viking vision seismic survey vessel

CGG to Cut Jobs and Fleet Size in 2015

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February 26, 2015

Viking Vision seismic survey vessel, image: CGG

By Angeline Benoit and Tara Patel

(Bloomberg) — CGG SA, the oil field seismic surveyor that rejected a takeover approach by Technip SA, reported a net loss of $1.2 billion in 2014 after a writedown for restructuring costs and cutting the size of its fleet.

“We have faced a difficult environment last year which deteriorated brutally with the drop of oil prices in the last quarter,” Chief Executive Officer Jean-Georges Malcor said on a conference call Thursday. “Our focus is to generate cash this year through lower capital expenditure and restructuring.”

CGG surged as much as 12 percent in Paris trading after the CEO said that while a merger wasn’t his priority, he wouldn’t rule it out. Last year, Europe’s second-biggest oil-services provider Technip approached CGG about a combination of the two French companies specialized in providing equipment and studies for the energy industry. The surveyor, which has cut jobs and reduced its fleet, rejected the bid.

“The market wants to believe a merger is still possible even though there’s no obvious candidate,” said Bertrand Hodee, an analyst at Raymond James in Paris. “That’s the only real positive news today beyond the additional restructuring, which is good but probably not enough to balance marine markets.”

CGG rose 10 percent to 6.39 euros at 11:45 a.m. in Paris, giving the company a market value of 1.13 billion euros ($1.28 billion).

Cutting Jobs

Malcor said CGG will cut about 400 jobs this year after the Paris-based company posted a net loss of $667 million in the fourth quarter. CGG’s $939 million writedown for the full year includes a impairment of $697 million as it cut the size of its fleet and incurred restructuring costs.

CGG’s fleet will be cut to 11 vessels this year from 13, and down from 18 vessels at the end of 2013, the company said. CGG doesn’t need to increase its capital and will focus on its three activities of selling seismic equipment, carrying out studies on specialized vessels and analyzing data, Malcor said.

“It’s more about industrial discipline than consolidation,” he said.

CGG’s order backlog dropped to $1 billion as of Jan. 1 from $1.1 billion three months earlier. Negative free cash flow was $137 million while net debt was $2.42 billion, the company said. CGG deploys equipment that drags behind ships to measure sound waves in search of underwater oil and gas deposits.

The company will cut capital expenditure by about 25 percent this year from $862 million in 2014.

Copyright 2015 Bloomberg.


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