Nov. 10 (Bloomberg) -- CGGVeritas, the world’s largest seismic surveyor, reported a 93 percent decline in third-quarter profit as the global recession forced oil producers to scale back exploration spending.

Net income fell to $12 million from $162 million a year earlier, the Paris-based company said today in a statement. Sales dropped 31 percent to $731 million.

Oil-service companies have reported lower quarterly earnings as explorers delay projects following a drop in crude prices from last year’s record. CGGVeritas competitor Petroleum Geo-Services ASA said Oct. 27 that profit declined 62 percent, while the U.S.’s Schlumberger Ltd. posted a 48 percent slump.

CGGVeritas, which conducts seismic studies and sells equipment for estimating the size of oil and natural-gas deposits, has cut costs to bolster income and expects business to pick up next year.

“Customers are talking about a different 2010 compared to this year, which was at a standstill,” Chief Executive Officer Robert Brunck told analysts today on a conference call. There may be a “rebound” in the second half of 2010 as tenders get under way, he said.

CGGVeritas fell as much as 2.9 percent to 14.55 euros in Paris trading, and was at 14.71 euros as of 1:19 p.m. local time.

Cost Savings

CGGVeritas said capital spending was down 25 percent year to date, while the number of vessels in operation dropped to 20 from 27. Brunck confirmed a target to reduce costs by $350 million by 2011.

The company reported a loss in the second quarter and said it would pull seven vessels from service by the middle of next year to reduce a surplus.

“In marine, the industry began capacity adjustments but oversupply still prevails,” leading to lower prices, Brunck said today. Overcapacity for so-called 3-D vessels and lower rates will continue into early 2010, he said. Revenue at the Sercel seismic equipment division will probably be unchanged in 2010 from this year, he said.

The company’s order backlog was $1.65 billion on Nov. 1, helped by a $465 million four-year contract from Petroleos Mexicanos to acquire and process seismic data in the Gulf of Mexico, according to the statement. CGGVeritas reported a backlog of $1.98 billion on Feb. 1.

Higher 2008 Backlog

“The positive contribution of higher-margin 2008 backlog coming to an end led to a more difficult quarter,” Brunck said in the statement.

Petroleum Geo-Services CEO Jon Erik Reinhardsen said last month he doesn’t expect vessel rates to rise until overcapacity is reduced and market balance is restored.

CGGVeritas agreed to buy Norway’s Wavefield Inseis ASA for $310 million last year, widening its services as reserves become more difficult to reach and costly to exploit.

CGGVeritas was created in 2006 when Massy, France-based Compagnie Generale de Geophysique SA bought Houston-based Veritas DGC Inc. Geophysique was founded in 1931 by Conrad Schlumberger and carried out its first survey in West Africa.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

Last Updated: November 10, 2009 07:23 EST