Getech Grp Regulatory News (GTC)

23 Sep 2005 08:01

IP2IPO Group PLC23 September 2005 For immediate release 23 September 2005 IP2IPO GROUP PLC GETECH GROUP PLC SUCCESSFUL PLACING AND ADMISSION TO AIM IP2IPO Group plc (AIM: IPO) ("IP2IPO"), the intellectual propertycommercialisation company, is pleased to note that today is the first day oftrading on AIM of shares in GETECH Group plc ("GETECH"), a spin-out company thatwas formed within the University of Leeds. GETECH is an oil services businessthat specialises in the compilation and analysis of gravity and magnetic data. GETECH raised £3.5 million (before expenses) at a placing price of 39p per share(the "Placing Price") and its capitalisation at the Placing Price was £10.8million. Following the placing IP2IPO owns 4,585,000 shares in GETECH (worth £1.8 millionat the Placing Price), representing 16.6 % of GETECH's enlarged share capital. For more information please contact: IP2IPO 020 7489 5200 David Norwood, Chief Executive Officer GETECH Group plc 0113 343 5240 Dr Derek Fairhead, Managing Director Buchanan Communications Tim Anderson, Mark Court, Mary-Jane Johnson 020 7466 5000 The press release issued today by GETECH follows: GETECH Group Plc ("GETECH" or "the Company") STRICTLY EMBARGOED UNTIL 23 SEPTEMBER 2005 FIRST DAY OF DEALINGS ON THE AIM MARKET OF THE LONDON STOCK EXCHANGE GETECH Group Plc, the oil services business specialising in the compilation andanalysis of gravity and magnetic data, is pleased to announce its flotation onthe AIM market of the London Stock Exchange today. Teather & Greenwood Ltd is the Company's nominated adviser and broker. INTRODUCTION GETECH is a profitable and cash generative oil services business specialising inthe compilation and analysis of gravity and magnetic data. GETECH licenses thesedata sets and interpretation reports to major oil, gas and mining companies toenable these companies to evaluate regional geology and thereby assist theirexploration strategies. GETECH has compiled one of the most extensive commerciallibraries of gravity and magnetic data. GETECH is based at the University ofLeeds, and it has a subsidiary in Houston, Texas. PLACING STATISTICS Placing Price 39p Number of Ordinary Shares in issue prior to the Placing 20,000,000Number of Placing Shares to be issued pursuant to the Placing 7,692,307Number of Vendor Placing Shares being placed 578,051Number of Ordinary Shares in issue immediately following Admission 27,692,307Market capitalisation of the Company following the Placing and Admission at the Placing Price £10,800,000Percentage of Enlarged Share Capital being placed pursuant to the Placing 27.77 %Estimated gross proceeds of the Placing £3,225,000Estimated net proceeds of the Placing receivable by the Company £2,498,000 For further information, please contact: Buchanan Communications 01943 883990 Kelly-Ann French GETECH Group Plc 0113 343 5240 Prof Derek Fairhead Colin Glass 07831 258494 Teather & Greenwood Ltd 020 7426 9000 Mark DickensonRob Naylor BACKGROUND Magnetic data can be mapped to show small variations in the Earth's magneticfield. These maps can then be analysed to show the location and depth ofgeological structures such as faults, rock boundaries and volcanics. Gravitydata is similar to magnetic data, except that it is used for mapping thevariation of the gravity field of the Earth. Variations in the Earth'sgravitational pull arise from changes in the density of rocks. The gravity fieldallows three-dimensional analysis of geological structures at depth. For examplethe gravitational field increases over anticlines (arch folds in rocks) anddecreases over the top of salt domes (a plug of salt). This information,together with other data, contributes to the evaluation of the mineral andhydrocarbon potential of a region. GETECH licenses its magnetic and gravitydatasets and interpretation reports to oil, gas and mining companies who areable to generate an image of the sub-surface geology over a potentialexploration area. The Directors believe this benefits the oil, gas and miningcompanies by adding a greater degree of certainty before more expensive seismicexploration and drilling operations are undertaken. HISTORY GETECH has evolved from a University of Leeds research group, which wasestablished in the early 1980s by Dr Derek Fairhead, currently Professor ofApplied Geophysics. In 1991, this research group was renamed GeophysicalExploration Technology and it became a division of ULIS, a company establishedto manage the University's commercialisation of intellectual property. In 1996,Geophysical Exploration Technology Inc. was established in Houston, Texas, tostrengthen and build on close contacts with major oil companies. In October2000, GETECH was "spun-out" from the University with 80 per cent. of the equitybeing allocated to senior employees within GETECH and with the Universityretaining the remaining 20 per cent. To preserve GETECH's valuable links withthe University, Dr Derek Fairhead still spends 20 per cent. of his time teachingand supervising research within the University. GETECH has, since the mid-1980s,undertaken and continues to undertake a series of major gravity and magneticcontinental scale studies, funded by oil and gas companies. These studies haveintegrated on a continental scale disparate exploration gravity and magneticdatasets owned by oil companies with other available data into a single unifieddatabase. GETECH took the strategic decision in mid-2004 to develop a newdivision of the business, the Petroleum Systems Evaluation Group (PSEG), andrecruited senior geo-scientists to manage it. PSEG uses data already held byGETECH with other data to analyse the potential petroleum systems withinsedimentary basins. The aim of PSEG is to provide oil companies with a moredetailed insight of where oil and gas are likely to be found within thesedimentary basins. This further analysis builds on GETECH's core competency ofdefining the location and structural architecture of the sedimentary basins. TheDirectors believe PSEG has significant growth potential due to the increasingdemand for its services. PRINCIPAL ACTIVITIES GETECH has 3 principal activities:Global Gravity and Magnetic Data LicensingInterpretation Studies and ServicesPSEG The first two activities contributed the majority of Group revenue for the yearended 31 July 2005. 1. Global Gravity and Magnetic Data Licensing GETECH has compiled one of the most extensive commercial libraries of gravityand magnetic data, which is marketed and then licensed to oil, gas and miningcompanies. This activity has contributed the majority of Group revenue andprofit since 2000 and contributed 51 per cent. Of Group revenue for the yearended 31 July 2005. GETECH continues to update its data library by entering intonew marketing agreements with data suppliers and therefore continues to developnew products. For example, RAMS, an ongoing GETECH study, receives funding fromfour of the leading oil companies totalling in excess of £1.2 million. 2. Interpretation Studies and Services The Group undertakes two types of interpretation studies: Non-exclusive studies, whereby a number of companies provide the funding for thestudy but the ownership of the study remains with GETECH. The study is thenlicensed to as many clients as possible after completion. GETECH's globalgravity and magnetic archive data are often incorporated within the studies. Anexample of such a study is the "Libya Depth to Basement Study", which usedGETECH-compiled gravity and magnetic data, over 700 wells, and public domaindata to undertake a geological/geophysical three-dimensional interpretationstudy of the basement. The study has been sold successfully for five years asoil companies either enter Libya for the first time or return after sanctionswere lifted. New studies are being considered in Africa, the Middle East andSouth East Asia. Proprietary studies, whereby a single client commissions work. Currently, thisis a relatively modest revenue earner for GETECH contributing 3 per cent. ofGroup revenue for the year ended 31 July 2005. The work covers processing andinterpretation of both GETECH datasets and survey data provided by the client.The Directors believe that this work broadens the Group's industry relationshipsand generates repeat work. GETECH provides three types of services, which include: Software sales and support of a limited range of databasing, processing andinterpretation software developed by GETECH. Training courses to oil, gas and mining companies, which are part of GETECH'smarketing strategy. Research and development to be undertaken and funded within set projects or as astandalone proprietary or group-funded study. The Directors consider that these three types of services are an important partof the business, although they do not generally represent a significantpercentage of Group revenue, as service contracts can lead to further projectwork. For example, a one year study has been solicited from a leading Europeanoil company as a result of services performed by GETECH for the oil company. 3. PSEG In mid-2004, GETECH decided to enhance its interpretation capability byestablishing PSEG, headed by Dr John Jacques and Dr Paul Markwick. PSEG usesdata already held by GETECH with other data to analyse the potential petroleumsystems within sedimentary basins. The aim of PSEG is to provide oil companieswith a more detailed insight of where oil and gas are likely to be found withinthe sedimentary basins. The Directors believe PSEG will increase GETECH's breadth of business activityin an area where there is competition, but also considerable demand from oilcompanies, for such services. PSEG will build on the already established linksand reputations that Dr John Jacques and Dr Paul Markwick have generated overthe last 5 to 10 years. PSEG has expanded to 5 people to date. The current focusis on proprietary studies, one of which has already been completed for a Britishcompany in South East Asia. PSEG is also promoting non-exclusive studies withone in the Gulf of Mexico having commenced, and another in the South Atlantic,which is currently being planned. CUSTOMERS The market in which GETECH operates is dominated by the large oil companies suchas Shell, ExxonMobil and BP. The nature of GETECH's core business is licensingdata on an enquiry by enquiry basis. This ensures GETECH is not heavily reliantupon one customer. GETECH's largest customers over the last three years,representing 50 per cent. of income, were BP and its joint ventures, ENI,ExxonMobil, Royal Dutch Shell, Statoil and the US Government. In addition,GETECH licensed data and services to over 30 smaller oil, gas and miningcompanies (representing the remaining 50 per cent. of its income). MARKET The market is dependent upon the size of exploration budgets in the oilindustry, which is, in turn, dependent on the existing oil production levels andfuture demand. An indication of this demand is the current high price of oil.Many of the oil companies have taken the decision to increase their explorationbudgets as they need to locate and exploit new fields to maintain currentproduction levels and to cope with the increasing demand from developing areassuch as China. GETECH has a range of products, including data for a large numberof countries worldwide, as well as a mixture of ongoing long and short-termprojects with oil and gas companies. Hence the Directors believe GETECH is wellpositioned to provide good value products to oil, gas and mining companies whichwill remain in demand even if exploration budgets were to be reduced. Dependency on licences Where GETECH enters into collaboration, sponsorship and supply agreements withdata providers to supply and enable GETECH to integrate data for specificgeographical areas, ownership of the data remains with the provider of the dataand GETECH requires a licence to be able to market the data derived from theproject. These licences have not always been expressly provided. Competitors The Directors believe GETECH is perceived by the industry as a major supplier ofregional gravity and magnetic data. GETECH's main competitor is Fugro Robertson,which is a subsidiary of Fugro N.V., an integrated oil services company.However, the Directors believe that Fugro Robertson offers no direct competitionin some of GETECH's specific areas of expertise. Another potential source ofcompetition is from in-house teams within the larger integrated oil and gascompanies accessing the data from the original data suppliers and undertakingtheir own interpretation. The levels of enquiries received by the Companyindicate that in-house technical teams are not currently able to cope with thedemands for their services. Strategy The Directors will continue to grow the existing core business of interpretationstudies and services, and are currently considering several new areas of studyin which to invest. The Directors also intend to expand the core global gravityand magnetic data licensing business, and will use a portion of the proceeds ofthe Placing for working capital to manage and expand the data library. TheDirectors aim to take the lead role in selected studies going forward therebyreducing the need for sponsors. The Directors believe that PSEG has major growthpotential and links closely and effectively with the existing core business,expanding the services GETECH is able to offer its customers. A portion of theproceeds of the Placing will be invested in PSEG to enlarge the operation,through recruiting additional qualified staff, increasing the accommodation andequipment and committing funds to additional marketing spend. The Directors willalso look to use the existing cash balance and remaining Placing proceeds foracquisitions and joint ventures both in GETECH's current areas of operation andalso to expand the Group's operations further down the exploration andproduction process, enabling it to access a wider range of oil, gas and miningcompany budgets. PROCEEDS OF PLACING The net proceeds of the Placing will be used: to invest in the core data library and for working capital for the developmentof global gravity and magnetic data sales, allowing the Group to take the leadin selected studies and providing funds to meet advanced royalty payments tosecure access to new databases and sources; to invest in Petroleum Systems Evaluation Group (PSEG), enlarging the operationby recruiting additional qualified staff, increasing the accommodation andequipment and committing funds to additional marketing spend; and together with GETECH's current cash balances, to seek opportunities foracquisitions and joint ventures both in its current areas of operation and alsoto expand the Group's operations further down the exploration and productionprocess, enabling it to access a wider range of oil, gas and mining companybudgets. Current Trading The Group has continued through August 2005 to work on a number of non-exclusiveand proprietary studies for its customers. In addition the Group continues tolicense magnetic and gravity data from its extensive library. Current trading istherefore in line with management's expectations. Directors The Board consists of 7 Directors in respect of whom brief biographies are setout below. Peter Stephens (aged 49), Non-Executive Chairman Peter was previously Head of European Equities Sales at Salomon Brothers andCredit Lyonnais. Since 2001 he has been working as a venture capitalist. He hasa M.A. in Jurisprudence from Oxford University and qualified as a Barrister in1978. He is a founding shareholder of Desire Petroleum plc and is anon-executive Director of Tristel plc, a company quoted on AIM. Dr Derek Fairhead (aged 60), Managing Director Derek is the founder of GETECH. Derek received a B.Sc. in Geology and Physicsfrom Durham University, a M.Sc. in Geophysics from Newcastle University, and aPh.D. in Geophysics from Newcastle University. He has been Managing Director ofGETECH for over fourteen years, and is also the Professor of Applied Geophysicsat Leeds University as well as having had over 100 papers published. Derek hasan honorary Professorship at the Ocean University of Qingdao, China; was awardedthe Bureau Gravimetrique International (BGI) medal "for outstanding works on theEarth's gravity" in 1994; and received the Special Commendation Award by theSociety of Exploration Geophysicists in 1999. Derek has numerous contacts in theoil and gas industry and Government Ministries/Survey Departments worldwide dueto his involvement with the continental data compilation studies. Dr Christopher Green (aged 44), Technical Director Christopher has a B.Sc. in Physics from Durham University, a M.Sc. in Geophysicsfrom the University of Leeds, and a Ph.D. in Geophysics from the University ofLeeds. He started work as a Research Assistant at the University of Leeds in1983 and subsequently became GETECH's chief Geophysicist and Technical Director.He has developed software for the visualisation of gridded gravity, magnetic andtopographic datasets, in a plate tectonic context and algorithms and techniquesfor the processing of altimeter data from the ERS-1 and GEOSAT satellites intofree-air gravity. Ian Somerton (aged 50), Marketing Director Ian started his career as a Geophysicist at the British Antarctic Survey, UK,and Antarctica in 1976. During 1980-82 he worked in the Applied GeophysicsResearch Unit at Birmingham University before moving to Robertson ResearchInternational Limited (currently renamed Fugro). Whilst with Robertson ResearchInternational Limited, Ian was responsible for many geophysical acquisition,processing and interpretation projects. These involved overseas fieldwork incountries including, Saudi Arabia, Turkey, Portugal, Botswana, Oman, Papua NewGuinea, Somalia, Libya and Yemen. Ian joined GETECH in 1994 and his currentresponsibilities include co-ordinating the marketing of all GETECH's productsand services to oil, gas and mining companies. Colin Glass (aged 62), Finance Director Colin is a Chartered Accountant and a partner in Winburn Glass Norfolk CharteredAccountants. He is a founder Director of the AIM quoted Surgical InnovationsGroup plc which reversed into Haemocell plc in 1998. He is a non-executiveDirector of Coe Group plc taking the company from venture capital funding to AIMquotation through a reverse takeover. He is a non-executive Director of Straightplc which he assisted in floating on AIM in 2003. He also advised the GETECHmanagement team in the negotiations on the spin-out from the University. Raymond Wolfson (aged 51), Non-Executive Director Raymond has a B.A. in Physics from Magdalen College, Oxford. He worked forthirteen years in BNFL in various management consultancy and commercial rolesand then moved to Ernst and Young and qualified as a Chartered Accountant. Since1991 he has been involved in the technology transfer company at the Universityof Leeds, as Finance Director and later Investment Director. He has created andbeen a director of various spin-out companies from the University, a significantnumber of which have raised funding and/or been sold. Most recently he has beenresponsible for managing the intellectual property created at the University ofLeeds. Dr David Roberts (aged 62), Non-Executive Director David has a B.Sc. and a D.Sc. in geology and geophysics from ManchesterUniversity. He worked for the Institute of Oceanographic Sciences for 16 yearsbefore joining BP Exploration in 1981 as Head of the Basins Analysis group. Heretired from BP in 2003 as Distinguished Exploration Advisor. David's experienceat BP has given him world wide exposure to exploration in a variety ofsedimentary basins and petroleum systems both onshore and offshore. He is also aVisiting Professor and fellow of Royal Holloway, University of London, theUniversity of Southampton and IFP school in Paris. David has published more than100 papers on a variety of geoscience topics. He is the founder and editor ofMarine and Petroleum Geology and is the recipient of numerous awards and alsoruns his own geoscience consultancy. Enterprise Investment Scheme and Venture Capital Trusts The Company has received provisional clearance that its shares will be aqualifying investment for the purposes of the EIS and a "qualifying company" forthe purposes of investment by Venture Capital Trusts ("VCTs"). -ENDS- This information is provided by RNS The company news service from the London Stock Exchange