TGS and PGS to merge

Norwegian offshore seismic acquisition specialists and data providers TGS and PGS have announced an agreement to merge and form one unified full-service geophysical company.

The transaction is expected to be completed as a statutory merger, with merger consideration paid to PGS shareholders in the form of 0.06829 ordinary shares of TGS for each PGS share.

Based on a TGS share price as of September 15 of NOK 147.50, an exchange ratio of 0.06829 and 925,321,732 fully diluted PGS shares, the equity value of PGS is around NOK9.3bn ($868m), corresponding to a price per share of NOK 10.073 and a premium of 20.7% to PGS closing price on September 15.

Following the completion of the merger, which is backed by the board of directors of both companies, TGS and PGS shareholders will own around 2/3 and 1/3 of the combined company, and Kristian Johansen and Sven Børre Larsen will continue as CEO and CFO, respectively.

Definitive merger agreements are expected to be entered into next month, with the closing of the transaction expected during the first half of 2024. The companies said they expect cost synergies to be above $50m annually.

The move establishes the combined company with offerings in all segments, including multi-client data, streamer data acquisition, ocean bottom node (OBN) data acquisition, imaging and new energy data and according to TGS and PGS “helps mitigate supply chain risks and will add further to economies of scale and efficiency”. The combined company will have an operational fleet of seven 3D survey vessels and around 30,000 mid and deepwater nodes.

“Our clients will benefit from scale, a unique technology portfolio and premier service quality. Bringing together two distinct, yet complementary, companies positions us even better for a continued upcycle in the energy sector,” stated Kristian Johansen, CEO of TGS.

“The seismic industry is changing whereby production seismic is becoming increasingly important alongside the traditional exploration seismic. By combining TGS and PGS’ complementary resources, we create a fully integrated geophysical service provider well positioned to generate significant value for all stakeholders,” added Rune Olav Pedersen, president and CEO of PGS.

“This is a strategic transaction for TGS and a major step on the journey we started in 2019. It will combine the capabilities of both companies to create a geophysical powerhouse. The transaction continues TGS’ strategic development from a pure multi-client seismic company to the leading acquirer and provider of geophysical data to both the oil and gas and new energy industries,” said Chris Finlayson, chair of the board of TGS.

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