CGGVeritas Announces Second Quarter 2007 Results

CGGVeritas (ISIN: 0000120164 - NYSE: CGV) announced its second quarter 2007 unaudited financial results.

Financial Highlights(1):


  • Revenues of US$769 million, up 37%
  • EBITDA of EUR210 million ($284 million), and EBITDA margin of 37% compared to EUR168 million, ($ 212 million), and EBITDA margin of 38%
  • Purchase Price Allocation (PPA) negative impact of EUR7 million ($9 million)
  • Operating Profit, including PPA, of EUR101 million ($136 million), a 18% operating margin compared to EUR66 million ($85 million), a 15% operating margin
  • Net Profit of EUR45 million ($60 million) compared to EUR18 million ($23 million).
  • Operating Profit of EUR46 million ($62 million), including PPA, a 12% operating margin compared to 11%


  • Revenues of EUR196 million, ($264 million), up 18 % in EUR and 28% in $
  • Operating Profit of EUR67 million ($91 million), an operating margin of 34% compared to 27%

Operational Highlights:

  • 26 land seismic crews in operation for the slower spring season, after demobilization of the arctic crews
  • Vessel utilization rate was lower at 75% with scheduled dry docks for performance upgrade and maintenance
  • The new seismic vessel, CGGVeritas Vision, completed successful sea trials and became active in our fleet in July
  • 3rd Wide Azimuth Acquisition program proceeding well in the deepwater Gulf of Mexico (GoM)
  • Multi-Client after-sales of EUR51 million, ($69 million) in this typically low quarter
  • Multi-Client pre-funding level at 80%
  • Successful deepwater implementation of Seabed solution in Asia Pacific
  • Sercel continued to see significantly strong sales with especially high land equipment deliveries
  • Backlog as of July 1st 2007 of $ 1.6 billion

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:

  • Group Revenues of EUR1163 million ($1546 million), up 18% in EUR and 29% in $
  • Group EBITDA of EUR468 million ($622 million), and EBITDA margin of 40% compared to EUR389 million, ($476 million), and EBITDA margin of 40%
  • Group Operating Profit, including PPA, of EUR244 million ($324 million), a 21% operating margin compared to EUR180 million ($220 million), a 18% operating margin
  • Net Profit of EUR114 million ($151 million), 10% percent of revenue compared to EUR53 million ($65 million), 5% of revenue
  • Second quarter revenues:

    • - Group Revenues were EUR571 million, ($769 million) up 28% in EUR and up 37% in $
    • - Revenues for Services were EUR390 million, ($525 million) up 26% in EUR and up 34% in $, due to strengthening market conditions, upward price mobility and partially offset by lower vessel utilization rate
    • - Revenues for Sercel were EUR196 million ($264 million), up 18 % in EUR and up 28% in $ year on year. Sercel external sales were EUR181 million ($244 million) up 32% in EUR and up 42% in $, year on year

    Services revenue breakdown by business line:

    • Contract revenues:
    • Land contract revenues were EUR72 million ($97 million) down 5% in EUR and stable in $
    • Offshore contract revenues were EUR134 million ($180 million) up 48% in EUR and up 57% in $
    • Processing and Reservoir revenues were EUR67 million ($90 million), up 7% in EUR and 15% in $
    • Multi-Client revenues
    • Total Multi-Client revenues were EUR117 million ($158 million) up 46% in EUR and up 53% in $
    • The Group EBITDA was EUR210 million ($284 million), a 37% EBITDA margin, compared to EUR168 million ($ 212 million), 38% EBITDA margin
    • The Group Operating Profit was EUR101 million ($136 million), a 18% operating margin, including PPA EUR7 million ($9 million) compared to EUR66 million ($85 million), including PPA EUR5 million ($6 million), a 15% operating margin


    • Services EBITDA was EUR147 million ($199 million), a 38% EBITDA margin compared to EUR132 million, ($167 million) and a 43% EBITDA margin, mainly due to increased vessel shipyards for performance upgrade and maintenance
    • Services Operating Profit including PPA was EUR46 million ($62 million), a 12% operating margin, compared to EUR34 million ($44 million), a 11% operating margin


  • Sercel EBITDA was EUR72 million ($97 million) corresponding to a 37% EBITDA margin, compared to EUR49 million ($61 million), a 30% EBITDA margin
  • Sercel Operating Profit was EUR67 million ($91 million), a 34% operating margin, compared to EUR46 million ($57 million), a 27% operating margin

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.

Net Income:

  • The net result was a Profit of EUR45 million ($60 million) compared to a pro-forma Profit of EUR18 million ($23 million)
  • EPS was EUR1.56 ($2.11)

Cash Flow:

  • During the quarter, we early reimbursed $100 million of our term loan B senior facility
  • The industrial Capex for the second quarter 2007 was EUR47 million ($64 million) compared to pro-forma EUR38 million ($48 million)
  • The Multi-Client Capex for the second quarter 2007 was EUR83 million ($111 million) compared to pro-forma EUR62 million ($75 million). The average pre-funding level was 80%

Balance Sheet items:

  • At the end of June 2007, Shareholder's equity was EUR2.4 billion and net financial debt was EUR 1.2 billion, representing a 50 % net debt to equity ratio
  • Group Revenues were EUR571 million ($769 million) up 83% in EUR and up 96% in $
  • Group Operating Profit was EUR101 million ($136 million), up 65% compared to EUR62 million ($77 million)
  • The Net Result was EUR45 million ($60 million) up 50% compared to EUR30 million ($37 million)
  • EPS was EUR1.56 compared to EPS of EUR1.69