CGG (NYSE:CGG) Q2 2020 Earnings Conference Call - Final Transcript

Jul 29, 2020 • 02:00 am ET


CGG (NYSE:CGG) Q2 2020 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Second Quarter 2020 Results Conference Call. At this time, all participants will be on listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

And I would now like to hand the conference to the CGG speakers. Thank you. Please go ahead.

Christophe Barnini

Good morning, ladies and gentlemen. Welcome to this presentation of CGG's Second Quarter 2020 Results. The call today is hosted from Paris where Mrs. Sophie Zurquiyah, Chief Executive Officer; and Mr. Yuri Baidoukov, Group's Chief Financial Officer, will provide an overview of the second 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 risks 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.

Sophie Zurquiyah

Thank you, Christophe. Good morning, ladies and gentlemen, and thank you for participating in this Q2 2020 conference call. Our presentation will cover our second quarter 2020 operational and financial results, and I will start today's presentation by giving some background on the market.

On Slide 4 now. So although crude oil prices have improved from the historic lows seen in May, the COVID-19 pandemic has continued to dramatically affect global economies and severely degrade our business environment. The energy sector is experiencing particularly strong headwinds. At CGG, we do not see the direct effect of the macro market. We see E&P companies' reactions. In the past, this created a lag and smoothing effect, but this time, our clients reacted very quickly and deeply.

In addition, during the previous downturn of 2015 and 2016, our clients extracted large savings from their suppliers in what I will call easy efficiency gains. This time it's different. The service sector is already lean, and our clients are more focused internally, reorganizing and reducing their staff. This has significantly slowed down activity on new projects and award of new work.

Our markets continued to deteriorate in Q2, more than was originally anticipated just a few months ago, and the timing for global economic recovery remains uncertain. This being said, I am convinced that as new projects are further delayed, the chances of undersupply are increasing. Energy transition also received more focus, and our clients are increasing their spend towards renewable energies, especially in Europe. They are also focusing oil and gas capex on their core areas and producing the most advantaged hydrocarbons.

Moving on to Slide 5. In this business environment, we are quickly adapting to reality and to our clients' new activity levels while preserving the future. CGG's strategic rationale is strong, especially in these challenging conditions, and is even reinforced in many ways. We are well