (1) losses relating
to operations in high-tax rate jurisdictions due to depressed
conditions in the oilfield services market during 1999;
(2) significant income earned in low or no-tax rate
jurisdictions; (3) the recognition of $15.3 million in
tax gains related to the successful resolution of tax issues;
and (4) a $14.8 million benefit related to tax
equalization swap contracts.

As a result of the depressed market conditions
for oilfield services in 1999, and the restructuring charges and
asset impairments that we took in response to these market
conditions, we recognized a loss on our geophysical services in
1999. Included in this loss was the substantial portion of a net
$55.5 million in charges consisting of the
$89.9 million in restructuring and impairment charges, the
$19.1 million in UK lease gains and the $15.3 million
in tax gains discussed above.

Effective January 1, 1999, we adopted
Statement of Position (SOP) 98-5, Reporting on
the Costs of Start-up Activities. Accordingly, we expensed
as a cumulative effect of an accounting change all previously
capitalized start-up costs. The $20.0 million in expensed
costs, net of income tax benefits of $8.1 million, included
costs related to the start-up of our floating production
business, our reservoir monitoring business and our
multi-component, vertical cable and land seismic businesses, as
well as costs related to the opening of various worldwide
offices. Subsequent to adoption, all start-up costs are expensed
as incurred.

12



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Financial Condition

Capital Requirements

The majority of our capital requirements consist
of capital expenditures related to:



| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | seismic vessels and equipment                                             
|
| |  | FPSO vessels and equipment                                                
|
| |  | investments in our 3D multi-client library                                
|
| |  | computer processing and reservoir monitoring
	equipment                   
|
| |  | working capital related to the growth and
	seasonal nature of our business

In prior years, our capital requirements have
related not only to normal ongoing equipment replacement and
refurbishment needs, but also to increases in capacity in our
seismic data acquisition operations and our
FPSO operations. In 2000, we did not have significant
capital expenditures related to capacity additions.

Capital expenditures of $126.9 million for
2000 related primarily to ongoing maintenance capital
expenditures and the upgrade of both the Ramform Banff
and Petrojarl I FPSO systems. Capital expenditures
of $667.9 million for 1999 related primarily to the
acquisition of the Petrojarl Varg in July 1999 and to
final payments on the Ramform Victory (delivered in
January 1999), the Ramform Vanguard (delivered in April
1999) and the Ramform Banff (which commenced production
in the first quarter of 1999). Capital expenditures of
$521.6 million for 1998 related primarily to the
acquisition of Acadian Geophysical Services, Inc. (in July 1998,
under the pooling of interests method of accounting) and to
payments on the Ramform Valiant (delivered in January
1998), the Ramform Viking (delivered in March 1998) and
the Ramform Banff.

During 2000, we invested $270.2 million in
our multi-client library, primarily in strategic, deepwater
seismic surveys in the North Sea, offshore Brazil and West
Africa and in the Asia Pacific region. These investments
reflected our evaluation of the future market demand for
non-exclusive surveys.

Despite the recent volatility in the oil and gas
environment and the impairment charges that we recorded in 2000,
we believe that our multi-client investment at December 31,
2000 provides a valuable revenue base. We believe that our
multi-client library provides oil and gas companies with an
immediately available, cost-effective exploration and
development product. In difficult market conditions, the
multi-client data allow oil and gas companies to focus their
investments and efforts on readily identifiable exploration and
development opportunities.

A substantial amount of our capital expenditures
and investments in our multi-client library is discretionary. We
do not expect to substantially increase such expenditures and
investments in 2001. Apart from ongoing maintenance
expenditures, we did not have any major commitments at
December 31, 2000 for future capital expenditures other
than: the Ramform Banff upgrade, which was completed in
the first quarter of 2001; and the Petrojarl I
upgrade, which is expected to be completed in mid-2001 and
substantially recovered through that FPSOs next long-term
contract. None of these capital expenditure projects is expected
to be material to our financial position. We intend to pursue
additional FPSO opportunities in the future, but we expect that
any substantial investment in additional FPSO assets will be
subject to obtaining long-term contracts for those assets.

Capital Resources and Liquidity

We have historically financed our activities
through cash flows from operations, bank credit facilities, the
issuance of debt and equity financing and, to a lesser extent,
leasing arrangements.

In December 2000, we sold all of our holdings in
Spinnaker Exploration Company, consisting of
5,388,743 shares, for net proceeds of $150.5 million.
At December 31, 2000, $70.0 million of the proceeds

13



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had been used to repay indebtedness outstanding
under the revolving bank credit facility. A $54.7 million
pretax gain from this transaction was recognized as additional
income from equity investments for the year ended
December 31, 2000.


Also in December 2000, we entered into a
definitive agreement with Halliburton to sell our global
Petrobank data management business and related software for
$175.0 million in cash. The transaction closed in
March 2001 and the proceeds received were used, in part, to
repay indebtedness outstanding under our revolving bank credit
facility.

In March 2000, we issued $225.0 million of
senior unsecured notes. The notes carry a floating interest rate
equal to 0.65% over the three-month LIBOR rate for US dollar
deposits, subject to quarterly adjustment, with interest payable
quarterly. The notes mature in March 2002, but we can
redeem them at our option, in whole or in part, on any interest
payment date at par plus accrued and unpaid interest. We used
the $223.8 million in net proceeds from this issuance
primarily to repay indebtedness outstanding under our revolving
bank credit facility.

At December 31, 2000, we had
$70.0 million available under our primary committed
revolving bank credit facility. This unsecured five-year
$430.0 million revolving bank credit facility bears
interest at a LIBOR-based rate plus a margin of either
0.35% per annum or 0.40% per annum, depending upon the
level of our indebtedness. During December 2000, we entered into
a $75.0 million unsecured revolving credit facility with a
syndicate of banks. The facility bears interest at a LIBOR-based
rate, plus a margin which escalates from 0.4% to 0.6% by
maturity; the maturity date is December 2001. At
December 31, 2000, we had not drawn any indebtedness under
this facility. Additionally during December 2000, we entered
into a $21.0 million unsecured bank credit facility to fund
some of our oil and gas activities. This facility bears interest
at a LIBOR-based rate plus a margin that ranges from 0.63% to
1.4%, and is payable in installments through 2003, with the
payment installments tied to future production from oil and gas
assets. At December 31, 2000, $3.3 million in
short-term debt was outstanding under this credit facility.

In April 2001, we entered into a securitization
transaction related to our multi-client marine seismic data
library. In exchange for approximately $233.0 million in
net proceeds, we transferred the ownership of a portion of this
data library to a wholly-owned subsidiary, which then issued
$240.0 million in cumulative preferred stock to a
third-party investor. We will redeem the preferred stock, and
pay a preferred dividend, solely through the proceeds that we
receive on future data sales from the transferred data. Once the
$240.0 million plus preferred dividends are repaid, we will
retain the full proceeds of any remaining data sales. We will
use the $240.0 million in net proceeds primarily to repay
indebtedness.

We expect to finance our future capital
expenditures, multi-client investments and working capital needs
through a combination of cash on hand, operating cash flows,
additional sales of non-core assets and our credit facilities.
We cannot assure you that such sources of funds will be
available in the future or be available at costs acceptable to
us. As a result, in addition to analyzing operating market
conditions and/ or the award of long-term contracts, we
routinely analyze our available sources of financing before
committing to significant capital expenditures.

We believe that cash on hand, operating cash
flows, our available bank credit facilities and the proceeds to
be received from the sale of non-core assets will be adequate to
meet our current commitments for capital expenditures,
anticipated multi-client investments and working capital
requirements.

Currency Fluctuations

While we do not experience any significant
effects from inflation, we can experience significant currency
fluctuations. The primary currencies for our operations are the
U.S. dollar, the Norwegian kroner and the British pound. A
strengthening or weakening of the Norwegian kroner or the
British pound against the U.S. dollar will generally have
an impact on operating profit. During 1997, we changed our
functional currency and the functional currency of our principal
Norwegian subsidiaries from the Norwegian kroner to the
U.S. dollar, as key financing, investing and operational
transactions shifted to U.S. dollars. We

14



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typically hedge a portion of our exposure to
foreign currency exchange rate fluctuations by generally
attempting to balance our asset and liability positions and, to
a lesser extent, by purchasing foreign currency exchange
contracts and other foreign currency exchange instruments from
time to time.


In 1998 and 1999, we entered into tax
equalization swap contracts to hedge the cash-flow risk
associated with the Norwegian statutory effect of unrealized
foreign currency exchange rate fluctuations between the
Norwegian kroner and U.S. dollar on our non-kroner
denominated financial instruments (primarily U.S. dollar
denominated debt and trust preferred securities). These
fluctuations are taxable/deductible on a mark-to-market basis
for Norwegian statutory purposes, and therefore create current
tax liability/benefit positions for us in our tax filings. The
aggregate settlement for the year 2000 on these contracts
created a $65.2 million liability to be paid to our
counterparty in installments during 2001. In addition to the
settlement liability, we recorded a $3.8 million benefit to
other expense during 2000 to properly reflect the fair value of
these contracts. The aggregate settlement for the year 1999
created an $8.4 million liability, which was paid during
2000. We recorded $24.4 million in additional other expense
for 1999 to properly reflect the fair value of these tax
equalization swap contracts. The aggregate settlement for the
year 1998 created a receivable of approximately
$0.2 million, which was paid to us during 1999. We recorded
$5.4 million in additional other expense in 1998 to
properly reflect the fair value of these contracts.

For the year ended December 31, 2000, we
recorded to other income, net $2.9 million in net foreign
exchange gains (exclusive of the effect of our tax equalization
swap contracts) as the U.S. dollar continued to strengthen
against the Norwegian kroner. For 1999, we recorded
$4.1 million in net foreign exchange gains (exclusive of
the effect of our tax equalization swap contracts). For 1998,
net foreign exchange gains were minimal.

As our level of international operations and the
revenue and expenses that we generate in other currencies
increases, our exposure to foreign currency exchange rate
fluctuations will also increase. These fluctuations could have a
material impact on our results of operations.

Under Norwegian foreign exchange controls
currently in effect, transfers of capital to and from Norway are
not subject to prior government approval, except for the
physical transfer of payments in currency which is restricted to
licensed banks.

Income Taxes

Statement of Financial Accounting Standard
(SFAS) No. 109, Accounting for Income
Taxes, requires that our provision for income taxes be
determined based upon the liability method, in which we
recognize deferred tax assets and liabilities based on
differences between the financial statement and tax bases of
assets. The liability method requires us to evaluate our
deferred tax assets for realization based on a more likely
than not standard, and to provide a valuation allowance
where realization is not determined to be more likely than
not. We have not provided a valuation allowance against
our deferred tax assets because we have realized taxable
earnings for the substantial portion of our operational history
and anticipate that our results of operations in future years
are more likely than not to generate taxable income sufficient
to allow utilization of the existing deferred tax assets before
their expiration.

New Accounting Standard

In June 1998, the Financial Accounting Standards
Board (FASB) issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative financial
instrument be recorded in the balance sheet as either an asset
or a liability measured at its fair value, with certain changes
in fair value recognized currently in earnings. In
June 1999, the FASB amended SFAS No. 133, delaying the
effective date to January 1, 2001. We will not recognize
any material effects at the transition to SFAS 133.

15



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PART III






|         |                     
|-------- | --------------------
|ITEM 18. | Financial Statements

We specifically incorporate by reference in
response to this item the auditors reports, the
consolidated financial statements and the notes to the
consolidated financial statements appearing on pages F-1
through F-31.

16



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SIGNATURES

The registrant hereby certifies that it meets all
of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this annual
report on its behalf.



| |                           
| | --------------------------
| | PETROLEUM GEO-SERVICES ASA

Date: February 15, 2002

| |     |                           
| | --- | --------------------------
| | By: | /s/ J. CHRISTOPHER BOSWELL

| |                                                   
| | --------------------------------------------------
| |                                                   
| | J. Christopher Boswell                            
| | Senior Vice President and Chief Financial
	Officer



| |     |                      
| | --- | ---------------------
| | By: | /s/ WILLIAM E. HARLAN

| |                                 
| | --------------------------------
| |                                 
| | William E. Harlan               
| | Vice President, Chief Accounting
| | Officer and Controller          

17



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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of

PETROLEUM GEO-SERVICES ASA


In our opinion, the accompanying consolidated
balance sheets and the related consolidated statements of
operations, of cash flows and of changes in shareholders
equity present fairly, in all material respects, the financial
position of Petroleum Geo-Services ASA and its subsidiaries at
December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of
the Companys management; our responsibility is to express
an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.

As described in Notes 1 and 22, the Company
restated its financial statements for the adoption of Staff
Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements, and to report the fair value of
certain derivative financial instruments.

PricewaterhouseCoopers LLP



|                                                                                                                                                                                                                                       | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Houston, Texas                                                                                                                                                                                                                         | 
|March 12, 2001, except as to the last three
	paragraphs of Note 4 and the last paragraph of
	Note 10, which are as of April 30, 2001, and as to the
	second to last paragraph of Note 1 and Note 22, which are as of
	January 30, 2002 | 

F-1



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##### Table of Contents






CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |         | 
|------------------------------------------------------------------------------ | ------------------------ | ------------------------------------------------ | ----------- | --------- | - | ---- | ---------- | ------- | - | - | ---------- | ------- | 
|                                                                               |                          |                                                 
|                                                                               |                          | Years ended December 31,                        
|                                                                               |                          |                                                 
|                                                                               |                          | 2000                                             |             | 1999      |   | 1998
|                                                                               |                          |                                                  |             |           |   |     
|                                                                               |                          |                                                 
|                                                                               |                          | (In thousands of dollars, except for share data)
|                                                                               |                          |                                                 
|                                                                               |                          | (As restated, Note 22)                          
|Revenue                                                                        |                          | $                                                | 913,482     |           |   | $    | 788,160    |         |   | $ | 761,762    |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Cost of sales                                                                  |                          |                                                  | 424,027     |           |   |      | 333,060    |         |   |   | 236,647    |        
|Depreciation and amortization                                                  |                          |                                                  | 262,109     |           |   |      | 238,576    |         |   |   | 273,799    |        
|Research and technology costs                                                  |                          |                                                  | 6,677       |           |   |      | 15,859     |         |   |   | 14,508     |        
|Selling, general and administrative costs                                      |                          |                                                  | 75,938      |           |   |      | 71,738     |         |   |   | 67,103     |        
|Unusual items                                                                  |                          |                                                  | 365,780     |           |   |      | 89,855     |         |   |   | 25,737     |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|                                                                               | Total operating expenses |                                                  |             | 1,134,531 |   |      |            | 749,088 |   |   |            | 617,794 | 
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Operating profit (loss)                                                        |                          |                                                  | (221,049    | )         |   |      | 39,072     |         |   |   | 143,968    |        
|Income (loss) from equity investments                                          |                          |                                                  | 61,151      |           |   |      | (4,935     | )       |   |   | 854        |        
|Financial expense, net                                                         |                          |                                                  | (122,933    | )         |   |      | (95,969    | )       |   |   | (40,241    | )      
|Other income (expense), net                                                    |                          |                                                  | (32,774     | )         |   |      | (9,144     | )       |   |   | 33,531     |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Income (loss) before income taxes                                              |                          |                                                  | (315,605    | )         |   |      | (70,976    | )       |   |   | 138,112    |        
|Provision (benefit) for income taxes                                           |                          |                                                  | (132,756    | )         |   |      | (57,137    | )       |   |   | 30,428     |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Income (loss) before cumulative effect of
	accounting change                   |                          |                                                  | (182,849    | )         |   |      | (13,839    | )       |   |   | 107,684    |        
|Cumulative effect of accounting change, net
	of tax                            |                          |                                                  | (6,555      | )         |   |      | (19,977    | )       |   |   |           |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|                                                                               | Net income (loss)        |                                                  | $           | (189,404  | ) |      | $          | (33,816 | ) |   | $          | 107,684 | 
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Basic income (loss) per share before cumulative
	effect of accounting change   |                          | $                                                | (1.79       | )         |   | $    | (0.15      | )       |   | $ | 1.31       |        
|Cumulative effect of accounting change, net
	of tax                            |                          |                                                  | (0.07       | )         |   |      | (0.21      | )       |   |   |           |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Basic income (loss) per share                                                  |                          | $                                                | (1.86       | )         |   | $    | (0.36      | )       |   | $ | 1.31       |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Diluted income (loss) per share before cumulative
	effect of accounting change |                          | $                                                | (1.79       | )         |   | $    | (0.15      | )       |   | $ | 1.27       |        
|Cumulative effect of accounting change, net
	of tax                            |                          |                                                  | (0.07       | )         |   |      | (0.21      | )       |   |   |           |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Diluted net income (loss) per share                                            |                          | $                                                | (1.86       | )         |   | $    | (0.36      | )       |   | $ | 1.27       |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Basic shares outstanding                                                       |                          |                                                  | 102,020,830 |           |   |      | 94,767,967 |         |   |   | 82,260,652 |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        
|Diluted shares outstanding                                                     |                          |                                                  | 102,020,830 |           |   |      | 94,767,967 |         |   |   | 84,794,836 |        
|                                                                               |                          |                                                  |             |           |   |      |            |         |   |   |            |        

The accompanying notes are an integral part of
these consolidated financial statements.

F-2



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##### Table of Contents






CONSOLIDATED BALANCE SHEETS

ASSETS

|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |           |           | 
|--------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                                                              |                                                                                                                                                                             |                                           
|                                                                                              |                                                                                                                                                                             | December 31,                              
|                                                                                              |                                                                                                                                                                             |                                           
|                                                                                              |                                                                                                                                                                             | 2000                                       |           | 1999     
|                                                                                              |                                                                                                                                                                             |                                            |           |          
|                                                                                              |                                                                                                                                                                             |                                           
|                                                                                              |                                                                                                                                                                             | (In thousands of dollars,                 
|                                                                                              |                                                                                                                                                                             | except for share data)                    
|                                                                                              |                                                                                                                                                                             |                                           
|                                                                                              |                                                                                                                                                                             | (As restated, Note 22)                    
|Cash and cash equivalents                                                                     |                                                                                                                                                                             | $                                          | 145,215   |           |           | $ | 63,044    |          
|Accounts receivable, net                                                                      |                                                                                                                                                                             |                                            | 237,815   |           |           |   | 240,634   |          
|Other current assets, net                                                                     |                                                                                                                                                                             |                                            | 90,030    |           |           |   | 94,926    |          
|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |          
|                                                                                              |                                                                                                                                                                             | Total current assets                       |           |           | 473,060   |   |           |           | 398,604   | 
|Multi-client library, net                                                                     |                                                                                                                                                                             |                                            | 854,899   |           |           |   | 816,423   |          
|Property and equipment, net                                                                   |                                                                                                                                                                             |                                            | 2,378,500 |           |           |   | 2,429,848 |          
|Goodwill, net                                                                                 |                                                                                                                                                                             |                                            | 253,861   |           |           |   | 264,354   |          
|Other long-term assets, net                                                                   |                                                                                                                                                                             |                                            | 333,331   |           |           |   | 275,768   |          
|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |          
|                                                                                              |                                                                                                                                                                             | Total assets                               |           | $         | 4,293,651 |   |           | $         | 4,184,997 | 
|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |          
|LIABILITIES AND SHAREHOLDERS EQUITY                                                         
|                                                                                             
|Short-term debt and current portion of long-term
	debt
	and capital lease obligations         |                                                                                                                                                                             | $                                          | 23,892    |           |           | $ | 22,409    |          
|Accounts payable                                                                              |                                                                                                                                                                             |                                            | 105,614   |           |           |   | 88,065    |          
|Accrued expenses                                                                              |                                                                                                                                                                             |                                            | 293,119   |           |           |   | 182,441   |          
|Income taxes payable                                                                          |                                                                                                                                                                             |                                            | 12,263    |           |           |   | 9,805     |          
|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |          
|                                                                                              |                                                                                                                                                                             | Total current liabilities                  |           |           | 434,888   |   |           |           | 302,720   | 
|Long-term debt                                                                                |                                                                                                                                                                             |                                            | 2,159,421 |           |           |   | 1,986,143 |          
|Long-term capital lease obligations                                                           |                                                                                                                                                                             |                                            | 12,560    |           |           |   | 12,387    |          
|Other long-term liabilities                                                                   |                                                                                                                                                                             |                                            | 78,471    |           |           |   | 104,737   |          
|Deferred tax liabilities                                                                      |                                                                                                                                                                             |                                            | 96,260    |           |           |   | 71,429    |          
|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |          
|                                                                                              |                                                                                                                                                                             | Total liabilities                          |           |           | 2,781,600 |   |           |           | 2,477,416 | 
|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |          
|Commitments and contingencies (Note 10)                                                       |                                                                                                                                                                             |                                            |          |           |           |   |          |          
|Guaranteed preferred beneficial interest in
	PGS junior subordinated debt securities (Note 9) |                                                                                                                                                                             |                                            | 140,050   |           |           |   | 139,164   |          
|Shareholders equity                                                                          |                                                                                                                                                                             |                                            |           |           |           |   |           |          
|                                                                                              | Common stock, par value NOK 5; authorized
	135,400,587 shares; issued and outstanding
	102,347,987 shares at December 31, 2000 and
	101,609,587 shares at December 31, 1999 |                                            |           | 70,542    |           |   |           | 70,126    |          
|                                                                                              | Additional paid-in capital                                                                                                                                                  |                                            |           | 1,215,884 |           |   |           | 1,208,873 |          
|                                                                                              | Retained earnings                                                                                                                                                           |                                            |           | 116,521   |           |   |           | 305,925   |          
|                                                                                              | Accumulated other comprehensive loss                                                                                                                                        |                                            |           | (30,946   | )         |   |           | (16,507   | )        
|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |          
|                                                                                              |                                                                                                                                                                             | Total shareholders equity                 |           |           | 1,372,001 |   |           |           | 1,568,417 | 
|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |          
|                                                                                              |                                                                                                                                                                             | Total liabilities and shareholders equity |           | $         | 4,293,651 |   |           | $         | 4,184,977 | 
|                                                                                              |                                                                                                                                                                             |                                            |           |           |           |   |           |          

The accompanying notes are an integral part of
these consolidated financial statements.

F-3



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##### Table of Contents






CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                       |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |          |          |          |  
|-------------------------------------- | ------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ----------------------------------------- | -------- | -------- | -------- | - | -------- | ------- | ---------- | - | -------- | -------- | -------- | -
|                                       |                                                                                                                     |                                                  
|                                       |                                                                                                                     | Years ended December 31,                         
|                                       |                                                                                                                     |                                                  
|                                       |                                                                                                                     | 2000                                              |                                           | 1999     |          | 1998    
|                                       |                                                                                                                     |                                                   |                                           |          |          |         
|                                       |                                                                                                                     |                                                  
|                                       |                                                                                                                     | (In thousands of dollars)                        
|                                       |                                                                                                                     |                                                  
|                                       |                                                                                                                     | (As restated, Note 22)                           
|Cash Flows From Operating
	Activities: |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|                                       | Net income (loss)                                                                                                   |                                                   | $                                         | (189,404 | )        |          | $ | (33,816  | )       |            | $ | 107,684  |         
|                                       | Adjustments to reconcile net income (loss) to net
	cash provided by operating activities:                           |                                                   |                                           |          |          |          |   |          |         |            |   |          |         
|                                       |                                                                                                                     | Depreciation and amortization charged to expense  |                                           |          | 262,109  |          |   |          | 238,576 |            |   |          | 273,799  |         
|                                       |                                                                                                                     | Non-cash charges                                  |                                           |          | 321,070  |          |   |          | 83,805  |            |   |          | 22,700   |         
|                                       |                                                                                                                     | Provision (benefit) for deferred income taxes     |                                           |          | (138,421 | )        |   |          | (60,629 | )          |   |          | 3,395    |         
|                                       |                                                                                                                     | Changes in current assets and current liabilities |                                           |          | (75,901  | )        |   |          | (8,401  | )          |   |          | (133,408 | )       
|                                       |                                                                                                                     | Loss on sale of assets                            |                                           |          | 199      |          |   |          | 3,256   |            |   |          | 1,366    |         
|                                       |                                                                                                                     | Other items                                       |                                           |          | (4,129   | )        |   |          | (22,113 | )          |   |          | (880     | )       
|                                       |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|                                       |                                                                                                                     |                                                   | Net cash provided by operating activities |          |          | 175,523  |   |          |         | 200,678    |   |          |          | 274,656  |  
|                                       |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|Cash Flows From Investing
	Activities: |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|                                       | Investment in multi-client library                                                                                  |                                                   |                                           | (270,241 | )        |          |   | (338,718 | )       |            |   | (388,228 | )       
|                                       | Capital expenditures                                                                                                |                                                   |                                           | (126,883 | )        |          |   | (667,869 | )       |            |   | (521,630 | )       
|                                       | Cash acquired in purchase acquisition                                                                               |                                                   |                                           |         |          |          |   |         |         |            |   | 55,398   |         
|                                       | Sale of investment in affiliated company                                                                            |                                                   |                                           | 150,508  |          |          |   |         |         |            |   |         |         
|                                       | Other items, including net proceeds from UK leases                                                                  |                                                   |                                           | (12,086  | )        |          |   | 5,496    |         |            |   | 37,652   |         
|                                       |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|                                       |                                                                                                                     |                                                   | Net cash used in investing activities     |          |          | (258,702 | ) |          |         | (1,001,091 | ) |          |          | (816,808 | )
|                                       |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|Cash Flows From Financing
	Activities: |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|                                       | Net proceeds from issuance of long-term debt                                                                        |                                                   |                                           | 223,845  |          |          |   | 195,712  |         |            |   | 891,506  |         
|                                       | Net proceeds from issuance of guaranteed
	preferred beneficial interest in PGS junior subordinated debt
	securities |                                                   |                                           |         |          |          |   | 138,914  |         |            |   |         |         
|                                       | Net proceeds from issuance of common stock                                                                          |                                                   |                                           | 7,425    |          |          |   | 220,024  |         |            |   | 7,940    |         
|                                       | Repayment of long-term debt                                                                                         |                                                   |                                           | (15,447  | )        |          |   | (29,924  | )       |            |   | (486,797 | )       
|                                       | Net increase (decrease) in revolving and
	short-term debt                                                           |                                                   |                                           | (34,409  | )        |          |   | 283,334  |         |            |   | 79,385   |         
|                                       | Principal payments under capital lease obligations                                                                  |                                                   |                                           | (7,775   | )        |          |   | (13,437  | )       |            |   | (24,380  | )       
|                                       | Lease financing of owned property and equipment                                                                     |                                                   |                                           |         |          |          |   | 15,512   |         |            |   |         |         
|                                       | Other                                                                                                               |                                                   |                                           | (8,068   | )        |          |   |         |         |            |   |         |         
|                                       |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|                                       |                                                                                                                     |                                                   | Net cash provided by financing activities |          |          | 165,571  |   |          |         | 810,135    |   |          |          | 467,654  |  
|                                       |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|                                       | Effect of exchange rate changes in cash and cash
	equivalents                                                       |                                                   |                                           | (221     | )        |          |   | 49       |         |            |   | 280      |         
|                                       | Net increase (decrease) in cash and cash
	equivalents                                                               |                                                   |                                           | 82,171   |          |          |   | 9,771    |         |            |   | (74,218  | )       
|                                       | Cash and cash equivalents at beginning of year                                                                      |                                                   |                                           | 63,044   |          |          |   | 53,273   |         |            |   | 127,491  |         
|                                       |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         
|                                       |                                                                                                                     |                                                   | Cash and cash equivalents at end of year  |          | $        | 145,215  |   |          | $       | 63,044     |   |          | $        | 53,273   |  
|                                       |                                                                                                                     |                                                   |                                           |          |          |          |   |          |         |            |   |         

The accompanying notes are an integral part of
these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY

|                             |                                              |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           |         |          |  
|---------------------------- | -------------------------------------------- | ------------------------------------------------ | ----------- | ---------- |  | -------- | ------ | ----------- |  | -------------------- | --------- | ------------- | - | ------------- | ------- | ------ | -------- | - | ----- |  | ------ | - | ------- | - | ------- | - | ------- | - | ------- | - | --------- | ------- | -------- | -
|                             |                                              |                                                  |             |            |  |          |        |             |  |                      |           |               |   |              
|                             |                                              |                                                  |             |            |  |          |        |             |  | Accumulated other    |           |               |   |              
|                             |                                              |                                                  |             |            |  |          |        |             |  | comprehensive income |           |               |   |              
|                             |                                              |                                                  |             |            |  |          |        |             |  |                      |           |               |   |              
|                             |                                              |                                                  |             |            |  |          |        | Foreign     |  | Long-term            |           |               |   |              
|                             |                                              | Common Stock                                     |             | Additional |  |          |        | currency    |  | intercompany         |           | Total other   |   |              
|                             |                                              |                                                  |             | paid-in    |  | Retained |        | translation |  | currency             |           | comprehensive |   | Shareholders
|                             |                                              | Number                                           |             | Par value  |  | capital  |        | earnings    |  | adjustments          |           | losses        |   | loss          |         | equity
|                             |                                              |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         |       
|                             |                                              |                                                 
|                             |                                              | (In thousands of dollars, except for share data)
|                             |                                              |                                                 
|                             |                                              | (As restated, Note 22)                          
|Balance at December 31, 1997 |                                              |                                                  | 72,978,568  |            |  | $        | 27,704 |             |  | $                    | 553,287   |               |   | $             | 233,692 |        |          | $ | 8,660 |  |        | $ | (11,996 | ) |         | $ | (3,336  | ) |         | $ | 811,347   |        
|                             | Comprehensive income:                        |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           |         |         
|                             |                                              | Net income                                       |             |            |  |          |        |             |  |                      |           |               |   |               |         |        | 107,684  |   |       |  |        |   |         |   |         |   |         |   |         |   |           |         | 107,684  |  
|                             |                                              | Other comprehensive loss                         |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  | (1,083 | ) |         |   | (895    | ) |         |   | (1,978  | ) |           |         | (1,978   | )
|                             | Issuance of common stock                     |                                                  |             | 16,084,969 |  |          |        | 6,288       |  |                      |           | 468,655       |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           | 474,943 |         
|                             | Exercise of stock options                    |                                                  |             | 477,000    |  |          |        | 287         |  |                      |           | 2,590         |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           | 2,877   |         
|                             | Stock split                                  |                                                  |             |            |  |          |        | 28,033      |  |                      |           | (28,033       | ) |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           |        |         
|                             | Distributions to former Acadian shareholders |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         | (1,635 | )        |   |       |  |        |   |         |   |         |   |         |   |         |   |           | (1,635  | )       
|                             |                                              |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           |        
|Balance at December 31, 1998 |                                              |                                                  | 89,540,537  |            |  |          | 62,312 |             |  |                      | 996,499   |               |   |               | 339,741 |        |          |   | 7,577 |  |        |   | (12,891 | ) |         |   | (5,314  | ) |         |   | 1,393,238 |        
|                             | Comprehensive loss:                          |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           |         |         
|                             |                                              | Net loss                                         |             |            |  |          |        |             |  |                      |           |               |   |               |         |        | (33,816  | ) |       |  |        |   |         |   |         |   |         |   |         |   |           |         | (33,816  | )
|                             |                                              | Other comprehensive loss                         |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  | (5,387 | ) |         |   | (5,806  | ) |         |   | (11,193 | ) |           |         | (11,193  | )
|                             | Issuance of common stock                     |                                                  |             | 11,159,500 |  |          |        | 7,232       |  |                      |           | 205,674       |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           | 212,906 |         
|                             | Exercise of stock options                    |                                                  |             | 909,550    |  |          |        | 582         |  |                      |           | 6,700         |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           | 7,282   |         
|                             |                                              |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           |        
|Balance at December 31, 1999 |                                              |                                                  | 101,609,587 |            |  |          | 70,126 |             |  |                      | 1,208,873 |               |   |               | 305,925 |        |          |   | 2,190 |  |        |   | (18,697 | ) |         |   | (16,507 | ) |         |   | 1,568,417 |        
|                             | Comprehensive loss:                          |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           |         |         
|                             |                                              | Net loss                                         |             |            |  |          |        |             |  |                      |           |               |   |               |         |        | (189,404 | ) |       |  |        |   |         |   |         |   |         |   |         |   |           |         | (189,404 | )
|                             |                                              | Other comprehensive loss                         |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  | (344   | ) |         |   | (14,095 | ) |         |   | (14,439 | ) |           |         | (14,439  | )
|                             | Exercise of stock options                    |                                                  |             | 738,400    |  |          |        | 416         |  |                      |           | 7,011         |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           | 7,427   |         
|                             |                                              |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           |        
|Balance at December 31, 2000 |                                              |                                                  | 102,347,987 |            |  | $        | 70,542 |             |  | $                    | 1,215,884 |               |   | $             | 116,521 |        |          | $ | 1,846 |  |        | $ | (32,792 | ) |         | $ | (30,946 | ) |         | $ | 1,372,001 |        
|                             |                                              |                                                  |             |            |  |          |        |             |  |                      |           |               |   |               |         |        |          |   |       |  |        |   |         |   |         |   |         |   |         |   |           |        

The accompanying notes are an integral part of
these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 1  Summary Of Significant
Accounting Policies

Basis
of Presentation and Restatement of Previously Issued Financial
Statements.

Petroleum Geo-Services ASA (the
Company) provides geophysical services and
production services. See further discussion of the
Companys services in Note 18.

The Company is a Norwegian limited liability
company and has prepared its consolidated financial statements
in accordance with generally accepted accounting
principles (GAAP) in the United States of
America (US). The Companys consolidated
financial statements include all accounts of Petroleum
Geo-Services ASA and its wholly owned and majority-owned
subsidiaries. Investments in associated entities (companies and
joint ventures) in which the Companys ownership interests
range from 20% to 50% and over which the Company exercises
significant influence in operating and financial policies are
accounted for under the equity method; other investments are
accounted for at cost. All significant intercompany accounts and
transactions are eliminated in consolidation. The Company did
not have any significant transactions with acquired companies in
the periods prior to acquisition. The consolidated financial
statements for 1998 give retroactive effect to the acquisition
of Acadian Geophysical Services, Inc. (Acadian)
under the pooling of interests method of accounting
(Note 2).

As more fully described in Note 22, the
accompanying financial statements and related disclosures as of
and for the years ended December 31, 2000 and 1999 have
been restated (1) to reflect fair value accounting for tax
equalization swap contracts entered into in 1998 and 1999 to
hedge our exposure to Norwegian taxes arising out of the
conversion, for Norwegian tax purposes, of our U.S. dollar
denominated debt into Norwegian kroner (Note 15), and (2)
to reflect the adoption of the Securities and Exchange
Commissions Staff Accounting Bulletin (SAB)
No. 101, Revenue Recognition in Financial
Statements, which became effective January 1, 2000, to our
revenue recognition policy for some types of volume seismic data
licensing arrangements.

Certain reclassifications have been made to prior
year amounts to conform to the current years presentation.

Foreign Currency
Translation.

Although the Companys activities span the
globe, its transactions are primarily denominated in
US dollars; therefore, the Company has adopted the
US dollar ($) as its reporting currency. The
Company uses the US dollar as the functional currency for
its parent holding company and certain of its Norwegian
subsidiaries.

The financial statements of non-US subsidiaries
using the US dollar as their functional currency are
translated as follows: non-monetary assets, share par value and
paid-in capital are translated at historical exchange rates;
revenue and expenses are translated at the average rates of
exchange in effect during the period, except for depreciation
and amortization, which are translated at historical exchange
rates; and all other financial statement accounts are translated
at the rate of exchange in effect at period end. Remeasurement
adjustments are credited or charged directly to income, except
for adjustments relating to long-term intercompany borrowings,
which are accumulated as a separate component of
shareholders equity.

The financial statements of non-US subsidiaries
using their local currency as their functional currency are
translated using the current rate method. Assets and liabilities
are translated at the rate of exchange in effect at period end;
share par value and paid-in capital are translated at historical
exchange rates; and revenue and expenses are translated at the
average rates of exchange in effect during the period.
Translation adjustments are recorded as a separate component of
shareholders equity.

The exchange rate between the Norwegian kroner
and US dollar at December 31, 2000 and 1999 was 8.80 and
8.01, respectively. The Company recorded $2.9 million,
$4.1 million and $0.1 million in net

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foreign exchange gains, exclusive of the effects
of the tax equalization swap contracts (Note 15), for 2000,
1999 and 1998, respectively.


Accounting
Estimates.

The preparation of financial statements in
conformity with US GAAP requires management to make various
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets
and liabilities. In addition, such estimates and assumptions can
have a material effect on the amount of reported revenue and
expenses during a particular period. Actual amounts may differ
from these estimates.

In determining the amortization rates applied to
surveys in the multi-client library, management considers
expected future sales and market developments as well as past
experience. These expectations include consideration of
geographic location, prospectivity, political risk, exploration
license periods and general economic conditions. Because of the
inherent difficulty in estimating future sales and market
developments, it is reasonably possible that amortization rates
could deviate significantly from period to period.

The modified units-of-production depreciation
method used for the Companys FPSO vessels is based on an
estimate of the total barrels to be produced from the fields
where the vessels are operating. Because the actual number of
barrels may ultimately differ from these estimates, it is
possible that depreciation rates could deviate significantly
over time.

Cash
And Cash Equivalents.

Cash and cash equivalents are stated at cost plus
accrued interest and approximate fair value. Cash and cash
equivalents include demand deposits and all highly liquid
financial instruments purchased with original maturities of
three months or less.

Receivables
Credit Risk.

The Company extends credit to various companies
in the oil and gas industry worldwide, which may be affected by
changes in economic or other external conditions. At
December 31, 2000 and 1999, accounts receivable (both
current and long-term) were primarily from multinational
integrated oil companies and independent oil and gas companies,
including companies owned in whole or in part by foreign
governments. The Company manages its exposure to credit risk
through ongoing credit evaluations of its customers and has
provided for potential credit losses through an allowance for
doubtful accounts. Management does not believe that the Company
is exposed to concentrations of credit risk that are likely to
have a material impact on the Companys financial position
or results of operations.

Multi-Client
Library.

The multi-client library consists of finished and
in-process seismic surveys that are licensed on a non-exclusive
basis. All costs directly or indirectly incurred in acquiring,
processing and otherwise completing seismic surveys are
capitalized into the multi-client library, including the
applicable portion of the Companys interest costs.

The multi-client library is stated at the lower
of survey costs less accumulated amortization or net realizable
value (total estimated future sales less selling expenses).
Amortization of the capitalized survey costs is recorded in
proportion to revenue recognized to date for each survey as a
percentage of the total estimated revenue for that survey.
Seismic surveys are reviewed for impairment at each balance
sheet date through a comparison of the undiscounted cash flows
expected from each survey to the carrying amount of each survey.
Each survey is also subject to minimum amortization that reduces
its book value to zero over a designated period of time,
currently ranging from five to eight years.

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Property
And Equipment.

Property and equipment are stated at cost less
accumulated depreciation. Depreciation is calculated using a
modified units-of-production method for FPSO vessels and
equipment and the straight-line method for all other property
and equipment, after allowing for residual values. The estimated
useful lives for the Companys property and equipment are
as follows:

|                                               |  |       |       | 
|---------------------------------------------- |  | ----- | ----- | 
|                                               |  | Years
|                                               |  |      
|Seismic vessels and FPSO vessels and equipment |  |       | 20-30 | 
|Seismic and operations computer equipment      |  |       | 3-20  | 
|Leasehold improvements  seismic vessels       |  |       | 1-30  | 
|Buildings and related leasehold improvements   |  |       | 10-30 | 
|Fixtures, furniture and fittings               |  |       | 3-5   | 

Expenditures for major property and equipment
additions and improvements are capitalized, while the
expenditures for minor replacement, maintenance and repair
projects are charged to expense. The Company capitalizes
interest costs to major capital projects that require a period
of time to complete. When property and equipment are retired or
otherwise disposed of, the related cost and accumulated
depreciation are removed from the accounts, and any resulting
gain or loss is included in the results of operations.

Goodwill.

Goodwill is stated at cost less accumulated
amortization. Goodwill amortization is calculated on a
straight-line basis over the estimated life, with a maximum life
of 40 years.

Other
Long-Term Assets.

Other long-term assets consist of investments in
associated entities, long-term receivables, deferred tax assets,
direct costs of software product development, patents,
royalties, licenses and deferred loan costs. Amortizable other
long-term assets are stated at cost less accumulated
amortization. Amortization is calculated on a straight-line
basis over the estimated useful lives of the related assets,
with a maximum life of 10 years.

Asset
Recoverability.

The Companys management evaluates the
recorded balances of its property and equipment, goodwill and
other long-term assets for impairment whenever events or changes
in circumstances indicate that the carrying amounts may not be
appropriate. This evaluation is based on a comparison of the
expected undiscounted cash flows associated with the assets to
the carrying amounts of the assets. Any impairment loss is
recorded as the difference between the assets carrying
amounts and fair values. As discussed in Note 21, during
the three-year period ended December 31, 2000 certain
events and circumstances warranted revision to the remaining
useful lives and affected the recoverability of the
Companys assets.

UK
Leases.

The Company periodically executes leasing
arrangements in the United Kingdom (UK leases)
relating to certain seismic and FPSO vessels and/or equipment,
whereby the Company sells the applicable assets to a
UK financial institution and leases the assets under a
long-term charter at the end of which the Company has an option
to purchase the assets for a de minimis amount. The Company
uses a portion of the sales proceeds to legally defease the
present value of the future charter obligations with a
third-party investment trustee. These UK leases provide the
financial institutions with the tax depreciation rights to the
assets and, therefore, the ability to utilize the related tax
benefits. Under its UK leases, the Company has indemnified the
financial institutions against certain future events that could
reduce their expected after-tax returns on the UK leases. These
events include potential changes in UK tax laws and

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interpretations, depreciation rates or interest
rates. At the date that the Company executes any UK lease, the
Company treats the excess of the sales proceeds received over
the amount required to legally defease the charter obligations
as a deferred gain, due to the indemnification contingencies.
The deferred gain is recognizable as other income once the
Company has determined that the possibility of the
indemnification contingencies being realized is remote.


Derivative
Financial Instruments.

Derivative financial instruments are used
periodically by the Company in the management of its interest
and foreign currency exchange rate exposures. The Company does
not engage in derivative financial instrument transactions for
speculative purposes. The derivative instruments used are
interest rate contracts and foreign currency exchange contracts.
The derivative contracts are entered into with major
international financial institutions utilizing over-the-counter
instruments. The likelihood of non-performance by the
Companys counterparties under these contracts is
considered to be remote.

Interest Rate
Contracts Amounts to
be settled under interest rate hedge contracts and interest rate
swap contracts designated as hedges are recognized over the life
of the contracts as adjustments to interest expense of the
underlying debt. Gains and losses on termination of interest
rate contracts or through debt retirement are recognized as
adjustments to interest expense.

Foreign Currency Exchange
Contracts Gains and losses
attributable to forward foreign currency exchange contracts and
option contracts that are designated as hedges are deferred and
included in the measurement of the related foreign currency
transaction. Gains and losses attributable to forward foreign
exchange contracts and option contracts that do not qualify for
hedge accounting, including tax equalization swap contracts
(Note 15), are recognized in income as they arise.

Revenue
Recognition.

Revenue from the acquisition of non-cancelable
exclusive seismic surveys and from the pre-funded portion of
non-exclusive seismic surveys is recognized in accordance with
the percentage-of-completion method of accounting, based upon
survey costs incurred to date as a percentage of total estimated
survey costs. Revenue from cancelable exclusive seismic surveys
is recognized as data are acquired and become chargeable to the
customer.

Revenue from the licensing of finished
non-exclusive seismic surveys is recognized at the inception of
the customers license period.

Revenue from the Companys other geophysical
services is recognized as the services are performed.

Tariff revenue from the Companys floating
production services is recognized as production occurs, while
day-rate revenue is recognized over the passage of time.
Production management services revenue is recognized as the
services are performed.

Income
Taxes.

The Company provides for all current taxes
payable and for deferred taxes arising from temporary
differences between the tax bases of assets and liabilities and
their reported amounts in the financial statements, based on
enacted tax rates and laws in effect for the years in which
differences are expected to reverse. Income tax benefits and
liabilities arising from tax-deductible share issue costs and
long-term intercompany foreign currency exchange gains and
losses are recorded directly to shareholders equity.
Except where required by law, Norwegian income taxes are not
accrued for unremitted earnings of international operations that
have been, or are intended to be, reinvested indefinitely.

New
Accounting Standards.

Effective January 1, 1999, the Company
adopted Statement of Position (SOP) 98-5,
Reporting on the Costs of Start-up Activities.
Accordingly, the Company expensed as a cumulative effect of an

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accounting change all previously capitalized
start-up costs. The $20.0 million in expensed costs, net of
income tax benefits of $8.1 million, included costs related
to the start-up of the PGS floating production business, the
reservoir monitoring business and the multi-component, vertical
cable and land seismic businesses, as well as costs related to
the opening of various worldwide offices. Subsequent to
adoption, all start-up costs are expensed as incurred.


Effective January 1, 2000, the Company
adopted SAB No. 101, Revenue Recognition in Financial
Statements. Application of this SAB required the deferral
of revenue recognition on some types of volume seismic data
licensing arrangements until the Company has entered into a
license agreement for specific data with the customer.
Accordingly, the Company adjusted revenue ($22.8 million),
amortization ($11.4 million) and commissions expense
($2.3 million) and recognized an aggregate charge to income
of $6.6 million, net of tax benefits of $2.5 million,
as the cumulative effect of the change in accounting principle.
As a result of the application of SAB No. 101, the Company
has deferred $15.6 million of licensing arrangement revenue
as of December 31, 2000 that will be recognized as revenue
in the future.

In June 1998, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standard (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative financial
instrument be recorded in the balance sheet as either an asset
or a liability measured at its fair value, with certain changes
in fair value recognized currently in earnings. In June 1999,
the FASB amended SFAS No. 133, delaying the Companys
adoption date to January 1, 2001. The Company will not
recognize any material effects at transition. According to the
requirements of SFAS No. 133, the Company will recognize
the fair value (including the interim settlement value
determined each December 30) of its tax equalization swap
contracts (Note 15) as either an asset or a liability in
each reporting period, with any periodic adjustments to fair
value recognized in the results of operations.

NOTE 2  Acquisitions and
Dispositions

In December 2000, the Company sold all of its
holdings (5.4 million shares) in Spinnaker Exploration
Company for net proceeds of $150.5 million. At
December 31, 2000, $70.0 million of the proceeds had
been used to repay indebtedness outstanding under the revolving
bank credit facility. A $54.7 million pretax gain on this
transactions was recognized as income from equity investments.

Also in December 2000, the Company entered into a
definitive agreement with the Halliburton Company, through its
Landmark Graphics Corporation subsidiary, to sell its global
Petrobank data management business and related software for
$175.0 million in cash. The financial position and results
of operations of the Petrobank data management business were not
material to the Companys consolidated financial position
and results of operations for any year presented.

In August 1998, the Company consummated the
acquisition of Atlantic Power Group (Atlantic
Power), an oil and gas production management specialist.
Consideration paid for the net assets acquired consisted of
approximately $38.4 million in equity issued (in the form
of 3,248,309 shares) to the former owners and the
assumption of approximately $6.8 million in liabilities.
The transaction was treated as a purchase for accounting
purposes, with the assets acquired and the liabilities assumed
recorded at their fair values. Goodwill of $31.6 million
recorded in the acquisition is being amortized on the
straight-line method over 40 years.

In May 1998, the Company consummated the
acquisition of the FPSO operations of Awilco ASA
(Awilco). Consideration paid for the net assets
acquired consisted of approximately $428.0 million in equity
issued (in the form of 12,638,080 shares) to the former owners
and the assumption of approximately $440.0 million in
liabilities. The transaction was treated as a purchase for
accounting purposes, with the assets acquired and the
liabilities assumed recorded at their fair values. Goodwill of
$234.0 million recorded in the acquisition is being
amortized on the straight-line method over 40 years.

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The unaudited pro forma results of operations for
the Company reflecting a full year of operations from Awilco and
Atlantic Power for 1998 are summarized as follows:

|                                   |                             |               |         |      | 
|---------------------------------- | --------------------------- | ------------- | ------- | ---- | 
|                                   |                             | Year ended   
|                                   |                             | December 31, 
|                                   |                             | 1998         
|                                   |                             |              
|                                   |                             | (In thousands
|                                   |                             | of dollars)  
|Revenue                            |                             | $             | 918,051 |     
|Income before extraordinary charge |                             |               | 116,898 |     
|Net income                         |                             |               | 116,898 |     
|Basic earnings per share:          |                             |               |         |     
|                                   | Before extraordinary charge |               | $       | 1.31 | 
|                                   | After extraordinary charge  |               |         | 1.31 | 
|Diluted earnings per share:        |                             |               |         |     
|                                   | Before extraordinary charge |               | $       | 1.27 | 
|                                   | After extraordinary charge  |               |         | 1.27 | 

In July 1998, the Company acquired Acadian, a
provider of 3D seismic acquisition services in
transition-zone and shallow-water areas. Consideration for the
acquisition consisted of 1,138,350 shares of the Company
issued to the former owners of Acadian in exchange for all of
the outstanding shares of Acadian. The acquisition was accounted
for as a pooling of interests. Accordingly, the financial
statements have been prepared as if the Company and Acadian were
combined as of the inception date of Acadian operations, which
was January 22, 1997. All costs of the acquisition,
approximately $3.0 million, were expensed. No adjustments
of net assets or income were required to conform the accounting
practices of the Company and Acadian.

NOTE 3  Accounts
Receivable

The Company has recorded allowances for doubtful
accounts of $4.2 million and $7.5 million at
December 31, 2000 and 1999, respectively. Accounts
receivable include $112.3 million and $121.2 million
of unbilled receivables at December 31, 2000 and 1999,
respectively; these receivables relate to revenue that has been
recognized under the percentage-of-completion method but is not
yet billable under the specific broker or customer agreements.
Of these unbilled receivables, $7.7 million and
$22.6 million were long-term receivables at
December 31, 2000 and 1999, respectively.

NOTE 4  Multi-Client
Library

The components of the multi-client library, net
of accumulated amortization, are summarized as follows:

|                                               |       |                           |         |         |  |   |         |         | 
|---------------------------------------------- | ----- | ------------------------- | ------- | ------- |  | - | ------- | ------- | 
|                                               |       |                          
|                                               |       | December 31,             
|                                               |       |                          
|                                               |       | 2000                      |         | 1999   
|                                               |       |                           |         |        
|                                               |       |                          
|                                               |       | (In thousands of dollars)
|Multi-client seismic surveys, finished         |       | $                         | 627,292 |         |  | $ | 484,341 |        
|Multi-client seismic surveys, work in progress |       |                           | 219,810 |         |  |   | 332,082 |        
|                                               |       |                           |         |         |  |   |         |        
|                                               | Total |                           | $       | 847,102 |  |   | $       | 816,423 | 
|                                               |       |                           |         |         |  |   |         |        

Amortization expense was $138.5 million,
$137.5 million and $193.6 million for the years ended
December 31, 2000, 1999 and 1998, respectively. Interest
capitalized into the multi-client library was
$21.7 million, $26.6 million and $14.6 million for the
years ended December 31, 2000, 1999 and 1998, respectively.

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| |                  
| | -----------------
| | Subsequent Event.

In April 2001, the Company entered into a
securitization transaction related to a portion of its
multi-client marine seismic library. Pursuant to this
transaction, the Company transferred the portion of its
multi-client marine seismic library to a bankruptcy remote,
special purpose entity incorporated in Jersey, in exchange for
net proceeds of $233.0 million and common securities of the
Jersey entity. The Jersey entity funded the $233.0 million
in proceeds through the issuance of $240.0 million in
mandatorily redeemable preferred securities to a third party
investor (a commercial paper conduit). The Company intends to
use a portion of the net proceeds to repay indebtedness
outstanding under its revolving bank credit facility.

The preferred securities issued by the special
purpose entity will be redeemed, as sales of applicable
multi-client marine seismic library occur, from a portion of the
sales proceeds. The preferred securities carry a floating
preferred dividend rate based initially on three-month LIBOR
and, upon the occurrence of certain events, commercial paper
rates. Dividends are cumulative and payable quarterly. The
Company may redeem the preferred shares at any time for an
amount equal to the outstanding preferred securities, accrued
preferred dividends and related expenses. The Company also has
the ability, under certain circumstances, to repurchase portions
of the library sold to its Jersey entity. Upon the occurrence of
certain events, the preferred securities holder has the right to
require full and immediate redemption of the preferred
securities. Additionally, under certain circumstances that the
Company believes are remote, the preferred securities holder has
the ability to gain voting control of the Jersey entity.
However, the Company has various means to prevent such a change
of control including, but not limited to, redemption of the
preferred securities, preferred securities call options and
options to purchase the data.

The preferred securities do not have rights
senior to any creditor and do not entitle the holder to any
substantive participation rights. Since the Company holds all of
the Jersey entitys common securities, the Company will
consolidate the Jersey entity.

NOTE 5  Other Current Assets
And Accrued Expenses

Other current assets at December 31, 2000 include
$27.9 million in prepaid expenses; other current assets at
December 31, 1999 include $26.7 million in prepaid
expenses. Accrued expenses at December 31, 2000 include a
$91.2 million liability related to the fair value of tax
equalization swap contracts (Note 15), $22.8 million
in customer advances and deferred revenue, $21.2 million in
accrued interest, $63.3 million in accrued loss contracts
(customer contracts and vessel contracts), $22.1 million in
accrued upgrade costs related to the Petrojarl Iand
Ramform Banff and $23.2 million in accrued vessel
operating costs. Accrued expenses at December 31, 1999 include a
$38.2 million liability related to the fair value of tax
equalization swap contracts (Note 15), $18.9 million in
deferred revenue, $18.5 million in accrued interest expense,
$17.3 million in accrued restructuring costs (Note 21) and $34.2
million in accrued vessel operating costs.

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NOTE 6  Property And
Equipment

The components of property and equipment are
summarized as follows:

|                                                        |       |                           |           |           |  |   |           |           | 
|------------------------------------------------------- | ----- | ------------------------- | --------- | --------- |  | - | --------- | --------- | 
|                                                        |       |                          
|                                                        |       | December 31,             
|                                                        |       |                          
|                                                        |       | 2000                      |           | 1999     
|                                                        |       |                           |           |          
|                                                        |       |                          
|                                                        |       | (In thousands of dollars)
|FPSO vessels and equipment                              |       | $                         | 1,710,188 |           |  | $ | 1,590,506 |          
|Seismic vessels, including leasehold improvements       |       |                           | 493,263   |           |  |   | 488,734   |          
|Seismic and operations computer equipment               |       |                           | 483,340   |           |  |   | 591,751   |          
|Buildings, including leasehold improvements, and
	other |       |                           | 141,402   |           |  |   | 95,824    |          
|Fixtures, furniture and fittings                        |       |                           | 67,983    |           |  |   | 68,685    |          
|Construction in progress                                |       |                           |          |           |  |   | 4,563     |          
|                                                        |       |                           |           |           |  |   |           |          
|                                                        |       |                           | 2,896,176 |           |  |   | 2,840,063 |          
|Accumulated depreciation                                |       |                           | (517,676  | )         |  |   | (410,215  | )        
|                                                        |       |                           |           |           |  |   |           |          
|                                                        | Total |                           | $         | 2,378,500 |  |   | $         | 2,429,848 | 
|                                                        |       |                           |           |           |  |   |           |          

The gross cost of property and equipment includes
$54.9 million and $89.8 million (primarily seismic and
computer equipment) relating to capital leases (Note 10) as
of December 31, 2000 and 1999, respectively. Accumulated
depreciation of property and equipment includes
$36.2 million and $63.1 million relating to capital
leases as of December 31, 2000 and 1999, respectively. Net
depreciation expense was $104.8 million, $86.8 million
and $65.6 million for the years ended December 31,
2000, 1999 and 1998, respectively. Interest capitalized into
property and equipment was $25.0 million,
$13.5 million and $29.3 million for the years ended
December 31, 2000, 1999 and 1998, respectively. Property
and equipment balances at December 31, 2000 and 1999
reflect the significant impairment charges and restructuring
activities undertaken by the Company in 2000 and 1999
(Note 21).

NOTE 7  UK
Leases

The Company had $1.5 billion in property and
equipment under UK leases at both December 31, 2000 and
1999.

In January and April 1999, the Company executed
UK leases on the Ramform Victoryand the Ramform
Vanguard(upon delivery of the seismic vessels). During the
respective quarters, the Company recognized the related
UK lease gains, with $9.4 million recorded in the
first quarter and $9.7 million recorded in the second
quarter. During the fourth quarter of 1998, the Company
recognized $32.5 million in UK lease gains related to UK
leases executed in 1998 and 1996.

As of the date of the Awilco acquisition (Note
2), Awilco had $51.0 million in indemnification
contingencies recorded for a UK lease on the Petrojarl
Foinaven. During the year ended December 31, 1998, the
Company was able to remove certain of the indemnification
contingencies and, as a result, reversed approximately
$25.0 million of the deferred UK lease gain against
goodwill recorded in the acquisition. During the year ended
December 31, 2000, the Company was able to remove the
remaining indemnification contingencies and, as a result,
recognized the remaining $26.0 million deferred UK lease
gain in income.

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NOTE 8  Debt

Long-Term
Debt, Excluding Revolving Bank Credit Facilities.

Long-term debt, excluding revolving bank credit
facilities, consists of the following:

|                         |           |                           |  |              |   |               |           |              |           |  |  |     |   |  |           |           |           | 
|------------------------ | --------- | ------------------------- |  | ------------ | - | ------------- | --------- | ------------ | --------- |  |  | --- | - |  | --------- | --------- | --------- | 
|                         |           | Year-end                  |  |              |   | Year-end      |           |             
|                         |           | weighted                  |  |              |   | weighted      |           |             
|                         |           | average                   |  | December 31, |   | average       |           | December 31,
|                         |           | interest rate             |  | 2000         |   | interest rate |           | 1999        
|                         |           |                           |  |              |   |               |           |             
|                         |           |                          
|                         |           | (In thousands of dollars)
|Bank loans/public notes: |           |                           |  |              |   |               |           |              |           |  |  |     |   |  |           |          
|                         | Secured   |                           |  | 8.3          | % |               | $         | 130,965      |           |  |  | 8.1 | % |  | $         | 146,825   |          
|                         | Unsecured |                           |  | 7.2          | % |               |           | 1,679,360    |           |  |  | 7.1 | % |  |           | 1,453,901 |          
|Other loans:             |           |                           |  |              |   |               |           |              |           |  |  |     |   |  |           |          
|                         | Secured   |                           |  | 7.5          | % |               |           | 186          |           |  |  | 7.5 | % |  |           | 294       |          
|                         | Unsecured |                           |  |             |   |               |           |             |           |  |  | 7.0 | % |  |           | 24        |          
|                         |           |                           |  |              |   |               |           |              |           |  |  |     |   |  |           |          
|                         |           |                           |  |              |   |               | 1,810,511 |              |           |  |  |     |   |  | 1,601,044 |          
|Current portion          |           |                           |  |              |   |               | (11,090   | )            |           |  |  |     |   |  | (14,901   | )        
|                         |           |                           |  |              |   |               |           |              |           |  |  |     |   |  |           |          
|                         |           | Long-term portion         |  |              |   |               |           | $            | 1,799,421 |  |  |     |   |  |           | $         | 1,586,143 | 
|                         |           |                           |  |              |   |               |           |              |           |  |  |     |   |  |           |          

In March 2000, the Company issued
$225.0 million of senior unsecured notes. The notes carry a
floating interest rate equal to 0.65% over three-month LIBOR,
subject to quarterly adjustment, with interest payable
quarterly. The notes mature in March 2002, but can be redeemed
at the Companys option, in whole or in part, on any
interest payment date beginning March 2001 at par plus accrued
and unpaid interest. The net proceeds from this issuance were
primarily used to repay indebtedness outstanding under the
Companys revolving bank credit facility.

In July 1999, the Company entered into a
$350.0 million unsecured bridge facility in order to
finance the acquisition of the Petrojarl VargFPSO. The
Company then issued $200.0 million of senior unsecured
notes for net proceeds of $195.7 million. The net proceeds
on these notes, together with the net proceeds from the
Companys ADS/share offering (Note 13), were used to
repay the $350.0 million bank bridge loan facility as well
as indebtedness outstanding under the Companys revolving
bank credit facility. The notes carry an interest rate of 8.2%,
with interest payable semi-annually, and mature in July 2029.
These notes can be redeemed at the Companys option, in
whole or in part, at any time, subject to an early redemption
premium.

In November 1998, the Company issued
$250.0 million of senior unsecured notes. The notes carry
an interest rate of 6.3%, with interest payable semi-annually,
and mature in November 2003. These notes can be redeemed at
the Companys option, in whole or in part, at any time,
subject to an early redemption premium. The net proceeds from
this issuance were used to repay indebtedness outstanding under
the Companys revolving bank credit facilities.

In April 1998, the Company issued
$450.0 million and $200.0 million of senior unsecured
notes. The notes carry interest rates of 7.1% and 6.6%,
respectively, with interest payable semi-annually, and mature in
March 2028 and March 2008, respectively. These notes
can be redeemed at the Companys option, in whole or in
part, at any time, subject to an early redemption premium. The
net proceeds from this issuance were primarily used to repay
indebtedness and certain other obligations that were assumed in
the Awilco acquisition (Note 2) as well as certain
indebtedness outstanding under the Companys revolving bank
credit facilities.

In April 1997, the Company purchased all of
the capital stock of a company that indirectly owns the
Ramform Explorer and the Ramform Challenger
seismic vessels. This company has outstanding registered
mortgage notes, in an original principal amount of
$165.7 million, secured by the Ramform Explorer and
the Ramform Challenger. The notes carry an interest rate
of 8.3%, with interest payable semi-annually, and mature in
June 2011. The notes are subject to mandatory redemption
through semi-annual sinking

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##### Table of Contents



fund payments. The notes can be redeemed at the
holders option on any sinking fund payment date on or
after June 2006, in whole but not in part, subject to an early
redemption premium.


In March 1997, the Company issued
$360.0 million of senior unsecured notes. The notes carry
an interest rate of 7.5%, with interest payable semi-annually,
and mature in March 2007. These notes can be redeemed at the
Companys option, in whole or in part, at any time, subject
to an early redemption premium. The net proceeds from this
issuance were used, in part, to redeem $125.0 million of
private placement senior notes which were scheduled to begin
amortizing in 2001.

The Companys remaining secured loans have
varying structures, with final maturities in 2001.
US dollar-denominated secured indebtedness, at outstanding
principal amounts of $0.3 million and $5.0 million at
December 31, 2000 and 1999, respectively, carried year-end
weighted average interest rates of 7.7% and 7.6%, respectively.
Norwegian kroner-denominated secured indebtedness, at
outstanding US dollar principal amounts of
$5.8 million and $9.3 million at December 31,
2000 and 1999, respectively, carried year-end weighted average
interest rates of 8.2% and 5.3%, respectively.

Aggregate maturities of the Companys
long-term debt as of December 31, 2000 are as follows:

|             |       |                           |           |           | 
|------------ | ----- | ------------------------- | --------- | --------- | 
|December 31, |       |                          
|             |       | (In thousands of dollars)
|2001         |       | $                         | 11,090    |          
|2002         |       |                           | 236,462   |          
|2003         |       |                           | 258,737   |          
|2004         |       |                           | 10,200    |          
|2005         |       |                           | 10,990    |          
|Thereafter   |       |                           | 1,283,032 |          
|             |       |                           |           |          
|             | Total |                           | $         | 1,810,511 | 
|             |       |                           |           |          

Revolving
Bank Credit Facilities.

In September 1998, the Company entered into an
unsecured five-year $430.0 million revolving bank credit
facility with a syndicate of international banks. The facility
bears interest at LIBOR, plus a margin of either 0.35% or 0.40%
depending on the Companys level of indebtedness, and
carries quarterly commitment fees on any unused portion of the
facility of 0.18%. The $430.0 million facility replaced an
unsecured $150.0 million revolving bank credit facility
previously used by the Company.

During the year ended December 31, 2000, the
Company borrowed an aggregate of $240.0 million under the
$430.0 million revolving bank credit facility, with a
weighted average interest rate of 7.0%. The average and maximum
borrowings outstanding were $328.3 million and
$430.0 million, respectively. At December 31, 2000,
the Company had $70.0 million available under this
facility, with the outstanding balance of $360.0 million
carrying a weighted average interest rate of 7.1%. During the
year ended December 31, 1999, the Company borrowed an
aggregate of $410.0 million under the $430.0 million
revolving bank credit facility, with average and maximum
borrowings outstanding of $299.2 million and
$400.0 million, and weighted average interest rates of 5.6%
and 6.4% over the year and at December 31, 1999,
respectively.

During December 2000, the Company entered into a
$75.0 million unsecured revolving credit facility with a
syndicate of banks. The facility bears interest at LIBOR, plus a
margin that escalates from 0.4%to 0.6% by maturity; the maturity
date is December 2001. At December 31, 2000, there was no
indebtedness outstanding under this revolving credit facility.
Additionally during December 2000, the Company entered into a
$21.0 million unsecured bank credit facility. The facility
bears interest at a LIBOR-based rate plus a margin which can
range from 0.63% to 1.4% and is payable in installments through
2003, with the payment installments tied to future production
from certain oil and gas assets. At December 31, 2000,
$3.3 million was outstanding under this credit facility,
classified as short-term debt.

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##### Table of Contents



Short-Term
Debt.

Based on working capital requirements, the
Company draws short-term debt with various international banks.
Short-term debt was $6.3 million and $0.7 million at
December 31, 2000 and 1999, respectively. Average and
maximum short-term debt balances for the year ended
December 31, 2000 were $18.6 million and
$46.8 million, and for 1999 were $30.7 million and
$120.8 million. The weighted average interest rates as of
and for the year ended December 31, 2000 were 7.7% and
7.1%, and for 1999 were 6.5% and 6.1%.

Covenants.

In addition to customary representations and
warranties, certain of the Companys debt agreements and
UK lease agreements (Note 7) include covenants
relating to the maintenance of minimum net worth levels,
interest coverage ratios and debt leverage ratios. Additionally,
certain covenants restrict certain types of indebtedness, such
as subsidiary indebtedness, liens on assets, cash dividends and
sale/leaseback transactions. The Company was in compliance with
all such covenants at December 31, 2000.

Pledged
Assets.

Seismic vessels and related equipment carrying a
book value of $153.9 million and $165.0 million at
December 31, 2000 and 1999, respectively, are pledged as
security on certain of the Companys indebtedness, as
described above.

Letters
Of Credit And Guarantees.

The Company had aggregate outstanding letters of
credit and related types of guarantees, not reflected in the
accompanying consolidated financial statements, of
$59.7 million and $61.3 million at December 31,
2000 and 1999, respectively.

NOTE 9  Trust Preferred
Securities

In June 1999, the Company entered into a
transaction with PGS Trust I (the Trust),
a newly formed Delaware statutory business trust and wholly
owned finance subsidiary of the Company, whereby the Trust
issued $4.4 million of common securities to a
U.S. subsidiary of the Company, issued $143.8 million
of trust preferred securities to the public and used the
proceeds to purchase $148.2 million of junior subordinated
debt securities (the junior debt securities) from
the Company. The Company used the $138.9 million in net
proceeds received to repay indebtedness outstanding under its
revolving bank credit facility.

The trust preferred securities consist of
5,750,000 securities which carry a $25 per security
liquidation value and mature on June 30, 2039. The trust
preferred securities represent undivided beneficial interests in
the assets of the Trust, but do not carry general voting rights.
The trust preferred securities carry a 9.625% distribution
rate, payable quarterly. The Companys junior debt
securities bear an interest rate of 9.625%, payable quarterly,
and mature on June 30, 2039. Absent any event of default,
the Company can defer interest payments throughout the life of
the junior debt securities for up to 20 consecutive
quarterly periods, subject to the maturity date and limitations
on certain other transactions during any interest deferral
period. In the event that the Company defers its interest
payments on the junior debt securities, the Trust will defer its
distributions on the trust preferred securities.

The Company may redeem the junior debt
securities, in whole or in part, at any time on or after June
2004. Prior to this time, the Company may redeem all junior debt
securities in the event of certain changes in tax or investment
company law. In the event that the Company redeems any of its
junior debt securities prior to maturity, the Trust must use the
redemption proceeds to redeem, on a pro rata basis, an
equivalent amount of its trust preferred securities and common
securities.

The Company has guaranteed, on a subordinated
basis, the trust preferred securities distributions to the
extent that the Trust has cash available for those
distributions. In the event that the Trust does not

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##### Table of Contents



have such cash, holders of the trust preferred
securities may directly sue the Company or seek other remedies
against the Company. When considered together, the declaration
of trust of the Trust, the junior debt securities, the indenture
under which the junior debt securities were issued and the
Companys guarantee related to the trust preferred
securities constitute a full and unconditional guarantee by the
Company of the Trusts obligations under the trust
preferred securities.


Since a U.S. subsidiary of the Company holds all
of the Trusts common securities, the Company consolidates
the Trust. The Trust serves solely as a finance subsidiary,
having no independent assets or operations. The sole assets of
the Trust are the junior debt securities issued by the Company,
which have an aggregate principal amount equal to the aggregate
liquidation amount of the trust preferred securities and the
common securities issued by the Trust. The Trust held the full
$148.2 million issue of the junior debt securities at
December 31, 2000 and 1999. The $140.1 million
carrying value of the trust preferred securities at
December 31, 2000 reflects issuance costs; the carrying
value will accrete to the $143.8 million redemption value
by the first date at which the Company can redeem the trust
preferred securities. During the years ended December 31,
2000 and 1999, the Company recorded $14.8 million and
$7.7 million, respectively, in financial expense for the
minority interest in income of subsidiaries due on the trust
preferred securities.

NOTE 10  Commitments And
Contingencies

Leases.

The Company has operating lease commitments
expiring at various dates through 2014. The Company also has
capital lease commitments for seismic vessels and equipment
expiring at various dates through 2005. Future minimum payments
related to non-cancelable operating and capital leases, with
lease terms in excess of one year, existing at December 31,
2000 are as follows:

|                  |                  |                           |         |         |         |   |        |        |        | 
|----------------- | ---------------- | ------------------------- | ------- | ------- | ------- | - | ------ | ------ | ------ | 
|                  |                  | Operating                 |         | Capital
|December 31,      |                  | leases                    |         | leases 
|                  |                  |                           |         |        
|                  |                  |                          
|                  |                  | (In thousands of dollars)
|2001              |                  | $                         | 133,054 |         |         | $ | 7,677  |       
|2002              |                  |                           | 103,566 |         |         |   | 6,247  |       
|2003              |                  |                           | 55,926  |         |         |   | 3,745  |       
|2004              |                  |                           | 32,177  |         |         |   | 2,088  |       
|2005              |                  |                           | 41,067  |         |         |   | 2,069  |       
|Thereafter        |                  |                           | 28,011  |         |         |   |       |       
|                  |                  |                           |         |         |         |   |        |       
|                  |                  | Total                     |         |         | 393,801 |   |        |        | 21,826 | 
|                  |                  |                           |         |         |         |   |        |       
|                  | Imputed interest |                           |         |         |         |   |        | (2,720 | )     
|                  |                  |                           |         |         |         |   |        |       
|Net present value |                  |                           |         |         |         |   | 19,106 |       
|                  | Current portion  |                           |         |         |         |   |        | (6,546 | )     
|                  |                  |                           |         |         |         |   |        |       
|                  |                  | Long-term portion         |         |         |         |   |        | $      | 12,560 | 
|                  |                  |                           |         |         |         |   |        |       

The future minimum payments under the
Companys operating leases relate to the Companys
operations as follows:

|                                   |       |                  |         |         | 
|---------------------------------- | ----- | ---------------- | ------- | ------- | 
|                                   |       | December 31,    
|                                   |       |                 
|                                   |       | (In thousands of
|                                   |       | dollars)        
|Marine seismic and support vessels |       | $                | 66,718  |        
|FPSO shuttle tankers               |       |                  | 145,512 |        
|Land seismic equipment             |       |                  | 69,310  |        
|Operations computer equipment      |       |                  | 20,584  |        
|Buildings                          |       |                  | 77,152  |        
|Fixtures, furniture and fittings   |       |                  | 14,525  |        
|                                   |       |                  |         |        
|                                   | Total |                  | $       | 393,801 | 
|                                   |       |                  |         |        

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Approximately $6.5 million in future minimum
payments relate to the Companys data management operations
(Note 2).

Rental expense for operating leases, including
leases with terms of less than one year, was
$137.7 million, $133.3 million and $141.4 million
for the years ended December 31, 2000, 1999 and 1998,
respectively.

Other.

The Company has contingent liabilities resulting
from litigation, other claims and commitments incidental to the
ordinary course of business. Management believes that the
probable resolution of such contingencies will not materially
affect the financial position, results of operations or cash
flows of the Company.

Subsequent
Event.

In April 2001, the Company agreed to a
time-charter of two of its FPSO shuttle tankers to a third
party. Under this agreement, which has a minimum term through
April 2002, the Company will incur approximately
$3.4 million in net lease expense on its use of these FPSO
shuttle tankers over the agreements minimum twelve-month
period, rather than the approximate $21.4 million reflected
in its commitments as of December 31, 2000.

NOTE 11  Income
Taxes

The provision (benefit) for income taxes consists
of the following:

|                |           |                           |   |          |          |      |   |         |         |   |   |        |        | 
|--------------- | --------- | ------------------------- | - | -------- | -------- | ---- | - | ------- | ------- | - | - | ------ | ------ | 
|                |           |                          
|                |           | Years ended December 31, 
|                |           |                          
|                |           | 2000                      |   | 1999     |          | 1998
|                |           |                           |   |          |          |     
|                |           |                          
|                |           | (In thousands of dollars)
|                |           | (As restated, Note 22)   
|Current taxes:  |           |                           |   |          |          |      |   |         |         |   |   |       
|                | Norwegian |                           | $ | 1,077    |          |      | $ |        |         |   | $ | 15,050 |       
|                | Foreign   |                           |   | 4,588    |          |      |   | 3,492   |         |   |   | 11,983 |       
|Deferred taxes: |           |                           |   |          |          |      |   |         |         |   |   |       
|                | Norwegian |                           |   | (120,268 | )        |      |   | (38,792 | )       |   |   | 7,503  |       
|                | Foreign   |                           |   | (18,153  | )        |      |   | (29,925 | )       |   |   | (4,108 | )     
|                |           |                           |   |          |          |      |   |         |         |   |   |       
|                |           | Total                     |   | $        | (132,756 | )    |   | $       | (65,225 | ) |   | $      | 30,428 | 
|                |           |                           |   |          |          |      |   |         |         |   |   |       

The net benefit for the year ended
December 31, 1999 includes $15.3 million related to
the resolution of certain tax issues.

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The provision (benefit) for income taxes differs
from the amounts computed when applying the Norwegian statutory
tax rate to income (loss) before income taxes (inclusive of
gross cumulative effect of accounting change) as a result of the
following:

|                                                            |                                                          |                                      |         |          |          |      |         |         |         |   |        |         |         | 
|----------------------------------------------------------- | -------------------------------------------------------- | ------------------------------------ | ------- | -------- | -------- | ---- | ------- | ------- | ------- | - | ------ | ------- | ------- | 
|                                                            |                                                          |                                     
|                                                            |                                                          | Years ended December 31,            
|                                                            |                                                          |                                     
|                                                            |                                                          | 2000                                 |         | 1999     |          | 1998
|                                                            |                                                          |                                      |         |          |          |     
|                                                            |                                                          |                                     
|                                                            |                                                          | (In thousands of dollars)           
|                                                            |                                                          |                                     
|                                                            |                                                          | (As restated, Note 22)              
|Income (loss) before income taxes:                          |                                                          |                                      |         |          |          |      |         |         |         |   |        |        
|                                                            | Norwegian                                                |                                      | $       | (320,312 | )        |      | $       | (52,487 | )       |   | $      | 30,037  |        
|                                                            | Foreign                                                  |                                      |         | 4,708    |          |      |         | (46,554 | )       |   |        | 108,075 |        
|                                                            |                                                          |                                      |         |          |          |      |         |         |         |   |        |        
|                                                            |                                                          | Total                                |         |          | (315,604 | )    |         |         | (99,041 | ) |        |         | 138,112 | 
|Norwegian statutory rate                                    |                                                          |                                      | 28      | %        |          |      | 28      | %       |         |   | 28     | %      
|                                                            |                                                          |                                      |         |          |          |      |         |         |         |   |        |        
|Provision (benefit) for income taxes at the
	statutory rate |                                                          |                                      | (88,369 | )        |          |      | (27,731 | )       |         |   | 38,671 |        
|Increase (reduction) in income taxes from:                  |                                                          |                                      |         |          |          |      |         |         |         |   |        |        
|                                                            | Different income rates on foreign jurisdiction
	earnings |                                      |         | (14,131  | )        |      |         | (34,503 | )       |   |        | (7,774  | )      
|                                                            | Prior year tax assessment                                |                                      |         | (1,177   | )        |      |         |        |         |   |        |        |        
|                                                            | Unrealized exchange losses                               |                                      |         | (33,147  | )        |      |         | (8,068  | )       |   |        |        |        
|                                                            | Permanent items                                          |                                      |         | 2,010    |          |      |         | 6,166   |         |   |        |        |        
|                                                            | Other                                                    |                                      |         | 2,058    |          |      |         | (1,089  | )       |   |        | (469    | )      
|                                                            |                                                          |                                      |         |          |          |      |         |         |         |   |        |        
|                                                            |                                                          | Provision (benefit) for income taxes |         | $        | (132,756 | )    |         | $       | (65,225 | ) |        | $       | 30,428  | 
|                                                            |                                                          |                                      |         |          |          |      |         |         |         |   |        |        

The temporary differences which generate the
Companys deferred tax assets and liabilities are
summarized as follows:

|                                            |       |                           |          |          |   |   |         |        |  
|------------------------------------------- | ----- | ------------------------- | -------- | -------- | - | - | ------- | ------ | -
|                                            |       |                          
|                                            |       | December 31,             
|                                            |       |                          
|                                            |       | 2000                      |          | 1999    
|                                            |       |                           |          |         
|                                            |       |                          
|                                            |       | (In thousands of dollars)
|                                            |       |                          
|                                            |       | (As restated, Note 22)   
|Property and equipment and long-term assets |       | $                         | 92,979   |          |   | $ | 65,987  |       
|Tax losses carried forward                  |       |                           | (139,710 | )        |   |   | (67,059 | )     
|Deferred gains                              |       |                           | 3,281    |          |   |   | (702    | )     
|Tax and book revenue and cost of sales      |       |                           | (75,582  | )        |   |   | 5,442   |       
|Tax credits                                 |       |                           | (3,839   | )        |   |   | (3,986  | )     
|Expenses deductible when paid               |       |                           | (18,412  | )        |   |   |        |       
|Other temporary differences                 |       |                           | (1,179   | )        |   |   | (837    | )     
|                                            |       |                           |          |          |   |   |         |       
|                                            | Total |                           |          | (142,462 | ) |   |         | (1,155 | )
|                                            |       |                           |          |          |   |   |         |       
|Deferred tax (asset) liability 
	Norwegian |       |                           | (96,175  | )        |   |   | 18,041  |       
|Deferred tax (asset)  Foreign              |       |                           | (46,287  | )        |   |   | (19,196 | )     
|                                            |       |                           |          |          |   |   |         |       
|                                            | Total |                           | $        | (142,462 | ) |   | $       | (1,155 | )
|                                            |       |                           |          |          |   |   |         |       

Norwegian tax losses of $339.7 million
expire at various dates beginning in 2003. Tax losses in the UK,
Singapore and Australia totaling $100.9 million carry
forward indefinitely. US tax losses of $20.8 million
expire in 2019. US minimum tax credits of $4.0 million
carry forward indefinitely.

Unremitted earnings of certain international
operations included in retained earnings total
$115.3 million at December 31, 2000. It is the
Companys current policy that these earnings, which reflect
full provision for non-Norwegian income taxes, have no
additional provision for Norwegian taxes, as these earnings are
expected to be reinvested indefinitely.

The tax effect of deductible share issue costs,
which have been credited directly to shareholders equity,
was approximately $0.7 million for both of the years ended
December 31, 1999 and 1998. There were no such effects for
the year ended December 31, 2000.

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NOTE 12  Earnings Per
Share

Basic earnings per share and diluted earnings per
share for the years ended December 31, 2000 and 1999 were
equal. The difference between the Companys 1998 basic
earnings per share and diluted earnings per share calculations
is reconciled as follows:

|                            |  |                              |         |          |  |           |            |  |  |   |      | 
|--------------------------- |  | ---------------------------- | ------- | -------- |  | --------- | ---------- |  |  | - | ---- | 
|                            |  |                             
|                            |  | Year ended December 31, 1998
|                            |  |                             
|                            |  | Income                       |         | Weighted |  |          
|                            |  | available to                 |         | average  |  | Per share
|                            |  | shareholders                 |         | shares   |  | amount   
|                            |  |                              |         |          |  |          
|                            |  |                             
|                            |  | (In thousands of dollars,   
|                            |  | except for share data)      
|                            |  | (As restated, Note 22)      
|Basic earnings per share    |  | $                            | 107,684 |          |  |           | 82,260,652 |  |  | $ | 1.31 | 
|Share equivalents  options |  |                              |         |          |  |           | 2,534,184  |  |  |   |      | 
|                            |  |                              |         |          |  |           |            |  |  |   |      | 
|Diluted earnings per share  |  | $                            | 107,684 |          |  |           | 84,794,836 |  |  | $ | 1.27 | 
|                            |  |                              |         |          |  |           |            |  |  |   |      | 

Certain options that would have been
anti-dilutive to earnings per share have been excluded from
share equivalents in the applicable quarters.

NOTE 13  Shareholders
Equity

The retained earnings of the Company, together
with additional paid-in capital, constitute the restricted
portion of shareholders equity and are only distributable
subject to shareholder approval. Additionally, the terms of
certain of the Companys debt agreements restrict dividend
payments. Dividends, if declared, are payable in Norwegian
kroner. There is no unrestricted shareholders equity as of
December 31, 2000.

In July and early August 1999, the Company issued
an aggregate of 11,159,500 shares and ADSs in an international
public offering. Net proceeds of $214.1 million were used,
together with the net proceeds from $200.0 million in
senior notes, to repay the bank bridge loan facility drawn to
finance the Petrojarl Varg acquisition as well as to
repay indebtedness outstanding under the Companys
revolving bank credit facility (Note 8).

In June 1998, the Company effected a stock split;
all share information has been restated to reflect this stock
split. Concurrent with the stock split, the par value of the
common stock was adjusted to an equivalent nominal value of
NOK 5 per share by a transfer from additional paid-in
capital.

NOTE 14  Share-Based
Compensation

At December 31, 2000, the Company had share-based
compensation plans for key employees and directors. The employee
and director plans authorize the Company to award options to
purchase shares prior to the year 2002. As of December 31,
2000, options to purchase 9,762,100 and 500,000 shares,
respectively, remained under these periodically renewed
authorizations, as defined under Norwegian law. Options granted
from the plans inceptions to December 31, 2000
totaled 16,462,404 and 696,800 shares, respectively, some
of which have been exercised or were otherwise no longer
outstanding at December 31, 2000.

Under the plans, the exercise price of each award
equals the market price of the Companys shares on the date
of grant. The vesting period for the granted options ranges from
approximately two and one-half years to approximately three and
one-half years, provided that the recipient is still employed by
the Company on the vesting date. Once vested, the recipient
generally has two years within which to exercise the options;
for options granted in June 2000 and forward, the exercise
period is generally three years. Certain option awards are
exercisable only on a specific date. The exercise prices for
options granted and outstanding at December 31, 2000 under both
the employee and director option plans ranged from NOK75.0 to
NOK99.0 for 1,584,600 options and from NOK111.0 to NOK229.5
for 9,106,204 options, with weighted average exercise
prices of NOK95 and NOK142 for these respective ranges. The
weighted

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##### Table of Contents



average remaining contractual lives of
outstanding options approximated six months and 39 months,
respectively, for the option ranges described above.


Awards made under the plans become immediately
exercisable upon the occurrence of a change in control of the
Company, generally defined to include certain changes in the
board of directors, the acquisition of a certain percentage of
outstanding shares, certain merger transactions and certain
dispositions of all or substantially all of the assets of the
Company (neither the sale of Spinnaker shares nor the Petrobank
data management disposition, discussed in Note 2,
constitute such a disposition).

The Company applies Accounting Principles Board
Opinion 25 in accounting for its share-based compensation
plans and has adopted the disclosure-only provisions of SFAS
No. 123, Accounting for Stock-Based
Compensation. Accordingly, no compensation cost has been
recognized under these plans. Had the compensation cost for the
Companys share-based compensation plans been determined
based on the fair values of the options awarded at the grant
dates, consistent with the provisions of SFAS No. 123, the
Companys net income (loss) and earnings (loss) per share
would have been reduced to the pro forma amounts indicated below:

|                                   |             |                           |   |          |   |      |   |         |   |  |   |         | 
|---------------------------------- | ----------- | ------------------------- | - | -------- | - | ---- | - | ------- | - |  | - | ------- | 
|                                   |             |                          
|                                   |             | Years ended December 31, 
|                                   |             |                          
|                                   |             | 2000                      |   | 1999     |   | 1998
|                                   |             |                           |   |          |   |     
|                                   |             |                          
|                                   |             | (In thousands of dollars,
|                                   |             | except for share data)   
|                                   |             | (As restated, Note 22)   
|Net income (loss):                 |             |                           |   |          |   |      |   |         |   |  |   |        
|                                   | As reported |                           | $ | (189,404 | ) |      | $ | (33,816 | ) |  | $ | 107,684 | 
|                                   | Pro forma   |                           |   | (202,566 | ) |      |   | (47,396 | ) |  |   | 93,916  | 
|Basic earnings (loss) per share:   |             |                           |   |          |   |      |   |         |   |  |   |        
|                                   | As reported |                           | $ | (1.86    | ) |      | $ | (0.36   | ) |  | $ | 1.31    | 
|                                   | Pro forma   |                           |   | (1.99    | ) |      |   | (0.50   | ) |  |   | 1.14    | 
|Diluted earnings (loss) per share: |             |                           |   |          |   |      |   |         |   |  |   |        
|                                   | As reported |                           | $ | (1.86    | ) |      | $ | (0.36   | ) |  | $ | 1.27    | 
|                                   | Pro forma   |                           |   | (1.99    | ) |      |   | (0.50   | ) |  |   | 1.11    | 

The fair value of each option award on the grant
date is estimated using the Black-Scholes option-pricing model
with the following weighted average assumptions used for grants
in 2000, 1999 and 1998, respectively: expected volatility of
53%, 52% and 48%; risk-free interest rates of 6.52%, 5.8% and
5.1%; and expected lives of 4.1, 3.4 and 3.5 years.
(Dividend yield is zero for all plan grants.)

The effects of applying the fair market value
method of accounting in the above pro forma disclosure may not
be indicative of future amounts since additional awards in
future years are anticipated.

A summary of the status of the Companys
share-based compensation plans as of December 31, 2000,
1999 and 1998, and changes during the years then ended, is
summarized as follows:

|                                                            |  |                           |          |          |  |         |        |          |  |         |         |          |  |  |        |  |  |  |         |   |  |  |        | 
|----------------------------------------------------------- |  | ------------------------- | -------- | -------- |  | ------- | ------ | -------- |  | ------- | ------- | -------- |  |  | ------ |  |  |  | ------- | - |  |  | ------ | 
|                                                            |  |                          
|                                                            |  | December 31,             
|                                                            |  |                          
|                                                            |  |                           |          |          |  |        
|                                                            |  | 2000                      |          | 1999     |  | 1998   
|                                                            |  |                           |          |          |  |        
|                                                            |  |                           |          | Weighted |  |         |        | Weighted |  |         |         | Weighted
|                                                            |  |                           |          | average  |  |         |        | average  |  |         |         | average 
|                                                            |  |                           |          | exercise |  |         |        | exercise |  |         |         | exercise
|                                                            |  | Options                   |          | price    |  | Options |        | price    |  | Options |         | price   
|                                                            |  |                           |          |          |  |         |        |          |  |         |         |         
|                                                            |  |                          
|                                                            |  | (In thousands of options)
|Outstanding at beginning of year                            |  |                           | 7,691.2  |          |  |         | NOK127 |          |  |         | 8,388.0 |          |  |  | NOK120 |  |  |  | 7,060.6 |   |  |  | NOK119 | 
|Granted                                                     |  |                           | 3,926.0  |          |  |         | NOK143 |          |  |         | 335.8   |          |  |  | NOK130 |  |  |  | 2,117.4 |   |  |  | NOK123 | 
|Exercised                                                   |  |                           | (738.4   | )        |  |         | NOK 90 |          |  |         | (909.6  | )        |  |  | NOK 68 |  |  |  | (477.0  | ) |  |  | NOK 70 | 
|Forfeited                                                   |  |                           | (188.0   | )        |  |         | NOK140 |          |  |         | (123.0  | )        |  |  | NOK126 |  |  |  | (313.0  | ) |  |  | NOK172 | 
|                                                            |  |                           |          |          |  |         |        |          |  |         |         |          |  |  |        |  |  |  |         |   |  |  |        | 
|Outstanding at end of year                                  |  |                           | 10,690.8 |          |  |         | NOK135 |          |  |         | 7,691.2 |          |  |  | NOK127 |  |  |  | 8,388.0 |   |  |  | NOK120 | 
|                                                            |  |                           |          |          |  |         |        |          |  |         |         |          |  |  |        |  |  |  |         |   |  |  |        | 
|Weighted average fair value of options granted
	during year |  |                           |          |          |  |         | NOK 69 |          |  |         |         |          |  |  | NOK 56 |  |  |  |         |   |  |  | NOK 48 | 
|                                                            |  |                           |          |          |  |         |        |          |  |         |         |          |  |  |        |  |  |  |         |   |  |  |        | 

F-21



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##### Table of Contents



As of December 31, 2000, 4,762,600 of the
outstanding options were vested with a weighted average exercise
price of NOK136. Exercisable options at December 31, 1999
and 1998 were 2,308,000 options at a weighted average exercise
price of NOK93 and 1,789,550 options at a weighted average
exercise price of NOK78, respectively.

NOTE 15  Derivative Financial
Instruments And Risk Management

Notional
Amounts And Credit Exposure Of Derivative Financial
Instruments.

The notional amounts of the derivative financial
instruments summarized below do not reflect the values exchanged
by the parties and, thus, are not a measure of the
Companys exposure. The amounts ultimately exchanged are
calculated on the basis of the notional amounts and the other
terms of the respective derivative financial instruments.

Interest
Rate Risk Management.

The Company periodically uses interest rate hedge
contracts and interest rate swap contracts to effectively
convert variable rate obligations to fixed rate obligations in
order to reduce the impact of interest rate changes on future
income. The Company did not engage in any interest rate hedge
contracts during the years ended December 31, 2000 and
1999. During the year ended December 31, 1998, prior to the
issuance of $650.0 million in unsecured senior notes
(Note 8), the Company entered into an interest rate hedge
contract for a notional amount of $50.0 million which
effectively locked into a range the interest rate risk on the
yet-to-be issued notes. This contract expired during May 1998.

Foreign
Currency Exchange Risk Management.

The Company periodically enters into forward
exchange contracts and option contracts to hedge against foreign
currency exchange risks associated with certain firm commitments
and transactions related to property and equipment. The Company
is most sensitive to changes in the Norwegian kroner to
US dollar exchange rates. There were no such foreign
currency exchange contracts outstanding at either
December 31, 2000 or 1999. At December 31, 1998, the
Company had approximately $121.0 million of forward foreign
currency exchange contracts outstanding as hedges on its
construction commitments for the Ramform Victoryand
Ramform Vanguardseismic vessels. These vessels were
delivered during the first quarter of 1999, and the hedge
contracts expired in the same period.

During 1998, the Company entered into forward
foreign currency exchange contracts known as tax equalization
swaps (TES) related to its $360.0 million
of senior unsecured notes and its mortgage notes (Note 8).
During 1999, the Company entered into additional TES contracts
related to its remaining $1.1 billion in unsecured senior
notes (Note 8) and its trust preferred securities
(Note 9). These contracts effectively hedge the risk
related to the cash tax effect of unrealized exchange rate
fluctuations between the Norwegian kroner and the US dollar
related to the Companys US dollar-denominated debt
and trust preferred securities, where such foreign currency
exchange gains and losses are taxable and deductible,
respectively, in each period on a mark-to-market basis for
Norwegian statutory tax purposes. Although these contracts are
economic hedges, they do not qualify for hedge accounting
treatment. As a result, the periodic adjustments necessary to
reflect the fair value of these instruments in the
Companys balance sheet are recognized immediately in the
Companys results of operations. The contracts
aggregate notional values at December 31, 2000 and 1999
were $682.8 million. The TES mature at various dates
through December 2003 and provide for interim settlements
between the Company and the counterparty each December 30.
At December 31, 2000, the Companys interim settlement
position was a $65.2 million liability (to be paid in
installments during 2001), and the Company carried an additional
liability of $26.0 million to reflect the fair value of the
contracts forward elements. At December 31, 1999, the
Companys interim settlement position was an
$8.4 million liability (which was paid during 2000), and
the Company carried an additional liability of
$29.8 million to reflect the fair value of the
contracts forward elements. Results of operations for the
years ended December 31, 2000, 1999 and 1998 included
$61.4 million, $32.8 million

F-22



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##### Table of Contents



and $5.2 million, respectively, of fair
value expense for these contracts, and tax benefits of
$50.3 million, $14.8 million and $1.5 million,
respectively.


Fair
Values Of Financial Instruments.

The carrying amounts of cash and cash
equivalents, accounts receivable, other current assets, accounts
payable and accrued expenses and other current liabilities
approximate their respective fair values because of the short
maturities of those instruments. The carrying amounts and the
estimated fair values of the Companys other financial
instruments are summarized as follows:

|                                           |  |                           |           |             |  |          |           |             |  |   |           |  |  |   |           | 
|------------------------------------------ |  | ------------------------- | --------- | ----------- |  | -------- | --------- | ----------- |  | - | --------- |  |  | - | --------- | 
|                                           |  |                          
|                                           |  | December 31,             
|                                           |  |                          
|                                           |  |                           |           |            
|                                           |  | 2000                      |           | 1999       
|                                           |  |                           |           |            
|                                           |  | Carrying                  |           |             |  | Carrying |           |            
|                                           |  | amounts                   |           | Fair values |  | amounts  |           | Fair values
|                                           |  |                           |           |             |  |          |           |            
|                                           |  |                          
|                                           |  | (In thousands of dollars)
|                                           |  | (As restated, Note 22)   
|Long-term debt, including current
	portion |  | $                         | 2,170,511 |             |  | $        | 2,084,703 |             |  | $ | 2,001,044 |  |  | $ | 1,915,521 | 
|Trust preferred securities                 |  |                           | 140,050   |             |  |          | 120,750   |             |  |   | 139,164   |  |  |   | 132,969   | 
|Tax equalization swap contracts            |  |                           | 91,163    |             |  |          | 91,163    |             |  |   | 38,229    |  |  |   | 38,229    | 

The following methods and assumptions were used
to estimate the fair values of each class of financial
instrument:

Long-term Debt and Trust Preferred
Securities The carrying
amounts of the Companys revolving bank credit facility
approximate their fair values. The fair values of the
Companys other long-term debt instruments and trust
preferred securities are estimated using quotes obtained from
dealers in such financial instruments.

Tax Equalization Swap Contracts The fair values of the Companys
tax equalization contracts are estimated based on periodic
quotes obtained from the financial instruments
counterparty.

NOTE 16  Retirement
Plans

The Company sponsors defined benefit pension
plans for substantially all of its Norwegian and
UK employees, with eligibility determined by certain
period-of-service requirements. These plans are generally funded
through contributions to insurance companies that assume all
liabilities for benefit payments. It is the Companys
general practice to fund amounts to these defined benefit plans
which are sufficient to meet the applicable statutory
requirements.

Reconciliations of the plans aggregate
projected benefit obligations and fair values of assets are
summarized as follows:

|                                         |                                                    |                  |   |        |   |  |   |        |  
|---------------------------------------- | -------------------------------------------------- | ---------------- | - | ------ | - |  | - | ------ | -
|                                         |                                                    |                 
|                                         |                                                    | December 31,    
|                                         |                                                    |                 
|                                         |                                                    | 2000             |   | 1999  
|                                         |                                                    |                  |   |       
|                                         |                                                    |                 
|                                         |                                                    | (in thousands of
|                                         |                                                    | dollars)        
|Change in projected benefit obligations: |                                                    |                  |   |        |   |  |   |       
|                                         | Projected benefit obligations at beginning of year |                  | $ | 33,886 |   |  | $ | 25,454 |  
|                                         | Service cost                                       |                  |   | 6,641  |   |  |   | 6,602  |  
|                                         | Interest cost                                      |                  |   | 2,042  |   |  |   | 1,674  |  
|                                         | Employee contributions                             |                  |   | 1,018  |   |  |   | 1,066  |  
|                                         | Amendments                                         |                  |   | 1,061  |   |  |   | 217    |  
|                                         | Actuarial loss, net                                |                  |   | 505    |   |  |   | 847    |  
|                                         | Benefits paid                                      |                  |   | (1,385 | ) |  |   | (424   | )
|                                         | Exchange rate effects                              |                  |   | (3,464 | ) |  |   | (1,549 | )
|                                         |                                                    |                  |   |        |   |  |   |       
|                                         | Projected benefit obligations at end of year       |                  | $ | 40,304 |   |  | $ | 33,887 |  
|                                         |                                                    |                  |   |        |   |  |   |       

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##### Table of Contents



|                       |                                                 |                  |   |        |   |  |   |        |  
|---------------------- | ----------------------------------------------- | ---------------- | - | ------ | - |  | - | ------ | -
|                       |                                                 |                 
|                       |                                                 | December 31,    
|                       |                                                 |                 
|                       |                                                 | 2000             |   | 1999  
|                       |                                                 |                  |   |       
|                       |                                                 |                 
|                       |                                                 | (in thousands of
|                       |                                                 | dollars)        
|Change in plan assets: |                                                 |                  |   |        |   |  |   |       
|                       | Fair value of plan assets at beginning
	of year |                  | $ | 25,149 |   |  | $ | 18,249 |  
|                       | Return on plan assets                           |                  |   | 1,515  |   |  |   | 2,453  |  
|                       | Employer contributions                          |                  |   | 4,037  |   |  |   | 4,799  |  
|                       | Employee contributions                          |                  |   | 1,018  |   |  |   | 1,066  |  
|                       | Amendments                                      |                  |   | 1,639  |   |  |   | 94     |  
|                       | Benefits paid                                   |                  |   | (1,385 | ) |  |   | (424   | )
|                       | Exchange rate effects                           |                  |   | (2,554 | ) |  |   | (1,088 | )
|                       |                                                 |                  |   |        |   |  |   |       
|                       | Fair value of plan assets at end of year        |                  | $ | 29,419 |   |  | $ | 25,149 |  
|                       |                                                 |                  |   |        |   |  |   |       

Plans with accumulated benefit obligations in
excess of assets had aggregate accumulated benefit obligations
of $2.7 million and $3.1 million and aggregate assets
of $2.2 million and $2.1 million at December 31,
2000 and 1999, respectively.

The aggregate funded status of the plans and
amounts recognized in the Companys balance sheets are
summarized as follows:

|                                              |  |                           |         |      |  |   |        |  
|--------------------------------------------- |  | ------------------------- | ------- | ---- |  | - | ------ | -
|                                              |  |                          
|                                              |  | December 31,             
|                                              |  |                          
|                                              |  | 2000                      |         | 1999
|                                              |  |                           |         |     
|                                              |  |                          
|                                              |  | (in thousands of dollars)
|Funded status                                 |  | $                         | (10,885 | )    |  | $ | (8,738 | )
|Unrecognized actuarial loss                   |  |                           | 2,442   |      |  |   | 4,545  |  
|Unrecognized prior service cost               |  |                           | 25      |      |  |   | 30     |  
|Unrecognized transition obligation            |  |                           | 138     |      |  |   | 181    |  
|                                              |  |                           |         |      |  |   |        |  
|Net amount recognized as accrued pension cost |  | $                         | (8,280  | )    |  | $ | (3,982 | )
|                                              |  |                           |         |      |  |   |        |  

The projected benefit obligations have been
calculated using the projected unit credit method. The weighted
average discount rate used was 6% for the year ended
December 31, 2000 and 7% for the years December 31,
1999 and 1998. The weighted average expected return on plan
assets was 8% and the weighted average rate of benefits increase
was 5% for each of the three years in the period ended
December 31, 2000.

The aggregate net periodic pension cost for the
Companys defined benefit pension plans is summarized as
follows:

|                                         |                                       |                           |   |        |   |      |   |        |   |  |   |        |  
|---------------------------------------- | ------------------------------------- | ------------------------- | - | ------ | - | ---- | - | ------ | - |  | - | ------ | -
|                                         |                                       |                          
|                                         |                                       | Years ended December 31, 
|                                         |                                       |                          
|                                         |                                       | 2000                      |   | 1999   |   | 1998
|                                         |                                       |                           |   |        |   |     
|                                         |                                       |                          
|                                         |                                       | (in thousands of dollars)
|Components of net periodic pension cost: |                                       |                           |   |        |   |      |   |        |   |  |   |       
|                                         | Service cost                          |                           | $ | 6,641  |   |      | $ | 6,602  |   |  | $ | 4,875  |  
|                                         | Interest cost                         |                           |   | 2,042  |   |      |   | 1,674  |   |  |   | 1,245  |  
|                                         | Expected return on plan assets        |                           |   | (2,039 | ) |      |   | (1,547 | ) |  |   | (1,245 | )
|                                         | Amortization of actuarial loss        |                           |   | 17     |   |      |   | 176    |   |  |   | 78     |  
|                                         | Amortization of prior service cost    |                           |   | 2      |   |      |   | 3      |   |  |   | 3      |  
|                                         | Amortization of transition obligation |                           |   | 14     |   |      |   | 17     |   |  |   | 12     |  
|                                         |                                       |                           |   |        |   |      |   |        |   |  |   |       
|                                         | Net periodic pension cost             |                           | $ | 6,677  |   |      | $ | 6,925  |   |  | $ | 4,968  |  
|                                         |                                       |                           |   |        |   |      |   |        |   |  |   |       

Substantially all employees not eligible for
coverage under the defined benefit plans are eligible to
participate in pension plans in accordance with local
industrial, tax and social regulations. All of these plans are
considered defined contribution plans. Under the Companys
US defined contribution plan,

F-24



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##### Table of Contents



essentially all US employees are eligible to
participate upon completion of certain period-of-service
requirements. The plan allows eligible employees to contribute
up to 15% of compensation, subject to IRS and plan
limitations, on a pre-tax basis. Employee pre-tax contributions
are matched by the Company up to 6% of compensation, with a
2000 employee contribution cap of $10,500. All contributions
vest as made. The annual employer matching contribution
recognized by the Company related to the plan was
$1.2 million, $0.7 million and $1.7 million for
2000, 1999, and 1998, respectively. Contributions to the plan by
employees for these periods were $3.8 million,
$2.3 million and $4.0 million, respectively. Aggregate
employer and employee contributions under the Companys
other plans for the years ended December 31, 2000 and 1999
totaled $5.4 million and $2.6 million (2000) and
$5.9 million and $2.5 million (1999); contributions
for 1998 were not significant.


NOTE 17  Related Party
Transactions

At December 31, 2000, 1999 and 1998, the
Company owned 50% of K/S Geo Explorer and had
chartered a vessel from the company during these years. The
Company also held 50% of the shares in Walther
Herwig AS and chartered three vessels from this company in
2000, 1999 and 1998. Total charter hire recognized by the
Company for 2000, 1999 and 1998 on these vessels was
$8.5 million, $13.9 million and $13.3 million,
respectively. Remaining lease commitments to these investees are
reflected in the Companys consolidated lease commitments
(Note 10).

At December 31, 2000 and 1999, the Company
held 50% of the shares in Calibre Seismic Company
(CSC), one of the companies through which the
Company markets its seismic data. The Company had $11.9 million
and $15.2 million in investment in CSC at December 31,
2000 and 1999, respectively, representing Company-funded costs
of seismic data acquisition projects performed for CSC from 1991
to 1995.

NOTE 18  Segment and
Geographic Information

The Companys services are provided by
various separately managed business units. These business units
have been aggregated into two reportable segments, geophysical
services and production services, based on shared economic
characteristics and similar long-term performance. The Company
believes that the business units within each reportable segment
are strategically and/or operationally interrelated and provide
similar services to the same customer base. The Companys
senior management regularly reviews the operating results of
these two reportable segments in resource allocation decisions
and performance assessment. The geophysical services segment
primarily acquires, processes and markets 3D, 4D and
multi-component marine and onshore seismic data and provides 4D
and multi-component reservoir interpretation, characterization
and monitoring services. The production services segment owns
and/or operates FPSOs and other offshore production facilities
and provides production management services for oil and gas
companies. The principal markets for the Companys
production services segment are the UK and Norway, while the
geophysical services segment serves a worldwide market.
Customers for both segments are primarily composed of major
multi-national, independent and national or state-owned oil
companies. The accounting policies for the segments are the same
as those described in Note 1. The Companys corporate
overhead has been allocated to the segments based on percentage
of revenue. Affiliated sales are made at prices that approximate
market value.

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##### Table of Contents



Information by segment is summarized as follows:

|                                         |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|---------------------------------------- |  | ------------------------- | --------- | ---------- |  | ----------- | --------- | ----- |  | - | ------- | - |  | - | --------- | -
|                                         |  |                           |           |            |  | Elimination |           |      
|                                         |  |                           |           |            |  | of          |           |      
|                                         |  | Geophysical               |           | Production |  | affiliated  |           |      
|Years ended December 31,                 |  | Services                  |           | Services   |  | sales       |           | Total
|                                         |  |                           |           |            |  |             |           |      
|                                         |  |                          
|                                         |  | (In thousands of dollars)
|Revenue, unaffiliated companies:         |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|2000                                     |  | $                         | 462,604   |            |  | $           | 450,878   |       |  |   |        |   |  | $ | 913,482   |  
|1999                                     |  |                           | 419,854   |            |  |             | 368,306   |       |  |   |        |   |  |   | 788,160   |  
|1998                                     |  |                           | 622,232   |            |  |             | 139,530   |       |  |   |        |   |  |   | 761,762   |  
|Revenue, includes affiliates:            |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|2000                                     |  | $                         | 472,570   |            |  | $           | 452,095   |       |  | $ | (11,183 | ) |  | $ | 913,482   |  
|1999                                     |  |                           | 426,363   |            |  |             | 369,166   |       |  |   | (7,369  | ) |  |   | 788,160   |  
|1998                                     |  |                           | 639,134   |            |  |             | 139,559   |       |  |   | (16,931 | ) |  |   | 761,762   |  
|Operating (loss) profit:                 |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|2000                                     |  | $                         | (246,970  | )          |  | $           | 25,921    |       |  |   |        |   |  | $ | (221,049  | )
|1999                                     |  |                           | (23,396   | )          |  |             | 62,468    |       |  |   |        |   |  |   | 39,072    |  
|1998                                     |  |                           | 119,723   |            |  |             | 24,245    |       |  |   |        |   |  |   | 143,968   |  
|Assets:                                  |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|2000                                     |  | $                         | 2,278,846 |            |  | $           | 2,014,805 |       |  |   |        |   |  | $ | 4,293,651 |  
|1999                                     |  |                           | 2,224,444 |            |  |             | 1,960,553 |       |  |   |        |   |  |   | 4,184,997 |  
|Depreciation and amortization:           |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|2000                                     |  | $                         | 206,953   |            |  | $           | 55,156    |       |  |   |        |   |  | $ | 262,109   |  
|1999                                     |  |                           | 189,335   |            |  |             | 49,241    |       |  |   |        |   |  |   | 238,576   |  
|1998                                     |  |                           | 254,027   |            |  |             | 19,772    |       |  |   |        |   |  |   | 273,799   |  
|Unusual items:                           |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|2000                                     |  | $                         | 288,595   |            |  | $           | 77,185    |       |  |   |        |   |  | $ | 365,780   |  
|1999                                     |  |                           | 82,855    |            |  |             | 7,000     |       |  |   |        |   |  |   | 89,855    |  
|1998                                     |  |                           | 18,397    |            |  |             | 7,340     |       |  |   |        |   |  |   | 25,737    |  
|Interest expense, net:                   |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|2000                                     |  | $                         | 57,191    |            |  | $           | 50,925    |       |  |   |        |   |  | $ | 108,116   |  
|1999                                     |  |                           | 40,622    |            |  |             | 47,636    |       |  |   |        |   |  |   | 88,258    |  
|1998                                     |  |                           | 28,670    |            |  |             | 11,571    |       |  |   |        |   |  |   | 40,241    |  
|Additions to long-lived tangible assets: |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|2000                                     |  | $                         | 291,450   |            |  | $           | 105,674   |       |  |   |        |   |  | $ | 397,124   |  
|1999                                     |  |                           | 554,972   |            |  |             | 451,615   |       |  |   |        |   |  |   | 1,006,587 |  
|1998                                     |  |                           | 615,502   |            |  |             | 294,356   |       |  |   |        |   |  |   | 909,858   |  
|Investment in equity method investees:   |  |                           |           |            |  |             |           |       |  |   |         |   |  |   |           |  
|2000                                     |  | $                         | 16,566    |            |  | $           | 2,902     |       |  |   |        |   |  | $ | 19,468    |  
|1999                                     |  |                           | 98,815    |            |  |             | 10,658    |       |  |   |        |   |  |   | 109,473   |  

Since the Company provides services to the oil
and gas industry worldwide, a substantial portion of the
Companys property and equipment is mobile, and the
respective locations at the end of the period (as listed in the
table below, together with multi-client library) are not
necessarily indicative of the earnings of the related property
and equipment during the period. The geographic classification
of income statement amounts listed below is based upon location
of performance or, in the case of multi-client seismic data
sales, the area where the survey was physically located.

F-26



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##### Table of Contents



Information by geographic region is summarized as
follows:

|                                 |      |                           |   |          |   |        |   |              |   |        |   |              |   |             |   |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |           |  
|-------------------------------- | ---- | ------------------------- | - | -------- | - | ------ | - | ------------ | - | ------ | - | ------------ | - | ----------- | - | ------- | - |  | - | ------- | - |  | - | ------- | - |  | - | ------- | - |  | - | --------- | -
|                                 |      |                           |   |          |   |        |   |              |   |        |   |              |   | Elimination |   |        
|                                 |      |                           |   |          |   |        |   |              |   |        |   |              |   | of          |   |        
|                                 |      |                           |   |          |   |        |   |              |   |        |   | Middle East/ |   | affiliated  |   |        
|Years ended December 31,         |      | Americas                  |   | UK       |   | Norway |   | Asia/Pacific |   | Africa |   | Other        |   | sales       |   | Total  
|                                 |      |                           |   |          |   |        |   |              |   |        |   |              |   |             |   |        
|                                 |      |                          
|                                 |      | (In thousands of dollars)
|Revenue, unaffiliated companies: |      |                           |   |          |   |        |   |              |   |        |   |              |   |             |   |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |          
|                                 | 2000 |                           | $ | 144,124  |   |        | $ | 402,735      |   |        | $ | 155,561      |   |             | $ | 115,130 |   |  | $ | 39,029  |   |  | $ | 56,903  |   |  |   |        |   |  | $ | 913,482   |  
|                                 | 1999 |                           |   | 152,088  |   |        |   | 381,452      |   |        |   | 118,788      |   |             |   | 69,718  |   |  |   | 61,535  |   |  |   | 4,579   |   |  |   |        |   |  |   | 788,160   |  
|                                 | 1998 |                           |   | 251,157  |   |        |   | 232,092      |   |        |   | 84,908       |   |             |   | 123,726 |   |  |   | 42,581  |   |  |   | 27,298  |   |  |   |        |   |  |   | 761,762   |  
|Revenue, includes affiliates:    |      |                           |   |          |   |        |   |              |   |        |   |              |   |             |   |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |          
|                                 | 2000 |                           | $ | 150,688  |   |        | $ | 411,417      |   |        | $ | 166,764      |   |             | $ | 117,716 |   |  | $ | 39,029  |   |  | $ | 68,134  |   |  | $ | (40,266 | ) |  | $ | 913,482   |  
|                                 | 1999 |                           |   | 168,237  |   |        |   | 389,407      |   |        |   | 138,081      |   |             |   | 70,942  |   |  |   | 61,535  |   |  |   | 8,670   |   |  |   | (48,712 | ) |  |   | 788,160   |  
|                                 | 1998 |                           |   | 262,066  |   |        |   | 243,843      |   |        |   | 89,064       |   |             |   | 125,556 |   |  |   | 42,581  |   |  |   | 46,022  |   |  |   | (47,370 | ) |  |   | 761,762   |  
|Operating (loss) profit:         |      |                           |   |          |   |        |   |              |   |        |   |              |   |             |   |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |          
|                                 | 2000 |                           | $ | (159,086 | ) |        | $ | (3,112       | ) |        | $ | (1,077       | ) |             | $ | (36,402 | ) |  | $ | (7,510  | ) |  | $ | (13,862 | ) |  |   |        |   |  | $ | (221,049  | )
|                                 | 1999 |                           |   | (33,707  | ) |        |   | 96,098       |   |        |   | 2,843        |   |             |   | (30,053 | ) |  |   | 4,549   |   |  |   | (658    | ) |  |   |        |   |  |   | 39,072    |  
|                                 | 1998 |                           |   | 25,917   |   |        |   | 83,705       |   |        |   | 1,978        |   |             |   | 26,033  |   |  |   | 6,881   |   |  |   | (546    | ) |  |   |        |   |  |   | 143,968   |  
|Long-lived tangible assets:      |      |                           |   |          |   |        |   |              |   |        |   |              |   |             |   |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |          
|                                 | 2000 |                           | $ | 534,616  |   |        | $ | 2,220,342    |   |        | $ | 183,045      |   |             | $ | 122,156 |   |  | $ | 100,177 |   |  | $ | 65,266  |   |  |   |        |   |  | $ | 3,225,602 |  
|                                 | 1999 |                           |   | 479,725  |   |        |   | 2,279,954    |   |        |   | 220,205      |   |             |   | 120,472 |   |  |   | 110,751 |   |  |   | 35,164  |   |  |   |        |   |  |   | 3,246,271 |  
|Depreciation and amortization:   |      |                           |   |          |   |        |   |              |   |        |   |              |   |             |   |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |          
|                                 | 2000 |                           | $ | 75,391   |   |        | $ | 97,448       |   |        | $ | 39,886       |   |             | $ | 28,470  |   |  | $ | 16,266  |   |  | $ | 4,648   |   |  |   |        |   |  | $ | 262,109   |  
|                                 | 1999 |                           |   | 68,530   |   |        |   | 93,579       |   |        |   | 30,489       |   |             |   | 26,331  |   |  |   | 17,552  |   |  |   | 2,095   |   |  |   |        |   |  |   | 238,576   |  
|                                 | 1998 |                           |   | 122,282  |   |        |   | 83,757       |   |        |   | 17,086       |   |             |   | 36,576  |   |  |   | 6,952   |   |  |   | 7,146   |   |  |   |        |   |  |   | 273,799   |  
|Capital expenditures:            |      |                           |   |          |   |        |   |              |   |        |   |              |   |             |   |         |   |  |   |         |   |  |   |         |   |  |   |         |   |  |   |          
|                                 | 2000 |                           | $ | 7,111    |   |        | $ | 57,320       |   |        | $ | 47,613       |   |             | $ | 360     |   |  | $ | 155     |   |  | $ | 14,324  |   |  |   |        |   |  | $ | 126,883   |  
|                                 | 1999 |                           |   | 4,812    |   |        |   | 608,054      |   |        |   | 31,320       |   |             |   | 82      |   |  |   | 282     |   |  |   | 23,319  |   |  |   |        |   |  |   | 667,869   |  
|                                 | 1998 |                           |   | 63,008   |   |        |   | 390,633      |   |        |   | 52,259       |   |             |   | 420     |   |  |   |        |   |  |   | 15,310  |   |  |   |        |   |  |   | 521,630   |  

Export sales from Norway to unaffiliated
customers did not exceed 10% of gross revenue for the years
ended December 31, 2000, 1999 and 1998.

For the year ended December 31, 2000, two
customers accounted for 16% and 11% of our revenue,
respectively; both customers utilized both geophysical and
production services. For the year ended December 31, 1999,
the Companys largest customer accounted for approximately
16% of the Companys revenue, all of which was production
services revenue. For the year ended December 31, 1998, no
single customer accounted for more than 10% of the
Companys revenue.

NOTE 19  Supplemental Cash
Flow Information

Cash paid during the year includes payments for:

|                                      |  |                           |         |      |  |      |        |  |  |   |        | 
|------------------------------------- |  | ------------------------- | ------- | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                      |  |                          
|                                      |  | Years ended December 31, 
|                                      |  |                          
|                                      |  | 2000                      |         | 1999 |  | 1998
|                                      |  |                           |         |      |  |     
|                                      |  |                          
|                                      |  | (In thousands of dollars)
|Interest, net of capitalized interest |  | $                         | 108,410 |      |  | $    | 83,957 |  |  | $ | 45,054 | 
|Income taxes                          |  |                           | 4,505   |      |  |      | 7,790  |  |  |   | 3,084  | 

The Company entered into capital lease agreements
for new equipment aggregating $8.5 million,
$3.5 million and $13.3 million in 2000, 1999 and 1998,
respectively.

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NOTE 20  Financial Expense,
Net

Financial expense, net, includes the following:

|                                                          |                        |                           |          |          |   |      |         |         |   |   |         |         |  
|--------------------------------------------------------- | ---------------------- | ------------------------- | -------- | -------- | - | ---- | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                        |                          
|                                                          |                        | Years ended December 31, 
|                                                          |                        |                          
|                                                          |                        | 2000                      |          | 1999     |   | 1998
|                                                          |                        |                           |          |          |   |     
|                                                          |                        |                          
|                                                          |                        | (In thousands of dollars)
|Interest income                                           |                        | $                         | 5,076    |          |   | $    | 4,494   |         |   | $ | 7,979   |        
|Interest expense                                          |                        |                           | (113,192 | )        |   |      | (92,752 | )       |   |   | (48,220 | )      
|Minority interest on trust preferred securities
	(Note 9) |                        |                           | (14,817  | )        |   |      | (7,711  | )       |   |   |        |        
|                                                          |                        |                           |          |          |   |      |         |         |   |   |         |        
|                                                          | Financial expense, net |                           | $        | (122,933 | ) |      | $       | (95,969 | ) |   | $       | (40,241 | )
|                                                          |                        |                           |          |          |   |      |         |         |   |   |         |        

NOTE 21  Unusual
Items

During the year ended December 31, 2000, the
Companys geophysical services did not recover as expected,
despite the significant, sustained improvement in oil and gas
prices. As a result of the market conditions, the Company
recorded $166.5 million in impairment charges against its
multi-client library; $148.8 million in impairment charges
against property, equipment and other assets; and
$50.5 million in contract losses. These charges included
$77.2 million related to the Ramform Banff and
certain other production assets.

During the year ended December 31, 1999, the
Company experienced a significant decrease in the demand for its
geophysical services due to the low price of oil during 1998 and
the first half of 1999. As a result of these reduced activity
levels, the Company implemented certain restructuring efforts
and recorded charges during the first and third quarters related
to these efforts as summarized below:

|                                                                       |                                                    |                           |                                 |         |        |              |   |         |        |              |   |        |        |  |   |        |        |  |   |   |   |  | 
|---------------------------------------------------------------------- | -------------------------------------------------- | ------------------------- | ------------------------------- | ------- | ------ | ------------ | - | ------- | ------ | ------------ | - | ------ | ------ |  | - | ------ | ------ |  | - | - | - |  | 
|                                                                       |                                                    |                           |                                 |         |        | Accrued      |   |         |        | Accrued     
|                                                                       |                                                    |                           |                                 | Amounts |        | balance at   |   | Amounts |        | balance at  
|                                                                       |                                                    |                           |                                 | paid in |        | December 31, |   | paid in |        | December 31,
|                                                                       |                                                    | Total charge              |                                 | 1999    |        | 1999         |   | 2000    |        | 2000        
|                                                                       |                                                    |                           |                                 |         |        |              |   |         |        |             
|                                                                       |                                                    |                          
|                                                                       |                                                    | (In thousands of dollars)
|Cash charges:                                                          |                                                    |                           |                                 |         |        |              |   |         |        |              |   |        |        |  |   |        |        |  |   |  
|                                                                       | Severance for approximately 500 employees          |                           | $                               | 12,685  |        |              | $ | 6,063   |        |              | $ | 6,622  |        |  | $ | 6,622  |        |  | $ |  |  
|                                                                       | Lease termination, derigging and other obligations |                           |                                 | 38,734  |        |              |   | 28,036  |        |              |   | 10,698 |        |  |   | 10,698 |        |  |   |  |  
|                                                                       |                                                    |                           |                                 |         |        |              |   |         |        |              |   |        |        |  |   |        |        |  |   |  
|                                                                       |                                                    | Cash charges              |                                 |         | 51,419 |              |   |         | 34,099 |              |   |        | 17,320 |  |   |        | 17,320 |  |   |   |  | 
|                                                                       |                                                    |                           |                                 |         |        |              |   |         |        |              |   |        |        |  |   |        |        |  |   |  
|Non-cash charges  write-off and
	write-down of property and equipment |                                                    |                           | 22,535                          |         |        |              |   |         |        |              |   |        |        |  |   |        |        |  |   |  
|                                                                       |                                                    |                           |                                 |         |        |              |   |         |        |              |   |        |        |  |   |        |        |  |   |  
|                                                                       |                                                    |                           | Total cash and non-cash charges |         | $      | 73,954       |   |         |        |              |   |        |        |  |   |        |        |  |   |   |   |  | 
|                                                                       |                                                    |                           |                                 |         |        |              |   |         |        |              |   |        |        |  |   |        |        |  |   |  

The employees whose employment was terminated
were primarily field and support personnel associated with
marine, transition zone and land seismic operations that were
removed from service, and employees within the Companys
data processing operations. The Company terminated the
employment of approximately 400 employees as of
December 31, 1999 and of approximately 100 additional
employees during 2000. The amount accrued was based upon the
positions eliminated, length of service and any statutory or
legal requirements applicable within the country where the
terminations occurred. The Company paid all of the costs accrued
at December 31, 1999 during 2000.

The Company accrued $38.7 million for costs
to (1) derig marine vessels removed from operations,
(2) settle contractual obligations associated with leased
vessels and equipment removed from service, and (3) accrue
for certain other incremental costs associated with the
Companys restructuring efforts.

The impairment of property and equipment
primarily consisted of the write-off or write-down of
geophysical assets that were scrapped, disposed of or were net
expected to benefit future operations, and

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##### Table of Contents



the write-off of leasehold improvements
associated with leased vessels and equipment removed from
service. The Company also recognized $15.9 million in
impairment charges for certain software, equity investment and
other assets.


Impairment charges were based upon a comparison
of the assets carrying amounts to internal estimates of
the realizable fair market values.

During the fourth quarter of 1998, the Company
recorded impairment charges totaling $22.7 million in
response to managements assessment of asset values in
light of the general decline in oil and gas market demand. Of
the total, $7.8 million in charges related to the
multi-client library, $11.5 million related to certain of
the Companys equity investments, and $3.4 million
related to property items associated with the Companys oil
and gas interests.

NOTE 22  Restatement of
Previously Issued Financial Statements

The Company determined that the value of tax
equalization swap contracts (Note 15) was incorrectly
recorded and presented in its previously issued financial
statements, as only the year-end net settlement value of these
instruments was recognized in the Companys statements of
financial position and results of operations, rather than the
fair value of the entire contracts in each reporting period. The
financial statements and related disclosures have been restated
to properly reflect the fair value of these tax equalization
swap contracts as of December 31, 2000 and 1999 and for
each of the years in the three-year period ended
December 31, 2000. The restatement also included a
reclassification of the tax equalization swap contracts in the
Companys statements of financial position and results of
operations. Since the previously reported settlement values of
the tax equalization swap contracts were treated as an
accounting hedge and presented as a net of tax amount within the
provision (benefit) for income taxes, the financial statement
effects of these contracts were reclassified to accrued expenses
and other income (expense). The effect of this restatement was
non-cash, net adjustments to previously reported net income for
fiscal years 2000, 1999 and 1998 of $2.8 million,
($17.5 million) and ($3.9 million), respectively.

In addition, the Company determined that its
financial position and results of operations as of and for the
year ended December 31, 2000 required restatement to
reflect the adoption of SAB No. 101 to the Companys
revenue recognition policy for some types of volume seismic data
licensing arrangements and to defer revenue recognition until
the Company has entered into a license agreement for specific
data. The effect of this restatement was non-cash, net
adjustments to previously reported net income for fiscal
year 2000 of ($4.6 million), including
($6.6 million) as the cumulative effect of the change in
accounting principle.

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##### Table of Contents



The effects of the restatement on the
accompanying financial statements are included below:

|                                                                               |  |                                                  |           |            |  |          |           |            |  |          |           |            |  |   |           |   |  |   |         |  |  |   |         | 
|------------------------------------------------------------------------------ |  | ------------------------------------------------ | --------- | ---------- |  | -------- | --------- | ---------- |  | -------- | --------- | ---------- |  | - | --------- | - |  | - | ------- |  |  | - | ------- | 
|                                                                               |  |                                                 
|                                                                               |  | As of and for the years ended December 31,      
|                                                                               |  |                                                 
|                                                                               |  |                                                  |           |            |  |         
|                                                                               |  | 2000                                             |           | 1999       |  | 1998    
|                                                                               |  |                                                  |           |            |  |         
|                                                                               |  |                                                  |           | As         |  |          |           | As         |  |          |           | As        
|                                                                               |  | As                                               |           | previously |  | As       |           | previously |  | As       |           | previously
|                                                                               |  | restated                                         |           | reported   |  | restated |           | reported   |  | restated |           | reported  
|                                                                               |  |                                                  |           |            |  |          |           |            |  |          |           |           
|                                                                               |  |                                                 
|                                                                               |  | (In thousands of dollars, except per share data)
|Revenue                                                                        |  | $                                                | 913,482   |            |  | $        | 906,233   |            |  | $        | 788,160   |            |  | $ | 788,160   |   |  | $ | 761,762 |  |  | $ | 761,762 | 
|Cost of sales                                                                  |  |                                                  | 424,027   |            |  |          | 423,121   |            |  |          | 333,060   |            |  |   | 333,060   |   |  |   | 236,647 |  |  |   | 236,647 | 
|Depreciation and amortization                                                  |  |                                                  | 262,109   |            |  |          | 258,484   |            |  |          | 238,576   |            |  |   | 238,576   |   |  |   | 273,799 |  |  |   | 273,799 | 
|Total operating expenses                                                       |  |                                                  | 1,134,531 |            |  |          | 1,130,000 |            |  |          | 749,088   |            |  |   | 749,088   |   |  |   | 617,794 |  |  |   | 617,794 | 
|Operating profit (loss)                                                        |  |                                                  | (221,049  | )          |  |          | (223,767  | )          |  |          | 39,072    |            |  |   | 39,072    |   |  |   | 143,968 |  |  |   | 143,968 | 
|Other income (loss), net                                                       |  |                                                  | (32,774   | )          |  |          | 28,583    |            |  |          | (9,144    | )          |  |   | 23,650    |   |  |   | 33,531  |  |  |   | 38,966  | 
|Income (loss) before income taxes                                              |  |                                                  | (315,605  | )          |  |          | (256,966  | )          |  |          | (70,976   | )          |  |   | (38,182   | ) |  |   | 138,112 |  |  |   | 143,547 | 
|Provision (benefit) for income taxes                                           |  |                                                  | (132,756  | )          |  |          | (69,392   | )          |  |          | (57,137   | )          |  |   | (41,890   | ) |  |   | 30,428  |  |  |   | 31,950  | 
|Income (loss) before cumulative effect of
	accounting change                   |  |                                                  | (182,849  | )          |  |          | (187,574  | )          |  |          | (13,839   | )          |  |   | 3,708     |   |  |   | 107,684 |  |  |   | 111,597 | 
|Cumulative effect of accounting change, net of tax                             |  |                                                  | (6,555    | )          |  |          |          |            |  |          | (19,977   | )          |  |   | (19,997   | ) |  |   |        |  |  |   |        | 
|Net income (loss)                                                              |  |                                                  | (189,404  | )          |  |          | (187,574  | )          |  |          | (33,816   | )          |  |   | (16,269   | ) |  |   | 107,684 |  |  |   | 111,597 | 
|Basic income (loss) per share before cumulative
	effect of accounting change   |  |                                                  | (1.79     | )          |  |          | (1.84     | )          |  |          | (0.15     | )          |  |   | 0.04      |   |  |   | 1.31    |  |  |   | 1.36    | 
|Cumulative effect of accounting change                                         |  |                                                  | (0.07     | )          |  |          |          |            |  |          | (0.21     | )          |  |   | (0.21     | ) |  |   |        |  |  |   |        | 
|Basic income (loss) per share                                                  |  |                                                  | (1.86     | )          |  |          | (1.84     | )          |  |          | (0.36     | )          |  |   | (0.17     | ) |  |   | 1.31    |  |  |   | 1.36    | 
|Diluted income (loss) per share before cumulative
	effect of accounting change |  |                                                  | (1.79     | )          |  |          | (1.84     | )          |  |          | (0.15     | )          |  |   | 0.04      |   |  |   | 1.27    |  |  |   | 1.32    | 
|Cumulative effect of accounting change                                         |  |                                                  | (0.07     | )          |  |          |          |            |  |          | (0.21     | )          |  |   | (0.21     | ) |  |   |        |  |  |   |        | 
|Diluted income (loss) per share                                                |  |                                                  | (1.86     | )          |  |          | (1.84     | )          |  |          | (0.36     | )          |  |   | (0.17     | ) |  |   | 1.27    |  |  |   | 1.32    | 
|Accounts receivable, net                                                       |  |                                                  | 237,815   |            |  |          | 253,410   |            |  |          | 240,634   |            |  |   | 240,634   |   |  |   |         |  |  |   |         | 
|Total current assets                                                           |  |                                                  | 473,060   |            |  |          | 488,655   |            |  |          | 398,604   |            |  |   | 398,604   |   |  |   |         |  |  |   |         | 
|Multi-client library, net                                                      |  |                                                  | 854,899   |            |  |          | 847,102   |            |  |          | 816,423   |            |  |   | 816,423   |   |  |   |         |  |  |   |         | 
|Other long-term assets, net                                                    |  |                                                  | 333,331   |            |  |          | 324,273   |            |  |          | 275,768   |            |  |   | 267,422   |   |  |   |         |  |  |   |         | 
|Total assets                                                                   |  |                                                  | 4,293,651 |            |  |          | 4,292,391 |            |  |          | 4,184,997 |            |  |   | 4,176,651 |   |  |   |         |  |  |   |         | 
|Accrued expenses                                                               |  |                                                  | 293,119   |            |  |          | 203,368   |            |  |          | 182,441   |            |  |   | 144,212   |   |  |   |         |  |  |   |         | 
|Income taxes payable                                                           |  |                                                  | 12,263    |            |  |          | 77,464    |            |  |          | 9,805     |            |  |   | 9,805     |   |  |   |         |  |  |   |         | 
|Total current liabilities                                                      |  |                                                  | 434,888   |            |  |          | 410,338   |            |  |          | 302,720   |            |  |   | 264,491   |   |  |   |         |  |  |   |         | 
|Deferred tax liabilities                                                       |  |                                                  | 96,260    |            |  |          | 96,260    |            |  |          | 71,429    |            |  |   | 79,852    |   |  |   |         |  |  |   |         | 
|Total liabilities                                                              |  |                                                  | 2,781,600 |            |  |          | 2,757,050 |            |  |          | 2,477,416 |            |  |   | 2,447,610 |   |  |   |         |  |  |   |         | 
|Retained earnings                                                              |  |                                                  | 116,521   |            |  |          | 139,811   |            |  |          | 305,925   |            |  |   | 327,385   |   |  |   |         |  |  |   |         | 
|Total shareholders equity                                                     |  |                                                  | 1,372,001 |            |  |          | 1,395,291 |            |  |          | 1,568,417 |            |  |   | 1,589,877 |   |  |   |         |  |  |   |         | 
|Total liabilities and shareholders equity                                     |  |                                                  | 4,293,651 |            |  |          | 4,292,391 |            |  |          | 4,184,997 |            |  |   | 4,176,651 |   |  |   |         |  |  |   |         | 

The pro forma effects of the adoption of SAB
No. 101 as if the adoption had been reflected in fiscal
years 1999 and 1998, rather than as the cumulative effect of a
change in accounting principle as of January 1, 2001, are
presented below:

|                                                                               |  |                          |         |      |  |   |         | 
|------------------------------------------------------------------------------ |  | ------------------------ | ------- | ---- |  | - | ------- | 
|                                                                               |  |                         
|                                                                               |  | Years ended December 31,
|                                                                               |  |                         
|                                                                               |  | 1999                     |         | 1998
|                                                                               |  |                          |         |     
|Income (loss) before cumulative effect of
	accounting change                   |  | $                        | (8,558  | )    |  | $ | 104,865 | 
|Cumulative effect of accounting change, net of tax                             |  |                          | (19,977 | )    |  |   |        | 
|Net income (loss)                                                              |  |                          | (28,535 | )    |  |   | 104,865 | 
|Basic income (loss) per share before cumulative
	effect of accounting change   |  |                          | (0.09   | )    |  |   | 1.27    | 
|Cumulative effect of accounting change, net of tax                             |  |                          | (0.21   | )    |  |   |        | 
|Basic income (loss) per share                                                  |  |                          | (0.30   | )    |  |   | 1.27    | 
|Diluted income (loss) per share before cumulative
	effect of accounting change |  |                          | (0.09   | )    |  |   | 1.24    | 
|Cumulative effect of accounting change, net of tax                             |  |                          | (0.21   | )    |  |   |        | 
|Diluted income (loss) per share                                                |  |                          | (0.30   | )    |  |   | 1.24    | 

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##### Table of Contents



NOTE 23  Summarized Financial
Information

PGS Exploration AS.

PGS Exploration AS (PEXAS), a
Norwegian corporation, is a wholly owned subsidiary of the
Company. PEXAS is the largest geophysical services company
within the PGS group of companies. PEXAS is also the charterer
of the Ramform Explorerand the Ramform
Challenger. The Company has fully and unconditionally
guaranteed PEXAS charter obligations in connection with certain
debt securities issued in order to finance the purchase of these
vessels. Summarized financial information for PEXAS and its
consolidated subsidiaries is presented below. This information
was derived from the financial statements prepared on a
stand-alone basis in conformity with US GAAP. Separate
financial statements and other disclosures with respect to PEXAS
are omitted because the information contained therein, in light
of the information contained in the consolidated financial
statements of the Company, would not be material.

|                       |  |                           |          |      |  |      |         |   |  |   |         | 
|---------------------- |  | ------------------------- | -------- | ---- |  | ---- | ------- | - |  | - | ------- | 
|                       |  |                          
|                       |  | Years ended December 31, 
|                       |  |                          
|                       |  | 2000                      |          | 1999 |  | 1998
|                       |  |                           |          |      |  |     
|                       |  |                          
|                       |  | (In thousands of dollars)
|INCOME STATEMENT DATA  |  |                           |          |      |  |      |         |   |  |   |         | 
|Revenue                |  | $                         | 200,560  |      |  | $    | 210,459 |   |  | $ | 138,816 | 
|Operating profit       |  |                           | (110,983 | )    |  |      | (10,924 | ) |  |   | 3,576   | 
|Net income             |  |                           | (89,640  | )    |  |      | (13,151 | ) |  |   | 9,043   | 
|BALANCE SHEET DATA     |  |                           |          |      |  |      |         |   |  |   |         | 
|Current assets         |  | $                         | 199,197  |      |  | $    | 100,165 |   |  | $ | 132,420 | 
|Noncurrent assets      |  |                           | 209,784  |      |  |      | 490,663 |   |  |   | 207,064 | 
|Current liabilities    |  |                           | 102,389  |      |  |      | 61,116  |   |  |   | 82,338  | 
|Noncurrent liabilities |  |                           | 285,144  |      |  |      | 425,704 |   |  |   | 139,988 | 
|Equity                 |  |                           | 21,448   |      |  |      | 104,008 |   |  |   | 117,158 | 

Oslo Explorer PLC and Oslo Challenger
PLC.

Both Oslo Explorer PLC (Explorer) and
Oslo Challenger PLC (Challenger), Isle of Man public
limited companies, are wholly owned subsidiaries of the Company,
purchased on April 4, 1997 (Note 8). Explorer and
Challenger own the Ramform Explorerand the Ramform
Challenger, respectively, and lease these vessels to PEXAS
pursuant to long-term bareboat charters. Explorer and Challenger
are jointly and severally liable under mortgage notes, in an
original principal amount of $165.7 million, which were
issued to finance the purchase of the Ramform Explorerand the Ramform Challenger. Summarized financial
information for each of Explorer and Challenger is presented
below. This information was derived from the financial
statements prepared on a stand-alone basis in conformity with
US GAAP. Separate financial statements and other
disclosures with respect to Explorer and Challenger are omitted
because the information, in light of the information contained
in the consolidated financial statements of the Company, would
not be material.

|                       |  |                           |        |            |  |          |        |            |  |   |        |  |  |   |        | 
|---------------------- |  | ------------------------- | ------ | ---------- |  | -------- | ------ | ---------- |  | - | ------ |  |  | - | ------ | 
|                       |  |                          
|                       |  | Years ended December 31, 
|                       |  |                          
|                       |  |                           |        |           
|                       |  | 2000                      |        | 1999      
|                       |  |                           |        |           
|                       |  | Explorer                  |        | Challenger |  | Explorer |        | Challenger
|                       |  |                           |        |            |  |          |        |           
|                       |  |                          
|                       |  | (In thousands of dollars)
|INCOME STATEMENT DATA  |  |                           |        |            |  |          |        |            |  |   |        |  |  |   |        | 
|Revenue                |  | $                         | 7,380  |            |  | $        | 7,341  |            |  | $ | 7,560  |  |  | $ | 7,520  | 
|Net income             |  |                           | 1,787  |            |  |          | 1,749  |            |  |   | 1,673  |  |  |   | 1,634  | 
|BALANCE SHEET DATA     |  |                           |        |            |  |          |        |            |  |   |        |  |  |   |        | 
|Current assets         |  | $                         |       |            |  | $        |       |            |  | $ |       |  |  | $ |       | 
|Noncurrent assets      |  |                           | 76,482 |            |  |          | 76,328 |            |  |   | 78,394 |  |  |   | 78,278 | 
|Current liabilities    |  |                           | 5,231  |            |  |          | 5,231  |            |  |   | 4,972  |  |  |   | 4,972  | 
|Noncurrent liabilities |  |                           | 63,668 |            |  |          | 63,666 |            |  |   | 67,626 |  |  |   | 67,625 | 
|Equity                 |  |                           | 7,583  |            |  |          | 7,431  |            |  |   | 5,796  |  |  |   | 5,681  | 

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EXHIBIT INDEX

|            |  |                                      
|----------- |  | -------------------------------------
|Exhibit No. |  | Description                          
|            |  |                                      
|23.1        |  | Consent of PricewaterhouseCoopers LLP