Seismic surveyor PGS ASA said Aug. 13 it had rejected a $600 million offer for its geophysical data library from rival TGS-NOPEC Geophysical Co. ASA, arguing that the bid undervalued the assets and that a sale would hurt its strategy.
Oil industry suppliers such as Oslo-listed TGS and PGS have been hard hit by weak crude prices during the coronavirus pandemic as energy companies rein in exploration and thus spend less on the seismic data needed to detect reserves.
TGS on Aug. 6 announced an unsolicited cash offer for PGS's so-called multi-client library, seeking to combine it with its own similar business and form a worldwide seismic offering with lower unit costs and better economies of scale.
But PGS said its board and management were unanimous in their rejection.
"Having consulted with its financial and legal advisers, the board of PGS has concluded that the proposal is not in the best interests of the company and its stakeholders," it said.
While TGS's strategy has been one of renting the ocean-going vessels used to obtain seismic data, PGS has had an integrated approach of owning its own ships—leaving the company more exposed at a time of weak oil prices.
"PGS remains committed to its integrated service strategy," it said.
TGS had argued that its proposal would give PGS enough cash to repay a $135 million debt facility due next month.
PGS last month said it was seeking to preserve liquidity while talking to creditors to seek an extension to the September repayment deadline and amend debt covenants.
"PGS remains focused on its ongoing discussions with its lenders, as previously announced," the company said Aug. 13.
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