Polarcus selling multi-client library to TGS

TGS and Polarcus have signed a Letter of Intent for TGS to acquire Polarcus’ multi-client library, with the exception of Australia, for a price of $27.5 million on a cash and debt free basis.

Polarcus said that the agreement includes an upfront cash payment, a tiered revenue share from future sales of the divested multi-client projects and further contains cash payments for costs deferred under existing contractual agreements. The transaction will result in a non-cash impairment of the multi-client library of approximately $65 million.

According to TGS, the multi-client library in Northwest Europe and West Africa consists of 22 3D seismic surveys comprising a total area of 40,000 sq. km and one 2D survey comprising 5,000 linear km. The data covers prime locations within the established hydrocarbon provinces of six countries along the western Atlantic margin corridor since 2011.

Polarcus noted that  22,130 sq. km. Capreolus 3D survey offshore Australia does not form part of the transaction and will continue to be owned and marketed by Polarcus.

“We are pleased to announce a Letter of Intent to acquire a high-quality multi-client library in key areas of future growth for TGS. This acquisition significantly strengthens our 3D-position in established areas in UK, Norway and West Africa and is very complimentary to our existing database with minimal overlap,” stated Robert Hobbs, CEO, TGS.

Rod Starr, CEO Polarcus, said: “The decision to sell a portion of the library provides Polarcus with additional liquidity to navigate the current challenging market environment by monetizing a portion of the asset value while retaining revenue upside from future late sales achieved by TGS. It should be noted that Polarcus is fully committed to continue developing its multi-client business going forward with a disciplined approach.”

TGS said that the transaction will be financed with cash, and in order to maintain its strong balance sheet and liquidity position, TGS has received a commitment from its existing lender to expand the current credit facility to $75 million.

The transaction is subject to due diligence and final definitive documents with target closing date on or before July 31, 2015.