Houston, Texas; Oslo, Norway; May 9, 2001: Petroleum Geo-Services ASA (NYSE: PGO; OSE: PGS) and Syntroleum Corporation (Nasdaq: SYNM) announced today that they have signed a letter of intent to pursue a joint venture to develop, market, and operate mobile marine production facilities, based on Syntroleum's proprietary gas-to-liquids (GTL) technology. The planned joint venture would offer multi-year contract GTL services to gas producers to convert otherwise stranded natural gas from multiple offshore fields into environmentally friendly hydrocarbon products ranging from synthetic crude to finished fuels. The mobility of the floating facilities would permit their use at multiple locations, thereby providing access to fields that are otherwise too small to justify permanent GTL facilities. Such facilities could also enable conversion and monetization of gas that is normally flared or wasted.
If completed, the joint venture company will be the exclusive means by which Syntroleum and PGS offer marine-based GTL services to third parties.
Syntroleum believes there is significant market potential for such GTL facilities for use in small associated gas fields, for monetization of gas caps (gas cap blow down), short-term use as an early production system on large fields while a large permanent GTL plant is being built, and as a long-term solution for offshore gas in a range of water depths, including the expanding activity in deepwater regions around the world. In association with UK-based AMEC, engineering and design work necessary to marinize the Syntroleum Process has been underway for a number of months. Increasing interest in GTL technology from companies with stranded offshore gas has prompted both Syntroleum and PGS to accelerate development efforts.
"This is a concept we've envisioned for a long time but have always known that it required the right partner,' stated Larry Weick, Syntroleum's Vice President for licensing and business development. "With PGS, we feel that we have found that partner. They have both the field operations and marine experience, coupled with ownership of marine FPSOs. Syntroleum's GTL design enables smaller footprints and more compact plants than other technologies, thereby opening opportunities for ship-mounted, mobile facilities. Syntroleum's air-based design is inherently safer than oxygen-based designs, which is an important consideration for offshore applications. In total it all seems like a very good fit for both companies.'
"This is a natural extension of our business model,' stated Kaare Gisvold, President of PGS Production. "The abilities to offer GTL in the offshore environments around the world mark a major step forward for the industry. We are pleased to be at the forefront of this initiative with Syntroleum. It has huge strategic value for many areas of the world where there is a willingness to avoid the pollution and waste gas flaring from existing operations. In addition, this places both PGS and Syntroleum in a strong position to offer methods of producing the huge reserves of offshore gas, which until now were considered stranded.'
Syntroleum Corporation is the developer of a proprietary technology for converting natural gas into synthetic liquid hydrocarbons. The company, in partnership with others, plans to build GTL plants using its technology in a number of global locations. Additionally, Syntroleum licenses its process to oil companies for the manufacture of fuels. Current licensees include ARCO (now BP), Enron, Ivanhoe Energy, Kerr-McGee, Marathon, Repsol-YPF, Texaco and the Commonwealth of Australia.
PGS, via its Joint Venture with Clough Engineering of Australia, has also contracted with Syntroleum to provide operating and maintenance services for the Sweetwater project, a 10,000-barrel per day GTL specialty products plant that is being developed in Western Australia.
Petroleum Geo-Services is a technologically focused oilfield service company principally involved in two businesses: geophysical seismic services and production services. PGS acquires, processes, manages and markets 3D, time-lapse and multi-component seismic data. This data is used by oil and gas companies in the exploration for new reserves, the development of existing reservoirs, and the management of producing oil and gas fields. PGS' PetroTracTM suite of advanced geophysical technologies allows oil and gas companies to better characterize and monitor their reservoirs in order to enhance production and ultimate recovery of hydrocarbons. In its production services business, PGS owns four floating production, storage and offloading systems (FPSOs) and operates numerous offshore production facilities for oil and gas companies. FPSOs permit oil and gas companies to produce from offshore fields more cost effectively. PGS operates on a worldwide basis with headquarters in Oslo, Norway and Houston, Texas.
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The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical and future trends, on general economic and business conditions and on numerous other factors, including expected future developments, many of which are beyond the control of the Company. Such forward-looking statements are also subject to certain risks and uncertainties as disclosed by the Company in its filings with the Securities and Exchange Commission. As a result of these factors, the Company's actual results may differ materially from those indicated in or implied by such forward-looking statements.