MEDIA RELEASE PR38938
ION and BGP Announce Successful Completion of Land Seismic Joint Venture
HOUSTON, Mar. 29 /PRNewswire-AsiaNet/ --
INOVA Geophysical Established as a Leading Seismic Technology
Company
ION Geophysical Corporation (NYSE: IO) today announced that it has
successfully completed the previously announced land seismic equipment joint
venture with BGP Inc., the world's leading land seismic contractor.
Originally announced at the Society of Exploration Geophysicists' (SEG)
annual conference in October 2009, the joint venture transactions received
all necessary government and regulatory approvals in both the United States
and the People's Republic of China. Definitive agreements associated with the
joint venture's formation and other related transactions were executed by
senior executives of ION and BGP late last week in Beijing.
The joint venture company, named INOVA Geophysical Equipment Limited,
will offer a comprehensive portfolio of advanced geophysical technologies
used in oil and gas exploration to land seismic service providers around the
world. Offerings include energy source and source control systems, land
seismic recording systems, and digital full-wave seismic sensors. Initial
products to be marketed by INOVA include Aries(R), FireFly(R), and
Scorpion(R) acquisition systems; AHV-IV(R) Vibroseis vehicles; ShotPro(R) and
VibPro(R) source control systems; and VectorSeis(R). INOVA's seven-member
Board of Directors appointed Mr. Steven A. Bate, formerly Senior Vice
President of ION's Land Imaging Systems group, as President and Chief
Executive Officer of the company.
Bob Peebler, Chief Executive Officer of ION, commented, "The formation of
INOVA marks a key milestone in ION's corporate history. If one were to trace
back the roots of all of the predecessor companies that today comprise ION
Geophysical, the root that would extend the longest is the one associated
with land seismic instrumentation. For nearly forty years, ION has been known
as a pioneer in land seismic technology, having brought to the market
game-changing innovations such as full-wave imaging, VectorSeis, and FireFly.
By combining forces with the world's largest land seismic contractor, we will
be providing INOVA's technical team with direct access to the expertise,
insights, and global operating footprint they require to design and deliver
geophysical instruments that are the most reliable, efficient, and cost
effective in the marketplace. Steve has a good sense of what is needed to be
successful in this business, and he is the right executive to guide INOVA to
success in the years ahead. I wish him the best."
INOVA is now owned 51% by BGP Inc., a subsidiary of China National
Petroleum Corporation (CNPC), and 49% by ION Geophysical Corporation. As
previously agreed, BGP paid $108.5 million to ION to purchase its 51% share
of INOVA. In addition, ION issued approximately 23.8 million shares of ION
common stock to BGP for a purchase price of $66.6 million; BGP now owns
approximately 16.66% of ION's outstanding shares of common stock.
As a result of the JV and stock purchase transactions, ION received a
total of approximately $175 million in cash from BGP. ION applied $118
million of the proceeds to pay in full all outstanding amounts owed to its
creditors under its revolving line of credit agreement. ION also applied $35
million of the proceeds to pay in full all amounts owed to the seller of ARAM
from the purchase made in September 2008. ION also transferred $19 million of
debt secured by ARAM rental equipment, along with $2 million in capital
leases, to the joint venture.
In addition, ION has entered into a new credit agreement with China
Merchants Bank Co., Ltd. that both refinanced all amounts outstanding under
ION's current 'Term A' long-term debt (totaling $106.3 million) and provided
ION with a new $100 million revolving line of credit, in each case on
improved terms and conditions.
Bob Peebler added, "By forming this JV, selling equity to our strategic
partners, and refinancing our debt, ION has significantly deleveraged its
balance sheet. After paying down our previous revolver and the ARAM seller
note, we netted approximately $20 million in cash from this series of
transactions. When this $20 million is combined with the $100 million line -
and zero balance - on our new revolver from China Merchants Bank, ION will
have roughly $120 million in liquidity to tap into when and if needed. This
will allow us to sustain our ongoing investments in new geophysical
technologies in the years ahead. As the global economy continues to
strengthen, commodity prices improve, and our customers increase their
capital spending on exploration and reservoir characterization services, we
believe our portfolio of advanced geophysical offerings will prove highly
attractive in the marketplace."
As part of the overall agreement between ION and BGP, ION will be adding
an additional member to its Board of Directors. Mr. Guo Yueliang, Vice
President of PetroChina - Iraq, has been nominated to fill the new Board
seat. Once approved by ION's current directors in April, Mr. Guo will become
the tenth Director on ION's Board.
Bob Peebler closed by saying, "Mr. Guo played an instrumental role in the
INOVA transaction. Before being promoted into his current position at CNPC's
PetroChina subsidiary, Mr. Guo served as VP, International for BGP. He has
worked in the seismic business for nearly thirty years and contributed
greatly to BGP's global expansion and operational success in recent years.
Mr. Guo understands what geophysical service providers expect from technology
developers like ION and will contribute a valuable and complementary
perspective as a member of ION's Board of Directors. His vision for the INOVA
joint venture and tireless efforts in helping us get the transaction 'over
the goal line' have helped position both ION and INOVA for future success."
About ION
ION Geophysical Corporation is a leading provider of geophysical
technology, services, and solutions for the global oil & gas industry. ION's
offerings allow E&P operators to obtain higher resolution images of the
subsurface to reduce the risk of exploration and reservoir development, and
enable seismic contractors to acquire geophysical data more efficiently.
The information included herein contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Actual results may vary
fundamentally from those described in these forward-looking statements. All
forward-looking statements reflect numerous assumptions and involve a number
of risks and uncertainties. These risks and uncertainties include risk
factors that are disclosed by ION from time to time in its filings with the
Securities and Exchange Commission.
Contacts
ION (Financial community)
Chief Financial Officer
Brian Hanson, +1 281.879.3672
ION (Media affairs)
Director - Corporate Marketing
Karen Abercrombie, +1 713.366.7281
karen.abercrombie@iongeo.com
SOURCE: ION Geophysical Corporation
CONTACT: Financial community,
Brian Hanson,
Chief Financial Officer,
+1-281-879-3672,
or Media,
Karen Abercrombie,
Director - Corporate Marketing,
+1-713-366-7281,
karen.abercrombie@iongeo.com,
both of ION Geophysical Corporation
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