Viridien S/Adr

Good day and thank you for standing by. Welcome to the CGG first quarter 2021 results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to CGG management. Please go ahead.

Yes, thank you. Good morning, ladies and gentlemen. Welcome to this presentation of CDG first quarter 2021 results. The call today is hosted from Paris, where Mrs. Sophie Dirkia, our CEO, and Mr. Yuri Baidukov, our CFO, will provide an overview of the first quarter and of the full year 2021 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. 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 would be pleased to take your questions, and now I will turn the call over to Sophie for the presentation of our first quarter results. Thank you.

Thank you, Christophe, and good morning, ladies and gentlemen, and thank you for participating in this Q1 2021 conference call. CDD was founded in 1931, and we are celebrating this year 90 years, and you'll see us communicate on 90 amazing years through the year. So I'll start on slide five with general comments on our first quarter 2021. We experienced a continuation of the same COVID early recovery market conditions that we saw in late 2020. These were marked by low but fairly stable industry spending. On one hand, the majors maintained their capital discipline, while national oil companies and large independents remained more active. As economies continue to recover from the pandemic, which is expected to be more gradual and complex than the downturn, I believe we will see the need for our clients to increase their activity, to not only catch up on the work postponed from 2020, but also to compensate for the depletion of their existing reservoirs. In that context, CGG's high-end technology will be a key component of the value chain moving forward. Our Q1, as anticipated, was a slow quarter following the historical low levels of 2020 with soft GGR activity upsetting excellent performance in equipment. Our three businesses of geoscience, multicline, and equipment all have different business models and drivers. Geoscience performed per our expectations based on the backlog that they generated in Q3 and Q4 of last year. Multi-client performance depends on the level of ongoing multi-client programs, and that's the pre-funding, and on the commercial sales of our existing data library, that's the after sales. The first quarter was soft with only one active project in Brazil and slow after sales, but we did start to see an increase in constructive conversations for both new projects and after sales during the quarter, as all prices strengthened and have maintained at higher levels than expected going into the year. Equipment was very busy in Q1, shipping orders to the Middle East, following strong activity around the end of 2020. Also during the quarter, we completed our restructuring plans with the successful refinancing of our debt, and going forward, this substantially reduces our interest rates, and provides us with the flexibility to repay portions of the debt as our cash flow generation will allow. With this, we can now focus on our business and strategic developments with a normalized capital structure. Moving on to the next slide for the Q1 2021 financial highlights. So our Q1 revenue of 213 million, we're down 21% year on year, from a high pre-COVID first quarter in 2020 with an unusual mix of business as equipment represented 53% of our total revenue. Group adjusted segment EBITDA was 39 million with a 19% margin mainly due to the business mix. Segment free cash flow including 73 million of positive change in working capital was 60 million and the next cash flow this quarter was positive at 28 million. I'll now cover our Q1 2021 operations by reporting segments. So the DGR segment revenue was low this quarter at 100 million, down 49% year-on-year, which resulted in a 31% adjusted EBITDA margin. Moving on to the due signs business indicators. Q1 Geoscience external revenue was 66 million, down 29% year-on-year, as it continued to deliver its backlog. After a year of drastic spending cuts, our clients' priorities in Q1 remain mainly on development projects. It appears that Geoscience has reached the low point in the cycle, as commercial activity and contract awards increased in March, especially in North and South America, Backlog as of April 1st stands at 240 million. We have adapted our cost base to market conditions while maintaining the capacity required to capture the growth in the second half of the year as the market continues to gradually recover. Also during the quarter, we strengthen the foundation of our new growth beyond the core initiatives in line with our ambitions. I will speak more about this growth beyond the core initiatives later in the call. If we look at geoscience operational highlights, which should be on slide 10, I've been commenting around the growing importance of ocean bottom nodes as a technology that can provide the data required as input for high-end processing to image the subsurface in high definition. Today, most of the applications of node technology are around reservoir development and management, but we're seeing increasing use for step-out exploration and appraisal in complex subsurface environments. This trend is clearly seen in our order intake, as 32% is now related to OBN processing. It is also a reflection of our clients' prioritizing production work versus exploration, and of our leading market share in OBN processing, where we tend to win over two-thirds of the projects on a recurring basis. As IOCs have maintained their capital discipline thus far in the COVID recovery market, I also want to highlight the increasing importance of national oil companies in our revenue mix. In Q1, they accounted for almost a third of our revenue. This trend is geographically diverse, with projects coming from around the world, Brazil, Mexico, Norway, Middle East, and Asia, as we enjoy stable long-term relationships with this group of clients. Moving on to multi-client, Q1 2021 multi-client revenue was 34 million, down 67% year-on-year. Q1 2020 was an unusually strong first quarter, supported by an active market with several ongoing projects. Multi-client cash capex was also low this quarter at 30 million, down 56% from Q1 2020, as we only had one marine multi-client program active which was offshore Brazil. In Q2, we will have two vessels working on multi-client programs, as we have commenced work on a five-month 3D multi-client program in the Norwegian North Sea, in addition to our ongoing Brazil project. The vessel is expected to acquire around 8,000 square kilometer of 3D data in the North Viking ribbon, in a direction perpendicular to our existing data sets. Our clients were impressed by the uplift that our high-end imaging can bring to this additional data and recognize the value that this provides for the management of their existing reservoirs. Multi-client after-sales were low at 19 million this quarter, as we have a number of significant opportunities that shifted to later in the year. It's worth noting the emergence of new private equity-backed players, especially in the North Sea, that need to buy data to develop their plans and access acreage. Moving on to slide 12, a large part of our multi-client capex for the quarter was invested in Brazil, and I would like to update you on the CGD footprint in the prolific pre-salt area. Brazil at current, together with Norway, is one of the most attractive areas of the world for E&P companies, as they present some of the best opportunities and economics. Over the years, we've built a substantial industry-unique, high-end, contiguous 3D seismic data library offshore Brazil, which enables our clients to develop both a regional and local understanding of the subsurface. This has been complemented by our geology and well packages that enable new entrants to access trusted and valuable data and insights very quickly. In addition to our ongoing Nebula acquisition, we have a number of ongoing reprocessing projects that will benefit from our latest processing innovations. Our presence offshore Brazil in the Santos and Pampas basins was extended by 23% in the last three years and we are currently looking at new ocean bottom nodes programs as they together with our leading imaging technology represent the next level of uplift that will enable our clients to unlock new value of their reservoirs in these prolific basins. We believe that our deep knowledge of offshore Brazil combined with our extensive pre-salt data and our preferred imaging technology will continue to deliver strong business values for year to come. Let's move on to equipment now. Equipment segment revenue was strong this quarter at 112 million, up 52% year-on-year, and heavily weighted towards land as marine acquisition companies continue to delay investments. Equipment adjusted segment EBITDA was 16 million, and equipment adjusted segment operating income was 8 million, a 7% margin. Moving on to slide 14. In Q1, equipment delivered over 125,000 LAN channels and 50 vibrators worldwide, primarily for large mega-cruises in Saudi Arabia. SoCell also delivered Wing LAN nodes to new clients. Marine equipment sales remained low during the quarter, essentially being for spare parts. We released a new technology called Pixel, which is an integrated and compact solution that enabled high resolution seismic data acquisition in targeted areas for offshore construction and field development. I would also like to highlight the excellent operational performance of CERCEL as they were able to manufacture at full speed and deliver equipment for two mega crews in a very short timeframe. In total, this represented the deployment of over 160,000 channels of 508 cross-tech and more than 80 nomads 65 neo-old terrain vibrators to Saudi Arabia in five months. Despite the numerous challenges imposed by the pandemic, we were able to meet all of our delivery, logistical and system commissioning targets. The two 3D mega-crew surveys in Saudi Arabia met their start-up dates and have been reporting outstanding productivity levels from the very start of operations with more than 10,000 VPs recorded based on 12 fleets of two vibrators on day one. Let me now give you a few comments on beyond the core businesses on slide 15. At CGD, we have a long history of supporting the geothermal, CCUS, earth monitoring, and digital geoscience businesses through our leading geoscience data and expertise, satellite mapping business, Sercel sensor technology and solutions, multi-physics processing, geoscience and data science technology and our CDG cloud, which is now well over 250 petaflops of compute power and 250 petabytes of storage. With the global acceleration of three key trends, energy transition, environmental awareness and sustainability, along with digitalization, TDD is well-placed to expand its business in these rapidly growing areas as they are very near step-outs from our core. During the quarter, we continue to strengthen these growth beyond the core initiatives, which are focused around digital geoscience, monitoring and observation, and energy transition. In these areas, we are advancing our trust strategies and technologies while working with our clients and partners on pilots and commercial projects. This page summarizes a few examples of our recent activity, and I am particularly pleased with our DeCarbonX strategic agreement that positions us for the assessment of geothermal and underground CO2 and energy storage opportunities in the North Sea. Let me now comment on slide 16 with the Data Hub. As part of our growing portfolio of Beyond the Core products and services in the digital geoscience domain, We have developed a complete offering to support our clients' digitalization agendas. With DataHub, CDG provides the tech solutions required to transform and enrich customer geoscience data into structured, decision-ready information. It is based on our extensive geological knowledge, advanced machine learning technology, and unique taxonomy, and it enables the classification of diverse geologic data in a meaningful and consistent way. With DataHub, our clients' geoscience teams can be more efficient and focus their time on value-add activities. We have completed multiple successful pilots for IOCs, NOCs, and independents, and are in discussions at current for longer-term commercial contracts. I look forward to providing you with further updates as this tech solution continues to mature. Moving on now to CSCOPE. on slide 17. Recently, we also launched Seascope, an innovative pollution monitoring tech solution, as part of our growing portfolio of products and services for environmental applications. It combines expertise in remote sensing science, earth observation data, machine learning, and high-performance computing. Seascope provides critical sea surface all-slick intelligence for a range of industries, to better understand and minimize risks for offshore assets, coastal facilities, vessel activity, and the natural marine environment. With Seascope, our clients can proactively establish production water baselines, rapidly detect anomalous events, and determine the source, whether from natural seeps or from third-party pollution. This is one of the tech solutions that we are developing for the environmental geoscience space, enabling more sustainable operations. I will now give the floor to Yuri for more financial highlights.