Core Laboratories has turned ‘disappointment’ (see last month’s Oil IT Journal) into $21 million cash by divesting its Reservoir Technologies Division (RTD) to Paradigm. Core’s RTD provides seismic data processing and depth imaging services to the upstream oil industry. The acquisition bolsters Paradigm’s offering in geoscience technology and geophysical services.
Core president and CEO Dave Demshur said, ‘We selected Paradigm as the new owner of RTD because of its commitment to the seismic data analysis business. Paradigm will provide the Division’s customers and employees with technological infrastructure and business focus.’
Core Lab’s Reservoir Technology Division has many years of experience and market leadership in both land and marine time and depth processing throughout the United States, Canada and Mexico. Paradigm will immediately gain strong synergies in its service capabilities from the transaction, which will complement its extensive integrated product portfolio of processing, imaging and reservoir characterization software.
Paradigm CEO Eldad Weiss said, ‘This acquisition demonstrates our commitment to setting a new standard for the highest quality service and deliverables to our clients. We are confident the combined experience, relationships, compute power and technical expertise of the Paradigm and RTD services groups will make us the provider of choice for subsurface and reservoir imaging solutions.’
The transaction includes ‘certain assets and assumed liabilities’ in Calgary and Houston and a business entity in Mexico. The assets and business generated approximately $24 million in revenue for Core in 2003. Core received approximately $18 million in cash at closing which will be used by Core to pay down debt, continue its Stock Repurchase Program or fund potential future acquisitions.
Core will record charges of approximately $6 million for the write-off of goodwill and approximately $2 million for fixed asset impairment associated with the transaction. Core will also record expenses for ‘severance and other related costs’ for the discontinued operations as they are incurred.
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