CGG announced today its 2020 First Quarter unaudited results.

Commenting on these results, Sophie Zurquiyah, CGG CEO, said:
“As we are navigating through this unprecedented industry crisis, created by the combined results of oversupply and reduction in demand due to the COVID-19 pandemic, our priority remains on the health and safety of our employees and all our stakeholders, along with the continuity of our business to meet our clients’ needs. With our new asset light business profile, and our business segments positioned around reservoir evaluation and production optimization, including our data library, which is focused on proven or mature sedimentary basins, we expect CGG to be much more resilient than in the past. While the duration of this severe crisis is uncertain, we are focusing on what we can control: managing our liquidity, implementing the required capex and cash cost reductions and adjusting the organization as necessary while maintaining our R&D efforts. With $624m of cash on hand after a solid Q1 and no bond debt to reimburse before April 2023, I am confident that our asset light strategy based on high-end technology, services, data and products positions us the best for these challenging market conditions“.

Q1 2020 Positive cash generation

• IFRS figures: revenue at $253m, OPINC at $(40)m
• Segment revenue at $271m, down 4% year-on-year, with solid multi-client revenue and lower equipment sales
• Segment EBITDAs at $123m, up 3% year-on-year, a 45% margin
• Segment operating income at $(31)m, including $(70)m impairments mainly related to multi-client library, and at $39m, a 14% margin, before them
• Segment Free Cash Flow at $44m
• Net Cash Flow was positive at $17m 
• Net loss of $(98)m, including $(27)m loss from Discontinued Operations and $(70)m impairments
• Net debt at $540m before IFRS 16 and $705m after IFRS 16
• Segment leverage at 0.8x Net Debt/LTM EBITDAs (excluding IFRS 16 impact)

Adjusting to an unprecedented crisis: focus on cost control and cash preservation

• 2020 Cash Capex around $300 million, down $(75) million vs. previous guidance of March 6, 2020:
• 2020 Multi-client cash capex, down $(60) million, at around $225 million at 75% prefunding rate
• 2020 Industrial and development costs cash capex around $75 million
• Cash costs reduction of around $(110) million annualized and around $(35) million year on year. 

Geology, Geophysics & Reservoir (GGR)

GGR segment revenue was $197 million, up 10% year-on-year.

• Geoscience revenue was $93 million, up 2% year-on-year. 

Geoscience performance in Q1 was solid driven by 11% increase in imaging business revenue year-on-year. We managed to maintain our business continuity in March with the majority of our people working from home due to the excellent support of our IT organization.

• Multi-Client revenue was $104 million this quarter, up 17% year on year. 

Prefunding revenue of our multi-client projects reached $57 million this quarter, up from $42 million in the first quarter of 2019, mainly due to higher multi-client capex this quarter, up to $67 million from $40 million in Q1 2019. 

CGG had four ongoing multi-client projects this quarter, including two Land surveys – Bayou Boeuf and Central Basin Platform – in the US, one Marine streamer survey – Nebula – in Brazil, one Marine streamer survey – Gippsland 2020 – in Australia, and started one Nodes survey in the UK North Sea in the Cornerstone area at the end of March. Prefunding rate in Q1 2020 was solid at 86%. 

After-sales were $47 million this quarter, stable year on year and solid across all regions.

In Q1 2020, CGG performed the impairment test of their multi-client library triggered by current low oil price environment, which resulted in non-cash charges of $(69) million. 

The segment library Net Book Value was $318 million ($475 million after IFRS 15 adjustments) at the end of March 2020, split 85% offshore and 15% onshore. 

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