Electromagnetic Geoservices ASA (EMGS) has acquired the exclusive worldwide rights to patented electromagnetic (EM) technology developed by KMS Technologies (Houston) that broadens its ability to support oil and gas exploration companies searching for new reserves in shallow waters. The KMS technology offers an alternative to EMGS' proprietary methodologies in shallowwater applications, significantly broadening EMGS' product offering for oil companies.

To acquire these proprietary rights EMGS has teamed with fast-growing Reservoir Exploration Technology ASA (RXT) to jointly acquire KMS Technologies in a 50:50 joint venture.   

Earlier this year RXT signed an agreement with KMS Technologies for exclusive rights to their cable-based seafloor EM technology. RXT will retain these rights. EMGS will have exclusive rights for KMS Technologies time-domain, node-based system ("tCSEMtm") that fits well with EMGS' existing survey equipment.

"KMS' tCSEMtm technology is a significant new development. Through the acquisition of KMS Technologies, EMGS improves the mix of products that we can offer to our clients. The add-on benefit for the industry has already been proven through use of the technologies of EMGS and KMS Technologies in a survey in Egypt for one of the major energy companies late last year," said EMGS CEO Terje Eidesmo.

"Deepwater electromagnetic imaging continues to improve discovery rates and reduce finding costs for our customers in frontier and mature regions. KMS Technologies' new time-domain system is an important development in electromagnetics," said Eidesmo. "The integration of this technique alongside our existing EM systems will broaden our portfolio and extend the range of benefits we can deliver to customers. This will further strengthen EMGS position as the market leader in EM.”

EMGS will pay US $10 million in EMGS shares and $7 million in cash for its 50% ownership of KMS and the rights to the node-based tCSEMtm technology. In addition, EMGS will pay $11 million over 12 years in royalty payment to KMS and an incremental $3 million in retention-oriented compensation for KMS's scientific team.

The transaction is expected to close in late November 2007.