PGS to Demerge Production Activities
The board of Petroleum Geo-Services decided to recommend that PGS' shareholders support a separation of the company into two separately listed businesses.
The proposed action would demerge PGS' floating production business into a newly-formed entity named Petrojarl ASA. The activities within the geophysical business will continue in the name of PGS. The separation will be implemented through a combined demerger and offering structure.
When the demerger concludes, each PGS shareholder will receive one share in Petrojarl for each share held in PGS on the record date. Each shareholder will thus hold separate investments in two listed companies. Descriptions of the two companies follow.
- The geophysical services company PGS will focus on acquiring marine and onshore seismic data, maintaining the world's largest library of multi-client data, as performing data processing services. PGS' shares will have a primary listing in Oslo, and its American Depository Shares will trade on New York Stock Exchange.
- The FPSO contractor Petrojarl will seek to maintain its strong North Sea position while pursuing growth opportunities internationally through the intended Teekay Petrojarl Offshore JV. The company's shares will be listed in Oslo.
The board recommends the demerger primarily because it believes each of the two PGS businesses need clearer strategic direction and increased flexibility to pursue growth opportunities. Through the separation, PGS and Petrojarl will obtain independent access to financing and each will be able to independently develop an optimal capital structure for its business. Furthermore, the separation will make possible separate evaluations of each business and allow each business to attract its own investor base.
The listing of Petrojarl is planned for early July 2006. Petrojarl will have its headquarters in Trondheim, Norway. The CEO of Petrojarl will be Espen Klitzing, who currently heads PGS' existing production business.
Completion of the demerger is subject in part to approval by an extraordinary general meeting of PGS shareholders scheduled for April 28.
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