M&A / Property
CMG Announces the Acquisition of Rose Subsurface Assessment
CMG Bolsters Geoscience Suite With $9.8M Rose Acquisition Amid Earnings Slump
Executive Summary
- On March 25, 2026, CMG announced the acquisition of Rose Subsurface Assessment for a total consideration of USD $9.8 million.
- The deal structure includes USD $8.8 million in cash at closing, an adjustment for Rose's cash on hand, a customary holdback, and a performance-based earn-out of up to USD $2.5 million.
- Rose contributes approximately USD $6.8 million in trailing twelve-month revenue, with over 50% classified as recurring.
- The acquisition integrates Rose's Geo Risk Analysis Studio into CMG's existing seismic and reservoir simulation portfolio, targeting both traditional oil and gas operators and carbon capture and storage projects.
- Peter Carragher, Rose's Managing Partner, will transition to General Manager of the combined business unit.
- This follows a clear strategic pattern established in late 2025: securing a USD $100 million revolving credit facility, acquiring SeisWare International, and signing a multi-year CoFlow licensing agreement with Shell.
Material Impact
- The acquisition is a logical, bolt-on expansion that aligns with CMG's stated strategy to use its credit facility for accretive M&A.
- At roughly 1.4x trailing revenue, the purchase price is reasonable for a software asset with >50% recurring revenue, but it does not fundamentally alter CMG's near-term earnings trajectory.
- The deal is fully funded through existing cash and the recently established credit facility, meaning no immediate equity dilution. However, the earn-out introduces future cash obligations contingent on integration success.
- Given CMG's recent financial deterioration (Q2 FY2026 adjusted EBITDA down 25% YoY, free cash flow down 68% YoY), this acquisition is a growth lever rather than a turnaround catalyst. It is in line with management's prior guidance to pursue strategic tuck-ins.
- The market has already priced in a significant portion of CMG's operational headwinds, as evidenced by the stock's decline from $8.51 to $3.65. This news provides incremental upside but lacks the scale to reverse the broader downtrend on its own.
CMG · Price
Company Overview
- CMG develops advanced reservoir simulation, geoscience, and production optimization software for the global energy sector.
- Flagship products include the CoFlow integrated reservoir-production workflow, IMEX (black oil), GEM (compositional), and STARS (thermal/advanced processes) simulators.
- The company serves major integrated oil companies, national oil companies, and independent operators, with a growing focus on carbon capture, utilization, and storage (CCUS) applications.
- The recent addition of Rose's Geo Risk Analysis Studio and SeisWare's seismic interpretation tools broadens the platform from pure reservoir engineering to full-field subsurface risk assessment.
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May 21, 2026 · 06:45