CGGVeritas buys Fugro Geoscience Division
CGGVeritas, the world’s largest geophysical contractor, has agreed to buy Fugro’s seismic division for $1.6 billion, to benefit from a forecast recovery in survey rates.
The global seismic survey business, is set to improve as oil companies increase offshore exploration spending, according to CGGV.
Rates had fallen after the 2010 moratorium on drilling in the Gulf of Mexico following the Deepwater Horizon disaster.
CGGV Chief Executive Officer Jean-Georges Malcor said in a statement, “It perfectly fits our strategy.”
The acquired unit generated sales of $1 billion with $161 million in earnings before interest, taxes, depreciation and amortization last year.
The companies also agreed to create a venture in seabed geophysics, which involves the installation of permanent monitors on the ocean floor.
Fugro decided to sell its seismic survey business because it lacks a market-leading position and earnings have been volatile, the company said in a September statement. Fugro will maintain a position in the oil services industry in exploration, development and production.
“This divestment allows Fugro to exit the capital intensive and volatile seismic segment of the oil and gas exploration market,” Fugro said. “Most seismic companies have indicated fleet expansion plans in the immediate future, creating a clear window of opportunity for Fugro to complete the transaction.”