FILED BY VERITAS DGC INC.
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933
AND DEEMED FILED PURSUANT TO RULE 14a-12 AND RULE 14d-2(b)
OF THE SECURITIES EXCHANGE ACT OF 1934
SUBJECT COMPANY: VERITAS DGC INC.
COMMISSION FILE NO.: 001-07427
SUBJECT COMPANY: PETROLEUM GEO-SERVICES ASA
COMMISSION FILE NO.: 001-14614
SUBJECT COMPANY: VENUS I
COMMISSION FILE NO.: 001-07427
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements herein contained are forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These statements are based on management's current
expectations and beliefs and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. The forward-looking statements
contained herein include statements about future financial and operating results
of the combined company, including the accretiveness and estimated cost savings
of the transaction, the financial position of the combined company after
completion of the transaction, and the timing and other benefits of the
transaction. These statements are not guarantees of future performance, involve
certain risks, uncertainties, and assumptions that are difficult to predict, and
are based upon assumptions as to future events that may not prove accurate.
Therefore, actual outcomes and results may differ materially from what is
expressed herein. In any forward-looking statement in which PGS or Veritas
expresses an expectation or belief as to future results, such expectation or
belief is expressed in good faith and is believed to have a reasonable basis,
but there can be no assurance that the statement or expectation or belief will
result or be achieved or accomplished. The following factors, among others,
could cause actual results to differ materially from those described in the
forward-looking statements: the risk that PGS' and Veritas' businesses will not
be integrated successfully; costs related to the proposed transaction; failure
of Veritas stockholders to approve the proposed transaction; failure of a
sufficient number of PGS shareholders to exchange their shares for the new
holding company's shares; failure of other closing conditions to be satisfied
and other economic, business, competitive and/or regulatory factors affecting
PGS' and Veritas' businesses generally, including prices of oil and natural gas
and expectations about future prices, as set forth in PGS' and Veritas' filings
with the SEC, including their most recent Annual Reports on Form 20-F (PGS) or
Form 10-K (Veritas), especially in the Management's Discussion and Analysis
section, PGS' most recent Reports on Form 6-K and Veritas' most recent Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. PGS and Veritas are under
no obligation to (and expressly disclaim any such obligation to) update or alter
their forward-looking statements whether as a result of new information, future
events or otherwise.
ADDITIONAL INFORMATION
In connection with the proposed merger of Veritas and a subsidiary of the new
Cayman Islands holding company ("Caymanco"), Veritas and Caymanco will file a
proxy statement/prospectus with the Securities and Exchange Commission (the
"SEC"), and with respect to the proposed exchange offer for PGS shares, Veritas
and Caymanco will file a Tender Offer Statement on Schedule TO, which will
include a related prospectus, and PGS will file a Solicitation/ Recommendation
Statement on Schedule 14D-9. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THESE DOCUMENTS, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders may obtain a free copy of these
documents (when they are available) and other documents filed by PGS, Veritas
and Caymanco with the SEC at the SEC's web site at www.sec.gov. The proxy
statement/prospectus, the tender offer statement and solicitation /
recommendation statement (when they are available) and these other documents may
also be obtained for free from PGS or Veritas by calling PGS at (281) 589-7935,
or by calling Veritas at (832) 351-8300.
The following documents are filed herewith pursuant to Rule 425 under the
Securities Act of 1933:
o Article published in the Seismic Observer news magazine
o Online Media Kit
o Operation Advantage Knowledge Site
****
THE FOLLOWING ARTICLE APPEARED IN THE "SEISMIC OBSERVER" NEWSLETTER DATED
DECEMBER 2001, AND WILL BE POSTED ON VERITAS WEBSITE:
VERITAS AND PGS AGREE TO MERGE
$3.5 BILLION COMBINATION CREATES WORLD-CLASS GEOPHYSICAL AND PRODUCTION COMPANY
On 26th November 2001, Veritas DGC Inc. and Petroleum Geo-Services ASA (PGS)
announced that their boards of directors had unanimously approved a definitive
agreement to combine the two companies in a merger of equals.
The combination will create the second largest company in the geophysical
services industry with an equity market capitalization of approximately $1.0
billion and a total enterprise value of approximately $3.5 billion. The
transaction is anticipated to be immediately accretive to the combined company's
earnings and cash flow per share.
The new company will offer a full range of integrated marine and land
geophysical services as well as floating production operations.
Benefits from the merger include:
o Leading presence in global marine and land seismic markets
o Largest, newest and most geographically diverse seismic library with over
400,000 square kilometers of modern 3D data
o More flexible, technologically advanced and efficient seismic fleet
o Owner and operator of four high-tech floating production, storage and
off-loading (FPSO) vessels
o Operator of more than 20 production installations in the North Sea, including
six floaters
o Broader geographic scope in seismic acquisition capabilities
o Significant leading-edge data processing, interpretation and reservoir
technologies
o More stable and diversified cash flow stream
o Improved liquidity and enhanced financial flexibility
In a joint statement, Dave Robson, Chairman and CEO of Veritas, and Reidar
Michaelsen, Chairman and CEO of PGS, said, "Growing global demand for reliable
seismic data coupled with ongoing consolidation, both among our customers and in
our industry, make this an opportune time for this combination. By combining our
complementary, high-quality seismic data libraries, we will be uniquely
positioned to offer our customers a much broader array of sophisticated 2D, 3D
and 4D geophysical data in active and highly prospective areas around the world.
Our combination will also create a more versatile marine seismic acquisition
fleet that is second to none, with the ability to provide data acquisition
services anywhere, at any time."
"We are excited about the tremendous upside potential this transaction creates
for the combined company and its shareholders, customers and employees. The
combination of Veritas and PGS will enable us to offer fully integrated services
to our customers and will give us the strength, flexibility and resources to
compete more effectively and efficiently on a broader global scale. Our combined
company will also possess the depth of talent and financial strength to pursue
exciting new growth opportunities around the world."
[PHOTO OF DAVE ROBSON, CHAIRMAN AND CEO OF VERITAS
WITH REIDER MICHAELSEN, CHAIRMAN AND CEO OF PGS]
--------------------------------------------------------------------------------
THE NEW COMPANY: FACTS-AT-A-GLANCE
o This `merger of equals' will create the No. 2 company in the seismic industry,
with annual revenues of about $1.5 billion.
o The new company (to be named) will have a balanced mix of services, consisting
of two-thirds geophysical services and one-third production services
o The combined company will be an industry-leading production company, and a
technology-driven reservoir company.
o The new company will capitalize on the synergies between the FPSO business and
the seismic business. Seismic technology and reservoir knowledge can help
exploit reserves in and around marginal oil and gas fields.
o The new company will have an expanded fleet of 21 vessels, with a more
versatile response to customer needs.
o The new company will offer 83,000 channels in its land operations, have 27
seismic processing centers and provide 400,000 square kilometers of
non-exclusive seismic data in its library.
o The new company will have the capability to serve all the major markets in the
world.
THE ORGANIZATION
o The new company will have its operational headquarters in Houston, Texas and
significant operations in Oslo, Norway.
o Shares of the combined company will be comprised of 60 percent PGS, 40 percent
Veritas.
o Veritas and PGS will each contribute four board members and the companies will
agree on two additional directors for the ten-person board.
o Reidar Michaelson, Chairman and CEO of PGS, will serve as Chairman and co-CEO
in charge of production for the new company.
o Dave Robson, Chairman and CEO of Veritas, will serve as Vice Chairman and
co-CEO in charge of geophysical services for the new company.
o The combined company expects to realize approximately $35 million in
annualized efficiencies from SG&A and operational savings, and optimization of
Research & Development efforts.
THE MERGER PROCESS
o Closing date for the transaction is expected to be in April 2002.
o Approvals of a majority of Veritas shareholders and 90% of PGS shareholders
will be required.
o The merger must pass United States regulatory review (Hart, Scott, Rodino), as
well as a European and other countries' regulatory review.
o The new company will be publicly traded on the New York Stock Exchange, and
also intends to pursue the listing of its shares on the Oslo and Toronto stock
exchanges.
--------------------------------------------------------------------------------
THE FOLLOWING ONLINE MEDIA KIT HAS BEEN POSTED ON VERITAS' WEBSITE:
VERITAS DGC
FACTS-AT-A-GLANCE
GENERAL
Veritas DGC is a leading provider of integrated geophysical services
designed to manage exploration risk and improve drilling and production
success.
Capabilities include seismic survey planning and design, seismic data
acquisition, data processing, data visualization, reservoir
characterization, and extensive non-exclusive seismic data library surveys
worldwide.
Veritas' libraries include 3.6 million line kilometers of seismic marine
and land data. More than 90 percent of this information is 3D.
Veritas crews share capacity of 41,000 seismic channels that can equip up
to 20 large-scale 3D crews.
Veritas has more than 3,000 employees in 14 countries on six continents. It
is headquartered in Houston, Texas.
Revenues in Fiscal 2001 totaled $477.3 million, up 35 percent from the
year before.
Earnings in Fiscal 2001 were $22.5 million, compared with $6.5 million
in the previous year.
Veritas is traded publicly under ticker symbol VTS on the New York and
Toronto stock exchanges.
CAPABILITIES/SERVICES
DATA ACQUISITION (LAND): Designing and recording seismic acquisition
programs for prairie, mountain regions, and Arctic areas of North America;
jungles in South America; deserts in the Middle East, and marsh, swamp, and
tidal basin environments.
DATA ACQUISITION (MARINE): A fleet of seven vessels installed with the
latest recording systems and technologies and on-board processing
capabilities.
LAND SEISMIC DATA LIBRARY: Extensive 2D and 3D data available from Texas,
Oklahoma, Wyoming, Mississippi, and the Western Canadian Basin.
o MARINE SEISMIC DATA LIBRARY: One of the largest libraries of marine
seismic data in the industry - 2.6 million line kilometers of 3D
coverage and a large number of 2D programs worldwide - that is
available for licensing under non-exclusive agreements.
o DATA PROCESSING: A network of 16 seismic data processing centers
worldwide, utilizing a comprehensive range of software that can
process 2D, 3D, and 4D data sets from land, transition zones
(wetlands), and marine environments.
o GEOMATIC SERVICES: Geophysical quality assurance, database management,
and oil and gas computer mapping.
o INTERNET TECHNOLOGIES: Applying emerging e-commerce technologies to
the geophysical business.
o PETROLEUM TRAINING: Two-, three-, and five-day courses offered
worldwide that provide the opportunity for participants to interact
with experts and become familiar with state-of-the-art software tools.
o RESERVOIR TECHNOLOGIES: A complete range of data interpretation
analysis skills, seamlessly integrated through data visualization
centers into a suite of advanced exploration services.
THE FLEET
Veritas' fleet consists of some of the world's most sophisticated vessels,
each equipped with advanced integrated geophysical and navigational data
acquisition systems, and full quality assurance capabilities.
In recent years, Veritas has spent nearly $300 million to upgrade and
expand its fleet.
The fleet consists of:
o TWO VIKING-CLASS VESSELS, the largest, most powerful, most technically
advanced seismic vessels in the industry, with a third one to be
launched in April 2002
o P/V POLAR SEARCH, a multi-purpose, multi-streamer seismic vessel
o M/V NEW VENTURE, a large, modern seismic vessel that is ideal for
deeper waters
o R/V VERITAS SEARCHER, ideal for 2D data acquisition and small 3D
programs
o M/V SEISQUEST, a large, modern, high-capacity 3D vessel
o M/V PACIFIC SWORD, also ideal for acquisition of 2D data and small 3D
projects
TECHNOLOGY
Veritas operates 16 seismic data processing centers in major oil and gas
markets worldwide.
The backbone of the company's global computing capability is over 5,000
clusters of PC computing power (planned to double in the next six months)
which are installed in Houston, Crawley, Singapore and Calgary, and backed
up by NEC SX-5 supercomputers in Houston, Crawley and Singapore.
The company has four state-of-the-art data visualization centers that
enable multi-disciplinary exploration teams to display and manipulate large
volumes of complex 3D seismic data covering large geographic regions. This
allows scientists and engineers to integrate and interpret various types of
data quickly, and with maximum clarity and accuracy.
PETROLEUM GEO-SERVICES (PGS)
FACTS-AT-A-GLANCE
GENERAL
Petroleum Geo-Services (PGS) is a technology focused oilfield service
company that is primarily involved in two lines of business:
GEOPHYSICAL SERVICES: The acquisition, processing and marketing of 3D
time-lapse and multi-component seismic data that oil and gas companies use
to explore new reserves, develop existing reserves and manage producing oil
and gas fields in marine, land, or transition zone environments.
PRODUCTION SERVICES: The operation of floating production, storage and
offloading systems (FPSO) and offshore production facilities.
PGS' 2000 revenues were $906.2 million, 15 percent higher than in the prior
year.
The company employs about 5,500 people of diverse technical backgrounds and
nationalities. Headquarters are in Oslo, Norway, and Houston, Texas.
OPERATIONS
The company's core expertise includes developing and operating high-tech
vessels; on-board and in-sea electronics; data transmission and processing;
commercial geoscience operations; reservoir evaluation, and petroleum data
management.
Supporting the geophysical services activities are PGS Research, a seismic
research and development group, and PGS Data Processing, which is
responsible for processing behind the Ramform seismic vessels, reservoir
services vessels, and onshore seismic equipment. The Data Processing group
also markets PGS' proprietary processing capabilities and data processing
centers worldwide.
PGS' Ramform acquisition technology includes six vessels that can tow up to
20 streamers, giving the company a large number of high capacity, high-
technology seismic equipment.
PGS owns and operates four FPSO systems and provides management,
engineering and maintenance services to numerous offshore production
facilities.
The FPSOs have a combined production capacity of 355,000 bopd and a crude
storage capacity of more than 1 million barrels.
The PGS Onshore Group has a total of eight crews.
Onshore data processing centers are located in the United States, Europe,
the Middle East and Asia.
FLEET
In addition to four classic vessels, PGS operates a fleet of six Ramform
vessels:
Ramform Explorer
Ramform Challenger
Ramform Valiant
Ramform Viking
Ramform Victory
Ramform Vanguard
FPSO FLEET
PGS' FPSO fleet consists of four vessels:
PETROJARL I: A purpose-built, turret-moored production vessel that can be
used in full field development, extended well test or early production
mode. It has serviced nine fields since 1986 and conducted more than 1,300
offloadings without a reportable environmental incident.
PETROJARL FOINAVEN: A turret-moored, converted submarine tender that has
achieved an exceptional record of production uptime in harsh environments,
and was certified to ISO 14001 standards for environmental procedures and
performance. It has conducted more than 500 offloadings.
PETROJARL VARG: A purpose-built, double-hulled vessel that is the newest
addition to PGS fleet of high-specification FPSOs. It has a production
capacity of 60,000 bopd and storage capacity of 470,000 bbls, making this
vessel adaptable to almost any offshore production requirement.
RAMFORM BANFF: A purpose-built, turret-moored vessel that utilizes a
unique wedge-shaped design. The double-hulled ship's beam equals 45
percent of LOA, and the turret is located forward of midships to enable it
to turn with the waves.
TECHNOLOGY/INNOVATION
The proprietary FOURcE Seafloor Seismic Acquisition System provides better
data at deeper depths than any available system. It is effective to depths
of more than 2,000 meters, as well as in shallow areas where towed streamer
surveys are not cost-efficient or geophysically inappropriate.
PGS' time-lapse Vertical Cable Seismic surveys provide quality,
high-resolution images for enhanced reservoir management.
THE NEW COMPANY (VERITAS AND PGS)
FACTS AT-A-GLANCE
THE NEW COMPANY AND ITS SERVICES
This 'merger of equals' will create the No. 2 company in the seismic
industry, with annual revenues of about $1.5 billion.
The new company will have a balanced mix of services, consisting of
two-thirds geophysical services and one-third production services (floating
production, storage and offloading, or FPSO).
The combined company will be an industry-leading production company, and a
technology-driven reservoir company.
The new company will have an expanded fleet of 21 vessels, with a more
versatile response to customer needs. The new company will offer 83,000
channels in its land operations, have 27 seismic processing centers and
provide 400,000 square kilometers of data in its library.
The new company will be able to capitalize on the synergies between the
FPSO and seismic businesses to help exploit reserves in and around marginal
fields.
THE ORGANIZATION
The new company will have its operational headquarters in Houston, Texas
and significant operations in Oslo, Norway.
Shares of the combined company will be comprised of 60 percent PGS, 40
percent Veritas.
Veritas and PGC will each contribute four board members and the companies
will agree on two additional directors for the ten-person board.
Reidar Michaelson, Chairman and CEO of PGC, will serve as Chairman and
co-CEO in charge of production for the new company.
Dave Robson, Chairman and CEO of Veritas, will serve as Vice Chairman and
co-CEO in charge of geophysical services.
The combined company expects to realize approximately $35 million in
annualized efficiencies from SG&A and operational savings, and the
optimization of R&D efforts.
THE MERGER PROCESS
The closing date for the transaction is expected to be in April 2002.
Approvals of a majority of Veritas shareholders and 90% of PGS shareholders
will be required.
The merger must pass United States regulatory review (Hart-Scott-Rodino)
and other countries' regulatory review.
The new company (to be named) will be publicly traded on The New York Stock
Exchange and will pursue listings on the Toronto and Oslo stock exchanges.
(Editorial Backgrounder)
PGS, VERITAS MERGER TO CREATE STRONG,
DIVERSE COMPETITOR
The seismic industry today is undergoing a shift that is unprecedented in recent
years. Increased competition, the need for more and improved data resources, and
an ongoing requirement for increasingly advanced technology have ushered in a
new era of service. The implications of this business climate are clear: Any
company that wants to succeed must be able to deliver on every demand the market
and its customers set.
By that standard - and many others - the proposed merger of equals between
Petroleum Geo-Services and Veritas more than meets the test. It brings together
a pair of proven companies whose complementary services will create a strong No.
2 in the seismic industry, not only positioning the new firm as a high-profile
player but also reshaping the competitive marketplace in a way that is expected
to benefit customers and shareholders alike.
EXPANDED RESOURCES AND CAPABILITIES
PGS, headquartered in Oslo and Houston, Texas, is a technically focused oilfield
service company that is primarily involved in two businesses: the acquisition,
processing, and marketing of time-lapse and multi-component seismic data that is
used by oil and gas companies to explore new reserves, develop existing
reservoirs, and manage producing oil and gas fields; and production services, in
which the company owns four floating production, storage and offloading systems
(FPSO) and operates nine offshore production facilities for oil and gas
companies. The FPSOs enable oil and gas firms to produce faster and more
efficiently from offshore fields.
Houston-based Veritas is a leading provider of services designed to help
customers manage exploration risk and improve drilling and production success.
Its capabilities include seismic survey planning and design, seismic data
acquisition, data processing, data visualization, reservoir characterization,
and extensive non-exclusive seismic data library surveys worldwide. Its
libraries consist of 3.6 million line kilometers of seismic marine and land
data, more than 90 percent of which is three-dimensional.
The combined company will be able to build on the respective strengths of both
PGS and Veritas to create a $1.5 billion entity whose balanced mix of services -
two-thirds geophysical, one-third production - will enable it to compete
effectively and efficiently against any competitor. Its strengthened position in
the seismic industry will be further enhanced by a broader set of capabilities
and resources that include:
An expanded fleet of 21-vessels, equipped with some of the most
sophisticated technology in the world;
83,000 channels in its land operations;
27 seismic processing centers;
400,000 square kilometers of data in its library, and
The ability to combine shallow water and transition zone (marches, tidal
basins, etc.) capabilities with a strong 3D capability.
Taken collectively, these advantages will enable the new company to provide
turnkey services and greater flexibility to customers, and put it in a position
to serve most of the major areas in the world more efficiently than either could
have done as separate entities.
SOUND RATIONALE
Ownership of the new company will be made up of 60 percent PGS and 40 percent
Veritas. While this may raise some questions in financial circles as to a
premium being paid by Veritas shareholders, there is a sound rationale behind
the transaction.
First and foremost, there can be little argument that the new company will
compete more effectively than either PGS or Veritas individually, and its
21-vessel fleet will allow for a more global reach. Beyond that, the more
balanced business mix will diversify the revenue and cash flow streams, while
more predictable FPSO earnings are expected to offset any fluctuations of the
multi-client seismic business. This latter point is of great value to Veritas
shareholders, who will effectively be getting 40 percent of the less cyclical,
$500 million per year FPSO business.
Although the 40-60 percent ratio may suggest to some that Veritas shareholders
are paying a premium at the outset, that ratio is actually consistent with a
number of factors. These include the three-month average market price; the
market prices when negotiations began, and the relative contributions of each
company to the new organization. Additionally, PGS is undervalued relative to
Veritas and is selling at only half of its book price, while Veritas was
receiving a higher relative valuation in the marketplace. The fact that
shareholders can expect to benefit significantly from the combined advantages of
both companies - including greater size and stability and a stronger market
presence - will also largely minimize potential concerns over dilution of
Veritas's value.
Nor are any problems anticipated by Veritas' assumption of $2.4 billion of PGS
debt. Veritas closely examined the liquidity and cash resources of the combined
company over the next few years, and concluded that the resources will be
available to effectively execute the necessary business plan. PGS's sale of
Atlantis, part of its non-seismic portfolio, is expected to yield $200 million,
and the FPSO assets are expected to continue to deliver strong operating cash
flows. The debt issue is further addressed by the improved competitive position
of the new company, as well as its initial $1.5 billion in combined revenues.
That having been said, debt reduction will remain a high priority for the new
company, which will seek to reduce its current debt-to-capital rate of 49
percent to approximately 40 percent during the next two years.
WHAT LIES AHEAD
The merger is expected to close in April 2002, and must pass regulatory review
in the U.S., South America and Europe. It must also get the support of a
majority of Veritas shareholders and 90 percent of PGS shareholders. The boards
of both companies have already unanimously approved the transaction, and PGS and
Veritas officials believe that shareholders will follow suit once they
understand the value and benefits of the transaction. Both companies are also
confident that regulatory bodies will view this transaction favorably.
Once approved, the new company will have its operational headquarters in
Houston. Reidar Michaelson, the chairman and CEO of PGS, will serve as chairman
and co-CEO in charge of production services; Dave Robson, who is chairman and
CEO of Veritas, will serve as vice chairman and co-CEO responsible for
geophysical services. Each company will contribute four members to and will
mutually agree on an additional two directors for the board of 10. The renamed
new company will be publicly traded on The New York Stock Exchange and will
pursue listings on the Toronto and Oslo stock exchanges.
* * * *
THE FOLLOWING WAS POSTED ON VERITAS WEB SITE FOR VERITAS' EMPLOYEES REFERENCE:
ABOUT OPERATION ADVANTAGE:
[OPERATION ADVANTAGE LOGO]
Welcome to the Operation Advantage Knowledge Site:
An Information Source for Veritas People
This site has been designed to give you the latest information on the pending
combination of Veritas and PGS into one company - a merger that will form the
best Geophysical and Production company in the industry. By joining forces, we
will create a stronger, more flexible company than either Veritas or PGS could
have achieved on their own.
The news section of this site will contain items of interest such as copies of
employee and investor presentations, as well as all the developing news on the
progress of the merger.
We know you will also have questions and concerns about the merger. The goal of
the FAQ section is to address these issues as best we can, and also to help
equip you to answer questions you may hear from family, customers, vendors, and
others.
We don't know all the answers yet.
Therefore, the content of this site will change and grow as the process moves
forward and as decisions are made about the new company. We will use the site to
communicate information as quickly and broadly as we can to all of you, as it
becomes available.
And - we want to hear from you, so please use the site, and let us know what you
think.
PRESS RELEASE - PGS & VTS TO MERGE
11/26/2001 07:00:00 PM
--------------------------------------------------------------------------------
Houston, TX and Oslo, Norway, November 26, 2001 - Petroleum Geo-Services ASA
("PGS") (NYSE: PGO, OSE: PGS) and Veritas DGC Inc. (NYSE & TSE: VTS) today
announced that their boards of directors have unanimously approved a definitive
agreement to combine the two companies in a merger of equals. The combination
will create the second largest company in the geophysical services industry with
an equity market capitalization of approximately $1.0 billion and a total
enterprise value of approximately $3.5 billion. The transaction is anticipated
to be immediately accretive to the combined company's earnings and cash flow per
share.
The new company will offer a full range of integrated marine and land
geophysical services and floating production operations. Benefits from the
merger include:
o Leading presence in global marine and land seismic markets
o Largest, newest and most geographically diverse seismic library with over
400,000 square kilometers of modern 3D data
o More flexible, technologically advanced and efficient seismic fleet
o Owner and operator of four high-tech floating production, storage and
offloading (FPSO) vessels
o Operator of more than 20 production installations in the North Sea,
including six floaters
o Broader geographic scope in seismic acquisition capabilities
o Significant leading-edge data-processing, interpretation and reservoir
technologies
o Initial estimated annual cost savings of at least $35 million
o More stable and diversified cash flow stream
o Improved liquidity and enhanced financial flexibility
In a joint statement, Reidar Michaelsen, Chairman and Chief Executive Officer of
PGS, and Dave Robson, Chairman and Chief Executive Officer of Veritas, said,
"Growing global demand for reliable seismic data coupled with ongoing
consolidation, both among our customers and in our industry, make this an
opportune time for this combination. By combining our complementary,
high-quality seismic data libraries, we will be uniquely positioned to offer our
customers a much broader array of sophisticated 2D, 3D and 4D geophysical data
in active and highly prospective areas around the world. Our combination will
also create a more versatile marine seismic acquisition fleet that is second to
none, with the ability to provide data acquisition services anywhere, at any
time.
We are excited about the tremendous upside potential this transaction creates
for the combined company and its shareholders, customers and employees. The
combination of Veritas and PGS will enable us to offer fully integrated services
to our customers and will give us the strength, flexibility and resources to
compete more effectively and efficiently on a broader global scale. Our combined
company will also possess the depth of talent and financial strength to pursue
exciting new growth opportunities around the world.
INDUSTRY-LEADING PORTFOLIO
The combined company will boast an industry-leading portfolio including:
o 400,000 square kilometers of modern 3D data
o 21 marine seismic crews
o 83,000 land seismic channels capable of fielding 25 to 30 high-tech 3D crews
o 4 high-tech, harsh environment FPSO vessels
o More than 20 data processing centers
o 8 data visualization centers
HEADQUARTERS, MANAGEMENT AND BOARD
The combined company will be headquartered in Houston, Texas and will maintain a
significant operating presence in Norway. Upon completion of the transaction,
Mr. Michaelsen will serve as Chairman and Co-CEO of the combined company, with
primary responsibility for the production business. Mr. Robson will become Vice
Chairman and Co-CEO of the combined company, with primary responsibility for the
geophysical business. The combined company's Board of Directors will be
comprised of ten directors, four designated from each of the two companies,
including Mr. Robson and Mr. Michaelsen, and two newly appointed unaffiliated
directors.
COST SAVINGS
The companies expect to achieve annual pre-tax cost savings of at least $35
million. Savings are expected to come from the elimination of duplicative
general and administrative and operating activities, improved operating
efficiencies and the optimization of research and development efforts.
TERMS AND CONDITIONS
Under the terms of the agreement, both Veritas and PGS will become wholly-owned
subsidiaries of a new holding company incorporated in the Cayman Islands. PGS
shareholders who exchange their shares will receive 0.47 shares of the new
holding company's common stock for each share of PGS they own. Veritas
shareholders will receive one share of the new holding company's common stock
for each share of Veritas they own. Based upon the closing stock prices of
Veritas and PGS on Friday, November 23, 2001, this represents a value of $7.64
per PGS share, or a 44 percent premium to PGS shares. The transaction is
expected to be tax-free to Veritas shareholders. The transaction is expected to
be taxable to PGS shareholders; however, PGS expects to apply for tax-exempt
treatment for Norwegian shareholders of PGS. At inception, PGS shareholders will
own approximately 60 percent of the new holding company and Veritas shareholders
will own approximately 40 percent.
The transaction is conditioned upon, among other things, the approval of a
majority of Veritas shareholders, expiration of the Hart-Scott-Rodino waiting
period, listing of the new holding company's shares on the NYSE and customary
regulatory approvals. The transaction also
requires 90 percent of PGS shareholders to exchange their shares for the new
holding company's ordinary shares. The companies expect that the transaction can
be completed in the second quarter of 2002. The new company also intends to
pursue the listing of its shares on the Oslo and Toronto stock exchanges.
Merrill Lynch & Co. and ABG Sundal Collier & Co. acted as financial advisors,
and Merrill Lynch provided a fairness opinion to PGS. Baker Botts LLP and
Wikborg, Rein & Co. acted as PGS' legal advisors. Evercore Partners Inc.
acted as financial advisor and provided a fairness opinion to Veritas and
Fulbright & Jaworski LLP and Baker & McKenzie acted as its legal advisors.
ABOUT PGS
Petroleum Geo-Services is a technologically focused oilfield service company
principally involved in two businesses: Geophysical Operations and Production
Operations. PGS acquires, processes and markets 3D, time-lapse and
multi-component seismic data. In its Production Operations, PGS owns four
floating, production, storage and offloading (FPSO) systems and operates
numerous offshore production facilities for oil and gas companies. FPSOs permit
oil and gas companies to produce from offshore fields more quickly and
cost-effectively.
PGS operates on a worldwide basis from Oslo, Norway and Houston, Texas.
ABOUT VERITAS
Veritas DGC Inc. offers the oil and gas industry a comprehensive suite of
integrated geophysical services designed to manage exploration risk and enhance
drilling and production success worldwide. These services include seismic data
acquisition in all environments, data processing, data visualization, data
interpretation, reservoir characterization, and extensive non-exclusive seismic
data library surveys worldwide. With over 36 years of operating experience,
Veritas is one of the world's leading providers of advanced geophysical
technologies.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations and
beliefs and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. The forward-looking statements contained herein
include statements about future financial and operating results of the combined
company, including the accretiveness and estimated cost savings of the
transaction, the financial position of the combined company after completion of
the transaction, and the timing and other benefits of the transaction. These
statements are not guarantees of future performance, involve certain risks,
uncertainties, and assumptions that are difficult to predict, and are based upon
assumptions as to future events that may not prove accurate.
Therefore, actual outcomes and results may differ materially from what is
expressed herein. In any forward-looking statement in which PGS or Veritas
expresses an expectation or belief as to future results, such expectation or
belief is expressed in good faith and believed to have a
reasonable basis, but there can be no assurance that the statement or
expectation or belief will result or be achieved or accomplished. The following
factors, among others, could cause actual results to differ materially from
those described in the forward-looking statements: the risk that PGS' and
Veritas' businesses will not be integrated successfully; costs related to the
proposed transaction; failure of Veritas stockholders to approve the proposed
transaction; failure of a sufficient number of PGS shareholders to exchange
their shares for the new holding company's shares; failure of other closing
conditions to be satisfied and other economic, business, competitive and/or
regulatory factors affecting PGS' and Veritas' businesses generally, including
prices of oil and natural gas and expectations about future prices, as set forth
in PGS' and Veritas' filings with the SEC, including their Annual Reports on
Form 20-F (PGS) or Form 10-K (Veritas) for the year ended 2000, especially in
the Management's Discussion and Analysis section, PGS' most recent Reports on
Form 6-K and Veritas' most recent Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K. PGS and Veritas are under no obligation to (and expressly
disclaim any such obligation to) update or alter their forward-looking
statements whether as a result of new information, future events or otherwise.
ADDITIONAL INFORMATION
In connection with the proposed merger of Veritas and a subsidiary of the new
Cayman Islands holding company ("Caymanco"), Veritas and Caymanco will file a
proxy statement/prospectus with the Securities and Exchange Commission (the
"SEC"), and with respect to the proposed exchange offer for PGS shares, Veritas
and Caymanco will file a Tender Offer Statement on Schedule TO, which will
include a related prospectus, and PGS will file a Solicitation/Recommendation
Statement on Schedule 14D-9. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THESE DOCUMENTS, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders may obtain a free copy of these
documents (when they are available) and other documents filed by PGS, Veritas
and Caymanco with the SEC at the SEC's web site at www.sec.gov. The proxy
statement/prospectus, the tender offer statement and solicitation/
recommendation statement (when they are available) and these other documents may
also be obtained for free from PGS or Veritas by calling PGS at (281) 589-7935,
or by calling Veritas at (832) 351-8300.
Veritas and its directors, executive officers and certain other members of its
management and employees may be soliciting proxies from its stockholders in
favor of the proposed merger. Information regarding the persons who may, under
the rules of the SEC, be considered to be participants in the solicitation of
Veritas' stockholders in connection with the proposed Veritas merger is set
forth in Veritas' proxy statement for its 2001 annual meeting, dated October 29,
2001 and filed with the SEC on October 29, 2001. Additional information will be
set forth in the proxy statement/prospectus when it is filed with the SEC.
ANALYST/INVESTOR TELECONFERENCE
There will be a analyst/investor teleconference call on Tuesday, November 27,
2001 at 9:00 am CST/10:00 am EST. The call will be webcast on both companies'
websites located at www.veritasdgc.com and www.pgs.com.
PGS CONTACTS:
J. Chris Boswell, SVP & CFO
Sam R. Morrow, SVP Finance & Treasurer
Phone: 281-589-7935
Dag W. Reynolds, Director European IR
Phone: +47 67 52 66 00
VERITAS CONTACTS:
Matthew Fitzgerald, SVP, CFO and Treasurer
Rene VandenBrand, VP Business Development
Phone: 832-351-8300
Mindy Ingle, Investor Relations
Phone: 832-351-8821
DAVE ROBSON ANNOUNCES VERITAS AND PGS TO MERGE - WORD DOCUMENT
11/26/2001 05:17:00 PM
Dear fellow employees:
I am please to announce an exciting event that will be very important to our
future and to our long-term success. The Boards of Directors of Veritas and PGS
have today approved a definitive agreement to combine the two companies in a
merger of equals. The press release that provides more details is available on
the Veritas Bulletin Board, the Internet and our website and will be posted at
all of our operating locations. Please review it carefully.
The Transaction
The combined company will be the second largest geophysical contractor in the
world. In addition, the Floating Production, Storage and Offloading (FPSO)
business owned by PGS will add significantly to the new company's profits and
cash flow. We will be a much larger company in the oilfield service area with
total sales in excess of $1.5 billion, offices in over 30 countries and about
10,000 employees. About 7000 of these employees will work in the combined
geophysical operation. Operationally, we will have 21 marine vessels, capacity
for more than 20 land crews, 27 processing centers and 36 locations.
We are planning to rename the company which involves assuming a new name,
creating a new logo and developing a branding/advertising program with new
graphics, etc. The reason for the new name is to create a spirit of cooperation
within the new entity.
The company will be more global in nature and better equipped to service our
customers. We can be more cost efficient because we can spread our overhead over
a larger revenue base. We will have significantly enhanced research and
development efforts in areas like data processing and acquisition technology to
improve our technology to even higher levels. When you look at the combined
strengths of the two companies, we are leading the industry in most areas of
operational excellence and technology.
The company will be organized into two areas, Production Services ( FPSO's) and
Geophysical. I will be Co-CEO responsible for the Geophysical Division and
Reidar Michaelson will be Co-CEO responsible for Production Services.
The Board of Directors will be composed of four current members of both Veritas
and PGS's Boards along with two new independent members to be selected. The
Company will be listed on the New York Stock Exchange and the Toronto Stock
Exchange. The head office will be in Houston, Texas and will be located at 10300
Town Park, the current headquarters for the Veritas company, and this will
happen as soon as practical. Organizational plans beyond this point have not
been solidified at this time. We will keep you informed as we proceed.
We are estimating consolidation savings of $35 million as a result of the
merger. Due to the many steps and procedures required for a merger of this size,
we do not expect to complete the deal until April 2002. In the meantime, we have
to operate separately. However, extensive due diligence will commence and
organizational planning will start in earnest immediately.
Why are we doing this
The geophysical industry currently is not a growth industry. The only way to
achieve our goal of providing opportunities for our employees to grow and for
our shareholders to have a decent return on their investment is to consolidate.
We have been having discussion with others but clearly PGS was the most
interested in such a plan. To capitalize on such an opportunity, there must be
both a need and a willingness to change. The geophysical industry needs more
consolidation to meet the challenges of investing large sums of capital in
research and development, in multi-client data libraries and in a never-ending
series of new technological advances in acquisition and processing capabilities.
The geophysical industry is now expected to provide leadership in many areas of
geophysical technology which were traditionally the domain of our customers, the
oil companies. At the same time, we need to deliver more value to our customers
and provide a reasonable return on the total capital entrusted to us. The
following are some of the reasons that this transaction makes sense:
ONE. We will be able to optimize the deployment of more assets in more
combined areas. This will reduce mobilization costs, allow us to focus the right
assets and the right people on the right jobs and give us the ability to tackle
increasingly complex challenges for our customers.
TWO. Combining our respective asset bases will give us the opportunity
to focus our capital expenditures and ensure full utilization of all of our
assets in a global market.
THREE. While maintaining our investment in R&D, we can broaden the scope
for new technological innovations that have made PGS and Veritas leaders in
providing better solutions to our customers.
FOUR. Together, we have the largest database in the world of modern 3D
seismic data, totaling over 400,000 square kilometers. Our customers will
benefit from our integration of these datasets and our making them available to
a worldwide market.
FIVE. We will capitalize on the synergies between the FPSO business and
the seismic business. Seismic technology and our combined reservoir knowledge
can help exploit reserves in and around marginal fields produced by FPSO's while
the FPSO's provide more stable and predictable cash flow streams to offset the
traditional, more volatile seismic business.
What this means to you
Over the next couple of years, we will be consolidating operations that are
duplicative to the new company. There may be some disruption to you if you are
in one of these areas. Obviously, one of the advantages to a merger like this is
to eliminate duplication. However, we do not have significant overlap in general
and therefore layoffs will be minimal. Notice that we are not making any public
announcements regarding the number of jobs lost for these reasons. Most everyone
in the new company is a essential employee. In other words, if a hand on the
back deck of a boat is not working, we can't deploy our cables, if a data
processor isn't working, we can't produce sections for our customers. Our job is
to produce product for our customers. That activity must go on uninterrupted.
Therefore, if you are doing a good job, you should have little cause for
concern.
We will be communicating with you on a regular basis as this transaction
evolves. Later this week, a Lotus Notes database ( Operations Advantage ) will
be available so that you may post issues and concerns and view the answers to
frequently asked questions. In addition, the senior management of the company
and of your division has been briefed to the extent that we can. We will try to
see as many of you in person as is practical between now and the end of the
year. In the meantime, video conferencing meetings are scheduled this week to
many different locations.
Finally, in situations like this, gossip and rumors tend to take a little
information and expand upon it significantly. Please visit with your supervisors
and senior management to seek further information. In the short term, they may
not be more informed than you are, but the presidents of all of the divisions
have been briefed to the extent that we have clear information. Please show
professionalism as you deal with limited information and please do not share any
information with the geophysical community if it is not factual.
Sincerely,
Dave Robson
FREQUENTLY ASKED QUESTIONS:
BENEFITS --
WHAT HAPPENS TO VTS STOCK I OWN
11/27/2001 11:02:19 AM
---------------------------------------------------
Your Veritas stock will be exchanged for new company stock at one share of the
new company for each share of Veritas.
This will also apply to shares purchased through the Employee Stock Purchase
Plan.
COMPANY ORG/STRUCTURE -
HOW WILL THE NEW ORGANIZATION BE STRUCTURED
11/27/2001 01:03:32 PM
---------------------------------------------------
A critical step in the merger process is creating a structure for the new
organization. At this time it has been determined that the business will be
divided into two major units: seismic services and FPSO (Floating Production
Storage and Offloading) systems. In the seismic services or geophysical business
unit we must now determine an organization design and subsequently decide who
will be placed in the leadership roles for our various seismic businesses. This
process will begin shortly and will be completed after the first of the new
year.
Once finalized, these decisions will be communicated by organizational
announcement and will also be placed in this database.
OTHER --
WHO IS THE WINNER IN THIS MERGER
11/27/2001 12:00:10 PM
---------------------------------------------------
Both companies and their customers and shareholders are winners in this
merger. This is a "merger of equals" that will create the second largest company
in the geophysical industry. Each company will bring extensive resources and
libraries of seismic data, sophisticated software, and extraordinary people to
the new organization. Remember that each company will be equally represented on
the board of directors and Dave Robson will be the leader of geophysical
operations.
HOW LONG WILL IT TAKE TO COMPLETE THE MERGER
11/27/2001 12:57:12 PM
---------------------------------------------------
Completing the merger is a complicated process that requires the approval of
shareholders of both companies and approvals of a number of regulatory agencies
in the U.S. and other countries. While there is no way to predict exactly when
the merger will close, we do expect to complete it sometime in April of 2002.
Others have asked if is possible that Veritas and PGS will not get the
appropriate approvals to complete the merger. The boards of both companies are
convinced of the merger's value, and they are communicating the strategic
business rationale to all audiences and shareholders. While it is possible that
the merger will not receive the necessary approvals, we believe that is
unlikely.
LET US HEAR FROM YOU
Got a question or concern?
Let us know, and we'll try to address it.
We'll research the subject, review similar questions that have been received,
and then publish a combined answer as soon as possible on the FAQ page. Please
remember that we don't know all the answers yet, but we will do our best to
respond as soon as possible.
SUBMITTED BY:
TYPE OF CONCERN:
DATE:
Thank you, your question has been received. Please check the FAQ page for
responses to similar questions received from you and your fellow employees.
FAQ's will be updated twice weekly.