Shearwater to buy Schlumberger's seismic business

Shearwater GeoServices and Schlumberger have entered into a definitive agreement for Shearwater to acquire the offshore seismic acquisition operations and assets of WesternGeco, Schlumberger's geophysical services product line

Schlumberger disclosed its plan for WesternGeco to exit the marine and onshore seismic acquisition business and transform it into a light assets business in January 2018. The transaction is subject to regulatory approvals and other customary closing conditions, and the parties expect to close the transaction in the fourth quarter of 2018, Shearwater said on Wednesday.

Shearwater GeoServices will operate the combined business as a global, customer-facing, technology-driven provider of marine geophysical services. 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 floor seismic (OBS).

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It is worth remembering that Shearwater was formed in 2016 between GC Rieber Shipping and Rasmussengruppen, acquiring four seismic vessels from GC Rieber Shipping: Polar Empress, Polar Duque, Polar Duquesa and Polar Marquis.

Shearwater will continue to develop and offer processing and imaging services and the Reveal software. The company will also have a portfolio of proprietary streamer technology and processing software, enabling it to effectively perform geophysical surveys and deliver high quality data.

“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 of Shearwater.

“Our strategy has been to build a stronger company during this crisis, and we are delighted to see the commitment of our owners that enables this transaction.”

Upon completion of the transaction, Shearwater will have approximately 600 employees and will 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 boost the efficiency of our services”, says Basili.

“We will have a strong balance sheet with the lowest loan-to-value ratio in the industry and a leading cost position, which together with our technology and highly skilled people provide significant competitive advantages.”

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

Acquire more than ten seismic vessels

Under the terms of the agreement, 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 coil assemblies complete with spares, as well as two source ships. The proposed transaction also includes WesternGeco's proprietary marine seismic technology, as well as development and manufacturing facilities in Norway and Malaysia.

The deal

Schlumberger will receive cash consideration based on the company's $600 million value, plus a 15% equity interest in closing Shearwater GeoServices Holding AS.

In addition, Schlumberger will, for a limited period, be entitled to payments under an earn-out agreement linked to the future use of the vessel, in addition to specified limits. To secure a more robust financial platform, an additional $50 million in cash will be injected into Shearwater GeoServices Holding AS for working capital purposes, bringing the total cash funding requirement for the proposed transaction to $650 million.

The USD 600 million in cash for Schlumberger and USD 50 million for working capital purposes will be funded by USD 325 million in new cash equity and USD 325 million in debt financing.

Rasmussengruppen has fully subscribed the share issue and GC Rieber Shipping ASA intends to subscribe approximately $28 million (out of a total $325 million) before closing. Debt financing will be provided by DNB Bank ASA and Sparebank 1 SR-Bank ASA.

Under the terms of the agreement, Schlumberger will have the option to utilize two Shearwater vessels in potential multi-client work within the first two years following the closing of the transaction.

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