Driven by multi-client sales, CGG to see spike in revenues

French geophysical services provider, CGG, expects to see an increase in revenues in the last quarter of 2018, driven by the highest quarterly revenues in the multi-client sales segment since 4Q 2015. 

CGG said on Wednesday it anticipates its fourth quarter 2018 revenue under the group’s new perimeter of around $432 million, up 16% year-on-year and 54% sequentially.

Furthermore, CGG anticipates fourth quarter 2018 revenue in the Geoscience segment of around $108 million, up 16% sequentially.

CGG anticipates segment multi-client sales of around $219 million for the fourth quarter of 2018, the highest quarterly segment revenue since 4Q 2015.

After-sales are expected to be around $114 million. Strong multi-client sales in Latin America, North Sea, West Africa, and US land drove multi-client revenue to this high level despite low Gulf of Mexico sales (including StagSeis data), CGG explained.

CGG anticipates Sercel fourth quarter 2018 external equipment sales of around $105 million, up 17% sequentially.

Following CGG’s new strategy presentation on November 7, 2018, the acquisition business segment will be reported and presented as discontinued operations and assets held for sale as of 4Q 2018.

To remind, CGG last November said it had decided to reduce its exposure to the acquisition business, which has been impacted over the years by structural industry overcapacity, lack of differentiation, commodity pricing and a heavy fixed cost base, in an effort to transition to an asset-light model.

Namely, in its marine business, CGG plans to adjust to a three-vessel fleet in 2019 and find a strategic partnership to cost-efficiently operate and control the vessels. In the land business, CGG plans to exit the market after a wind-down period. Finally, CGG plans to market its multi-physics business for sale, and monetize when suitable.

CGG reduces financial debt 

CGG also said it expects its 2018 year-end net debt to come down to around $736 million from $769 million at the end of September 2018.

The group’s liquidity is expected to increase to around $435 million at the end of December 2018, compared to $412 million at the end of September 2018.

CGG CEO, Sophie Zurquiya, said: “Our solid Geoscience performance, strong Multi-Client sales and high level of land equipment deliveries by Sercel this quarter confirm clients’ recognition of CGG’s technology leadership and our new strategy focused on the group’s core businesses.”