- CGG foresees a lasting drop in demand from customers
- Group plans to cut an additional 13 percent of workforce
CGG SA , the French oil field surveyor which last year rejected a takeover approach from Europe’s largest oil engineer Technip SA, plans to sell shares and assets after reporting a $1.07 billion loss in the third quarter.
"We plan to finance the group needs, notably related to the transformation plan, through disposal of non-core assets and equity offering or sale of a minority interest," the company based in Massy, close to Paris, said in an e-mailed statement on Thursday.
The surveyor is suffering from a drop in demand as oil explorers such as Total SA, facing depressed crude oil prices, cut budgets to hunt for new reserves and defer orders for seismic studies to preserve cash.
The company is bracing for a third straight year of decline in customers’ exploration needs, CEO Jean-Georges Malcor said during a conference call. Additional cost cuts will be implemented by June, including a reduction of the marine fleet to five vessels, compared with 18 at end 2013, and the slashing of an additional 930 jobs, representing about 13 percent of its global headcount and the reduction of CGG’s exposure to contractual data acquisition. The group operated as many as 23 vessels at the peak of its operations.
A capital increase is among the options considered by the company, Malcor said, without providing further details. CGG is talking to its banks and isn’t at risk of a covenant breach for now, he said.
CGG shares fell 8.9% in early Paris trading on Thursday, down 27 percent from the start of the year.