Bloomberg News

CGGVeritas Reports Third-Quarter Loss Amid Low Vessel Rates

November 09, 2010

CGGVeritas (GA), the world’s largest seismic surveyor of oilfields, reported a third-quarter net loss amid “difficult” conditions for marine and North American land contracts and low vessel rates.

The results “reflect the challenging conditions that prevail during the low phase of the cycle we are going through,” Chief Executive Officer Jean-Georges Malcor said in a statement.

The net loss was $33 million compared with a profit of $8 million last year, the Paris-based company said today in a statement. This was lower than the average estimate of close to breakeven from 11 analysts surveyed by Bloomberg. Sales fell 10 percent to $656 million while earnings before interest, taxes, depreciation and amortization fell 32 percent to $157 million.

The seismic market has struggled as oil producers slashed spending last year because of the global recession, an oversupply of vessels and the Gulf of Mexico moratorium that has now been lifted on deepwater oil and gas drilling. CGGVeritas’s Malcor said in a Sept. 3 interview that he didn’t anticipate a price recovery until mid-2011 due to the vessel oversupply.

The shares retreated as much as 3.1 percent and were trading down 33.5 cents to 18.25 euros at 9:11 a.m. in Paris. They’ve advanced 22 percent this year.

CGGVeritas reported a group operating margin of 4 percent, compared with 8 percent a year earlier. The measure of profitability was 30 percent for its Sercel seismic equipment division due to higher land sales compared with 18 percent a year earlier. The services business had an operating margin of negative 4 percent compared 7 percent a year earlier due to “challenging” market conditions both offshore and for onshore North America, according to the statement.

The company’s vessel availability and production rates stood at 87 percent “in the continued low price market,” according to the statement.

The surveyor was created in 2006 when Massy, France-based Compagnie Generale de Geophysique SA bought Houston-based Veritas DGC Inc.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.


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