Seismic giants to merge

Some truly seismic news…TGS and PGS have announced an $864 million merger, creating what they describe as the world's "premier energy data company". Providing regulatory approvals are met the deal will be finalized in the first half of 2024, with TGS the surviving entity.

The new company will no longer be asset light, taking on PGS' seven working 3D vessels, as well as the chartered Sanco Swift, the 12-streamer PGS Apollo and two cold-stacked 3D units. It was noted the changing market and not access to vessels was the main driver for the merger. TGS believes that pure multi-client surveying has dropped by two thirds in the last 10 years.

Its January 2023 acquisition of Magseis Fairfield put TGS at the forefront of the ocean-bottom node (OBN) market; by adding PGS' streamer expertise and tonnage, the company can cover the full seismic market.

The new TGS will be a direct competitor to Shearwater GeoServices, providing OBN, streamer and hybrid seismic solutions globally. Meanwhile, SeaBird will be hoping to be the next acquisition by the burgeoning TGS, believing that further consolidation is what the OBN market needs.

The merger may not be good news for all, however. PGS recently entered into a memorandum of understanding with node-provider inApril, with an intention to work strategically for a year on the emerging OBN/streamer hybrid survey method. The PGS CEO admitted that this agreement would be "impacted" by the merger, unsurprising now that the company has 30,000 mid- to deepwater nodes at its disposal.

TGS and PGS believe the companies possess complimentary multi-client data libraries around the globe, in mature and frontier basins alike. Furthermore, the companies' strategies for new energy are believed to go hand-in-hand, with TGS' focus on available data, and PGS' drive to conduct wind site characterization surveys with P-cable technology. It will be interesting to see if PGS' plan for a second P-cable vessel next summer comes to fruition.

The companies have calculated that they will see an estimated $50 million in cost synergies per year. The two seismic giants had been considering the merger for years, but now feel the time is right. As a result, the marine seismic market is going to get a lot smaller next year.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.