Integra shareholders approve combination of IGSS, Geotech seismic assets
MOSCOW. Dec 7 (Interfax) - Shareholders in Integra at an extraordinary meeting on December 5 approved a combination between the Russia-based geophysical and seismic assets of Schlumberger - IG Seismic Services (IGSS) and Geotech Holding, Integra said in a statement.
The merger will occur on the basis of the existing IG Seismic Services joint venture between Integra and Schlumberger.
Assets will be merged through an additional issue of IGSS shares in the volume required to buy 99% of Geotech Holding. This was approved at Integra's EGM on December 5. The participants of the merger will not have to contribute cash.
Geotech Holding management will own 27% of IGSS, Gennady Timchenko's Volga Resources will have around 13% and institutional investors around 12%.
Geotech was created by businessman Nikolai Levitsky in 2007. Company management own 77% of shares and the other 23% belong to institutional investors. It was reported in March 2010 that Volga Resources Sicav-SIF, the fund of businessman Gennady Timchenko, had bought 25% of Geotech Holding's parent company - Geotech Oil Services Holding Limited.
Integra Group, Schlumberger Oilfield Holdings Limited, Geotech Oil Services Holding Limited (GOSH) and IG Seismic Services Limited (IGSS) have entered into a conditional agreement to combine IGSS, the entity through which Integra Group and Schlumberger conduct their land and transition zone seismic joint venture in Russia and the CIS, with GOSH's seismic business, conducted through Geotech Holding JSC. The combination will be effected through the transfer by GOSH of 99% of the issued share capital of Geotech Holding to IGSS in exchange for newly issued shares in IGSS.
Following completion of the transaction, Integra Group will hold 36%, Schlumberger will hold 12%, and GOSH will hold 52% of the entire enlarged issued share capital of IGSS.
Completion is expected to occur in December 2011, subject to satisfaction of certain conditions, including approval of the Transaction by Integra Group shareholders and the receipt of certain anti-trust approvals.
It is expected that the transaction will create one of the largest land seismic companies globally, with a leading position in the Russian and CIS market and access to all the key customers and provinces in the region. The combined seismic business will offer high quality seismic acquisition, data processing and interpretation services and will benefit from the wider application of IGSS's transition zone capabilities and access to certain interpretation and land seismic and data processing software (Omega 2 and Petrel, both of which are trademarks of Schlumberger group) from the Schlumberger group as well as the right to use Schlumberger group's proprietary "UniQ" technology and tailored training. The access to the defined Schlumberger group proprietary technologies and training is expected to add significant value to the services being delivered to clients.
Annual cost savings of over $15 million are expected to be achieved from optimization of logistical and maintenance facilities and other overheads in the second year from Completion, and further revenue and cost benefits are also expected from improved asset utilization and logistics.
Integra and Schulmberger will contribute all the geophysical assets that were formerly part of IGSS, while Geotech Holding will contribute all its geophysical subdivisions, such as Naryan-Maseismorrazvedka, Severgeofizika, Khantymansiiskgeofizika, Central Geophysical Expedition, Sibneftegeofizika, Novosibneftegeofizika, Boguchansk Geophysical Expedition, Yeniseigeofizika, Ilimpeyskaya Geophysical Expedition and Orenburg Geophysical Expedition.
Geotech Holding drilling subdivisions, such as Intaneft and Agan-Burenie, will not go into IGSS.
The merger with Integra and Schlumberger at IGSS will not require a Geotech Holding extraordinary shareholders meeting.
After Integra shareholders hold their extraordinary meeting on December 5, the merger will be considered by the Federal Antimonopoly Service. The transaction does not require the approval of the intergovernmental foreign investments commission.
Once the merger process is complete, IGSS will be listed on the London exchange without subsequent placement. The company hopes the listing procedure will be completed in September 2012. "Whether there will be a further share placement will depend on the market. The new company will already have a considerable free-float and we will see if we want to increase it further. But this is not being discussed yet," a representative of one of the IGSS participants said.
IGSS is virtually a new company. Its management structure has not been entirely formulated, but the participants do not rule out that it will contain Nikolai Levitsky from Geotech and from Integra Mario Rusev, the executive vice president for geophysics.
Integra reports that the merger with Geotech will create one of the largest companies not just in Russia but in the world.
Geotech occupies around a third of the Russian geophysics market. The holding company operates in Timan-Pechora, West Siberia and East Siberia. Its largest customers are Tatneft , Gazprom Neft , Russneft and Rosneft . Integra carries out work for Rosneft, TNK-BP , Novatek and Gazprom Neft.