After three years, the two companies decide to realign their businesses.

At the 2007 meeting of the Society of Exploration Geophysicists, an article in the daily paper discussed the new combination of Rock Solid Images (RSI), a company that specialized in rock physics-driven integration of seismic and well data, and Offshore Hydrocarbon Mapping (OHM), a company that provided acquisition and processing services for controlled-source electromagnetic (EM) and magnetotelluric surveys. The plan was to integrate the EM data with seismic and well data for a more complete understanding of reservoir properties. 

Three years later, the companies are trying on a slightly different business model. OHM-RSI has kept the processing part of OHM but has sold the acquisition portion to a syndicate of Norwegian companies – Euro Trans Skips AS, the company that owns OHM’s vessels, and Sector Asset Management, a private equity firm. The acquisition company will be private, while the processing company remains publicly traded. 

Why the change of heart? While sharing intellectual property was part of the justification behind OHM acquiring RSI in 2007, the goal of truly integrating EM with seismic and well data often got sidetracked by difficulties in the EM market. A press release announcing the deal stated, “Although business conditions for the group have improved somewhat since April 2010, the marine acquisition component of the group continues to be loss-making. This division continues to consume capital, including capital previously allocated to other areas of the group’s activities, and significant capital investment will be needed in the near future to replace items of offshore survey equipment (that) are currently nearing the end of their useful lives. In the directors’ opinion, the marine acquisition business requires an additional (US) $10 million … to fund working capital and investment which, given the group’s current financial position and the state of the equity and debt capital markets in general, presents a major challenge.” 

Added Richard Cooper, CEO of OHM plc, “The processing part of the EM business really needs to be working very closely with the seismic and well bit, that integration bit that we’ve tried to put together over the last couple of years. This transaction makes that easier to do. We’ve got all the processing and interpretation in one company and the marine acquisition business in another, and they’re different types of companies, so it makes sense to have them as different businesses.” He agreed that the acquisition company will need quite a bit of investment going forward. In the new scenario, the syndicate will invest in the acquisition company and own it 100%. It also will put some money into the public company.

The new public company will be “a bit of a unique company,” Cooper said. Until now, companies that wanted EM data processed had to take it to the same company that acquired it. “It will be independent of any acquisition contractors, and we’ll just do high-end seismic, well, and EM work,” he said. 

There is plenty to work with – many EM surveys have been shot over the years and are ripe for reprocessing as well as integrating with other types of data. The processing company will maintain a relationship with the acquisition company, and the acquisition company is likely to subcontract its processing to the processing company. “But they don’t have to,” Cooper said. “It’s kind of like a right of first refusal.” Nor is the processing company beholden to the acquisition company. “We were careful not to plan any agreements that would prevent us from doing other things if we wanted to,” he said. “We’re not exclusively tied back to the acquisition company.” 

Client response has been muted; former RSI customers are not really affected by the announcement, and former OHM customers mostly have asked for reassurances that their surveys still are on schedule and that they still will be working with the same people. 

“There are no people being lost through the process,” Cooper said. 

He added that the two companies still will be branded the same, so differences are likely to be subtle at first. As time goes by, however, they could become more noticeable. “We might pursue additional business models that weren’t available to us before,” he said. “It’s nice from the point of view of creating this independent consulting company. That’s a little bit different.” 

Overall, he said, he is pleased to be able to retain the same people, software, and intellectual property. “We’re not losing anything,” he said. “In fact, we’re logically organizing the companies perhaps in a better way. 

“The two companies are now independently set up, well-financed, and free to go off in slightly different directions if that’s what makes sense from a business point of view.”