CGG : Announces Second Quarter 2014 Results

• 2014-2016 Transformation Plan intensified, accelerated and implemented in 2014

• Resilient second quarter operating income in weak market conditions

PARIS, France - August 1st, 2014 - CGG (ISIN: 0000120164 - NYSE: CGG), world leader in Geoscience announced today its non-audited 2014 second quarter results.

• 2014-2016 Transformation Plan intensified and accelerated. Restructuring measures implemented in 2014:
  • Marine fleet reduced to 13 seismic vessels by end 2014. 1 vessel already decommissioned, 1 vessel retired from the seismic market, 2 vessels de-rigged and 1 permanently converted to source vessel
  • North American land contract business disposed to Geokinetics
  • New Argas set up finalized in the Middle-East
  • More than 10% headcount reduction
  • Strong cost reduction, reinforced cash management, 2014 industrial capex reduced by 10%
  • Operational sites closed down in Bergen (Norway), Nigeria and Venezuela
    
• Resilient second quarter operating income in difficult current market environment:
  • Revenue at $689m
  • Operating income at $45m with solid operational marine performance
  • EBIT at $31m, including a $(13)m negative contribution of equity from investees, mainly related to the Seabed Geosolutions JV
    
• $230m of non-recurring charges:
  • $120m (including $96m cash costs) restructuring costs related to the Transformation Plan
  • $74m write-off related to Seabed activities 
  • $37m write-off related to 2007-2008 multi-client library in Brazil
    
• Successful refinancing operations to extend debt maturity:
  • Issue of a €400m High Yield Bond due 2020 at 5.875%
  • Issue of a US $500m High Yield Bond due 2022 at 6.875%
  • $57m financial one-off costs related to the April debt refinancing
    
• Backlog was $1.1bn as of 1st July 2014:
  • Marine fleet coverage at 97% in Q3 and 40% in Q4
  • Strategic agreement with Sovcomflot to create a marine JV

CGG CEO, Jean-Georges Malcor, commented:
« Given the current weak market conditions characterized notably by the unpredictable capex spending of our clients, delays in awarding projects and pressure on prices, we anticipate 2014 to remain difficult.

In this context, CGG has decided to accelerate and intensify its restructuring measures into 2014, downsizing the fleet from 18 to 13 vessels by the end of the year and disposing of its North America land acquisition business to Geokinetics. Thanks to the full commitment of our employees we managed to deliver resilient profitability this quarter.

We anticipate, with this new perimeter, a sequential improvement in our results during the second half of the year sustained by a typically strong fourth quarter.

The set of measures put in place during 2014 allow us to confirm our objective of 400 bps Ebit margin improvement in 2016.»

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About CGG

CGG (www.cgg.com) is a fully integrated Geoscience company providing leading geological, geophysical and reservoir capabilities to its broad base of customers primarily from the global oil and gas industry. Through its three complementary business divisions of Equipment, Acquisition and Geology, Geophysics & Reservoir (GGR), CGG brings value across all aspects of natural resource exploration and exploitation.

CGG employs over 9,500 people around the world, all with a Passion for Geoscience and working together to deliver the best solutions to its customers.

CGG is listed on the Euronext Paris SA (ISIN: 0000120164) and the New York Stock Exchange (in the form of American Depositary Shares. NYSE: CGG).