Viridien S/Adr

good day and thank you for standing by welcome to the cgg q2 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 the session you'll need to press star 1 1 on your telephone you will then hear an automated message advising your hand is raised please be advised today's conference is being recorded I'd now like to hand the conference over to your speakers today. Please go ahead.

Thank you. Good afternoon and good morning, ladies and gentlemen. Welcome to this presentation of CGG's second quarter 2022 results. The call today is hosted from Paris, where Mrs. Sophie Durkia Chief Executive Officer and Mr. Yuri Baidukov, Group CFO. We 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 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. Thank you for participating in this T2 2022 conference call. We move on to slide five, and I'll start with a few comments on the macro environment. The oil and gas market is tight after years of underinvestment, combined with post-COVID strengthened demand and increased geopolitical uncertainty with the war in Ukraine highlighting the importance of energy security. Energy transition continues to progress, but it will be a long process, during which all sources of energy will be required. Short cycle projects and unconventionals will not be sufficient to meet demand, and new resources will progressively need to be discovered. It will take time to bring meaningful New Orleans gas supply to the market, which means that we anticipate entering a longer period of sustained high oil and gas prices. While NOCs, private equity-backed companies, and to a certain extent, independents, are reacting more swiftly with increased capex, IOCs are still constrained by public pressure towards oil and gas investments, along with their capital discipline, deleveraging, and shareholder return commitments. Given the significant cash flows generated by the sector, E&P companies are still in a strong position to both respond to the demand for hydrocarbons and invest into the decarbonization of our industry and energy transition. I expect significant increases in E&P capex in 2023 and beyond, and we're already seeing the first signs of return to more frontier exploration with longer cycles, particularly offshore importer. Overall, in Q2, we saw more active commercial discussions and engagements across our business lines, signaling further upcoming market improvements. In Q2, CDG delivered strong financial performance, with segment revenue at $214 million, up 66% pro forma year-on-year, EBITDA at $126 million, multiplied by three year-on-year, and positive net income at $16 million. Revenue was driven by the strong activity of our DDE segment as clients started to catch up on geoscience work and data purchases. Net cash flow was negative 56 million for the quarter, including a 42 million negative change in working capital and 47 million cash cost of debt. However, we remained net cash flow positive at 13 million for the first half of the year. I'll go on to slide seven now. Our core markets continue to recover, and Q2 DBE segment revenue was high this quarter at 194 million, up 100% pro forma year on year, with growth in both geoscience and earth data. Profitability significantly increased, with a high 70% EBITDA margin and a 43% operating income margin, driven by the revenue mix, the full effect of cost savings, and some pricing improvements. On slide eight for geoscience. Geoscience external revenue was 17 million in Q2, up 16% pro forma compared to last year. Sequentially, geoscience revenue was softer this quarter due to the timing of project completion. We continue to anticipate a high single digit growth for the fall. Total geoscience order intake value was up 61% year-on-year during the period of January to June 2022. The total production per head KPI continues to improve as we're achieving the full effect of cost reduction combined with efficiency gains and the strengthening commercial environment. We anticipate our HPC capacity to be above 300 petaflops at the end of 2022. which is required to support our near-term growth perspective. The construction of our new European HPC hub in Southeast England, that will become the second half of 2023, is progressing as planned. Moving on to slide nine. Imaging activity is the strongest in North America, where customers require advanced technology for infrastructure-led exploration in the Gulf of Mexico. Technology differentiation continues to be key, especially in complex geology, where we win the majority of opportunities. Our unique technology significantly contributes to reducing drilling lists, increasing success rates, and optimizing production. And on this slide, we show a beautiful image of the complex geology of the Nordkapp Basin in the Barents Sea at 500-meter depth. The acquisition was designed to improve the resolution of the shallower depth and finally image the interface between salt and overburden. Thanks to our recent advanced 200 Hz four-way form inversion imaging algorithm, we were able to reveal abundant geological details which will be critical for exploration. Similar technology will prove important for the analysis and monitoring of carbon sequestration and storage reservoirs. In Beyond the Core, we were awarded a large contract over two years by BP to support their digitalization journey. And more specifically, we will work with the asset team to help extract the full value from their data and enable more efficient and high-quality data-driven decisions. Our subsurface experts and data scientists will apply our advanced and bespoke machine learning models and data pipelines to transform and curate data to help solve complex asset specific challenges. On slide 10, we developed one of the largest and from our analysis, the most efficient high performance computing capability amongst all industries globally, because over the decades, our imaging algorithms combined with the volumes of data that we utilize have continuously demanded compute power and storage capabilities that are beyond general industry offering to effectively respond to our clients' needs. With the emergence of the cloud, our clients are increasingly looking to procure compute power as a service, and we think it is a market that we can serve effectively based on our highly customized technology, middleware, and software that is specifically optimized for the unique challenges faced by our industry. Beyond our industry, there are huge quantities of data acquired with the Internet of Things. AI and machine learning requires large compute power capacity to train the models. And many industries, including biomedical, automobile, and aeronautics, need access to large and efficient compute power for the modeling of their products. And to be clear, this is not just about the raw compute power, but it's the design of the IT stack to address specific requirements along with all the layers of software and services that make the best use of it. Our experience in optimizing high-performance computing centers spans over seven decades, resulting in a highly differentiated HPC solution, much of which can be packaged and offered externally. Agnès Boudot recently joined CGG to lead the continued expansion of the HPC and cloud solutions business. Previously, Agnès led HBC, AI and quantum global business line at Atos, where she successfully grew the activity over the last five years and captured many references in the academic world and diverse industry around the globe. Moving on to slide 11. In Q2, we had two vessels working on our Earth data programs in the Norwegian North Sea and one vessel offshore Brazil. Earthdata cash capex was 75 million this quarter, up 72% EUR. Pre-funding revenue was 36 million with a pre-funding rate of 48%. Earthdata after-sales was 88 million this quarter, significantly up EUR, sustained by sales in Latin America, Gulf of Mexico and Norway, and significant transfer fees. Moving on to slide 12. We continue to invest in our core basins with the 12,000 square kilometer Antares project offshore Brazil in the South Santos Basin and with our Norwegian NVG East-West program. These two programs are continuing from earlier in the year and we expect to attract more pre-funding in the upcoming quarters. In addition to the stack size reprocessing project in the GOM, we started another reprocessing project in the Brazil Poste Amazona. Both projects are driven by the need to find new exploration targets in the most established and prolific basins in the world. The image on the slide is a nice example of the value of OBN taken from our UK North Sea Survey. It is an image with velocity overlaid on the seismic image. With OBN data and our unique advanced technology, we can significantly improve the velocity model and increase illumination. As a result, we enable our clients to see geological features more clearly and see some structures that have never been seen before, especially under the salt. And finally, we continue to expand our offering of data to address energy transition, especially CCUS and mining. Moving on to slide 13. A paleocellular study is a good example of what we can deliver to the mineral and mining industry. by combining our broad expertise in geology and geophysics, along with our geology data and satellite imagery. The lithium triangle is an area between Chile, Bolivia, and Argentina. This study uses maps of lithology, rock age, surface structures, erosion, and topography in the near surface to produce lithium concentration estimates in the different basins. The output map with the different grades of lithium is used by the exploration departments of mining companies to identify potential new commercial deposits. We move into SMO now with slide 14. Ascending and managing segment revenue was soft this quarter at 46 million, down 4% year-on-year in the absence of large mega crude deals and few contracts slipping into Q3 of this year. At this level of sales, the EBITDA of the sending and monitoring business was negative at minus 7 million. We anticipate strong acceleration in the second half of the year with orders either in backlog or currently in negotiation. However, the timing of the Saudi mega cruise is slipping into 2023 as the acquisition tenders are yet to come out. Typically, there is a six-month mobilization period between the award and the start of acquisition. Side 15. During the quarter, land equipment sales represented 28% of total sales due to a shift of some deliveries to Q3 2022. Several land nodal wing systems were delivered to Europe and Asia. Marine equipment sales represented 49% of total sales driven by significant deliveries of GTR 300 OBN noise. Tercel was awarded a major contract for the supply of a complete Sentinel streamer set, the first order of a complete streamer set since 2014. And sales from beyond the core business were 6 million, sustained mainly by increasing demand from the defense sector. And in summary, following the slow first half of the year, we anticipate a significant strengthening of the sensing and monitoring business in H2 2022, and even more so in 2023. driven notably by the upcoming tenders for large-land-sized big megacruise and OBN megacruise in the Middle East and North Africa, with equipment deliveries expected at the end of 2022 or in H1 2023. Slide 16. During the quarter, Tercel completed the acquisition of Geocomp, which is specialized in high-value services and products for geotechnical risk management and infrastructure monitoring. Headquartered in Acton, Massachusetts, and present in key U.S. states, Geocomp employs 120 engineers, technicians, and support staff. Its 2021 revenue was $20 million. This acquisition is a major step in our strategy to become a significant global player in the fast-growing infrastructure monitoring industry. We strongly believe that the complementary technologies and skills of GeoComp and CERCEL will provide cutting-edge solutions to address the numerous infrastructure challenges in the U.S. and into international markets. Also this quarter, CERCEL was selected as a successful bidder for the acquisition of ION Geophysical Corporation Software Business. ION Software Business is the leader in navigation software. both for vessels and ocean bottom mills. The integrated navigation systems of ION is at the heart of seismic operations and it has been adapted to serve outside the industry for general marine fleet management. This acquisition is also a great opportunity for SIRSEL to further diversify and to develop a layer of value-add solutions on top of the equipment. Now handing the floor to Yuri to cover the financial details.