Seismic surveyor TGS-NOPEC Geophysical Co. ASA said Aug. 14 it would continue to seek consolidation in the geophysical data industry despite a rejection of its unsolicited offer to buy a key unit of competitor PGS ASA.
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.
The board of PGS late on Aug. 13 turned down a $600 million offer for its so-called multiclient library from TGS, arguing that the bid undervalued the assets and that a sale would hurt its strategy.
"We're surprised and disappointed they did not want to talk to us," TGS CFO Fredrik Amundsen told Reuters.
"The offer has now expired," he said.
Shares of the two companies fell on Aug. 14, with PGS down 5% and TGS down 3.5% at 3:45 a.m. CT (8:45 GMT).
"TGS remains committed to our strategy of industry leadership and further consolidation," CEO Kristian Johansen said in a statement.
TGS first announced its offer for PGS's data library on Aug. 6, seeking to combine it with its own similar business and form a worldwide seismic offering with lower unit costs and better economies of scale.
"It's a difficult market, with significant impact on seismic demand from the coronavirus outbreak, but the fundamental need is still there," Amundsen said.
"We don't see an alternative that can fully replace oil and gas in the foreseeable future, and there will be a need for seismic," he said.
PGS on Aug. 13 said it continued to talk to its lenders as it seeks to extend a September deadline to repay a $135 million debt facility.
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