TGS has entered into an agreement to acquire 100% of the shares of Stingray Geophysical Limited (Stingray). The transaction will provide TGS with a strong position in the rapidly growing market for Permanent Reservoir Monitoring (PRM) solutions. The acquisition will substantially increase TGS' addressable market through access to production seismic spending from large international oil companies as well as national oil companies (NOCs), while maintaining its successful asset light model.
Robert Hobbs, CEO of TGS said, "The age of "easy to find" oil is over, forcing oil companies to increase investment in their existing fields to extend production and increase recovery factors. The acquisition of Stingray allows TGS to access a larger portion of the reservoir optimization market. The combination of TGS and Stingray will leverage both companies' strengths to create a powerful PRM offering to the industry."
The 4D seismic market, of which PRM is an integral and increasing part, was estimated to be over USD 1 billion in 2010 with the majority of data being acquired by towed streamers (source: ODS PetroData). Expectations are for the 4D market to exceed USD 2.5 billion within the next four years (source: Stingray estimate). New PRM installations are expected to trend towards optical versus electrical solutions due to the expected increase in reliability and flexibility that this technology offers, especially in deep water.
The transferred assets include 11 employees and an extensive portfolio of intellectual property. All management team members and employees of Stingray will continue as employees of TGS.
The consideration for 100% of the shares is based on an initial payment of USD 45 million and incremental payments of up to USD 35 million based on the success in commercializing the technology.
The transaction is expected to complete in April 2011.
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