Viridien S/Adr

Good day and thank you for standing by. Welcome to the CGG Q1 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded Wednesday 4th May 2022. If you require any further assistance, please press star zero. I would now like to hand the conference over to CGG. Please go ahead.

Thank you. Good morning and good afternoon, ladies and gentlemen. Welcome to this presentation of CGG's first quarter 2022 results. The call today is hosted from Paris where our chief executive officer, Mr. Our group CFO will provide an overview of the quarter results as well as provide comments on our outlook. Let me remind you that some of the information contains forward-looking statements subject to risk and the 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, and good morning, good afternoon, ladies and gentlemen, and thank you for participating in this Q1 2022 conference call. We'll move to slide five now, and let me start with some general comments on the evolution of our businesses and market environment during the quarter. Overall, Q1 was a slow start of the year, with significant differences among our three business lines. Geoscience revenue was $75 million, up 36% year-on-year pro forma. Our geoscience perimeter no longer included geosoftware and the physical assets storage business of smart data solutions, which we disposed of last year. And we will present year-on-year pro forma revenue comparisons to best show the underlying business performance. Geoscience performed very well this quarter and continues to see steadily increasing activity. The level of bidding activity is up 51% year-on-year, and the level of commercial bids pending was at 347 million early April, compared to 209 million early December 2021. Earthdata, which is our renamed multi-client business, as we continue to expand the data types that we sell, Earth data was in line with our expectations and up year-on-year, with a typical low Q1 pre-funding revenue, but stable year-on-year with stable CapEx. As you know, the pre-funding ratio is usually low at the beginning of the year and increases through the quarters. We expect to see the same trend in 2022. The positive news is that Q1 after sales increased 56% year-on-year, which confirmed our view of seeing after-sales continuing to strengthen as the year progresses. As expected and highlighted during our Q4 conference call, sensing and monitoring, which is the new name of equipment business as we continue to grow into new markets, had a low quarter in a business that tends to be lumpy and is increasingly driven by significant orders. In addition, some sales this quarter shifted to later in the year. Large tenders in Saudi Arabia for land and OBN are positive signals for an active second half of the year and 2023. Overall, our Q1 revenue of 153 million was down 24% year-on-year per format, with contrasting dynamics between the business lines. Data, digital, and energy transition was up 34% year-on-year per format, while SMO, sensing and monitoring, was down 70% year-on-year. Segment EBITDA and adjusted segment EBITDA was 39 million, a 25% margin and up 31% year-on-year. Net cash flow was 68 million, including 19 million positive change in working capital. Our core markets continued to recover, signaled by increasing commercial discussions with our clients and bids. We operate today in a favorable cycle driven by the need to replace depleting oil and gas reserves with a focus on short cycle exploration. We're seeing also more consistent requests from energy companies to better understand the subsurface for their energy transition programs. We move to slide seven now. DDE segment revenue was solid this quarter at 119 million, up 34% year-on-year pro forma, with growth in both geoscience and earth data. DDE's business dynamics have historically been strongly correlated with E&P spend, and this is what we're experiencing in Q1 2022. Profitably significantly increased with a fall through at 90% on incremental revenues. Now on slide eight, Geoscience revenue exclude revenue from Geosoftware and the physical assets business of smart data solutions that we divested in 2021. Geoscience external revenue was 75 million in Q1, up 36% year-on-year pro forma, with growth mainly coming from North America and EME. Year-on-year backlog was slightly down, which is related to the decreasing average size of the projects and does not reflect yet the rapidly growing commercial activity that we see. Several clients are now concerned about being able to access processing capacity for the upcoming needs, and rightfully so, as it will take some time to recruit people. The total production per head KPI continues to improve as we're achieving the full effect of cost reductions, combined with improving utilization of our resources. And to support our growth perspective in our core businesses and the development of our beyond-the-core businesses, particularly high-performance computing, CDD recently signed a lease to build a new European HPC hub in southeast England that will become operational in the first half of 2023 and increase our cloud HPC capacity by 50 petaflops initially and up to 100 petaflops as required. Going into slide 9. In geoscience, our technology differentiation continues to make significant impact in our market position. We have been recently awarded several large projects where our elastic full waveform inversion imaging technology was viewed as unique in the industry. In fact, these advanced algorithms contain more accurate physics and provide striking improvements in soft salt imaging. They enable our clients to access a much clearer view and understanding of previously imaged reservoirs. As an example here, the image on the lower right shows much more distinctly the continuity of the various layers below the salt and will substantially improve the interpretation of this area. A client recently mentioned how this technology enabled them to identify an extra 500,000 barrels of oil. Geoscience activity has picked up, starting with North America and more recently Europe, with a few of our imaging centers running at near full capacity already in early May. We are encouraged by the high level of commercial activity, which will drive improvements in other parts of the world. We also continue to develop and promote our Beyond the Core businesses, and this quarter we launched Tailings Pulse, a smart mind monitoring solution for structural integrity. We released new GeoVerse studies, products from our Earth data library for lithium brine, geothermal resource evaluation, and carbon storage identification, all leveraging our geology capabilities and historical geological database. We signed strategic partnerships, including one with Kent, another with Carbon Management Canada, and a third with GCE Ocean Technologies Cluster. Our aim is to be the partner of choice for subsurface understanding and monitoring for the energy transition. Slide 10. We'd like to continue to introduce you to our Beyond the Core businesses, and this quarter we will highlight our Data Hub offerings. During the last few years, building on our digital data management and subsurface expertise, CDG put considerable efforts towards building a unique data ecosystem that enables our clients to effectively ingest, classify, access, visualize, and utilize the diverse data sets they need to optimize their subsurface understandings, both for their oil and gas portfolios and for the energy transition. It is very different from the analytic solutions offered by the hyperscale cloud providers because we use a geologic taxonomy and ontology that we have developed over the last 45 years. This allows clients to digitally associate the diverse data sets geologically, including their own data and data from other vendors, in a meaningful way. This offer is typically provided as a service, and we conservatively see the market to be at a few hundred million dollars per year in the short term, given the amount of subsurface data that our clients manage. For clients that wish to move their data to the cloud, we can also leverage our CDG HPC cloud and data as a service offering. In summary, DataHub offers digitalization services that create robust, integrated, and structured subsurface data sets or models, which enable users to efficiently discover, access, and utilize all their data in order to overcome subsurface challenges and reduce cycle time. We have just been verbally awarded a significant multi-million dollar contract to perform this type of work over a period of 18 to 24 months for a supermajor. We'll move to Earth data now. Earth data sales were 44 million, up 28% year on year. Cash capex of 33 million this quarter was stable year on year. We started a marine program offshore Brazil that represented a significant portion of our capex. Our pre-funding revenue of $15 million was stable year-on-year, and pre-funding is typically low in the first half of the year and builds throughout the second half. Aftersales was stronger this quarter at $13 million, up 56% year-on-year, sustained by the U.S. and North Sea. Now in slide 12. In Brazil, After the completion of the vast and successful NEBULA program, we started Antares, located in the South Santos Basin. With good weather and fewer mammal interruptions, the Antares acquisition has been very productive so far. The new data will provide a second azimuth with a longer offset to improve images of the pre-salt. Nebula A processing is now complete. and we have conferred that the dual azimuth data provides significant image improvement. In the U.S. GOM, our re-imaging projects continue to draw pre-funding, and we began the reprocessing of our large stack size II program with solid pre-funding. In the North Sea, we just started our 2022 summer campaign and secured significant pre-funding from different clients for our North Viking-Rabbin East-West program. We're adding 1,800 sparse nodes to this 9,000-square-kilometer streamer program. This will create hybrid node streamer data to better invert for subsurface velocity and thus improve the identification of target structures, supporting the search for short-cycle, near-step-out exploration opportunities. And finally, our GeoVerse geology and well data library is now fully accessible as a service, and we have closed several commercial projects. Now in slide 13. In support of energy transition, we carried out screening studies for geothermal energy and geothermal lithium brine. These data-rich studies capitalize on CDG's wealth of geoscience data, know-how, and data science expertise, and they address a wide spectrum of application from geothermal resource assessment through critical mineral exploration to carbon sequestration. These are just a few examples of the vast amount of geologic and geophysical data available through our GeoVerse platform that can be used to explore for oil and gas, explore for the various minerals necessary for the energy transition, and may even be used to search for geothermal opportunities by looking for favorable gradients and anomalies. The data includes over 550,000 quality control data points, and viewing and selection of the data is made easy in the GeoVerse platform. We'll now move to sensing and monitoring. Slide 14. Our sensing and monitoring segment revenue was low this quarter at 34 million, down 70% year-on-year. While the SMO business is lumpy in nature based on large acquisition programs globally, and we had a strong Q1 in 2021 based on year-end 2020 mega-cruise sales, revenue was lower than expected this quarter as some sales of land equipment shifted to later in the year. Marine sales continue to be limited to repair and maintenance. And this year, Beyond the Core activities are supported by a very active defense sector, and will increase through the year. At this level of sales, the EBITDA of the sensing and monitoring business was negative at minus $12 million, a limited loss for such a low level of revenue. We have evaluated the full impact of the Russia sanctions to be around $35 million for the four-year, which could be partially offset depending on the timing of large mega crews in the Middle East. Based on the growing visibility of these opportunities in the second half of the year, we remain confident in the four-year SMO performance. Now moving on to slide 16. During the quarter in land, we delivered equipment to Brazil and India. Marine was particularly slow, but we see significant potential for our GPR 300 node, marine node, in the second half of the year and are preparing for these opportunities. In summary, following the slow Q1, We anticipate an acceleration of the sensing and monitoring business in the second half of the year, driven notably by the confirmation of several tenders for large land seismic mega-cruise and OBN mega-cruise in Saudi Arabia with equipment deliveries at the end of 2022 and early 2023. I'll now give the floor to Yuri for more financial highlights.