PGS and TGS Move Closer to Combining Into One Energy Data Company
The combined firm aims to create a stronger and more diversified geophysical company and energy data provider.
Shareholders for TGS and PGS have agreed to combine the two companies to create one full-service energy data company. The plan was accepted at meetings at both companies on 1 December.
“We are very pleased that our shareholders have approved the merger plan and agree to the business rationale of merging PGS and TGS to establish the premier energy data company,” said Rune Olav Pedersen, CEO at PGS. “The combined company will be uniquely positioned to unlock substantial value for our shareholders, customers, and employees.”
According to a Reuters report, TGS said the multiclient business, where a company collects seismic data and sells it to oil and gas exploration and production companies, was long overcrowded but now fewer owners and vessels area available. TGS primarily had relied on chartered vessels to collect seismic data. The merger will result in TGS ownership of seven 3D data acquisition vessels and 30,000 mid-depth and deepwater nodes for ocean bottom node acquisition.
“Today marks a pivotal moment for TGS and PGS as we receive approval from our shareholders for the merger plan. This support reflects the shared vision of our stakeholders in establishing the combined entity as a leading diversified energy data and intelligence company with an enhanced industry offering,” said Kristian Johansen, CEO of TGS. “We strongly believe this merger will bring substantial value to our respective stakeholders, from shareholders and customers to the combined organization’s employees. As we move forward, we remain dedicated to navigating through the regulatory processes and meeting all closing conditions to ensure the successful completion of this transformative merger. Together, we are poised to deliver unparalleled energy data solutions to our global partners.”
Johansen and Sven Børre Larsen will continue as CEO and CFO, respectively.
“The seismic industry is changing whereby production seismic is becoming increasingly important alongside the traditional exploration seismic,” Pedersen said. “By combining TGS and PGS’ complementary resources, we create a fully integrated geophysical service provider well positioned to generate significant value for all stakeholders.”
The merger is supported by the board of directors of both companies.
“The transaction continues TGS’ strategic development from a pure multiclient seismic company to the leading acquirer and provider of geophysical data to both the oil and gas and new energy industries,” said Chris Finlayson, chairman of the board for TGS.
“Financial flexibility enables investments in attractive core activities as well as in the rapidly growing new energy business,” said Walter Qvam, chairman of the board for PGS. “The pioneering innovation cultures in both companies will contribute to a strong foundation for new product offerings and profitable growth.”
Following the completion of the transaction, TGS and PGS shareholders will own approximately two-thirds and one-third of the combined company, respectively, on the basis of the share capital of each of the companies as of 15 September 2023.
The transaction establishes the combined company as a full-service geophysical data company with a strong offering in all segments, including multiclient data, streamer data acquisition, ocean bottom node data acquisition, imaging, and new energy data. Moreover, the transaction is expected to help mitigate supply chain risks and add to economies of scale and efficiency.
The combined company is expected to have a combined fully diluted market cap of approximately $2.616 billion and a net interest-bearing debt of $649 million.