CGG - comment

In the final analysis and as management had alluded to, CGG’s year proved to be very much one of two distinct halves. The second half of 2021 saw improvements in revenue and order book within the core business. Underinvestment in E&P is finally beginning to lead to an increase in spending. National Oil Companies (NOCs) are driving this recovery as the Oil Majors are trying to assuage ESG concerns by investing in the renewable business. Despite the rosy outlook for 2022 revenue, free cash flow remains tough for CGG. Next year will still see only minimal free cash flow generation. EBITDA is guided at around $410m, CAPEX at $270m, financing costs are $100m, Idle Vessel Compensation at $20m. All of this implies around $20m of Free Cash Flow and that figure assumes there are no working capital outflows. This year free cash flow of $81m was boosted by $95m of asset disposals, next year there will be a further $35m from the sale and leaseback of the Galileo building (signed and completing in Q2). However, given cash on hand of $319m and an undrawn RCF of $100, CGG is in a strong liquidity position for now.