Petroleum Geo-Services, the indebted Norwegian oilfield services company, has said that the planned merger with rival Veritas DGC Inc., once valued at $1 billion, collapsed, causing PGS stock to plunge 68 percent to a record low.
The shares fell 10.95 kroner to 5.25 kroner in Oslo. Four years ago the stock reached a record high of 282 kroner. Houston- based Veritas said its board withdrew support for the merger. Veritas rose 29 percent to $11.59 at 10:14 a.m. New York time.
“We will see a restructuring of debt combined with a share sale, PGS writing down balance sheet items and changes in top management,” said John Olaisen, an analyst at Carnegie in Oslo, who recommends selling the stock. “That would create a new company and a new investment case.”
PGS shares, the worst performer this year on Oslo's benchmark OBX Index, have fallen by 93 percent as the company failed to cut debt. PGS said today it will close several offices and reduce crew costs to save up to $75 million starting next year.