Comments and Perspectives:
CGGVeritas Chairman & CEO, Robert Brunck, commented:
"I am pleased that our performance, in the industry's typically slow seasonal quarter, was inline with our expectations enabling CGGVeritas in our first six months following the merger to reach our mid year goals. Supported by continued superior results from Sercel and robust year on year growth from Services across all of our business lines in the Eastern and Western Hemisphere, it is clear that CGGVeritas is off to a strong start in creating the leading Geophysical company.
I was particularly pleased to see the quick take-up and successful results of our high-end innovative products and services, including our industry leading wide-azimuth capabilities offshore Gulf of Mexico and onshore Middle East, our advanced imaging algorithms worldwide and our first wireless equipment sale. Looking forward, with the continued strengthening market conditions, and increasing multi-client sales along with Sercel's continued leadership performance, I am pleased to say that we expect to exceed our previously announced 2007 targets."
First Half 2007 Financial Highlights:
Second quarter revenues:
Services revenue breakdown by business line:
Overview of Operations and Market Outlook:
Land Contract Acquisition: The land market continues to strengthen and during the quarter, we operated 23 crews in average, 9 crews in Western Hemisphere and 14 crews in the Eastern Hemisphere where our high-density wide-azimuth HPVAtm continues to gain acceptance. In the third and fourth quarter we expect strong activity especially in Europe Africa and Middle East (EAME) and Asia Pacific.
Land Multi-Client: During the quarter, 3 crews shot highly pre-funded Multi-Client programs in North America and data sales continued to be strong especially in the Canadian Foothills.
Offshore Contract Acquisition: During the quarter, five 3D vessels were operating in Asia Pacific, one in EAME and one in GoM on a wide-azimuth contract. As anticipated, the 3D vessel utilization rate at 75% was lower than the first quarter mainly based on the scheduled dry docks for performance upgrade and maintenance. The utilization rate will be up again in the third and fourth quarter and two new vessels, the Vision and the Vanquish, join our fleet, respectively in early July and mid October. The Seisquest was decommissioned June 9th. Also during the quarter we successfully implemented a seabed solution offshore Malaysia at a water depth of over 1000 meters.
Multi-Client Offshore: Approximately 40% of our 3D vessels during the quarter were dedicated to our Multi-Client library. We operated 5 vessels on highly pre-funded new Multi-Client programs, in GoM, Brazil and North Sea. Demand for recent vintage and well located data, particularly in deep and ultra-deep waters of the GoM, remains robust and we began shooting a highly pre-funded new wide-azimuth program in the GoM. We expect Multi-Client after-sales to strengthen in the second half of the year in line with lease sales and typical seasonal cycles in the industry.
Processing & Reservoir: Processing activity continued to increase worldwide driven by marine data volumes especially with the increasing market take-up of wide-azimuth and the high demand for our advanced imaging capabilities. Backlog continues to remain strong.
During the quarter, Sercel delivered a significantly large volume of land equipment into an expanding market and increasing demand for higher channel counts to increase seismic resolution. Marine equipment sales continue to be at record levels driven by demand for leading streamer technology and new vessels coming into the market.
Balance Sheet items:
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