Bloomberg News

CGGVeritas Quarterly Loss Narrows as Seismic Rates Increase

May 10, 2012

CGGVeritas (GA), the world’s largest seismic surveyor of oilfields, said its first-quarter loss narrowed and predicted marine services rates will improve in the second half.

The net loss of $3 million compared with a restated loss of $37 million a year earlier, the company said today in a statement. Revenue climbed 8 percent to $787 million on increased equipment sales.

“Prospects are good,” Nicolas Royot, at analyst at Portzamparc, said by phone. “Price increases could be seen in third-quarter results.”

CGGVeritas, which conducts seismic studies and sells equipment to estimate the size of oil and natural-gas deposits, has said it expects business to pick up this year as oil companies raise spending on exploration and production. The company was hurt by political uprisings in Libya and parts of the Middle East as well as the slowdown in the Gulf of Mexico following the worst U.S. oil spill in 2010.

The backlog “is significantly increasing, confirming the recovery in demand for the high-end seismic equipment and services market,” Chief Executive Officer Jean-Georges Malcor said in the statement. Prices for marine survey contracts are “strengthening” from last year when orders in the second half were signed at “historic low prices.”

Market Tripled

The global market for seismic equipment and surveys tripled to about $15 billion from $5 billion in 1999, he said. The French company has a market share of about 65 percent for equipment and 25 percent for marine and land surveys.

Demand could materialize this year in India, Myanmar, the eastern and western coasts of Africa and Brazil, according to Malcor. Growth could also come from seismic surveys of the Marcellus shale formations in the U.S., he said.

CGGVeritas reported a group operating margin of 7 percent, compared with 3 percent a year earlier. The company has forecast revenue growth of 10 percent to 15 percent this year and $150 million in additional operating income.

The company’s backlog rose to $1.565 billion from a restated $1.218 billion at the end of the first quarter in 2011. “We are about 40 percent covered for the fourth quarter, which is good visibility compared with last year,” Malcor said.

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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