Wavefield asks shareholders to delay TGS Nopec merger over Q3 revenue shortfall

Wavefield asks shareholders to delay TGS Nopec merger over Q3 revenue shortfall

	Published : Mon, 19 Nov 2007 09:45 By : Agencies Print this Story

OSLO (Thomson Financial) - The board of Norwegian seismic group Wavefield Inseis ASA said it was recommending to its shareholders that they delay the planned merger with fellow Norwegian group TGS-Nopec Geophysical.

Wavefield said that on Sunday evening it had not received a report examining the causes for a shortfall in TGS's third quarter revenues which had had a 'significant negative effect' on Wavefield's share price.

As a result, Wavefield said its board was not in a position to assess and advise a forthcoming extraordinary general meeting.

'The board of Wavefield Inseis is compelled to recommend to its shareholders.... to postpone the merger with TGS until it has been presented with reasonable evidence to the effect that the terms and conditions for completing the merger have been fulfilled,' Wavefield said in a statement.

TGS, meanwhile, issued a statement saying there was nothing wrong with its third quarter accounts.

TGS released a report prepared by PriceWaterhouseCoopers which it said was intended to address its third quarter revenue shortfall and the extent to which TGS could have been aware of the shortfall at the time of the EGM to approve the merger.

'The findings and conclusions... support the facts that TGS performed all its obligations in accordance with its high corporate governance standards,' TGS said.

On Oct 25 TGS-Nopec posted third quarter profits below expectations at the pretax level, after seeing earnings hit by productivity issues on two of its new 3D vessels, but the firm said it believes the market outlook to be have ry strong.'

For the third quarter TGS posted pretax profits of 50.0 mln usd, down from 57.1 mln last year and below the 55 mln consensus forecast of analysts polled by TDN Finans.

At the operating level, profits came in at 48.9 mln usd, down from 54.8 mln last year and below the 54 mln consensus forecast.

Looking ahead, the seismic firm said: 'As evidenced by our backlog growth both in the multi-client and contract sectors, the outlook for the seismic market continues to be very strong.'

However TGS added that vessel utilisation rates 'will be lower than normal' in the coming quarter due to the steaming time necessary to deploy the fleet, as well as an unplanned dry-docking for repairs of a chartered 3D vessel in West Africa.

patrick.mcloughlin@thomson.com

pm/lam

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