CGG flags large step change

Seismic firm will spin off vessels to become a “people, data and technology” company
CGG flags large step change CGG flags large step change CGG flags large step change CGG flags large step change CGG flags large step change

Helen Clark


The company, battered as all were by the last oil price rout, wants to ensure it remains profitable through future price cycles and will reduce its exposure to the data acquisition business, which, it says, "has been impacted over the years by structural industry overcapacity, lack of differentiation, commodity pricing and a heavy fixed cost base". 
Next year it plans to reduce its fleet to just three vessels and will seek a strategic partnership to operate and control the vessels, while on land it will leave the onshore market entirely after a wind down period and will market and sell its multi-physics offering. 
It will also "monetise" its equity stakes in the Argas and SBCGS joint ventures when the time is right. 
CGG aims to become a ‘people, data and technology company' by strengthening its more profitable businesses units covering geoscience, multi-client surveys and equipment, which it said perform well through the cycles and can best capture the market rebound.
The geoscience unit kept its leading market share through the downturn "based on clear differentiation that clients recognise and value," the company said. 
It plans to strengthen this position further by "recruiting and developing talents, investing in algorithms and computer technology and surpassing our clients' expectations". 
The multi-client surveys unit also performed well through the cycle and since 2017 has seen signs of a strengthening offshore exploration market.
And its equipment section has the manufacturing flexibility required to offset the impact of industry cycles, while maintaining the investments in research and development made, and the resources necessary to capture the rebound.
CGG expects its equipment will unit benefit from its very large installed base in the onshore space. 
The marine market will also strengthen as a significant number of streamers need replacement. Gauges and downhole tools growth is driven by the US land unconventional market, which continues to be strong.
CGG targets 30% of revenue to come from new offerings by 2021 and will leverage the recovering offshore exploration market by developing new areas of profitable growth. 
It will focus on expansion into adjacent markets, leveraging increased reservoir development activity, the unconventional market, equipment diversification and the rapid advance of geoscience and digital technologies.
The company also recently announced fast track 3D seismic data from its recent Mozambique survey will be available for companies to view in CGG data rooms before next year's licensing round. 
The new offering covers 15, over blocks Z5-C and Z5-D and was acquired as part of an agreement it made with the nation's petroleum institute last year.