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WIKI ANALYSIS
CGGVeritas (Compagnie Générale de Géophysique-Veritas, NYSE: CGV) is the world’s leading international geophysical company. It provides oil and gas companies with solutions to gather and process geophysical data. These solutions include offshore and onshore seismic acquisition, seismic data processing and imaging, as well as reservoir management. Offshore, CGGVeritas operates the industry’s largest fleet with 21 seismic vessels offering the most flexible variety of towing configurations to suit client requirements.[1] The company was created as a result of a 2007 merger between Compagnie Générale de Géophysique and Veritas.
CGGVeritas manufactures geophysical equipment through its subsidiary, Sercel. This equipment includes integrated electronic recording systems, cables, land, ocean-bottom and and borehole sensors. Through Hampson-Russell Software & Services, CGGVeritas offers a range of geophysical interpretation software and reservoir characterization services aimed at enhancing customers' knowledge of their prospects and reservoirs. Hampson-Russell has an installed base of more than 1400 licenses at over 500 petroleum and service companies worldwide.[2]
Company Overview
CGGVeritas operates a fleet of 21 seismic vessels which collect data on geophysical properties of land and the ocean floor.[1] The company also operates 41 global processing and imaging centers to analyze and interpret the data.[1] The data is then used by oil and gas companies in evaluating prospective areas, selecting drilling sites and managing producing reservoirs.
Business Segments
Services (77% of revenue)[1]
The Services segment includes land contract, multi-client land, marine contract, multi-client marine, and processing and imaging. Land seismic acquisition includes all seismic surveying techniques where the recording sensor is close to the ground. The land business line offers integrated services, including the acquisition and on site processing of seismic data on land, in transition zones and on the ocean floor. Land operations include surveying crews and recording crews.
The company provides a range of three-dimensional marine seismic services, principally in the Gulf of Mexico, the North Sea and off the coasts of West Africa and Brazil, as well as in the Asia-Pacific region. Seismic data processing operations transform seismic data acquired in the field into 2D cross-sections, or 3D images of the earth's subsurface or 4D time-lapse seismic data. The images are then interpreted by geophysicists and geologists for use by oil and gas companies in evaluating prospective areas, selecting drilling sites and managing producing reservoirs. CGGVeritas operates 41 global processing and imaging centers.[1]
Equipment (23% of revenue)[1]
The company conducts its equipment development and production operations through Sercel and its subsidiaries. Sercel operates five seismic equipment manufacturing facilities, located in Nantes and Saint Gaudens in France, Houston, Singapore and Alfreton in England.[1] In the People’s Republic of China, Sercel operates through Sercel-JunFeng Geophysical Equipment Co Ltd (JunFeng), based in Hebei.
Sercel offers and supports globally a range of geophysical equipment for seismic data acquisition, including seismic recording equipment, software, and seismic sources. Sercel’s principal product line is seismic recording equipment.[1]
Trends and Forces
The seismic surveying market has seen an oversupply of vessels
The seismic surveying market has struggled after oil producers reduced spending due to the global recession amid an oversupply of vessels. With the seismic industry oversupplied with contractors, CGGVeritas is struggling to obtain price increases for its surveying services. The oversupply has been further exacerbated by the addition of 10 new-build 3D vessels that joined the industry in 2010.[3]
The Gulf of Mexico deepwater drilling moratorium has an adverse effect on CGV's business
Following the BP (BP) Deepwater Horizon oil spill in May 2010, CGGVeritas' stock price declined by 24%, a drop even more dramatic than BP's. After the oil spill, the Obama administration imposed a six month moratorium on deepwater drilling in the Gulf of Mexico. The moratorium on expansion is negative for drilling firms because their clients, the oil majors, can ask for lower day rates since many drilling firms are shifting their drilling fleets to other parts of the world.[3] As dayrates fall, CGG's clients, the drilling firms, must cut back their spending on the exploration services provided by CGGVeritas.
Demand for CGV's advanced technology drives international growth
CGV's broadband marine solution BroadSeisTMis is seeing increasing interest with 8 successful projects since its launch in June 2010. Also, demand for CGV's advanced capabilities such as RTM 3D gather depth imaging technology and shale gas reservoir solutions is driving growing revenue. In response to growing demand for its technology, CGV has opening a data processing center in Copenhagen. Additionally, the company's sales in Saudi Arabia have increased with two large OBC contract in that country.[4]
Competition
- Schlumberger N.V. (SLB) provides oil & gas drilling & exploration companies technologically advanced equipment and management services that aid in the extraction and production of crude oil and natural gas. WesternGeco, a business segment of Schlumberger, competes directly with CGGVeritas and accounts for about 10% of Schlumberger's revenue. WesternGeco provides reservoir imaging, monitoring, and development services to land, marine, and shallow-water well projects.[5] Services range from 3D and 4D (time-lapse) seismic surveys to multicomponent and electromagnetic surveys.
- Petroleum Geo-Services ASA (PGSVY) is a Norwegian company specializing in seismic and electromagnetic services, data acquisition, processing, reservoir analysis/interpretation and multi-client library data. The company operates 16 offshore seismic vessels, 23 data processing centers, and 41 offices worldwide.[6]
- Fugro (AMS:FUR) collects, processes and interprets data related to the earth's surface and the soils and rocks beneath and provides advice based on the results to clients in many sectors.[7]
- ION Geophysical Corporation (IO) provides advanced acquisition equipment, software and planning and seismic processing services to the global oil & gas industry.[8]
- BGP is a Chinese company involved in onshore seismic data acquisition, deep water seismic survey, shallow water and transition zone seismic surveys, seismic data processing, interpretation and reservoir studies, borehole seismic surveys, geophysical research and software development, and geophysical equipment manufacturing. BGP currently has 119 land seismic crews, 6 shallow water and transition zone crews, 8 VSP crews and 21 non-seismic crews operating in 35 countries on 4 continents.[9]
References
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 Reuters: Profile for COMPAGNIE GENERALE DE GEOPHYSIQUE-VERITAS (CGV)
- ↑ About CGGVeritas
- ↑ 3.0 3.1 Marketwatch: "Oil-services firms volatile in Europe after Gulf spill" June 3, 2010
- ↑ phttp://www.cggveritas.com/data//1/rec_docs/1723_Q3_2010_Conf_Call_Presentation.pdf CGV Investor Relations: "2010 Q3 Results Presentation"]
- ↑ slb.com: Company Background
- ↑ Petroleum Geo-Services ASA: Company Profile
- ↑ About Fugro
- ↑ About Ion
- ↑ About BGP
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