UK company Stingray Geophysical has been snapped up by TGS-Nopec Geophysical of Norway.
The deal is worth up to $80million, of which $45million is upfront, with the balance contingent on successful commercialisation of its core technology.
The acquisition is expected to provide TGS with a strong position in the rapidly growing market for permanent reservoir monitoring (PRM) solutions.
Under the terms of the deal, all 11 staff and an extensive portfolio of intellectual property at Stingray will move across to TGS.
The Norwegian group said that the purchase would substantially increase its addressable market, through access to production seismic spending from large international oil companies (IOCs) as well as national oil companies (NOCs), while maintaining its successful asset-light model.
Stingray was set up in Guildford in March 2006, and possesses patented fibre optic sensing technology for seismic PRM and other oil & gas applications.
Commenting on the raison d’etre for the takeover, Robert Hobbs, chief executive at TGS, said: “The age of easy-to-find oil is over, forcing oil companies to increase investment in their existing fields to extend production and increase recovery factors.
“The acquisition of Stingray allows TGS to access a larger portion of the reservoir optimisation market.
“The combination of TGS and Stingray will leverage both companies’ strengths to create a powerful PRM offering to the industry.”
Stingray managing director, Martin Bett, said of the deal: “TGS brings complementary capabilities, a global organisation, established seismic project management skills and financial strength to Stingray.
“As a part of TGS, Stingray is now well positioned to deliver innovative PRM solutions that will assist our clients to increase production and reserves, while decreasing risk and the cost of their enhanced oil recovery programmes.”
The 4D seismic market, of which PRM is an integral and increasing part, was estimated to be worth more than $1billion last year, with the majority of data being acquired by towed streamers.
Stingray expects the 4D market to exceed $2.5billion within the next four years, with new PRM installations expected to trend towards optical versus electrical solutions due to the expected increase in reliability and flexibility that this technology offers, especially in deep water.
The core technology for Stingray’s fibre-optic sensing system was originally developed by UK defence research laboratories in the mid-1980s, when its small size, high sensor count and extreme robustness were attractive for anti-submarine defence applications, including towed sonar arrays and permanently installed seabed arrays.
The technology was incorporated into QinetiQ, an international defence technology company, formed in 2001 from part of the UK Government’s Defence Evaluation and Research Agency (DERA), and now Europe’s largest science and technology organisation.
The core technology has probably already had in excess of $50million spent on its development. Stingray Geophysical holds the exclusive licence from QinetiQ to commercialise the fibre-optic sensing technology for seismic PRM and some other oil & gas applications.
Initial funding was raised through a consortium led by the specialist upstream venture-capitalist company Energy Ventures. Investors in the consortium include Chevron Technology Ventures and Statoil Venture.
Stingray has received research grants from the UK’s Technology Strategy Board and Norway’s Demo 2000 programmes, as well as industry funding through a joint industry project supported by BP, Chevron, ConocoPhillips and Statoil.