CGG (NYSE:CGG) Q1 2020 Earnings Conference Call - Final Transcript
May 12, 2020 • 02:15 am ET
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the first quarter 2020 results call. [Operator Instructions]
And I would now like to hand the conference over to your host for today. Thank you. Please go ahead.
Thank you. Good morning, ladies and gentlemen. Welcome to this presentation of CGG's first quarter 2020 results. The call today is hosted from France, where Mrs. Sophie Zurquiyah, Chief Executive Officer; and Mr. Yuri Baidoukov, Chief Financial Officer, will provide an overview of the first quarter 2020 results as well as provide comments on our outlook.
As a reminder, some of the information contains forward-looking statements, including, without limitation, statements about CGG plans, strategies and prospects. These forward-looking statements are subject to risk and uncertainties that may change at any time, and therefore, the actual results may differ materially from those that were expected.
Following the overview of the quarter, we will be pleased to take your questions. And now I will turn the call over to Sophie.
Thank you, Christophe. Good morning, ladies and gentlemen, and thank you for participating in this Q1 2020 conference call. A presentation will cover our first quarter 2020 operational and financial results, our market environment, the unprecedented crisis that we are experiencing and our action plans to adapt to this new reality. On March 6, we released our Q4 results and our 2020 guidance. At that time, we were still envisaging relative stability in the market, and were shaping up CGG for a year of further development with recruiting plans, a healthy pipeline of new Geoscience technology while prefunding multi-client programs and new equipment products. Since then, two compounding crisis dramatically affected the global economies, and especially, the oil and gas industry, severely degrading our business environment.
The first crisis was triggered by the global COVID-19 pandemic. The second was caused by the rapid drop of oil price by more than 50% to the current Brent levels of around $30 per barrel, which resulted from the combined impact of the significant decline in all demand caused by the COVID-19 and the market share war, which was led by Saudi Arabia and Russia, increasing their supply.
In just a few weeks, our business environment totally changed. At current, as we navigate through these unprecedented crisis, we have little visibility on how long the oil prices will remain at these levels. Most forecasters are experiencing it to remain low for the next 12 to 18 months. And of course, these market conditions and outlook are having a significant impact on all our clients.
On average, oil and gas companies have announced reductions in their planned 2020 capital spending of around 25% to 30%. In this business environment, we have changed our plans and are preparing and adapted for our businesses to effectively manage through what we currently expect to be a challenging 2020.
I'm glad that we made significant progress well ahead of our plans last year towards a strategic objective to become an asset-light,