Shares in AIM listed oil and gas services group Offshore Hydocarbon Mapping Plc (LON:OHM) rose by 9% to 9p early this morning on news that the company was planning to cut loose its loss making marine acquisition business. The proposed move will see OHM plough its efforts into the more viable geophysical processing and interpretation consulting business, Rock Solid Images, which it acquired in 2007.

As part of the deal, OHM is selling its OHM Ltd and OHM Malaysia operations, which broadly incorporate the group’s controlled source electromagnetic (CSEM) surveying business. They are being sold to a concert party comprising oil and gas investor, Sector Asset Management and Euro Trans Skips AS, which was one of OHM’s largest shareholders. On paper, the businesses are being sold for $150,000 but the concert party is also subscribing for £2.0m of shares in OHM at 10p per share and has set up an ongoing services agreement between the two sides worth $3.0m.

The effect of the deal on OHM is inevitably going to involve wider losses in the near term as it absorbs exceptional charges connected to the deal. However, the company said it was on course to meet expectations at a revenue and EBITDA level this year. In the longer term, the company will be free from the capital intensive CSEM business which has struggled to get traction in the market in recent years. In December last year, OHM was forced to ask its two largest shareholders, East Hill Hedge Fund and Euro Trans Skips, for a $2m credit facility because of delays to CSEM orders. Although business conditions for the group have improved somewhat since April 2010, its is understood that the CSEM component of the group has continued to be loss making. In turn, ageing offshore survey equipment meant that the business was facing a $10m capital outlay in 2011 just to maintain its service levels.

The ongoing Rock Solid Images business will itself require $3m of investment of the next 18 months, which should be well covered by the proceeds of the proposed share placing and services agreement. Rock Solid’s operations are split between two businesses: well-driven integration of seismic and electromagnetics (WISE) and well and surface seismic (WSS). In the six months to February 2010, WISE delivered revenues of £0.35m…

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