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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Sharp_End_Of_Drill who wrote (75215)	10/3/2000 8:51:47 PM
From: rolatzi	Respond to of 95453

PGS in talks with CGG and Veritas By Valeria Criscione in Oslo Published: October 3 2000 19:49GMT \| Last Updated: October 3 2000 22:32GMT Petroleum Geo-Services, the world's second-largest seismic services company, on Tuesday said that it was in initial talks with its rivals, France's Compagnie Generale de Geophysique and Houston-based Veritas, about a possible combination of their businesses. PGS also outlined plans to sell $500m-worth of non-core assets to reduce debt and move its senior management to London. The development is a further sign of consolidation of companies that provide seismic data to the global oil and gas industry. US oil service company Baker Hughes, and Paris and New York-based Schlumberger last month signed an agreement to merge their seismic businesses into a new company called Western Geco to create an industry giant controlling 40-50 per cent of the market. Seismic data is seen as a key part of pre-exploration activity for oil companies, which use the data to visualise subterranean reservoirs before drilling wells. However, despite record oil prices, the seismic business has been hit by over-capacity and poor pricing over the past 12 months. "[PGS] needs to do something to get their stock [price] back in positive territory," said a New York-based oil analyst. "It would definitely be interesting if they did something with CGG and Veritas." PGS will transfer about six of its top managers from its Houston headquarters to London by June. The company wants them to move closer to its floating production business, as well as its seismic market in the Middle East and West Africa, said Erik Hokholt, a PGS spokesman. PGS plans to divest its non-seismic portfolio, including a 20 per cent stake in US oil company Spinnaker Exploration and PGS Atlantis, each worth about $200m. In addition, it will dispose of $100m-worth of miscellaneous non-core assets, which might include its data management business, Mr Hokholt said. The disposals are part of its overall plan to reduce its debt to capital ratio from 56 per cent to 45 per cent within 18 months. The company has had increasingly to borrow in order to acquire a floating production business and boost its seismic data library. "In the next 18 months, they were not going to generate enough cash," said Roger Read, an oil service analyst at Simmons & Co, a Houston-based investment bank. "The only way was for them to sell assets or raise equity, and management said they were not interested in raising equity with the current stock price."