Shearwater to Buy Schlumberger’s Seismic Business

Norwegian marine geophysical services company Shearwater GeoServices Holding AS has entered into a definitive agreement to acquire the marine seismic acquisition assets and operations of Schlumberger’s geophysical services product line, WesternGeco.

The transaction, which remains subject to regulatory approvals and other customary closing conditions, is expected to close in the fourth quarter of 2018.

Houston based Schlumberger will receive cash consideration based on an enterprise value of $600 million plus a 15 percent post-closing equity interest in Shearwater. For a limited period, Schlumberger  will be entitled to payments under an earn-out agreement linked to future vessel usage over and above specific thresholds. Schlumberger will also have an option to utilize two vessels from Shearwater on potential multiclient work for the first two years after closing the transaction.

Shearwater will acquire 10 high-end seismic acquisition vessels, including seven 3D vessels and three multipurpose vessels (MPVs) configured to serve the growing OBS market, 12 complete streamer sets with spares, as well as two source vessels. The proposed transaction also includes WesternGeco proprietary marine seismic technology, as well as development and manufacturing facilities in Norway and Malaysia.

“We will combine two strong complementary businesses and create an industry-leading full-service geophysical company with a solid financial and strategic platform,” said Irene Waage Basili, CEO, Shearwater. “Our strategy has been to build a stronger company during the downturn, and we are very pleased to see the commitment made by our owners, which enables this transaction.”

Shearwater will own and operate a fleet of 14 fully equipped seismic vessels offering a full range of acquisition services including 3D, 4D and ocean bottom seismic (OBS). Shearwater shall continue to develop and offer high quality processing and imaging services and Reveal software. The company will also have a portfolio of proprietary streamer technology and processing software enabling effective execution of geophysical surveys and delivery of high-quality data. After completion of the transaction, Shearwater will have close to 600 employees and operate in all major offshore basins around the world.

“Our customers will benefit from our expansion as a full-service provider that has critical mass, global reach and long-term viability. We intend to grow, and we are committed to investing in technology and people to drive the efficiency of our services,” says Basili. “We will have a strong balance sheet with the sector’s lowest loan-to-value ratio and a leading cost position, which together with our technology and highly skilled people provide significant competitive advantages.”

Maurice Nessim, President, WesternGeco, added, “With the divestiture of our marine seismic acquisition business, WesternGeco will be strategically positioned as one of the largest asset-light geophysical services providers in the oil and gas industry. Through access to the industry’s global marine fleet, including Shearwater’s vessels, we will continue to provide our customers with exploration and discovery services that leverage our leading global multiclient library, advanced seismic imaging and interpretation services, with the aim of helping to accelerate hydrocarbon discovery.”

To ensure a more robust financial platform, an additional $50 million of cash will be injected in Shearwater GeoServices Holding AS for working capital purposes, bringing the total cash funding requirement for the proposed transaction to $650 million.

The $600 million in cash consideration to Schlumberger and $50 million for working capital purposes will be funded by $325 million in new cash equity and $325 million in debt financing. RASMUSSENGRUPPEN AS has fully underwritten the equity issue and GC Rieber Shipping ASA intends to subscribe for approximately $28 million (of the total of $325 million) before closing. The debt financing will be provided by DNB Bank ASA and Sparebank 1 SR-Bank ASA.

Carnegie and DNB Markets has acted as financial advisor to Shearwater in connection with the transaction and Arntzen de Besche acted as legal advisor. Pareto Securities has acted as financial advisor and Advokat firmaet Schjødt AS as legal advisors for Schlumberger.