TGS and PGS to merge to create full-service energy data giant

TGS ASA and PGS ASA announced that they have agreed on the principal terms for a merger, aiming to create a powerful full-service energy data company. As per Norwegian corporate law, the merger consideration for PGS shareholders will be 0.06829 ordinary shares of TGS for each PGS share. Post-merger, TGS and PGS shareholders will own approximately 2/3 and 1/3 of the combined company, respectively, based on the share capital as of September 15, 2023.

Operational Leadership Post-Merger

Supported by the Board of Directors of both companies, the merger is anticipated to finalize definitive agreements in October 2023. The transaction is expected to close during the first half of 2024, subject to certain conditions. Kristian Johansen and Sven Børre Larsen will continue their roles as CEO and CFO, respectively, following the merger.

Expanding Data Offerings and Mitigating Risks

The new company aims to be a full-service geophysical data company with robust offerings in Multi-Client data, streamer data acquisition, and ocean bottom node (OBN) data acquisition, among others. This merger is expected to mitigate supply chain risks and improve economies of scale and efficiency. The combined company will hold a strong position globally in data acquisition with an operational fleet of seven 3D data acquisition vessels.

Financial Outcomes and Stakeholder Opinions

The combination will lead to cost synergies with a preliminary estimate above USD 50 million annually. The equity value of PGS, based on a TGS share price as of close on September 15, 2023, is NOK 9,321 million. Kristian Johansen, CEO of TGS, said, “Our clients will benefit from scale, a unique technology portfolio and premier service quality.” Rune Olav Pedersen, CEO of PGS, stated that the merger would position the new company to “generate significant value for all stakeholders.”

Regulatory and Closing Details

The transaction is subject to several conditions, including due diligence by both parties, regulatory approvals, and approval by extraordinary general meetings in both TGS and PGS with at least a two-thirds majority. Once these conditions are met, the transaction will close as soon as possible.