Strengthening Results in Q3

Early Impact of our Performance Plan

Revenue up 21%

Operating Income at $98m, a 12% margin

Net Income of $41m

Company Website: http://www.cggveritas.com
PARIS -- (Business Wire)

Regulatory News:

CGGVeritas (ISIN: 0000120164 – NYSE: CGV)(Paris:GA) announced today its non-audited third quarter 2011 consolidated results. All comparisons are made on a year-on-year basis unless stated otherwise.

Strengthening Financial Results

• Group Revenue was $797 million, up 21% year-on-year and 6% sequentially.
• Group Operating Income was $98 million, a 12% margin.
  • Sercel delivered excellent results with Operating Income at $87m, a 32% margin.
  • Services strengthened significantly with Operating Income at $53m, a 9% margin, mainly driven by strong Marine performance in the continued low priced environment.
• Net Income was $41 million compared to a loss of $33 million in the third quarter 2010.
• Group Operating Cash Flow was $119 million up 45% year-on-year and $486 million for the first nine months of the year, up 54%.
• Net Free Cash Flow was negative at $66 million for the quarter and negative at $8 million for the first nine months of the year compared to a negative Net Free Cash Flow of $213m for the first nine months of 2010.
• Net Debt to Equity ratio was stable at 41% compared to the end of 2010.

Positive Impacts of Performance Plan

• Strong vessel utilization rates with vessel availability at 91% and vessel production at 93%.
• Vessel upgrade plan on schedule:
  • The new X-BOW Oceanic Sirius, designed for 20 streamers, was delivered on October 3^rd, 2011.
  • The upgraded Oceanic Phoenix and Endeavour were back in operations. The Endeavor completed the first BroadSeis^TM wide-azimuth project ahead of schedule.
  • The Champion, the last of our vessels targeted for the performance program was delivered to the shipyard for major upgrade.
• The commercial success of BroadSeis^TM was confirmed with more than 10 surveys acquired since the beginning of the year, including the first BroadSeis^TM wide-azimuth.
• The strategic agreement with Spectrum was finalized. The disposal of our 2D marine library generated a capital gain of $19 million this quarter and CGGVeritas now owns a 25% stake in the company.

Backlog at the end of the quarter was $1.24 billion

Third Quarter 2011 key figures

CGGVeritas CEO, Jean-Georges Malcor commented:

“We are pleased to report that our results strengthened this quarter.Sercel continued to deliver superior performance and Services benefited from the early impact of our performance plan including strong fleet utilization rates, the growing success of BroadSeis and the continued development of our partnerships. We maintain our focus on performance improvements, cost reduction, and technological and commercial differentiation.

Looking forward, in the longer term and within the context of current global economic uncertainties, strong underlying oil and gas fundamentals are expected to translate to continued high levels of seismic demand. In the short term, while land mobilization ahead of an expected strong winter season and marine seasonal transits should moderate contract activity, planned lease sales should drive strong multi-client sales in the fourth quarter, especially near year-end. Based on this and an anticipated strong fourth quarter for Sercel, we remain confident to achieve our 2011 objectives.

In 2012, we will continue to pursue our performance plan in a seismic market which is expected to further strengthen for high-end technologies and solutions. Specifically, we expect demand for seismic equipment to remain strong, activity to build globally in key basins and marine overcapacity to progressivelybeabsorbed.”

Third Quarter 2011 Financial Results

Group Revenue

Group Revenue was up 21% in $ (7% in €) year-on-year and 6% sequentially in $.

Sercel

Year-on-year, revenue was up 11% in $ (down 2% in €). The growth in land equipment was driven by robust 428^{and UNITETM channel demand for high density surveys and regional activity. Sequentially, revenue was up 3% in $. Internal sales represented 25% of revenue as Sentinel and Nautilus were delivered to the Oceanic Sirius.}

Services

Year-on-year, revenue was up 28% in $ (13% in €). Sequentially revenue was up 11% in $ mainly driven by stronger vessel utilization rates.

• Marine contract revenue was up 69% year-on-year in $ (48% in €). Sequentially, revenue was up 20% in $. Our 3D vessels were allocated 88% to contract and 12% to multi-client programs. The vessel availability rate¹ grew to 91% and the production rate² to 93% as a result of the early impact of our performance program with the Oceanic Phoenix and Oceanic Endeavour returning to operations following their performance upgrades. The Champion, the last of our vessel planned for performance upgrade was delivered to the shipyard and will return to operations in second quarter 2012. We completed three BroadSeis^TM contracts worldwide this quarter and the Oceanic Sirius began operations after its October 3^rd delivery on a BroadSeis^TM survey on the Avaldnes Field.
• Land contract revenue was down 17% year-on-year in $ (29% in €). Sequentially revenue was down 16% in $ due to operational difficulties on complex projects and the ongoing impact from the earlier unrest in North Africa and the Middle East. This contrasted with a strong North American market which is expected to extend through the 2012 winter campaign. 14 crews were in operation this quarter, including 4 Ocean Bottom Cable and Shallow Water crews in Indonesia and the Middle East.

• Processing, Imaging and Reservoir revenue was up 21% year-on-year in $ (7% in €). Sequentially revenue was up 7% in $ with increasing activity for high-end projects including BroadSeis^TM. During the quarter, we were awarded a dedicated processing center for Repsol.
• Multi-client revenue was up 6% year-on-year in $ (down 5% in €). Sequentially, revenue was up 15% in $ as prefunding followed higher Capex this quarter at $75 million (€53 million) and stronger levels of multi-client after-sales were sustained in the Gulf of Mexico, Brazil and the North Sea. The amortization rate averaged 54%, with 85% in land and 41% in marine. Net Book Value of the library at the end of October was reduced to $585 million (€433 million).
  • Multi-client marine revenue was up 8% in $. Capex was $29 million (€20 million) as we extended our North Sea data library in the Cornerstone area. In Q3, we started our first BroadSeis^TM Multi-Client survey in Brazil. The project will cover approximately 13,000km2 in the key pre-salt area between the Santos and Campos basins. Prefunding was $18 million (€13 million), a rate of 63%. After-sales worldwide were up 56% to $65 million (€45 million) particularly related to the Gulf of Mexico and Brazil.
  • Multi-client land revenue was up 3% in $. Capex was $46 million (€32 million) mainly dedicated to our Marcellus program with 3 crews operating in continued adverse weather conditions. Prefunding was $34 million (€24 million), a rate of 74%. After-sales were $2 million (€1 million).

¹ - Thevessel availability rate, a metric measuring the structural availability of our vessels to meet demand; this metric is related to the entire fleet, and corresponds to the total vessel time reduced by the sum of the standby time, the shipyard time and the steaming time (the “available time”), all divided by total vessel time.

² - Thevessel production rate, a metric measuring the effective utilization of the vessels once available; this metric is related to the entire fleet, and corresponds to the available time reduced by the operational downtime, all then divided by available time.

Group EBITDAs was $254 million (€178 million), a margin of 32%.

Group Operating Income was $98 million (€69 million), a margin of 12%.

Financial Charges

Financial charges were $32 million (€22 million):

• Cost of Debt was $40 million.
• Other financial items were positive at $8 million due to the favorable impact of currency translation.

Taxes were $27 million (€19 million) including the negative impact of $8 million (€6 million) of currency translation.

Group Net Income was $41 million (€29 million), including the $13 million post tax positive impact related to the Spectrum strategic agreement.

Net Income attributable to owners of CGGVeritas was at $37 million (€27 million) after the impact of minority interests of $3 million. EPS was €0.18 per ordinary share and $0.25 per ADS.

Cash Flow

Cash Flow from Operations

Cash flow from operations was $119 million (€82 million), up 45% year-on-year.

Capex

Global Capex was $179 million (€125 million) this quarter, up of 6% year-on-year.

• Industrial Capex was $104 million (€73 million).
• Multi-client Capex was $75 million (€53 million), up 22% in $ with a 70% prefunding rate.

Free Cash Flow

After interest expenses paid during the quarter, free cash flow was negative $66 million.

Third Quarter 2011 Comparisons with Third Quarter 2010

Year to Date 2011 Financial Results

Group Revenue

Group Revenue was up 14% in $ year-on-year (6% in €).

Group EBITDAs was $567 million (€400 million), a margin of 25%.

Group Operating Income was $136 million (€96 million), a margin of 6%.

Financial Charges

Financial charges were $146 million (€103 million):

• $104 million of recurring cost of debt.
• $42 million of one-off charges related to our debt refinancing in the first half of the year with $25 million in the first quarter and $17 million in the second quarter.

Group Net Income was negative at $34 million (€24 million) for the first nine months of the year, including $28 million post tax one-off charges.

Net Income attributable to owners of CGGVeritas was negative at $44 million (€31 million) after the impact of minority interests of $10 million. EPS was negative at -€0.21 per ordinary share and -$0.29 per ADS.

Cash Flow

Cash Flow from Operations

Cash flow from operations was $486 million (€343 million), up 54% year-on-year.

Capex

Global Capex was $448 million (€316 million), down 5% year-on-year.

• Industrial Capex was $283 million (€200 million).
• Multi-client Capex was $165 million (€116 million) down 30% in $ with 72% prefunded.

Free Cash Flow

After interest expenses paid, free cash flow was negative at $8 million for the first nine months of the year to be compared with a negative $213 million for the first nine months of 2010.

Balance Sheet

Net Debt to Equity Ratio

Group gross debt was up to $1.973 billion (€1.461 billion) at the end of September 2011.

Group net debt was up to $1.543 billion (€1.143 billion), compared to $1.536 billion at the end of 2010, with $430 million (€319 million) in available cash. Consequently, the net debt to equity ratio was stable at 41%.

Year to Date 2011 Comparisons with Year to Date 2010

Other Information:

• A French language conference call is scheduled today November the 9th, at 10:00am (Paris), 9:00am (London).

To take part in the French language conference, simply dial in 5 to 10 minutes prior to the scheduled start time.

- France call-in +33 1 70 77 09 22

- International call-in +44 203 367 94 59

- Replay +33 1 72 00 15 01 & +44 203 367 94 60

Code: 273902 #

• An English language conference call is scheduled today November the 9^th, at 3:00pm (Paris), 2:00pm (London), 8:00am (US CT), 9:00am (US ET).

To take part in the English language conference, simply dial in 5 to 10 minutes prior to the scheduled start time.

- US Toll-Free 1-877-317-6789

- International call-in 1-412-317-6789

- Replay 1-877-344-7529 & 1-412-317-0088

Code: 451944

Copies of the presentation and detailed financial results will be posted on the CGGVeritas website at www.cggveritas.com and can be downloaded.

These conference calls will be broadcast live on the CGGVeritas website at www.cggveritas.com and a replay will be available for two weeks thereafter.

About CGGVeritas

CGGVeritas (www.cggveritas.com) is a leading international pure-play geophysical company delivering a wide range of technologies, services and equipment through Sercel, to its broad base of customers mainly throughout the global oil and gas industry. CGGVeritas is listed on the Euronext Paris SA (ISIN: 0000120164) and the New York Stock Exchange (in the form of American Depositary Shares. NYSE: CGV).

The information included herein contains certain forward-looking statements within the meaning of Section 27A of the securities act of 1933 and section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties as disclosed by the Company from time to time in its filings with the Securities and Exchange Commission. Actual results may vary materially.

CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(1) Dollar amounts represent euro amounts converted at the exchange rate of US$1.350 per € on the balance sheet date.

______________

(1) Dollar amounts represent euro amounts converted at the average exchange rate for the period of US$1.417 per €.

(2) Stock-options and performance shares plans have an anti-dilutive effect at September 30, 2011; as a consequence, potential shares linked to those instruments are not taken into account in the dilutive weighted average number of shares, nor in the calculation of diluted loss per share.

______________

(1) Corresponding to the nine months ended September 30 in US dollars less the six months ended June in US dollars.

(1) Dollar amounts represent euro amounts converted at the average exchange rate for the period of US$1.417 per € (except cash and cash equivalents balances converted at the closing exchange rate of US$1.350 per € at September 30, 2011 and of US$1.336 per € at December 31, 2010).

(a) Includes general corporate expenses of €29.0 million for the nine months ended September 30, 2011 and €29.7 million for the comparable period in 2010.

(b) Includes (i) investments in multi-client surveys of €116.2 million for the nine months ended September 30, 2011 and €177.4 million for the nine months ended September 30, 2010, (ii) equipment acquired under capital leases for €11.2 million for the nine months ended September 30, 2011 and €9.9 for the comparable period of 2010, (iii) capitalized development costs of €9.6 million for the nine months ended September 30, 2011 and €15.7 million for the comparable period of 2010 in the Services segment. Capitalized development costs in the Equipment segment were €2.9 million for the nine months ended September 30, 2011 and €2.0 million for the comparable period of 2010.

(c) Includes multi-client survey amortization of €114.4 million for the nine months ended September 30, 2011 and €126.0 million for the comparable period of 2010.

(1) Dollar amounts represent euro amounts converted at the average exchange rate for the period of US$1.417 per € in 2011 and of US$1.323 per € in 2010.

(2) Dollar amounts were converted at the average exchange rate of US$1.417 per € for the Equipment segment.

(3) Dollar amounts for the Consolidated total were converted at the rate of US$1.417 per €, corresponding to the weighted average based on each segment’s operating revenues.

ANALYSIS BY OPERATING SEGMENT

(a) Includes general corporate expenses of €8.8 million for the three months ended September 30, 2011 and €8.1 million for the comparable period in 2010.

(b) Includes (i) investments in multi-client surveys of €52.6 million for the three months ended September 30, 2011 and €49.4 million for the three months ended September 30, 2010 (ii) no equipment acquired under capital leases for the three months ended September 30, 2011 and €9.9 million for the comparable period of 2010, (iii) and capitalized development costs of €4.4 million for the three months ended September 30, 2011 and €8.9 million for the comparable period of 2010, in the Services segment. Capitalized development costs in the Equipement segment were €0.9 million for the three months ended September 30, 2011 and €0.6 million for the comparable period of 2010.

(c) Includes multi-client survey amortization of €44.8 million for the three months ended September 30, 2011 and €45.8 million for the comparable period of 2010.

____________

(1) Corresponding to the nine months ended September 30 in US dollars less the six months ended June 30 in US dollars.

Contacts:

Investor Relations
Paris:
Christophe Barnini, +33 1 64 47 38 10
invrelparis@cggveritas.com
or
Houston:
Hovey Cox, +1 832 351 8801
invrelhouston@cggveritas.com

Source: CGGVeritas