Viridien S/Adr

Good day and thank you for standing by. Welcome to the GGQ3 2023 Financial Results Conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. 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 the CGG South Quarter 2023 Results. The call today is hosted from Paris, where Mrs. Sophie Giacchia, our Chief Executive Officer, and Mr. Jérôme Serre, our Group CFO, will provide an overview of the quarter results. as well as provide comments on our outlook. Just let me remind you that some of the information contains forward-looking statements subject to risk and uncertainty 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 and good afternoon, ladies and gentlemen. Thank you for participating in this Q3 2023 conference call. We're on slide five now. And before reviewing the quarter and market perspective, I'd like to start by highlighting the particularly strong ESG rating of CGG. After confirming our high MSCI and Sustainalytics rating, we received a silver sustainability rating from EcoBuddies. from their evaluation of a reduction of greenhouse gas emissions throughout the value chain. We prioritise ESG and are pleased to see this recognised in our performance. Macro oil and gas trends over the quarter have been fairly stable, with increasing realisation that all sources of energy will be required to optimally manage across the energy transition for decades to come. Our clients are trying to find the right balance between meeting the increased requirements for future production and managing long-term risks. To address this, we see progressively increasing interest in exploration, yet in lower time to market locations. As an example, in frontier areas that already have discoveries or in basins where infrastructure is already in place. This not only lowers risk, but importantly shortens cycle times. Good data and high-end imaging are fundamental to reduce exploration risks and maximize spill production. We are in a favorable cycle for CGG, where quality and precision increasingly matter, and our clients, especially NOCs, turn to best-in-class organizations capable of delivering integrated geoscience. I expect a continued trend of sustained higher levels of E&P capex, especially offshore and in the Middle East, both key markets for CDG. Looking at our Q3, we had an excellent quarter, both in terms of operational and financial performance. Geoscience revenue was $78 million, up 13% year-on-year, driven by innovations in high-end imaging. Earth data sales were $107 million, up 74% year-on-year, with solid after-sales at $52 million, up 21%. Pre-funding revenue was $55 million, with a $111 pre-funding weight. Sensing and monitoring sales were $122 million, up 42% year-on-year. Overall, our Q3 revenue reached $307 million, up 42% year-on-year. Segment EBITDA was $109 million, up 41%, including our payment this quarter of $20 million to Shearwater to compensate for the non-utilization of the streamer vessels. Q3 net cash flow was positive at $63 million, And we had $370 million of liquidity at the end of September, including $95 million of undrawn RCF. We'll change to slide 7 now. DDE segment revenue was $185 million in Q3, up 41% year-on-year, with double-digit growth in geoscience and strong Earth data sales. Profitability was solid despite the $20 million impact of non-utilization compensation fees to share water for their streamer vessels. Slide 8. Geoscience external revenue was $78 million in Q3, up 13% year-on-year, with growth coming from all regions. The geoscience business remains solid, supported by strong demand and by our technology differentiation, particularly valuable for OVN processing. Backlog is up 3% year-under, mainly due to delays in the award of large projects for NOCs. We continue to increase quality and extract more efficiencies as our work becomes more and more data-driven and less people-intensive. Slide 9. In geoscience, demand for a unique elastic full waveform inversion is very high, driven by North America and expanding worldwide. To support the ramp up of our activity, we are recruiting top talents from the best schools globally and remain highly attractive because of CGG's culture, advanced technology and focus on innovation. Our new highly specialized UK HPC hub is coming online to support running the most compute-intensive algorithms as demand for advanced technologies is picking up in the eastern hemisphere. The picture on this slide is a very nice example of CGG's imaging added value for CCUS projects. You can see the subsurface in the shallow waters of the Gulf of Mexico. Thanks to our unique high-frequency TLMWI velocity imaging technology, we can show the reservoir pressure differences across the fault and identify high-pressure areas which are not optimal for carbon storage. The range of our offerings in carbon sequestration is expanding with more projects targeting the monitoring phase, which is the most sensitive from a regulatory standpoint and offers longer-term business opportunities. Our scope of involvement in many of the mining covers a broad spectrum from exploration, such as our recent contract for lithium mining in Mongolia, all the way to production, where we provide services to assess mine stability. Overall, our quarterly revenue stream for these low-carbon services is showing a positive dynamic, as more companies acknowledge the need for high-end geofines, as an example, to explore for new mineral deposits buried in the subsurface that are needed for energy transition, or to characterize reservoirs for CCUS and better understand their long-term behavior. We'll go to slide 10 now. The most recent implementation of our full waveform inversion algorithm brings a higher geological fidelity to subsurface images. And this, together with our machine learning and AI techniques, is enabling a much more rapid and accurate interpretation of the data. As such, we are becoming increasingly involved in supporting activities that were historically performed exclusively by our clients and are expanding the scope of our services. Results are particularly striking with OBM data, and this is a key reason our clients are increasingly using OBM technology together with our high-end imaging, even though it is multiple times more costly than streamer acquisition. Processing is more complex, and with our differentiation, clients tend to use our unique and leading technology to extract the most value from the OBM acquisition investment. The images you see on the slide are five years apart, and the 2023 image is based on the most advanced acquisition and imaging technology. You can see that the details of the salt geometries are defined much more clearly, especially at the reservoir level. Slide 11. In early October, we opened our new UK high-performance computing hub in South East England. The initial capacity of the center is 100 petaflops, bringing CGG's global total to just over 500 petaflops. The highly optimized environment, together with the hub's use of 100% renewable energy, reflects CGG's commitment to sustainably meet the massive computing demand required by high-end scientific and AI applications. I expect the trend of increasing our computing capacity to continue in the future, possibly accelerate, as we not only support our traditional imaging business, but also our new and growing businesses in digital and data transformation, as well as new verticals. We announced this morning another new client, LightOn, a pioneering artificial intelligence AI company to our emerging HPC business. Our highly optimized and sustainable AI and HPC solutions will help Liton optimally evaluate and test large language models to support the industrial deployment of AI. Ultimately, our outcome-driven specialized approach combined with our proprietary technology enables companies such as Liton to accelerate and maximize their return on investment through evaluation, testing, scaling, and commercial production. This unique HPT AI solution brings tremendous value to our internal and external clients. We'll move to slide 12 with EarthData. Q3 EarthData revenue was $107 million, up 74% year-on-year. Pre-funding revenue was solid at $52 million, bringing the pre-funding rate for the first nine months to 93 percent and i am confident that we will finish the year above 90 percent earth data cash capex was 50 million dollars this quarter down 31 year-on-year and after sales were 55 million dollars up significantly year-on-year Overall, we see a strong improvement in pre-funding as we have been more selective on projects this year to focus on shorter-term cash return. Slide 13. In Norway, we completed the Sleipner 1200 square kilometer OBN acquisition, and the 2023 NVG East-West is now in the processing phase. We have several reprocessing projects ongoing across the globe to revitalize a library where clients are interested. This reflects the trend of renewed interest in more frontier areas where risks and time to market are lower. All these projects have industry-proof funding. The APAB bid round in Norway was closed on August 23rd with 25 companies submitting bids. Results will be announced in Q1 2024. In Brazil, the permanent offer bid round was launched in August, and we expect the bid round to be closed in December. Uncertainty remains around the timing of the Gulf of Mexico lease sales, which typically trigger after sales. However, we expect clients might still decide to buy data as part of the year-end budget. Going to slide 14. I'd like to highlight two new projects that started in Q4. The Selat Melaka 2D multi-client cycling program over the Langkas Suka Basin Offshore Malaysia. This project of 8,000 kilometers will take about 80 days to complete and is well-prefunded. It is our first project in Malaysia, a country where we see increasing activity. Second project, we kicked off a large-scale CCUS screening study in Southeast Asia covering Indonesia, Malaysia, Thailand, and Vietnam. Interest around carbon sequestration has grown in Asia, driven by both IECs and NECs. Now moving on to slide 15. On Q3, sensing and monitoring segment revenue was high at $122 million, up 42% year-on-year. Land sales at $58 million were driven mainly by deliveries of high number of vibrators. Marine sales at $45 million more than doubled year on year, supported by the sales of OBN to the Middle East. Sales from beyond the core were also up at $13 million, mainly from structural health monitoring projects. The profitability of SMO was exceptionally low this quarter, but we expect the profitability of the SMO business to come back to normal in Q4. Slide 16 for highlights. Q3 was another quarter of very high deliveries, both inland and marine, driven by stronger activity in North Africa and the Middle East. Given the success of our shallow OBN GPR 300, that features the best sensor in the industry, we are launching the full range of products to address deeper water markets. We are also promising a range of sources to offer broadband and solutions that lower any potential impact on the environment. Our MetaBlue product offers value-add solutions that complement our marine acquisition systems and make our clients more efficient both in planning and acquiring their surveys. In BTC, we are proud of our first commercial successes in Saudi Arabia for the identification and monitoring of sinkholes along railways. This is a multi-year contract which covers an initial phase of analysis and subsequent monitoring. We are also active in the space of wind turbine monitoring. Let me now give the floor to Jérôme for more financial details.

Thank you, Sophie. Good morning, good afternoon, ladies and gentlemen. Let me start with the income statement on slide 18. As previously highlighted, Q3 was a solid quarter, with our segment revenue growing 41% to $307 million, mainly driven by SMO higher equipment deliveries for land and OBL mega crews, as well as a strong pre-funding for our earth data business. Segment EBITDA reached $109 million, up 41% versus last year. This translates into 35% margin, including a negative impact of 20 million extra costs linked to the shareholder agreement, as well as dilutive business mix coming from SMO. Regarding segment operating income, Q3 was at $33 million, or 11% margin, After IFRS 15 adjustment, Q3 operating income was $42 million. Net income for the quarter was positive at $8 million. Moving on to the cash flow statement on slide 19. Q3 23 segment free cash flow was positive at $85 million after 31 million positive change in working capital. As mentioned during our Q2 results, the high level of SMO revenues booked in May and June, coupled with an inventory kept under tight control, did translate into a strong cash generation for SMO this quarter. Regarding Q3 year-to-date capex, they stand at $190 million, $20 million lower than last year. This is mainly coming from our multi-client capex, decreasing from $180 million last year to 142 million year-to-date, but with the pre-funding ratio increasing from 38% last year to 93% year-to-date. This year, we have indeed been more selective in the way we have invested into new multi-client surveys, scrutinizing both the pre-funding and cash-on-cash ratio, as well as balancing the potential extra cost paid to Sherwater. Overall, the Q3 23 net cash flow was positive at 63 million. Looking at our full year guidance, we expect to reach net cash flow break-even after change in working capital, and this despite the potential unfavorable EURUSD and EURGBP exchange rates. Moving on to slide 20, the group balance sheet and capital structure, The group liquidity amounted to $370 million at end of September, including 95 million of unrolled RCF. Before IFRS 16, group gross debt was $1,197,000,000 and net debt was $921,000,000. Net debt is actually 60 million higher than that of December 22, mainly from the negative net cash flow over the nine-month period. 24 million of debt interest due at the end of September, as well as circa 20 million of asset financing for our BOLnet data center. After IFRS 16, gross debt was $1,283,000,000. and net debt was just above 1 billion at the end of September 23. Segment leverage ratio of net debt to EBITDA was 2.3 multiple at the end of September 23. Now I hand the floor back to Sophie for conclusion.

Thank you, Jérôme. Now we're on slide 22. This quota confirms the positive market trends that we saw during the first six months of the year. A favorable cycle is clearly shaping up for our industry as clients continue to look for ways to optimize production from their producing fields and increasingly prioritize new reserves to meet demand. The cycle, together with our technology differentiation, has already driven the geoscience business back to pre-COVID level. In Earthdata, as our clients have started to increasingly prioritize the rebuilding of their portfolio of opportunities, the cycle is still emerging and has not fully materialized. Looking forward, we do see growing interest in exploration, which is positive for Earthdata. Together with Geoscience, we'll benefit from OBM becoming a reference technology for optimizing the production of mature reservoirs, as well as for lowering the risk of near-field exploration opportunities. The land business in SMO will continue to be driven by the national oil companies, especially in the Middle East, who are taking a longer-term view on the cycle. It is expected that timing of the Middle East mega cruise will create some quarterly volatility. In this context, our core businesses are doing well and should continue to strengthen in 2024 where we already have improved visibility. Our beyond the core business activities continue to mature and we are gaining experience and progressively building our commercial business as we participate in more streams of the value chain and especially around low carbon and digital. Our new contract for HPC applied to GenAI strengthened our credential in this growing sector and we expect continued success moving forward. Finally, we're very pleased to see our structural health monitoring business continuing to grow with a successful expansion into the mid-list. In summary, we are on track to meet our 2023 objectives and continue to see a supportive outlook for our business moving forward. Thank you very much for your interest and we're now ready to take your questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now go to our first question. And your first question comes from the line of Harris Papadopoulos from Bank of America, please go ahead.

Hello, hi, can you hear me? Yes, hello. Hi, yeah, thanks for taking my questions. I have four actually, please. First one, could you perhaps give us an indication of working capital for the fourth quarter?

Hi, Harry, sorry, can you repeat your question? I didn't catch it.

yeah i was just wondering could you perhaps give us an indication of working capital for the fourth quarter uh working cap for the fourth quarter that's a question for usual um will be slightly negative uh around 10 million

Okay, thanks a lot. And then on the SMO business, I appreciate margins here were exceptionally low this quarter. How should we think about it for the fourth quarter?

Yeah, I did. Yeah, that's an interesting question. Again, that's linked to some of the mix of delivery we have this quarter. But what we did say is that we expect, if you see where we are year-to-date, we'll probably stay around that number. So Q4 will be around the sort of average for the year-to-date. So we'll just catch up and have the normal, back to the normal probability in Q4.

And sorry, back to my first answer. As you know, the working capital depends very much on the late sales. So there's a cell that will be booked in November, December, and especially our data after cells, which have a tendency to be booked more in December time. But again, what we just said is we ambition, as we already mentioned it in Q2, to have a a cash flow generation break-even, including working capital variation, although the guidance we have made earlier this year was excluding working capital.

Okay, thanks a lot. And then thirdly, I appreciate your liquidity target. I remember it was $150 million. This means that you currently have a large cushion. over that, would you perhaps consider using your 10% special redemption goal?

It's been communicated in the past that we needed 150 million to operate, minimum. And depending on our outlook for 2024, that's something that we indeed may consider paying down, reimbursing part of our debt.

Okay, thanks a lot.

And then finally, perhaps again on the capital allocation front, how should we think about M&A?

So the question is about where we are with M&A, is that correct?

Yes.

We keep cash for M&A. We don't have like a large M&A inside, but we're always optimistic like we had last year. So we like to be both on M&A in that range of $20 million. that our technology adds to what we have. Right now we're actually not working on any, but yes, but we feel like organically this is something we can afford.

Okay, thank you very much. That's all from me.

Thank you. We will now go to your next question. And your next question comes from the line of Mick Pickup from Barclays. Please go ahead.

Good evening, everyone. It's Mick here. Just a couple of questions. Can I just check that in DDE, that increase in cost base, that's all the shear water payment that we've seen in the quarter?

Yes. Thank you, Nick, and good evening, and thanks for the question and for the benefit of everyone. That is the reason, and we've seen the geoscience revenue per head continue to increase. We're actually increasing productivity. So actually, what's hiding, if you want, the increases or the good, you know, performance and profitability has been those payments. And they've been significant enough that we've been flagging them for the last two quarters.

Perfect, that's nice and clear. The next one is, can I just talk about on the multi-client business, obviously your investments appear to be running a bit lower than I think you were looking for after the year, and you mentioned that it's much higher pre-funding. Just wondering how you balance that going forward with your clients wanting to rebuild their inventory of prospects, and clearly that would suggest spending more going forward, but you're on the path of trying to spend a bit less at the moment. I wonder how this all balances out?

I mean what we look at and this is not new we look we manage multi-client from the cash out place which is the um basically how much capex we in you know basically pre-funding ratio either way right so this is the capex minus the pre-funding revenue and we look at how much we're sort of willing to to invest and that number has been over the years like a 15 million this year is going to be less But we've been going all the way to $15 million. So we look at the project, project by project, on the merits of if we see pre-funding or not, and when that pre-funding might be coming. So this year, I would say if we had had a compelling project, we would have invested, provided that we saw the pre-funding. And that's the reason that in particular, there was a couple of projects in Norway that we decided to delay until 2024 because we knew and the client had told us they didn't have the budget this year. So we didn't see a point of putting more cash out and wait until next year to get the pre-funding. So we're trying as much as we can to line up the investment with the pre-funding. to manage the cash, basically. So I don't think you should read much into the level of CAPEX. It just depends a little bit on client interest and quality of the project. So I do expect and I hope we will invest, for example, in OBNs in the Gulf of Mexico, so that might drive some of the CAPEX up in 2024.

And then just finally, obviously a low margin in sensing and monitoring, and you're saying low margin equipment, but 10% is a big step down from what, 20-odd percent you did last quarter. So can you just talk me through exactly what's driving it? Because it was very low margin.

Yeah, it is low, and we were very disappointed. I mean, it's very simple. It's the vibrators. So those are the vibrators, and we've sold a large number of vibrators to Saudi Arabia. And they're just typically the equivalent, and I've seen those vibrators or trucks over the years typically attract a lower margin, kind of lower value add if you want, and it's just an unfavorable mix this quarter. But the GPR products, for example, have the typical SMO high margins. So that's why it was just, again, a bit of a volatility. It all happened in that quarter. The next quarter, we're confident that we'll be back.

Thank you.

Thank you. Thank you. We'll now go to your next question. And your next question comes from the line of Baptiste Lebec from Odo. Please go ahead.

Yes, hi, good afternoon, everybody. Just a very quick question regarding the, let's say, potential merger between Exxon and Pioneer and Chevron and S. In this context, can you benefit in 2024 of transfer fees if the mergers are done? Thank you.

Yeah, thank you, Baptiste, and good evening. So Exxon Pioneer is purely land on show US, and if you remember, we sold... We sold our land onshore data business last year, at the end of last year, so we're not going to benefit any of that. Chevron has, there is definitely a potential for transfer fees that will be, I would call them in the mid-range. If you remember, the Oxy one was in a higher range, so we're sort of, it's going to be significant, but not as significant. And that would happen at the moment of closing. And of course, it always depends on the appetite of the buyer to transfer the data. So that means we're in the process of identifying which data they don't have that likely they might want to transfer, but they could still make a decision not to transfer the data. So I don't have the final numbers until those conversations take place. But we should definitely have some pioneering, nothing on that side. And then Chevron has, there should be something. Just to remind everyone on the line, the U.S. Land Library last year generated around 18 million of aftersales. And so when you compare the year-on-year aftersales from 2022 to 2023, you have to take into account the footprint change.

The year-to-date, yes.

The year-to-date.

Six million in Q3.

Thank you. And maybe still one question, if I can, regarding M&A. Let's say two of your competitors or clients, it depends on where you stand, want to merge. What is your view? Can you share with us your view? Is it for you positive or are you afraid by, I don't know, bigger competition because they are by far bigger now than previously? Thank you.

Yes, sure. So in terms of the client, I think generally speaking, less client is not necessarily good. Now, it depends, you know, who is the buyer and who is the company that's bought and, you know, what's our position with them. So there's a lot of consideration in that. But in general, we benefit when there's a larger client base. So that general trend of mna amongst our client base we will benefit in the short term with chance to feed but in the long term i would rather have more clients um now the good news is that there are some uh startups private equity backed companies that are creating in some of the basins in the mature basins and what we're seeing as well which is also a good thing and a new trend is noc are trying to go more international. So that kind of opens up an avenue for new client base if you want. The second one is on our competitor. Probably you're referring to the TGS-PGS merger. I would say it's relatively neutral in the sense where it creates a big competitor, a larger competitor in the multi-client space. But multi-client is not really about scale. It is more around position. And so in that sense, whether you're mid-sized like us or larger size, it doesn't make a huge difference. And then on the processing side, They were both quite small, so the combination remained small, so nothing on that side. And on the acquisition business, it just moves from one player to another player, but it's the same business in the end. So that particular consolidation is fairly neutral for us.

Thank you very much.

Thank you. Thank you. Once again, if you would like to ask a question, please press star 1 and 1 on your telephone keypad. We will now go to the next question. And your next question comes from the line of Jean-Luc Romain from CIC Market Solutions. Please go ahead.

Good afternoon. You had a very strong first quarter in SMO and a very strong year so far. How should we expect the end of the year compared to the past quarter? As good or even better? And how do you see from today, 2024, you mentioned quite a few possibilities of mega-coups. Do you see a higher 2024 already for SMO?

Thank you, Jean-Luc, for the question, and good evening. So in terms of year-end, I mean, I think we're going to be on the trend of the high quarter. Hard to give you the comparison on Q3 or Q1 and Q2, but every quarter has been fairly high above the 100 million mark, and that's kind of the range that we expect in Q4 as well. So it will be a very good year. But keep in mind that the business of SMO is composed of two revenue streams. If you want a certain recurring revenue stream, which is linked to our install base, a replacement if you want. And then there's those mega-crews that create volatility from a quarterly basis. So to date, we have one mega-crew identified in Saudi Arabia. I would call it a super mega-crew in the sense that it's equivalent to two traditional mega-crews. So it's fairly significant. Now, if you remember this year, the bid was being delayed and there's been a lot of delays. So right now, it seems like deliveries would be targeted to Q4 last year, next year. meaning that it could easily slip from Q4 to Q, you know, into even 2025, right, creating some volatility. So that's for the super metal crew in Saudi Arabia. We have in mind as well some large crews in North Africa that we'll be pursuing. And on the node side, it's Looks like it might be more deeper water requests, but it's not like associated to specific megacrew, but it's just general increasing demand for OBM.

Are companies doing marine seismics finally starting to replace streamers, which should be quite hard by now?

Yes, we're always looking at the age of our treatment base. So the age of our treatment base is like somewhere around 11 years old. So you think that by now, you know, they will definitely go into replacement cycle. What we're seeing is more, I told you, the replacement cycle is taking a different shape than we anticipated. in the sense that our clients are replacing portions of their streamer sets. So they're doing a mix and match between old streamers and newer streamers. They're trying to refurbish as well. Now eventually all these streamers will have to be replaced and we're definitely seeing requests for quotations. but not really a significant increase in orders. It was still at that recurring level, not at that sort of full replacement level yet. I would expect that at least that replacement level sets at the higher level.

Thank you. Thank you. We have one further question. And the question comes from the line of Guillaume Delary from Society General. Please go ahead.

Bonsoir, Sophie. Bonsoir, Jérôme. One question for Jérôme, basically. I would like to come... back on the working capital dynamics to be sure to really understand the different moving parts. So basically, change in working capital after nine months is minus 23.5 million dollars. If I understood correctly, and we all know that forecasting change in working capital is highly difficult exercise, but I understand that it might be 10 million more, so let's say minus 33 million at the end of the year. Your guidance at the beginning of the year was neutral free cash flow excluding change in working capital, and now you are saying neutral free cash flow, including. So just to be really sure, is it, I would say, given the fact that you are more or less implicitly forecasting a minus 33 million, so is it, I would say, some kind of increase in guidance, just to be sure?

Yeah, let's call it that way. Because the guidance was excluding working capital and here we say we ambition to be break-even or inclusive. So, yes.

So, okay. No, no, I just wanted to be sure because, you know, thank you. I turn it over.

Yeah, Guillaume, just to add, you know, when we, as you know, it's difficult to plan for working cap and that's why when we guided for the year we wanted to exclude the working cap, but now we are fairly advanced in the year and have a good visibility on it and so we are more confident. But we always, I told you last quarter that our aim was always to have it all inclusive. And that's the number we look at is the net cash flow, including everything. And by the way, including at year end, around $16 million of payments to Shearwater between the $21 million of IDC. I know that's exceptional, which is going below. And then the $47 million that will be included in the EBITDA.

Please look here. Merci, Sophie. Have a nice evening.

Thank you. We have another question. And the question comes from the line of Daniel Thompson from BNP Paribas. Please go ahead.

Hi, good evening. Just one question on late sales. Obviously, we had improvement this quarter, but of course, we had 20 million, which was delayed from 2Q to 3Q coming this quarter. So underlying thoughts were probably not as robust as you want it to be. I think you mentioned last quarter that you saw improvements in order intake trends related to this in the year-to-date figures. So can you just talk about that? order intake trends in the third quarter, how it's progressed and how it's looking over the first nine months. Thanks.

Yes, thank you, Daniel. So I'll comment first on Earth data. So in terms of order intake, and you see it through the pre-funding, I mean, the pre-funding has been very sustained this year, and that's the reason also is we've invested less in CapEx. But in terms of after sales, I did mention that last quarter, we were looking at kind of thinking it's around that 10%-ish improvement year on year. But outside, keep in mind that exceptional transfer fee that we had last year and our footprint change of demand U.S. So corrected for that, we're sort of trending a 10% up year-to-date and we look at it on a rolling basis and that's pretty much where we're at. So it is improving but not as much if you take as a reference 15%, 15-17% exploration capex offshore improvement in 2023 over 2022. the Earth data is sort of a little down from that macro trend, if you want. And that's when we're in the conclusion, I said, well, for geoscience, it's fully sort of materializing, where for Earth data, we're somewhat lagging. And I think the difficulty of Earth data is clients are struggling with the projecting themselves beyond, say, 2035, 2040. And they're really looking for projects that they think can become material and have an impact on production in the shortest term possible. But at the same time, we're seeing one-word demands for our data that is not in the core basins. And so we're launching the project in Malaysia, for example. So we're doing and we're going basically where the pre-funding is. So in general, correcting for those exceptional, it's trending up, but not as high as the macro number in Earth data. But then in geoscience, we're definitely trending along those lines of the sorts of macro trends. And SMO is being difficult to project because it has that volatility of specific deals that could be positioned a quarter or another, or even from a year to another year. I think I mentioned as well somewhere that perhaps on the backlog of geoscience and the reason why it was that 3% year-on-year is because there are two large contracts for NOCs that are pending signature and that we haven't put in our backlog. So they're fairly significant. If we had them in there, we would see kind of a significant increase in backlog year-on-year. So we're not concerned that geoscience is definitely on that uptrend.

Okay. Thanks, Sophie.

Sure. Thank you. There are currently no further questions. I will hand back to CDD for closing remarks.

All right. Well, thank you very much. Thank you for the lots of questions and really good questions. And thanks for your time and your interest. And we'll be in touch in the next few days or weeks. Thank you again. Good evening.

Thank you indeed. Good evening.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.