October 23, 2023, Oslo, Norway: An English arbitration tribunal has over the weekend provided a decision in PGS’s favor regarding a dispute over transfer fees under several data license agreements.
In 2022, PGS recorded revenues of approximately $30 million of transfer fees relating to a change of control event under several data license agreements, where the amount was still not agreed with the client. Given the inability to timely conclude the negotiations, PGS initiated two separate arbitration proceedings under the dispute resolution provisions in the agreements. The tribunal in the first arbitration proceeding has now issued a decision in PGS’s favor. The award includes late payment interest and reasonable legal costs. The amount due to PGS, net of any revenue share to third parties, is estimated to be approximately $40 million. The detailed calculation of this amount for each of the data license agreements is currently being undertaken.
The full and formal text of the decision will be released by the tribunal in due course and PGS expects the amount to be paid during Q4 2023 or Q1 2024. The second arbitration proceeding is expected to conclude during the second half of 2024, unless a settlement between the parties is reached earlier.
PGS is assessing the accounting consequences of the decision in the first arbitration proceeding. The decision covers $18 million of the amounts already recognized as revenues by PGS in 2022. PGS expects to recognize additional revenues in Q3 2023 of approximately $15 million, but the amount is still not concluded. Such revenues would be in addition to the estimated $168 million Q3 2023 revenues reported in the Company’s pre-announcement to the market October 10, 2023. The company will in addition recognize a significant amount as interest income.
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|Bård Stenberg, VP IR & Corporate Communication |
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PGS ASA and its subsidiaries (“PGS” or “the Company”) is a fully integrated marine geophysical company that provides a broad range of seismic and reservoir services, including data acquisition, imaging, interpretation, and field evaluation. Our services are provided to the oil and gas industry, as well as to the broader and emerging new energy industries, including carbon storage and offshore wind. The Company operates on a worldwide basis with headquarters in Oslo, Norway and the PGS share is listed on the Oslo stock exchange (OSE: PGS). For more information on PGS visit www.pgs.com.
The information included herein contains certain forward-looking statements that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and uncertainties. The Company is subject to a large number of risk factors including but not limited to the demand for seismic services, the demand for data from our multi-client data library, the attractiveness of our technology, unpredictable changes in governmental regulations affecting our markets and extreme weather conditions. For a further description of other relevant risk factors we refer to our Annual Report for 2022. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward-looking statements. The reservation is also made that inaccuracies or mistakes may occur in the information given above about current status of the Company or its business. Any reliance on the information above is at the risk of the reader, and PGS disclaims any and all liability in this respect.