Shipowner PGS and charterer TGS are merging to create a seismic survey shipping and data company worth $2.6bn.

The two Oslo-listed companies said the new entity will be stronger and more diversified, focusing on technology and innovation.

PGS is valued at $707m in Oslo and has a fleet of 11 survey ships, plus four support vessels chartered in from PF Thor.

The combined company will offer multi-client services and data acquisition, imaging and new energy operations, including carbon capture and storage and offshore wind survey work.

There will be “significant economies of scale”, with a preliminary estimate of more than $50m annually in cost synergies.

PGS shareholders will receive 0.07 of a TGS share for each PGS share.

TGS investors will control two-thirds of the company, with PGS’ shareholders having the rest.

The deal represents a premium of 20.7% to the PGS closing price on 15 September.

TGS bosses Kristian Johansen and Sven Borre Larsen will continue as chief executive and chief financial officer respectively.

“Definitive merger agreements are expected to be entered into in October 2023, with closing of the transaction expected during the first half of 2024,” the companies said.

Complementary companies

“We are excited to announce a merger with PGS, completing a major milestone of building a fully integrated and robust global energy data provider. Our clients will benefit from scale, a unique technology portfolio and premier service quality," said Johansen.

“Bringing together two distinct, yet complementary, companies position us even better for a continued upcycle in the energy sector,” he added.

The future of PGS CEO Rune Olav Pedersen is not yet clear.

He said: “The seismic industry is changing whereby production seismic is becoming increasingly important alongside the traditional exploration seismic.”

“By combining TGS and PGS’ complementary resources, we create a fully integrated geophysical service provider well positioned to generate significant value for all stakeholders,” Pedersen added.

Net interest-bearing debt will be $649m. PGS’ $450m senior notes issue and its term loans will be refinanced.

In July, PGS boosted its financial flexibility with a new $75m loan as it steps up its seismic, wind and carbon capture survey operations.

The cash is coming from private investment companies Sculptor Capital Management and Varde Partners.

One of the big two

PGS is one of two big seismic survey players, the other being Rasmussen-backed Shearwater GeoServices.

Rasmussen is lining up an initial public offering for the company next year.

In 2020, PGS was restructured through a $1.2bn refinancing

The year before, TGS bought Spectrum, the owner of the world's largest 2D data library.

TGS estimated significant cost synergies of about $20m per year as a result.

The deal valued Spectrum at NOK 3.67bn ($418.5m).

Its shareholders received a 13.9% stake in TGS.