Annual Report 2011 - PGS

Notes to the financial Statements of PGS ASA
NOTES TO THE FINANCIAL STATEMENTS OF PGS ASA
Note 20 - Investment in Associated Company
Investments in associates are recognized in PGS ASA’s balance sheet at cost less any impairment:
Registered office
Ownership
as of
December
31, 2011
Share of income/(loss) in
year ended
December 31, 2011
(In thousands)
Equity as of
December 31, 2011
(In thousands)
Book value as of
December 31,
2011
(In thousands)
Geokinetics Inc United States 11.4% NOK 92,738 ($16,500) NOK (663,470) ($(110,200)) NOK 27,877
The Geokinetics investment was a part of the Onshore transaction closed at February 12, 2010, see Note 4 to the consolidated
financial statement for further information. The fair value of the shares received was NOK 112.5 million. At inception the
investment was assessed as an associated company based on the Company’s total ownership and board representation. For
the year ended December 31, 2011 PGS ASA has recognized an impairment charge on shares of NOK 84.6 million, in order to
reflect estimated fair value of the shares.
In fourth quarter 2010, the PGS group invested additional NOK 58.5 million ($10 million) in 40,000 preferred stocks and
1,165,000 warrants in Geokinetics. The warrants was initially valued to NOK 23.8 million ($4.1 million) using a Black-Scholes
option price model. The remaining value was allocated to the preferred shares and has been included as part of the investment
in Geokinetics held by a subsidiary of PGS ASA. For the year ended December 31, 2011 PGS ASA has recognized an
impairment on the warrants of NOK 21.5 million in order to reflect estimated fair value of the warrants.
As of December 31, 2011 and 2010, the warrants was valued to NOK 3.1 million and NOK 23.8 million, respectively, and
presented as other financial long-term assets (see Note 8).
Note 21 - Subsequent events
During 2012 the Company made optional repurchases of the Convertible notes for a nominal amount of $144.0 million at an
average price of 100.67%. Following the transactions the Company owns $353.4 million of the Convertible notes representing
88.4% of the total outstanding issue. According to the loan agreement the Company can redeem all of the Notes outstanding at
their principal amount if it has repurchased and cancelled more than 85% of the principal amount issued. On February 20, 2012
the Company announced its intention to exercise the option to redeem the remaining outstanding Notes, including accrued but
unpaid interest up until the redemption date set to March 16, 2012. On March 16, 2012 note holders for a nominal amount of
$1.1 million requested that their notes were converted to shares. This was effectuated on March 20, 2012 when the Company
transferred 28,079 of its treasury shares as settlement. The remaining outstanding amount was redeemed and cancelled on
March 22, 2012.
67 PGS ANNUAL REPORT 2011
PGS Annual Report 2011 135