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Commodity Pricing

‘Not in the best interests of the company’: PGS rejects TGS’ $600m offer

Norwegian seismic player continues discussions with lenders

The board of directors for Norwegian seismic player PGS has rejected an unsolicited $600 million offer from peer TGS for its multiclient library, saying the proposal was “not in the best interests of the company and its stakeholders”.

PGS said Thursday that the board believed offer undervalued its multiclient data library.

The board also viewed the timing of the proposal as “opportunistic given the current market backdrop and macro-economic environment.”

PGS, hammered by the downturn in commodity prices and demand for fossil fuels, is aiming to slash costs by about a third this year through measures including staff redundancies and consolidation of business units.

The company, which has already decided to stack three of its eight operated seismic vessels, is now targeting annual costs of about $400 million, down from the previous estimate of $600 million for this year before the Covid-19 pandemic and related oil price crash hit seismic demand.

On Thursday, the company said it remained focused on already announced discussions with lenders.

TGS launched the offer last week, saying the PGS data would strongly complement its own business. TGS also proposed that, should the deal close, the pair should collaborate for future PGS multi-client projects.

“We believe the consolidation and further partnership between our two companies carries a strong industry logic and we look forward to initiate the dialogue with the management and board of PGS.”

Source: Upstream| This text was excerpted from the media outlet cited on August 13, 2020 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.