Geokinetics Inc. and Petroleum Geo-Services have signed a definitive agreement under which US based Geokinetics, a leading provider of seismic data acquisition, processing and interpretation services, will acquire the onshore seismic data acquisition business and onshore MultiClient library business (PGS Onshore Business Unit) of PGS in a cash and stock transaction valued at approximately USD 210 million, of which approximately USD 184 million will be paid in cash. PGS expects an estimated gain on the transaction in the range of USD 10 - 20 million to be reported in Q1 2010.

The final purchase price is subject to certain post-closing adjustments. The transaction is expected to close in the first quarter of 2010 and is subject to certain customary closing conditions including approval of certain competition authorities, but not a financing condition.

The combination of Geokinetics and the onshore business of PGS will create the second largest onshore seismic acquisition company in the world in terms of crew count and the largest based in the Western Hemisphere. The company will have the assets and technical capabilities for up to 38 crews and carry in excess of 207,000 equipment channels, more than 150 vibroseis units and possess in excess of 6,240 square miles of MultiClient library data upon completion of current projects in progress.

The combined company will be geographically diversified with a significant presence in Africa, Asia and the Americas. Combined, the two companies will offer a broad range of technologies that include transition zone ("TZ"), ocean bottom cable ("OBC") and land vibroseis, and can compete effectively within the entire onshore seismic value chain of planning, acquisition, processing and interpretation services.

In 2008, PGS Onshore generated USD 74.2 million in EBITDA on revenues of USD 273.1 million. For the nine months ended September 30, 2009, it generated USD 13.4 million in EBITDA on revenues of USD 136.2 million. PGS Onshore had an order book of USD 196 million as of September 30, 2009. (Figures are according to International Financial Reporting Standards, IFRS).

Jon Erik Reinhardsen, President and Chief Executive Officer of Petroleum Geo-Services comments: "The combination of PGS' and Geokinetics' competence and market presence will create a new force in the onshore seismic industry. As a future key shareholder, we are excited about the growth potential and leading market position of the new Geokinetics. This transaction will add value for our shareholders, our employees and our customers."

Mr. Reinhardsen continues: "At the same time, this transaction establishes PGS as a focused marine geophysical company. The strengthened financial position of PGS will further allow us to continue to develop the most efficient fleet and leading edge technology in the industry."

Richard F. Miles, President and Chief Executive Officer of Geokinetics, said, "We are extremely pleased to enter into this agreement as it solidifies Geokinetics' position as the clear leader in the onshore seismic data acquisition business. With the addition of PGS Onshore's technologies; its broad international operations capable of working in diverse climate conditions; its extensive MultiClient library providing multi-year potential and a focus on high-impact drilling areas or areas of high lease turnover, we will be able to expand our services, accelerate our entrance into the MultiClient business and enhance our position within the seismic contractor industry. "

Tags: Petroleum Geo-Services ASA