PGS ASA

M&A Activity • Sep 18, 2023

PGS and TGS combine to establish the premier energy data company

PGS and TGS combine to establish the premier energy data company

* Creating a stronger and more diversified geophysical company and data

provider to the energy value chain, driven by technology and innovation

* The combined entity will offer a robust position in all verticals: Multi-

Client, acquisition, imaging and new energy

* Significant economies of scale, preliminary estimate of more than USD 50

million annually in cost synergies

* Enhancing the value and technology offering to clients

* Bringing together two complementary players, creating the most attractive

workplace in the industry

* The transaction is supported by the Board of Directors of both companies

Oslo, 18 September 2023

TGS ASA ("TGS" or the "Company", OSE: TGS) and PGS ASA ("PGS", OSE: PGS)

announced today that they have agreed the principal terms of a combination of

TGS and PGS to create a strong full-service energy data company.

The transaction is expected to be completed as a statutory merger pursuant to

Norwegian corporate law, with merger consideration to PGS shareholders in the

form of 0.06829 ordinary shares of TGS for each PGS share.

Following the completion of the transaction, TGS and PGS shareholders will own

approximately 2/3 and 1/3 of the combined company, respectively, on the basis of

the share capital of each of the companies as of 15 September 2023.

The transaction is supported by the Board of Directors of both companies.

Kristian Johansen and Sven Børre Larsen will continue as CEO and CFO post

transaction.

Definitive merger agreements are expected to be entered into in October 2023,

with closing of the transaction expected during the first half of 2024, subject

to satisfaction of conditions for completion.

The transaction establishes the combined company as a full-service geophysical

data company with a strong offering in all segments, including Multi-Client

data, streamer data acquisition, ocean bottom node (OBN) data acquisition,

imaging and new energy data. Moreover, the transaction helps mitigate supply

chain risks and will add further to economies of scale and efficiency, enhancing

the value offered to clients.

In Multi-Client, the combined company will offer customers a global seismic

library with data from all active basins in both the western and eastern

hemispheres. In data acquisition, the combined company will be a substantial

player globally with a strong operational track record. For streamer

acquisition, it will hold an operational fleet of seven 3D data acquisition

vessels, and for ocean bottom node (OBN) acquisition, the combined company will

benefit from around 30,000 mid and deepwater nodes. Within imaging, the combined

company will offer a strong service to in-house and external customers

integrating on-premises and cloud based high-performing computing services. In

addition, the combined company sees significant growth opportunities in new

energy with complementary technology offerings for Carbon Capture and Storage

(CCS) and offshore wind.

In addition to providing an improved client offering and a platform for further

profitable growth, the combination will benefit from cost synergies with a

preliminary estimate to be above USD 50 million annually.

"We are excited to announce a merger with PGS, completing a major milestone of

building a fully integrated and robust global energy data provider. Our clients

will benefit from scale, a unique technology portfolio and premier service

quality. Bringing together two distinct, yet complementary, companies positions

us even better for a continued upcycle in the energy sector", stated Kristian

Johansen, Chief Executive Officer of TGS.

"The seismic industry is changing whereby production seismic is becoming

increasingly important alongside the traditional exploration seismic. By

combining TGS and PGS' complementary resources, we create a fully integrated

geophysical service provider well positioned to generate significant value for

all stakeholders" stated Rune Olav Pedersen, President & Chief Executive Officer

of PGS.

"This is a strategic transaction for TGS and a major step on the journey we

started in 2019. It will combine the capabilities of both companies to create a

geophysical powerhouse. The transaction continues TGS' strategic development

from a pure Multi-Client seismic company to the leading acquirer and provider of

geophysical data to both the oil and gas and new energy industries" stated Chris

Finlayson, Chair of the Board of TGS.

"The merger creates a full-service geophysical company with a strong balance

sheet. Financial flexibility enables investments in attractive core activities

as well as in the rapidly growing new energy business. The pioneering innovation

cultures in both companies will contribute to a strong foundation for new

product offerings and profitable growth" stated Walther Qvam, Chair of the Board

of PGS.

Financing:

The combined company will have a combined fully diluted market cap of approx.

USD 2,616 million and a net interest-bearing debt (NIBD) of USD 649 million (2Q

2023), corresponding to a market cap:NIBD ratio of 80:20. The combined company

will seek to optimize its capital structure, efficiency and cost based on the

strength of the combined balance sheets and cash flows. As such, the combined

company plans to refinance PGS' USD 450 million senior notes and the term loans

on first call opportunity. As an overriding principle, TGS will continue to

maintain a conservative balance sheet profile.

Key terms of the merger:

Based on a TGS share price as of close 15 September 2023 of NOK 147.50, the

exchange ratio of 0.06829 and 925,321,732 fully diluted PGS shares, the equity

value of PGS is NOK 9,321 million, corresponding to a price per share of NOK

10.073. This represents a premium, of 20.7% to PGS closing price on 15 September

2023 and an exchange ratio premium of 22.4%, 40.8% and 41.6% based on 30 days,

3 month and 6 months VWAP as of 15 September 2023, respectively.

Future TGS dividend payments up to closing will be compensated to PGS

shareholders. The full merger plan is expected to be published during October

The transaction remains subject to certain conditions, including a confirmatory

due diligence by both parties, finalizing and executing a definitive merger

plan, as well as customary closing conditions such as relevant regulatory

approvals and consents and expiry of statutory waiting periods and no material

adverse change occurring. The transaction is also subject to approval by

extraordinary general meetings in both TGS and PGS with at least two-thirds

majority. Closing of the transaction would occur as soon as possible thereafter.

Conference call:

Further information regarding the transaction will be provided in a joint TGS

and PGS conference call at 10:00 (CEST) on 18 September 2023. A replay of the

conference call will be provided at tgs.com and pgs.com.

Link to webcast:

https://channel.royalcast.com/landingpage/hegnarmedia/20230918_1/

(https://nor01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fchannel.royal

cast.com%2Flandingpage%2Fhegnarmedia%2F20230918_1%2F&data=05%7C01%7Chkh%40sb1mar

kets.no%7C2aa4fa955f3d49002fff08dbb7b4d4e8%7C10b30f001bbd40419c4d64749f4a7041%7C

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2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=zjrSw%2BMtHIxncze%2F

83Jc%2B2NNX4LJ%2FzC9i2hP6MFQSHI%3D&reserved=0)

Advisors:

SpareBank 1 Markets is acting as financial advisor and Schjødt is acting as

legal advisor to TGS. Pareto Securities is acting as financial advisor and

Advokatfirmaet BAHR is acting as legal advisor to PGS.

Contact information:

TGS:

Sven Børre Larsen

CFO

Tel: +47 909 43 673

Email: investor@tgs.com

PGS:

Gottfred Langseth

CFO

Tel: +47 930 55 580

Email: ir@pgs.com