With a weak start of the year for CGG, the French seismic company will reduce its fleet by another three vessels by the end of Q1, as its revenue dropped 32% from 2014.
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The Oceanic Vega. Image from CGG. |
According to CGG, as of year-end 2015, its transformation plan is on track, as the company reduced its fleet to eight vessels by year end 2015; reported a 64% reduction in marine costs since 2013; a 54% reduction in general and administrative expenses; and the reduction of 3700 in its workforce.
In 2016, the company will reduce its fleet to only five vessels by the end of this quarter. CGG’s is also targeting a year-end net debt of below US$2.4 billion.
“2016 will remain difficult with a very weak start of the year. In this context, the group is resolutely implementing its transformation plan, particularly with the reduction in its fleet to five vessels by the end of the first quarter of 2016,” Jean-Georges Malcor, CGG CEO said in the company’s Q4 2015 and full year report. “Contractual data acquisition will gradually decline to less than 15% of group revenue, while GGR will represent more than 60%. By implementing very rigorous cash management, we target a net debt of less than $2.4 billion by the end of the year.”
Although CGG’s year-on-year revenue dropped from $3.1 billion in 2014 to $2.1 billion in 2015, marking a 25% decline, the company did experience a 25% increase in Q4, compared to Q3. CGG reported $589 million in Q4, up 25% from $470 million in Q3, but a 35% drop when compared to Q4 2014’s $906 million.
“The group refinanced its debt and successfully completed a capital increase of 350 million euros ($382.5 million) in February 2016. This enables CGG to start 2016 with $791 million liquidity on a pro-forma basis,” Malcor said.
Yesterday (2 March), the Paris-based company received a notice from the New York Stock Exchange (NYSE) that CGG was no longer in compliance with NYSE’s continued listing standards since the company’s average per share closing price was below the required $1 per security in a 30-day period, which ended on 1 March.
“The company intends to notify the NYSE of its intention to cure the deficiency within the prescribed time frame of six months from receipt of the NYSE notice on 2 March 2016,” CGG said.
In January, CGG launched a $378.8 million (€350 million) rights offering to existing shareholders to fund its transformational plan to convert CGG from a seismic acquisition company into an integrated geosciences group.
Net proceeds of the issuance are expected to be used this year, to cover the shortfall in CGG’s consolidated net working capital of some $175 million, in addition to other activities. In November, CGG announced the reduction of 950 jobs, 13% of its workforce, and a reduction in its fleet.
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