By Peter B. de Selding
-
- The GeoEye-2 high-resolution optical satellite. Credit: GeoEye artist's concept Enlarge Image
PARIS — Satellite Earth imagery provider GeoEye Inc. on Aug. 7 said
it expects to complete negotiations with the U.S. National
Geospatial-Intelligence Agency (NGA) within the next couple of weeks to
determine the extent of cuts to GeoEye’s principal government contract.
The company also expects these negotiations to fix the
conditions of NGA’s remaining $70 million in cost-share payments related to the
GeoEye-2 satellite scheduled for launch in early 2013.
In a conference call with investors and an Aug. 7 filing with
the U.S. Securities and Exchange Commission, GeoEye said its planned
merger with competitor DigitalGlobe late this year or early in 2013 will not affect
the company’s near-term talks with NGA or its progress toward the launch of
Geoeye-2.
Herndon, Va.-based GeoEye and DigitalGlobe of Longmont,
Colo., have proposed a merger that will create a single company operating a
fleet of three high-resolution optical satellites instead of the four or five
the companies would be operating separately.
DigitalGlobe has the upper hand in the merger mainly because
NGA elected to cut GeoEye’s piece of a 10-year contract vehicle called
EnhancedView, and not DigitalGlobe’s, as part of the 2013 budget submitted to
Congress by the administration of U.S. President Barack Obama.
GeoEye Chief Executive Matt O’Connell said the company had
tried to lobby Congress to restore EnhancedView to its originally planned
funding levels for the 2013 budget year, which begins Oct. 1. Even as that
effort was being mounted, NGA in late June told the company that its
EnhancedView payments for the 12-month period beginning Sept. 1 likely would be
cut, and perhaps cut dramatically.
That set in motion the talks that led the boards of
directors of DigitalGlobe and GeoEye to agree to a merger, which still must win
approval of the two companies’ shareholders and U.S. government regulatory
agencies.
In the conference call, O’Connell conceded that the merger
decision “has probably affected the appetite [in the U.S. Congress] for full
restoration of funding” for EnhancedView. “But if funding is available, we do
think NGA will exercise the option to renew for nine months.”
As described in NGA’s letters to GeoEye, the U.S. agency has
proposed to renew EnhancedView for just three months starting in September, with
a nine-month option to be exercised subject to the availability of funds.
Under this scenario, NGA would pay GeoEye a total of $39.75
million over the three months beginning Sept. 1, and an additional $119.25
million over the following nine months if funds are available.
Under the EnhancedView contract as originally foreseen,
GeoEye would have received $12.5 million per month from NGA until GeoEye-2 got
certified as fully operational around September 2013, at which point payments
would rise to $27.8 million per month.
A second NGA letter proposed that $70 million in co-payments
for GeoEye-2’s construction be attached to a new series of milestones that
GeoEye has said pose no problem for the company. NGA already has paid $111.2
million in GeoEye-2 co-payments.
GeoEye Chief Financial Officer Joseph F. Greeves said during
the call that GeoEye-2, under construction by Lockheed Martin Space Systems of
Sunnyvale, Calif., is still expected to cost between $820 million and $850
million including launch and insurance. Greeves said that as of June 30, the
company had spent $718 million on GeoEye-2.
NGA had previously told GeoEye that the agency’s earlier
indication that it would pay $337 million in GeoEye-2 costs was no longer
viable, and that the $181.2 million already approved would probably be the
final total.
O’Connell said it likely would be months before the final
2013 budget emerges from Congress. Before leaving Washington for a five-week
summer recess, House and Senate leaders agreed to take up in September a
temporary spending measure, called a Continuing Resolution, that would fund the
U.S. government at 2012 levels through March. O’Connell said a six-month
Continuing Resolution would have unknown consequences on the EnhancedView
budget.
Also unclear are the effects of the EnhancedView budget’s
evolution, and the progress of the DigitalGlobe-GeoEye merger, on the launch of
GeoEye-2.
O’Connell said a go/no-go decision on the launch of GeoEye-2
would need to be made in the first three months of 2013. The two companies have
said their merger should close by then, leaving the merged company with the
option of keeping GeoEye-2 on the ground as a spare.
In the meantime, GeoEye is continuing to compete with
DigitalGlobe, notably on NGA’s GeoInt Data Services business, a five-year
contract vehicle for which GeoEye is bidding as part of a team of other
contractors. A decision is expected in January, O’Connell said.
GeoEye’s contract with Google, an exclusive relationship
that gives Google “all GeoEye-1 imagery in the Internet search engine space for
the next several years,” will continue after the merger along with all other
GeoEye contracts, O’Connell said.
For GeoEye-1, GeoEye has recently adopted an
imagery-processing technology called Enhanced Line Rate, which increases by 20
percent the speed of imagery collection and distribution. The technology had
already been foreseen for GeoEye-2.
For the three months ending June 30, the U.S. government
accounted for 68.5 percent of GeoEye’s revenue of $88.4 million.
source: http://spacenews.com
Posts
No comments:
Post a Comment