Norwegian firms merging to make ‘strong full-service energy data company’

Norwegian seismic companies PGS and TGS are merging their businesses to create what they say will be a full-service geophysical data company, pursuing potential in new energy with complementary technology offerings for carbon capture and storage (CCS) and offshore wind.

TGS and PGS agreed on the principal terms of the combination of the companies to create a “strong full-service energy data company” with offerings in all segments, including multi-client data, streamer data acquisition, ocean bottom node (OBN) data acquisition, imaging and new energy data.

“The merger creates a full-service geophysical company with a strong balance sheet. Financial flexibility enables investments in attractive core activities as well as in the rapidly growing new energy business. The pioneering innovation cultures in both companies will contribute to a strong foundation for new product offerings and profitable growth,” said Walther Qvam, Chair of the Board of PGS.

The transaction is expected to be completed as a statutory merger pursuant to Norwegian corporate law, with merger consideration to PGS shareholders in the form of 0.06829 ordinary shares of TGS for each PGS share. Following the completion, TGS and PGS shareholders will own approximately 2/3 and 1/3 of the combined company, respectively, on the basis of the share capital of each of the companies as of 15 September 2023.

Definitive merger agreements are expected to be entered into in October, with transaction closing expected during the first half of 2024, subject to satisfaction of conditions for completion.

According to the parties, the combined company will offer a global seismic library with data from all active basins in both the western and eastern hemispheres and will hold an operational fleet of seven 3D data acquisition vessels, as well as 30,000 mid and deepwater nodes.

Furthermore, the combination will benefit from cost synergies with a preliminary estimate to be above $50 million annually.

The transaction is supported by both Board of Directors. Kristian Johansen and Sven Børre Larsen will continue as CEO and CFO post-transaction.

“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,” said Rune Olav Pedersen, President and Chief Executive Officer of PGS.

The transaction remains subject to certain conditions, including confirmatory due diligence by both parties, finalizing and executing a definitive merger plan, as well as customary closing conditions such as relevant regulatory approvals and consents and expiry of statutory waiting periods and no material adverse change occurring. It is also subject to approval by extraordinary general meetings in both TGS and PGS with at least two-thirds majority.

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