Vultures gather for PGS floater killing
Upstream (published in Oslo), September 6
By Knut Evensen
Troubled seismic outfit Petroleum Geo-Services is being scrutinised by banks in a search for market values on the company's floating production assets and for potential buyers.
PGS is facing a very challenging 15 months, with $930 million in debt maturing in the second half next year. The debt structure could trap PGS in a liquidity squeeze, making bankruptcy a possibility. Lenders are nervous and bonds have traded as low as 25% of face value after the merger collapse with rival seismic contractor Veritas DGC last month.
Floating production competitors said investment bankers have been doing the rounds in recent weeks in search of potential buyers for the PGS Production division.
Analyst estimates range from $1.1 billion to $1.5 billion, well below the $1.8 billion book value. In a firesale, some industry players even believe that the price could go below $1 billion for the Petrojarl 1, Petrojarl Foinaven, Petrojarl Varg and Ramform Banff FPSOs, including their respective contracts.
In its second-quarter presentation, the company told investors it intends to rely upon asset sales, banks and cash from operations to make debt payments of nearly $1 billion next year. PGS hopes to sell assets worth $200 million before next summer and it sees opportunities to divest another $200 million, on top of a free cash flow in excess of $300 million.
However, analysts are sceptical after PGS' unsuccessful efforts to sell off its Atlantis subsidiary. |
