Bloomberg News

Petroleum Geo Gains on Sale of Onshore Seismic Unit

December 03, 2009

Petroleum Geo-Services ASA (PGS), the world’s third-biggest oil-field surveyor, rose to the highest price in more than a year in Oslo trading after the sale of a unit will allow it to focus on a business with higher returns.

The shares rose 5.35 kroner, or 8.8 percent, to 66.25 kroner in Oslo today.

The company sold its onshore seismic division for about $210 million in cash and stock to Houston-based Geokinetics Inc. (GOK:US), Lysaker, Norway-based PGS said today in a statement. PGS expects to book a gain of $10 million to $20 million on the transaction when it closes in the first quarter.

“It’s without doubt positive,” said Goeran Andreassen, an Oslo-based analyst at Fondsfinans ASA who has a buy on the stock. “They’re getting a good price for a business that doesn’t generate a lot of profit.”

The new company will have operations in Africa, Asia and the Americas and will be able to accommodate as many as 38 crews and have seismic data it can share with multiple clients for more than 6,240 square miles of territory, PGS said.

Pure Marine

“PGS will continue as a pure marine geophysical company and concentrate where it makes more sense,” PGS Chief Executive Officer Jon Erik Reinhardsen said on a conference call, adding that the marine business has generated higher returns. The unit represented about 12 percent of revenue in the first nine months and proceeds from sale will give the company “financial muscle” to take advantage of growth opportunities, he said.

The company’s first priority will be on developing its GeoStreamer technology, which offers improved data quality, broader bandwidth, the possibility to operate in more diverse weather conditions and reduced noise, he said.

“It’s not our short-term ambition to start paying out dividends until we’ve invested in sound areas of business,” the CEO said. As part of the deal, PGS will get 2.15 million shares in Geokinetics, or 19.9 percent of the company’s outstanding shares, spokesman Tore Langballe said.

Geokinetics CEO Richard Miles said the agreement ”solidifies Geokinetics’ position as the clear leader in the onshore seismic data acquisition business.”

To contact the reporters on this story: Vibeke Laroi in Oslo at vlaroi@bloomberg.net.

To contact the reporter on this story: Vibeke Laroi in Oslo at vlaroi@bloomberg.net


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