UPDATE 1-PGS announces private placement of shares

* Placement to strengthen balance sheet

* Could raise more than 800 mln Norwegian crowns (Adds details, background)

OSLO, May 27 (Reuters) - Norwegian seismic survey group PGS (PGS.OL) said on Wednesday that it will make a private placement of up to 21.63 million shares to strengthen its balance sheet in a challenging market.

PGS said the placement comprises up to 18 million new shares and up to about 3.6 million of its own shares that the company owns. The price will be determined through a book-building process, with the aim of completing a sale Thursday morning.

Shares in PGS closed at 37.75 crowns on Tuesday. If they were sold at this price, the company would raise 816 million Norwegian crowns ($127 million).

"The purpose of the private placement is to strengthen the company's balance sheet," PGS said in a statement.

"Together with the company's previously announced plans for asset sales, which are targeting proceeds of $200 million, the private placement will better position PGS in a more challenging market," the company said.

PGS has hired ABG Sundal Collier, DnB NOR Markets and SEB Enskilda as managers for the private placement. (Reporting by Oslo newsroom)