When CGG and Veritas united in 2007, the merger created the world's largest geophysical contractor. But apparently that milestone did not temper the company's appetite.

Recently, CGGVeritas announced that it would purchase all of Fugro's Geoscience division except for Fugro's existing multiclient library and nodes business. According to the press release, "The transaction will enable CGGVeritas to become a fully integrated geoscience company, and it also will strengthen and extend its existing equipment and acquisition businesses, in particular with the addition of four high-end 3-D vessels."

According to Antoine Lefort, senior vice president of communications for CGGVeritas, the transaction will both extend and strengthen the company's offerings. "One of the reasons for the transaction is for us to move into the high-end geology, geophysics, and reservoir characterization markets," Lefort said. "We were partly there with Hampson Russell, and now we're establishing a leading position in this market."

Fugro's Geoscience division comprises Fugro-Jason, Fugro-Robertson, Fugro-Data Solutions, Fugro-Seismic Imaging, Fugro-Gravity and Magnetics, Fugro-Geoteam, Fugro MultiClient Services, and Fugro Airborne.

Obtaining the four new vessels will strengthen the company, Lefort added. "We think it's a very sound alternative to newbuilds," he said. "We will have new boats without extending the fleet, plus newbuilds take a couple of years to complete, and here we'll have four immediately after the closing. That is a very good alternative to catch up with the recovering market."

CGGVeritas also will benefit from the addition of new acquisition services – airborne, marine electromagnetics, and marine magnetics and gravity.

In addition to the new companies CGGVeritas will acquire, it also has plans to form a joint venture (JV) with Fugro in seabed acquisition. Under the terms of the deal, Fugro will own 60% of the JV and will pay US $290 million to CGGVeritas. This JV will combine CGGVeritas' existing seabed services, including permanent reservoir monitoring, ocean-bottom cable, and 1,000 seabed nodes, with Fugro's 1,300 seabed nodes to create a "focused global leader in the fast-growing seabed acquisition market," according to information from CGGVeritas.

There also is a commercial agreement for CGGVeritas to act as a nonexclusive broker of Fugro's existing multi-client data, which remains owned by Fugro. This gives CGGVeritas access to a broader range of client contacts while increasing its exposure to complementary and high-potential regions such as Australia and northwest Europe, including the Barents Sea.

Finally, the deal includes a global strategic technical and commercial mutual preferred supplier agreement. The addition of Jason and Robert-son to the CGGVeritas portfolio will beef up the company's reservoir characterization and exploration and appraisal capabilities, adding more than 500 employees and giving it a leading position in these markets. "This is going to create synergies, and those synergies are about productivity for scaled savings for the fleet but also through the technical and commercial leverage in processing, imaging, and multiclient," said Lefort. "We also expect additional sales from our preferred supplier agreement."

Moving into more of a service-oriented model will help buffer the company against the cyclical nature of the business, he added. The deal also is expected to be accretive as early as the first year after closing, "something that is not so common when you have such a large transaction," he said.

"This transaction is a major step forward and fits perfectly with CGG-Veritas' strategy," Lefort said.

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