Viridien S/Adr

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the first quarter 2020 resource call. At this time, all participants are now listening only mode. There will be a presentation for the question and answer session, at which time, if you wish to ask a question, you will need to press star and one on your telephone keypad. I must advise you that this telephone conference is being recorded today, and I would now like to hand the conference over to your host for today. Thank you. Please go ahead.

Thank you. Good morning, ladies and gentlemen. Welcome to this presentation of CGG's first quarter 2020 results. The call today is hosted from France, where Mrs. Sophie Zierkia, Chief Executive Officer, and Mr. Yuri Baidukov, Chief Financial Officer, will provide an overview of the first quarter 2020 results, as well as provide comments on our outlook. As a reminder, some of the information contains forward-looking statements, including, without limitation, statements about CDG plans, strategies, and prospects. These forward-looking statements are subject to risk and uncertainties that may change at any time. And therefore, the actual results may differ materially from those that were expected. Following the overview of the quarter, we will be pleased to take your questions. And now, I will turn the call over to Sophie.

Thank you, Christophe. Good morning, ladies and gentlemen, and thank you for participating in this Q1 2020 conference call. Our presentation will cover our first quarter 2020 operational and financial results, our market environment, the unprecedented crisis that we are experiencing, and our action plan to adapt to this new reality. On March 6, we released our Q4 results and our 2020 guidance. At that time, we were still envisaging relative stability in the market and were shaping up CDG for a year of further development with recruiting plans, a healthy pipeline of new geoscience technology, well-prefunded multi-client programs and new equipment products. Since then, two compounding crises dramatically affected the global economies and especially the oil and gas industry, severely degrading our business environment. The first crisis was triggered by the global COVID-19 pandemic. The second was caused by the rapid drop of oil price by more than 50% to the current levels of around $30 per barrel, which resulted from the combined impact of the significant decline in all demand caused by the COVID-19 and the market share war, which was led by Saudi Arabia and Russia increasing their supply. In just a few weeks, our business environment totally changed. At current, as we navigate through these unprecedented crises, we have little visibility on how long the oil prices will remain at these levels. Most forecasters are experiencing it to remain low for the next 12 to 18 months. And of course, these market conditions and outlook are having a significant impact on all our clients. On average, oil and gas companies have announced reductions in their planned 2020 capital spending of around 25 to 30%. In this business environment, we have changed our plans and are preparing and adapted for our businesses to effectively manage through what we currently expect to be a challenging 2020. I'm glad that we made significant progress well ahead of our plans last year towards the strategic objective to become an asset light, people, data, and technology company with a much leaner organization. A key part of the rationale behind our CGD 2021 strategy that we launched in 2018 was to prepare the company to better position to manage through the cycles. I am encouraged now that we are asset light. Most of the subsurface imaging projects that we deliver are linked to development and production. Our multi-client library is positioned in proven, developed, and mature sedimentary basins. And our equipment business has the largest install base. is strong in the world's most resilient locations and has a flexible manufacturing organization. I'm also pleased that we built a strong backlog in 2019 and that CDD has $624 million of cash in the bank at the end of March and no debt to reimburse before 2023. I'll start the presentation with slide five. During the ongoing COVID-19 pandemic, the CDG priority for CDG remains to focus on the health, safety, and well-being of our employees and all stakeholders. At the global and local level, we are constantly monitoring the evolution of the situation and ensuring that measures mandated by the government and recommended by experts are in place. This enables us to combat the spread of the virus and ensure that our work environment is as safe as possible for our employees who need to be at the workplace. We have been able to ensure strong business continuity through the proactive measures that we implemented in our facilities, operations, and to enable the vast majority of our employees to work effectively from home. In Geoscience, we continue to deliver projects on time, and all our data centers are operational. Our multi-client programs in Brazil, North Sea, US and Australia are all ongoing and did not experience any significant interruptions. Equipment manufacturing plants in France and in the US were shut down in mid-March and are gradually ramping up, while our plant in China resumed normal production after closing for two weeks in January. As countries around the world consider reopening, we are implementing our back-to-work plans, which includes most of our employees continuing to work from home where possible. As the situation changes daily, we continue to monitor it closely globally and locally, updating our plans as appropriate and encouraging all teams to work within local health authority updates and guidelines. I'll now move to slide six. We delivered a good Q1 with solid business performance in geoscience and multi-client, while equipment saw lower demand than Q1 last year, which, if you remember, had strong deliveries in the Middle East. Equipment was also impacted by COVID-19, which created some delays in supply, manufacturing, and logistics. Our revenue in Q1 was down 4% year-on-year compared to Q1 2019. Our EBITDA was higher than last year, and more importantly, we generated a positive 17 million net cash flow this quarter, despite a 50% increase in capex, mainly in multi-client. The group net loss for the quarter was 98 million, including 17 million impairment mainly related to our multi-client library that were based on deteriorating market conditions as a result of the pandemic and 27 million loss from discontinued operation. I will now cover our Q1 2020 operational achievements by reporting segment. We're moving on to slide seven. GGR had a good start of the year as we benefited from a solid backlog in geoscience and from a healthy pipeline of well-prefunded multi-client programs. Overall GGR top line increased 9%, EBITDA increased 17%, and the EBITDA margin was high at 62%. Going on to slide eight. Geoscience total production was 125 million in Q1, quite stable year on year. Backlog was 256 million, not including the recent Repsol dedicated center award. And our HPC capacity has now reached 250 petaflops. Continuing on to slide nine, market demand for geoscience was solid across all regions at the beginning of the year, as very high resolution images of the reservoir were required for near field exploration, development, and reservoir management. I have pointed out in earlier calls our technical leadership in marine and ocean bottom nodes imaging. We are now seeing more and more clients requiring higher quality land imaging as well. Land data can be much more difficult to process than marine data because it is much noisier and is impacted by near surface effects. Again, based on our technical leadership, we can provide significant improvements with our advanced technology for high-density datasets, such as in the Middle East. Recently, we are making good progress here, and it can provide our clients with the ability to see important details in the subsurface that could not be seen before. Looking at 2020, we know that our clients will spend less and postpone some of their plans, but they will keep working on their most important projects to high-grade their portfolios One interesting data point is that most of the projects we deliver in subsurface imaging are related to producing fields and fields undergoing development. These projects are important to our clients, even in the current environment, and our technology provides a much better understanding of the subsurface and therefore is of significant value to them as they decide on drilling locations, development opportunities, or producing plans. Our top priority in geoscience is to maintain our technology leadership. I move on to slide 10 now with a focus on dedicated imaging centers. Around 15% of our geoscience revenue comes from our dedicated imaging centers. This is a long-term business model where CGG provides a dedicated team of experienced geoscientists and experts together with access to our leading technology and global expertise to one client on its premises. With this win-win business approach, the procurement process is streamlined and clients secure on-demand access to our advanced seismic imaging, while CDG gains stable revenue and visibility in both good and challenging times. The dedicated processing centers provide our clients with a strong technological edge and accelerate project turnaround times, both of which help them meet their business objectives. More importantly, this creates a long-term collaboration environment where we gain a deep understanding of our clients' challenges and objectives. Together with their G&G teams, we build relationships based on trust and superior service performance. Today, we operate eight dedicated centers worldwide, And for example, we've been in Oman for more than 25 years working inside PDO's offices. And we recently renewed two dedicated centers, one in France for Total and the other in Spain for Repsol. I'll now go to slide 11 to cover the multi-client. Q1 numbers reflect the fact that we started the year with a healthy pipeline of multi-client projects with good pre-fundings. We were quite active this quarter with multi-client capex increasing to 67 million with an 86% pre-funding rate. After sales were 47 million this quarter, stable year-on-year and solid across regions. Towards the end of March, we started to see the effect of clients reprioritizing their investments. And following the collapse of oil price at the end of March, we performed an impairment review of our multi-client library which resulted in a non-cash charge of $69 million. Going on site 12 now. We had four ongoing multi-client projects during the quarter, including two land surveys, Bayou Buff and Central Basin Platform in the U.S. Despite the announced reduction of capex by U.S. independents, these two U.S. land projects are well pre-funded. One has now been completed, and we have no plans for additional projects in U.S. land this year. In marine, there are two ongoing streamer surveys, Nebula in Brazil, a 15,000-square-kilometer program in the Santos Basin that attracted high interest from clients, and Gippsland in Australia, the program in the Gippsland Mature Producing Basin. At the end of March, we started a new ocean bottom node survey in the cornerstone area of the U.K. North Sea, This program also has good pre-funding. After a solid Q1, we have a strong portfolio of ongoing committed projects. Looking at the rest of 2020 and given the current downturn, we reviewed our project pipeline and decided not to pursue projects that had not secured an acceptable level of pre-funding. This translates into a 60 million reduction of 2020 multi-client capex versus our original guidance for around 225 million multi-client capex in 2020 with a solid pre-funding rate of more than 75%. Moving on to slide 13 with equipment. Equipment segment revenue was 75 million, down 29% compared to last year. Land equipment sales represented 71% of total sales. Marine equipment sales represented 17% of total sales, mainly spare parts. and downhaul equipment sales were 7 million on lower demand for artificial lift from unconventional projects in the US lower 48. After the month of March, when two of our manufacturing plants were shut down due to COVID-19, work is gradually resuming in order to manufacture and ship our active orders. Equipment segment EBITDA was 8 million and 11% margin. Equipment segment operating income was at break-even which is consistent with this break-even point. I'll move on to slide 14 now. During the quarter, equipment delivered over 80,000 508 cross-tech land data acquisition channels, mainly in Russia, India, and North Africa. At this time, the tendered mega-cruise in the Middle East could be delayed until near the end of the year or perhaps into 2021, but none have been canceled. Demand for marine equipment, both streamers and nodes, is expected to remain low in 2020. In our non-oiling gas segments, fuel tests continue to progress well for CESEL's new structural health monitoring node prototype designed for the growing high-end infrastructure monitoring market. I will now give the floor to Yuri for more financial highlights.