XML 38 R8.htm IDEA: XBRL DOCUMENT v2.4.0.8
Acquisition of OceanGeo
 9 Months Ended
Sep. 30, 2014
Business Combinations [Abstract]  
Acquisition of OceanGeo
Acquisition of OceanGeo
In February 2013, the Company acquired 30% of OceanGeo B.V. (“OceanGeo”). OceanGeo specializes in seismic acquisition operations using ocean bottom cables deployed from vessels leased by OceanGeo. In October 2013, the Company reached agreement with its joint venture partner in OceanGeo, Georadar Levantamentos Geofisicos S/A (“Georadar”), for the Company to have the option to increase its ownership percentage in OceanGeo from 30% to 70%, subject to certain conditions.
To further assist OceanGeo in acquiring backlog, in October 2013, the Company also agreed to loan OceanGeo additional funds for working capital, as necessary, up to a maximum of $25.0 million. Prior to obtaining a controlling interest in OceanGeo, the Company advanced a total of $18.9 million to OceanGeo.
In January 2014, the Company acquired an additional 40% interest in OceanGeo, through the conversion of certain outstanding amounts loaned to OceanGeo by the Company into additional equity interests of OceanGeo, bringing the Company’s total equity interest in OceanGeo to 70% and giving the Company control over OceanGeo. The Company has included in its results of operations, the results of OceanGeo from the date of the Company’s acquisition of a controlling interest.
In July 2014, the Company paid $6.0 million to Georadar for the remaining 30% of OceanGeo, increasing its equity interest in OceanGeo to 100%. In addition to the $6.0 million cash purchase price, the Company agreed to pay Georadar up to an additional $5.0 million, contingent upon the occurrence of certain future events, including the award of a future material project in 2014 and a minimal amount of vessel downtime. The Company does not believe that it will have to pay the contingent amount and, therefore, has not accrued this amount as of September 30, 2014. Since the initial investment in early 2013, the Company has invested or contributed assets totaling approximately $46.5 million to OceanGeo.
The Company acquired OceanGeo as part of its strategy to expand the range of service offerings it can provide to oil and gas exploration and production customers and to put its Calypso® seabed acquisition technology to work in a service model to meet the growing demand for seabed seismic services.
The acquisition of OceanGeo was accounted for by the acquisition method, whereby the assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date based on an income approach. The estimated fair value of the assets acquired and liabilities assumed approximated the purchase price and therefore no goodwill or bargain purchase was recognized. During the three months ended September 30, 2014, management adjusted its purchase accounting valuation estimates and, as a result, retrospectively adjusted the valuations of assets with a corresponding increase to property, plant, and equipment as of the acquisition date. The retrospective adjustments amounted to approximately $3.9 million and primarily related to revisions of estimates of recoverability of the multi-client data library. In connection with the acquisition, the Company incurred $1.3 million in acquisition-related transaction costs related to professional services and fees. These costs were expensed as incurred and were included in other income (expense), net in the Company’s condensed consolidated statement of operations for the nine months ended September 30, 2014. As a result of consolidating OceanGeo’s results into the Company’s consolidated results of operations for the period from the acquisition date at the end of January 2014 to September 30, 2014, the Company’s results of operations include $25.0 million of OceanGeo revenues and $1.7 million of income from OceanGeo’s operations for the three months ended September 30, 2014, and $71.5 million of OceanGeo revenues and $12.3 million of income from OceanGeo’s operations for the nine months ended September 30, 2014. The following table summarizes the fair value assigned to the assets acquired and liabilities assumed, as well as the noncontrolling interest, at the acquisition date (in thousands):
Estimated Fair Value of Assets Acquired and Liabilities Assumed:
 
 
Cash and cash equivalents
 
$
609

Accounts receivable
 
9,247

Prepaid expenses and other current assets
 
1,433

Property, plant, equipment and seismic rental equipment, net
 
18,474

Other assets
 
2,227

Total identifiable assets
 
31,990

Accounts payable and accrued liabilities
 
(13,464
)
Bank loans
 
(6,135
)
Other liabilities
 
(1,026
)
Net assets
 
11,365

Noncontrolling interest
 
(3,410
)
Total consideration
 
$
7,955


The following summarized unaudited pro forma consolidated income statement information for the nine months ended September 30, 2014 and 2013 and for the three months ended September 30, 2013, assumes that the OceanGeo acquisition had occurred as of the beginning of the periods presented. The Company has prepared these unaudited pro forma financial results for comparative purposes only. These unaudited pro forma financial results may not be indicative of the results that would have occurred if ION had completed the acquisition as of the beginning of the periods presented or the results that may be attained in the future. Amounts presented below are in thousands, except for the per share amounts:
Pro forma Consolidated ION Income Statement Information
 
Three Months Ended September 30, 2013
 
Nine Months Ended September 30,
 
2014
 
2013
Net revenues
 
$
79,838

 
$
381,902

 
$
362,157

Income (loss) from operations
 
$
(72,757
)
 
$
22,492

 
$
(66,997
)
Net income (loss)
 
$
(214,305
)
 
$
55,838

 
$
(277,612
)
Net income (loss) attributable to ION
 
$
(213,807
)
 
$
53,684

 
$
(277,097
)
Basic net income (loss) per common share
 
$
(1.40
)
 
$
0.33

 
$
(1.81
)
Diluted net income (loss) per common share
 
$
(1.40
)
 
$
0.33

 
$
(1.81
)