CGGVeritas Reports CGG Stand-alone Results for 2006

CGGVeritas on Thursday announced CGG's fourth-quarter and full-year 2006 unaudited financial results, the merger with Veritas becoming effective in 2007.

2006 Highlights:

--2006 Group revenues of Euros 1,330 million (US$ 1,670 million), up 53% in EUR and 54% in US$ compared to 2005.
--Group operating profit of Euros 289 million, a 22% operating margin compared to Euros 75 million in 2005, an 8% operating margin.
--Geophysical Services revenues of Euros 792 million (US$ 991 million), up 43% in EUR and up 44% in US$, and an operating margin of 19%, not including the contribution from Argas.
--Sercel revenues of Euros 610 million, (US$ 768 million), up 61% in EUR and 63% in US$ and a record operating margin of 28.6%.
--2006 net profit of Euros 159 million compared to a net loss of Euros 6.8 million in 2005.
--When not including the specific charge related to the convertible bond, the 2006 net profit is Euros 182 million compared to a net profit of Euros 4.7 million in 2005.
--Year end 2006 net debt to equity gearing ratio of 18%

Q4 2006 Highlights:

--Fourth quarter 2006 Group revenues of Euros 374 million (US$ 483 million) up 43% in Euros and 55% in US$ compared to the fourth quarter of 2005.
--Group operating profit of Euros 71 million representing a 19% operating margin compared to Euros 30 million for the fourth quarter of 2005 ( an 11% operating margin).
--Geophysical Services revenues of Euros 189 million (USD$ 244 million) up 17% in EUR and 28% in US$ compared to the fourth quarter of 2005 and representing an operating margin of 11% not including the contribution from Argas.
--Sercel revenues of Euros 189 million, (US$ 244 million), up 53% in EUR and up 67% in US$ compared to the fourth quarter of 2005 and representing a record operating margin of 32%.
--Fourth quarter Group net profit of Euros 38 million.

Comments and Perspectives:

CGGVeritas Chairman & CEO, Robert Brunck, commented:

"In 2006, the CGG Group took advantage of strong demand in geophysics to increase its market share and its profitability through its renewed and modernized fleet, the excellent quality of its multi-client library and more generally its reinforced technological positions in imaging and in equipment through the successful launch of new Sercel products. The CGG Group almost quadrupled its operational profit with a record year for Sercel and strong operational performance of Geophysical Services.

"Looking forward in 2007 continued favorable market conditions provide an excellent environment for the new CGGVeritas Group to meet our growth, operational performance and debt reduction objectives."

Revenues 2006 and Fourth Quarter 2006:

Revenues 2006:

Group revenues at the end of 2006 were Euros 1,329.6 million, (US$ 1,669.7 million) up 53% in Euros and up 54% in US$, year on year.

Revenues for Geophysical Services for 2006 were Euros 792.1 million, (US$ 991.3 million) up 43% in Euros and up 44% in US$, year on year.

Revenues for Sercel at the end of 2006 were at a record level of Euros 610 million (US$ 768 million), up 61% in EUR and up 63% in US$ year on year. 2006 Sercel external sales were Euros 537.5 million (US$ 678.4 million) up 69% in EUR and up 72% in US$, year on year.

Fourth Quarter 2006 per Segment:

Group revenues for the fourth quarter of 2006 were Euros 374 million (US$ 483 million) up 42% in EUR and 55% in US$, compared to the fourth quarter of 2005.

Revenues for Geophysical Services for the fourth quarter of 2006 were Euros 188.7 million, (US$ 243.9 million), up 17% in EUR and 28% in US$ compared to the fourth quarter of 2005.

Land revenues for the fourth quarter of 2006 were Euros 22.3 million (US$ 28.8 million) down 30% in EUR and 24% in US$ when compared to the fourth quarter of 2005. During the quarter, for safety concerns, we stopped work and demobilized a large seismic crew based on a force majeure event.

Offshore revenues for the fourth quarter of 2006 were Euros 129.1 million (US$ 166.8 million) up 33% in EUR and 44% in US$ compared to the fourth quarter of 2005. As expected, a high number of transits and port calls impacted the quarter. Multi-client revenues were of Euros 52.2 million, up 108% compared to the fourth quarter of 2005. The net book value of the multi-client library at the end of 2006 was of Euros 72 million.

Processing and Reservoir revenues for the fourth quarter of 2006 were Euros 37.4 million (US$ 48.3 million) up 18 % in EUR and 28% in US$ compared to same period last year.

Total revenues for Sercel for the fourth quarter of 2006 were at a record level of Euros 188.5 million (US$ 243.6 million), up 53% in EUR and 67% in US$ compared to the same period last year. External sales for the fourth quarter of 2006 were Euros 185.2 million (US$ 239.4 million), up 82% in Euros and 98% in US$ compared to the same period last year.

2006 and Q4 2006 Operating Income:

2006 Operating Income:

The Group operating profit at the end of 2006 were of Euros 289.0 million, a 21.7% operating margin, compared to Euros 75.1 million operating profit at the end of 2005 and representing an 8.6% operating margin.

The 2006 operating profit for Geophysical Services, not including the contribution from Argas of Euros 9.5 million, were Euros 150.3 million compared to a Euros 25.2 million operating profit in 2005. The operating margin for 2006, when including Argas, exceeded 20%.

The 2006 operating profit for Sercel were Euros 174.2 million corresponding to a 28.6% operating margin, compared to a Euros 79.8 million operating profit and a 21% operating margin in 2005.

Fourth quarter 2006 Operating Income per Sector:

Group operating profit for the fourth quarter of 2006 were Euros 71.4 million, a 19.1% operating margin, compared to Euros 30.1 million operating profit for the fourth quarter of 2005 and an 11.4% operating margin.

The operating profit for Geophysical Services for the fourth quarter of 2006 were Euros 20.5 million, a 11% operating margin, compared to a Euros 11.1 million operating profit for the fourth quarter of 2005. During the quarter, apart from the land force majeure event and the numerous expected vessels transits and dry docks, operations ran smoothly with good performance in imaging and a sustained level of multi-client revenues.

Operating profit for Sercel for the fourth quarter of 2006 were Euros 60.8 million, a record 32% operating margin, compared to Euros 30.5 million for the fourth quarter of 2005, corresponding to a 25% operating margin. During the quarter, demand remained strong for all types of land and offshore seismic equipment.

Net Result:

The 2006 net result was a profit of Euros 158.7 million including Euros 23.0 million specific financial charges for the variance on derivative of the convertible bonds compared to a net loss of Euros 6.8 million in 2005 (including Euros 11.5 million charge for the variance on derivative of the convertible bonds).

The net result for the fourth quarter of 2006 was a profit of Euros 37.7 million compared to a profit of Euros 20.5 million (including an exceptional profit of Euros 26.5 million for the variance on derivative of the convertible bonds) for the same period last year.

Adjusted EBITDA:

The "Adjusted EBITDA" is defined as the EBITDA minus the cost of equity based compensation

Adjusted EBITDA at the end of 2006 was Euros 483 million, representing 36% of the revenues and an increase of 113% year on year.

Adjusted EBITDA for the fourth quarter of 2006 was Euros 125 million, representing 33% of revenues and a 55% increase year on year.

Summary of cash-flows:



                                              Summary of cash-flows:

    Million Euros
    IFRS                                   2006    2005   Q4 2006 Q4 2005
    Net Cash before change in working      405.9   204.0   109.9   82.8
    capital
    Net Cash provided by operating         347.4   182.4   153.1   73.1
    activities
    Total purchases of tangible and       (149.2) (117.1) (17.9)  (49.4)
    intangible assets
    Investment in multi-client surveys    (61.5)  (32.0)  (22.6)  (12.8)


Balance Sheet items: As the end of 2006, net equity was Euros 877 million and net financial debt was Euros 153.8 million, representing a 17.5% net debt to equity.


    Million Euros
    IFRS                               31/12/ 2006  31/12/2005

    Shareholders' equity               877.0        698.5
    Net financial debt                 153.8        297.2
    Net debt to equity                 17.5%        42.5%

Backlog: The backlog as of March 1st 2007 for CGGVeritas was at a level of US$ 1.610 billion.

CGGVeritas is an international pure-play geophysical company delivering a wide range of technologies, services and equipment through Sercel, to its broad base of customers mainly throughout the global oil and gas industry.

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