Looking for a specific product?

Make a search for products & suppliers, articles & news.

Veritas, PGS merging to form second largest geophysical company

HOUSTON, Nov. 27 -- Petroleum Geo-Services AS, Oslo and Norway, and Veritas DGC Inc., Houston, said Tuesday they will merge to create the second largest geophysical company with a market capitalization of $1 billion and an enterprise value of $3.5 billion. The largest is WesternGeco, London, a joint venture of Schlumberger Ltd. and Baker Hughes Co. PGS and Veritas said the transaction would be immediately accretive to the combined company's earnings and cash flow per share. The new company will offer a full range of integrated marine and land geophysical services and floating production operations. The deal is expected to close in the second quarter. In a joint statement, the chairmen and CEOs of the companies -- Reidar Michaelsen of PGS and Dave Robson of Veritas -- said, "Growing global demand for reliable seismic data coupled with ongoing consolidation, both among our customers and in our industry, make this an opportune time for this combination. "Our combination will also create a more versatile marine seismic acquisition fleet that is second to none, with the ability to provide data acquisition services anywhere, at any time." The portfolio of the combined company will include 400,000 sq km of 3D data, 21 marine seismic crews, 83,000 land seismic channels capable of fielding 25-30 crews for 3D work, four harsh-environment FPSO vessels, more than 20 data processing centers, and eight data visualization centers. The firm will be headquartered in Houston and will maintain a significant operating presence in Norway. Michaelsen will be chairman and co-CEO with primary responsibility for the production business. Robson will be vice chairman and co-CEO with primary responsibility for the geophysical business. The companies expect to achieve pre-tax cost savings of at least $35 million/year from the elimination of duplicative activities and improved operating efficiencies. Veritas and PGS will become subsidiaries of a holding company incorporated in the Cayman Islands. PGS shareholders will get 0.47 share and Veritas stockholders 1 share of the new company's common stock for each existing share they own. Based Nov. 23 stock prices, this represents a value of $7.64/PGS share, or a 44% premium to PGS shares. At first, PGS shareholders will own 60% of the new holding company and Veritas shareholders 40%.