Viridien Société anonyme (VIRI) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the CGG's Third Quarter 2020 Results Conference Call. [Operator Instructions]. I must advise you that this conference is being recorded today, Thursday, 5th of November 2020. I'd now like to hand the conference over to first speaker today, CGG. Thank you. Have a great day.

Thank you. Good morning, ladies and gentlemen. Welcome to this presentation of CGG's Third Quarter 2020 Results. The call today is hosted from Paris where Mrs. Sophie Zurquiyah, our Chief Executive Officer; and Mr. Yuri Baidoukov, the Group's Chief Financial Officer, will provide an overview of the third quarter 2020 results as well as provide comments on our outlook. As a reminder, some of the information contains forward-looking statements, including, without limitation, statements about CGG plan, strategies and prospects. These forward-looking statements are subject to risks and uncertainties that may change at any time, and therefore, the actual results may differ materially from those that were expected. Following the overview of the quarter, we will be pleased to take your questions. And now I will turn the call over to Sophie.

Thank you, Christophe, and good morning, ladies and gentlemen, and thank you for participating in this Q3 2020 conference call. Our presentation will cover our third quarter 2020 operational and financial results. And I would like to start with a quick update on COVID-19. Our focus has been on maintaining business continuity and we are fortunate that through our IT expertise, combined with the CGG HPC cloud that supports our geoscience business, most of our employees have been able to work effectively from home. Over the last few months, we have progressively brought back staff into the office. And overall, we've had a very limited number of confirmed COVID-19 cases. We've had no fatality. And in addition, there has been no cross-contamination at our sites, thanks to strict social distancing, wearing of masks and the overall protocols that we put in place. With this, along with the strong business continuity of our Geoscience and Multi-Client business, our manufacturing sites have, in general, been able to maintain production and meet client demand. Moving on to Slide 4. Looking at the market. In Q3, crude oil prices stabilized, but the COVID-19 pandemic is still dramatically affecting global economies and severely suppressing our business environment. In 2020, we have seen some major strategic shifts from the integrated oil companies, especially in Europe, making firm commitments to decarbonize portfolios, increase renewable power generation, de-gear balance sheets and support dividend commitments. Yet, most analyst reports project oil and gas as a fundamental source of energy through the energy transition and for a long time to come. As the required investments to maintain productions are delayed, this will eventually create an unbalance that will need to be addressed. During Q3 2020, CGG markets stabilized. However, visibility remains low with the second wave of lockdowns in Europe and the evolving geopolitical landscape in the U.S. We will monitor the situation closely and assess the implications. But at this stage, I do not see clients making additional CapEx cuts. Geoscience and Multi-Client markets are mainly driven by the large independents and NOCs, which have remained focused on their core business of producing oil and gas. IOCs are largely still reorganizing, cutting headcount and right now in their 2021 budgeting process. I expect commercial activity with them will remain low through November. However, there should still be some year-end budgets available for data and software purchases. In general, as I expected, as expressed clearly by our clients, they are retrenching in their core areas, and they're prioritizing CapEx to the low-risk, highest-return projects. In this environment, our Geoscience Imaging technology plays a key role as it enables our clients to make surgical choices to assign their CapEx. Reprocessing, in particular, is a cost-effective alternative to new data acquisition, and we have seen the balance between processing and reprocessing shift towards reprocessing. Our equipment business is also benefiting from NOCs sustained activity in land in North Africa, Middle East, Russia and India. And more recently, in October, 2 of the 3 land 3D mega-crews in Saudi and 1 land 2D crew have been awarded to geophysical contractors. CGG's strategic rationale remains strong. Our 3 differentiated businesses are well positioned with the best technology and increasingly working together to best serve our clients and to develop unique solutions. In parallel, CGG is reducing costs and quickly adapting to our clients' new activity levels, while preserving our differentiated capabilities as activity is resuming. In addition, we continue to advance our new initiatives focused on leveraging our core capabilities in new step-up markets and following our clients in support of the energy transition. Moving on to Slide 6. Overall, Q3 was similar to Q2. Our Q3 revenue of $199 million was sequentially stable with GGRs $150 million, driven by increased Multi-Client revenues and Equipment at $50 million. Group adjusted segment EBITDA before $28 million nonrecurring severance costs was $80 million, up 6% sequentially and with a 40% margin. Group adjusted segment operating income before $30 million nonrecurring charges was negative $4 million, not far from breakeven and slightly better than our Q2 adjusted segment operating income. Ahead of increasing Q4 sales, especially in Equipment, our change in working capital was especially high at minus $37 million as we started to ramp up inventory of land products. CGG also consumed this quarter $26 million of exceptional cash costs related to our saving plan, essentially severances. After the $37 million of negative change in working cap and $26 million of nonrecurring charges, the net cash flow this quarter was negative $92 million. This puts our liquidity at $465 million at the end of September, which allows us to operate comfortably. I will now cover our Q3 2020 operations by reporting segment on Slide 7. Overall, GGR top line increased sequentially 4% to $150 million, with an adjusted EBITDA margin of 57%. For the first 9 months of the year, our year-on-year revenue drop of 28% is consistent with our clients' overall E&P CapEx reductions. While CGG has an important role to play in exploration, the majority of our work comes from development and production activities. OPINC before nonrecurring charges was positive at $10 million, up 7% sequentially. Moving on to Geoscience with the Slide 8. Geoscience total production was $111 million in Q3, sequentially stable with higher internal production for our Multi-Client projects. Business remained solid in Europe, Africa and Middle East and Latin America. Commercial activity rebounded in Q3 after a very low Q2, and backlog only decreased by $10 million this quarter to $204 million at the end of September. We have been awarded several significant contracts in October, resulting in an increasing Geoscience backlog. We are introducing a new quarterly KPI dedicated to our Geoscience personnel, which we believe is relevant. Compute power, which we reported earlier as an enabler, but the unique profile of people at CGG makes the difference. The Geoscience division at the end of September was around 1,900 employees. 15% are dedicated to R&D and 55% to production, which is essentially the data processing people. 27% of our production and R&D employees have a PhD. Now on to the operational highlights with Slide 9. Geoscience activity remained resilient in Q3, driven by sustained activity in both our large imaging centers and dedicated centers, which offset reduced activity in our smaller processing centers regionally. Our GeoSoftware business was successful in retaining maintenance revenue, which also supported our performance. Q3 total production was down 13% year-on-year and 2% sequentially. The business continuity of our Geoscience division has been excellent. All projects throughout the pandemic were delivered on time with excellent quality. Cash preservation and profitability has been and continues to be the key focus. Geoscience has been able to quickly adapt to low demand and we continue to reduce costs as required. CGG's Geoscience leading technology continues to be recognized by our key clients and we are consistently rated #1 in their supplier evaluations. We continue to see demand for high-end services that solve complex problems in difficult subsurface environment. On Slide 10. As of recently, and in order to provide more visibility and clarity into our Geoscience business, we have been increasingly sharing publicly via press releases our technology innovations and commercial achievements. Our technology advances are impressive, and clients rely on us to resolve some of their complex challenges. Recent commercial awards range from a geothermal resources study for a major client and several high-end reprocessing projects to cloud computing software and data management. We will continue to update you in the future. Let's move on to Multi-Client with the Slide 11. In the last 2 years, Multi-Client made a conscious effort to increase focus in development and production areas and use much more caution in frontier basins as they were believed to be less robust. This was a very successful and timely decision. Our Multi-Client library today is very well positioned in proven, developing and mature sedimentary basins. These unique positions in key basins globally provide us with visibility and opportunity in Brazil and Norway for 2021. We have opportunities to extend our footprint and reprocess our data by leveraging advances in technology. In Q3, Multi-Client revenue increased 20% sequentially, driven by solid prefunding and increased aftersales. Prefunding revenue was $39 million in Q3, a 68% prefunding rate. Aftersales increased sequentially to $34 million, driven by Brazil and Gulf of Mexico. On Slide 12. In Multi-Client, we also saw excellent continuity. Despite COVID-19, all of our operations in several countries progressed uninterrupted. We had 5 Multi-Client projects in acquisition during the quarter, including the Central Basin Platform, a land survey that was completed this quarter. Along with this, we also had 4 well prefunded Multi-Client programs offshore, Nebula in Brazil, a 17,700 square kilometers program in the Santos Basin, which is attracting a high level of interest from clients. We announced last week Phase 2. Phase 2 will cover approximately 10,000 square kilometers on the northern side of the survey area. CGG's industry-leading subsurface imaging center in Rio de Janeiro, will employ state-of-the-art processing technology to eliminate the pre-salt events. This quarter, we also completed the 8,700 square kilometer Gippsland program in a mature producing base in offshore Australia. The third program is an ocean bottom node survey in the Cornerstone area of the U.K. North Sea that we are acquiring in partnership with Magseis. And finally, we extended our North Viking Graben data library in Norway and validated the value of a second azimuth in that area. Looking at the rest of the year, we expect 2020 Multi-Client cash CapEx of around $225 million with a solid prefunding rate of more than 75%. On to Slide 13. In addition, we also commenced this quarter multiple reprocessing projects. The first is the reprocessing of our Multi-Client StagSeis marine survey in the GOM. The first phase of this reimaging project is bringing new light to the data and major improvements in key areas. Clients are very interested in this as it has the potential to substantially de-risk this prolific area. We also launched our Walker Ridge program, a reprocessing program in the central GOM covering 300 OCS blocks, which is around 7,000 square kilometers, and that's what's shown on this slide and it's leveraging all of our existing data sets and the latest technologies. Several clients already joined the project given the attractiveness of the area. And in general for reprocessing project, we look for opportunities where we can create significant uplift by new technology and bring to the market more cost-effective and quicker alternatives than new acquisitions. With our unique processing technology, we can extend the life of Multi-Client data sets by rejuvenating legacy fully depreciated data. On that picture, you can clearly see the improved definition of the structures below the salt on images as well as the continuity of the layers that were impossible to see before. Moving on to Equipment now with the Slide 14. Our business in equipment continued to be supported by the large installed base that we have in land and marine, and in particular by NOCs that have continued with their land exploration and development projects. This quarter, Equipment segment revenue was down 14% quarter-to-quarter at $50 million due to the continued reduced demand for land equipment and the general lumpiness of sales in equipment, the very weak marine market and delays in some deliveries due to the pandemic situation in different countries. Marine equipment sales remain at the lowest levels as the total market fleet has been reduced to 14 3D vessels, and geophysical contractors continue to try and extend the use of their existing streamers past the typical life span. At this time, half of the active 3D fleet is equipped with their cell equipment. Equipment segment EBITDA was at breakeven, which shows our ability to adapt our structure to the market cycles. Moving on to Slide 15. During the quarter, Equipment delivered over 50,000 508 cross-tech channels, mainly to India and Russia. Sercel also delivered its first node land WING system in North America, which is very positive, demonstrating that we have a competitive land node product. After the award of the seismic cruise in Saudi Arabia, we are in advanced discussions with the geophysical companies and are encouraged by the potential outcome. Demand for Marine equipment, both streamers and nodes, is expected to remain low throughout 2020 and into 2021 as geophysical contractors stack more vessels and try to reuse old streamers and extend their life as long as physically possible. In this context, due to the downturn in the oil and gas industry triggered by the COVID-19 pandemic, CGG and Shearwater have jointly agreed to suspend negotiations around creating a marine streamer equipment JV, until visibility in the streamer replacement cycle improves. We are committed to continuing our mutually beneficial cooperation. In our non-oil and gas segment, we had a successful joint test with our partner for Sercel's new structural health monitoring node prototype designed for the growing high-end infrastructure monitoring market, and we're now preparing for the commercial launch. I will now give the floor to Yuri for more financial highlights.

Thank you, Sophie. Good morning, ladies and gentlemen. Looking at consolidated P&L for the third quarter of 2020 on Slide 17, our segment revenue from the new profile amounted to $199 million, stable quarter-on-quarter. GGR contribution was $150 million, a 4% increase quarter-on-quarter, with 75% weight. Geoscience revenue was $77 million, a 7% increase quarter-on-quarter. And Multi-Client sales were at $73 million, increasing 18% sequentially on higher aftersales. The Equipment revenue contribution was $50 million, down 14% quarter-on-quarter, with 25% weight. Segment EBITDA was $52 million, down from $68 million in the second quarter of 2020. Adjusted segment EBITDA was $80 million before $28 million of severance cash costs with 40% margin and up 6% sequentially. Segment operating income was negative $38 million, up from negative $53 million last quarter. Adjusted segment operating income was negative $4 million before $34 million of nonrecurring charges, up from negative $5 million in the second quarter. IFRS 15 adjustment at operating income level was negative $5 million, and IFRS operating income after this IFRS 15 adjustment was negative $43 million. Cost of financial debt was $34 million, including a noncash peak component of $12 million. Net loss from continuing operations was $88 million, and adjusted net loss from continuing operations was $47 million before $41 million of nonrecurring charges. Net loss from discontinued operations was $5 million, and group net loss was $93 million. Moving to Slide 18. In Q3 2020, segment operating cash flow was negative $12 million, including a significant negative change in working capital of $37 million on increased equipment inventories for upcoming higher sales in Q4 and higher Multi-Client sales in September. Segment operating cash flow also included $7 million of paid severance costs. Our Multi-Client cash CapEx of $58 million was down 20% quarter-on-quarter and was prefunded at 68% on the back of solid portfolio of ongoing well prefunded projects. The industrial cash CapEx and R&D costs in our Geoscience and Equipment businesses were stable at $13 million. Q3 segment free cash flow, including $37 million significant negative change in working capital and nonrecurring severance costs, was negative at $59 million this quarter. Q3 cash cost of debt was $7 million, and Q3 net cash flow from discontinued operations was positive $8 million this quarter. Q3 cash costs related to the implementation of CGG 2021 Plan were at $19 million, and cash costs related to new severance was $7 million. Overall, net cash flow this quarter was negative at $92 million. Looking at our group balance sheet and capital structure on Slide 19. Our liquidity decreased to $465 million at the end of September 2020 and remains solid. Following the exit from acquisition business, CGG, with its new asset-light profile has lower capital intensity. With no debt maturities before 2023, and $150 million required to run the business, our current liquidity levels allow us to securely navigate through the current market environment. At the end of September 2020, our gross debt was at $1,374 million or $1,213 million before IFRS 16 with the following breakdown: $628 million first lien USD and euro bonds due in 2023; $559 million, secondly in USD and euro bonds due in 2024; $26 million other items, mainly accrued interest; and 161 million lease liabilities, including $41 million of Galileo financial lease and $120 million of operating leases under IFRS 16. Looking at our financial leverage ratios at the end of September 2020, net debt to shareholder equity was at 75%, and segment leverage before IFRS 16 was at 1.9x net debt to last 12 months EBITDA. At the end of September 2020, our capital employed was at $2.17 billion, down from $2.3 billion at the end of 2019. Net working capital after IFRS 15 was up at $168 million. Goodwill was down at $1.18 billion, corresponding to 54% of total capital employed. Multi-Client library net book value after IFRS 15 was at $499 million, including $416 million of marine and $84 million of land net book value. Other assets were $472 million, including $279 million of property, plant and equipment, down from $300 million at year-end, and $167 million of IFRS 16 right-of-use assets, of which $41 million related to Galileo financial lease; $156 million of other intangible assets, stable year-on-year; and $37 million of other noncurrent assets, up $7 million from 2019 year-end mostly from Shearwater vendor note of $19 million. Other noncurrent liabilities were at $144 million, including $93 million of noncurrent portion of liabilities related to capacity agreement with Shearwater, split between $45 million related to off-market components and $48 million to idle vessel compensation. Shareholders' equity was at $1.26 billion, including $41 million of minority interest mainly related to JunFeng JV. Moving to Slide 20. We continue to operate in uncertain times and turbulent environment. This is why we stay focused on what we can control by significantly reducing our cash costs and CapEx, continuing to generate cash from operations and preserving our liquidity. Our CapEx guidance remains unchanged, as was communicated back in May. We're also well on track with our cash cost reductions, mainly coming from adjustments to our headcount across the world, with half of them implemented by the end of Q3. Now I hand the floor back to Sophie for her concluding remarks.

Thank you, Yuri. I'd like to reiterate that in Q3, we saw the CGG market stabilize. Barring any new volatility from the U.S. political backdrop and lockdowns in Europe, CGG's revenue appears to have reached the bottom. At current, we also anticipate a typical seasonality pattern in Q4 with higher Multi-Client sales and increasing Equipment deliveries. During the first 9 months of 2020, we have been able to maintain or increase our market share in our core businesses. Thanks to our unique technology, which remains key to our clients for improving their understanding of the subsurface and supporting the prioritization of their energy investments. Our technology, which is essential for step-out exploration, development and production, combined with our focus on mature basins, provides CGG with a unique value proposition to our clients. We are progressing well in the development of new offerings in adjacent fields, including structural health monitoring, carbon capture, securitization and storage, geothermal and environmental geoscience. I'd like to conclude by confirming that while we are preserving our ability to capture the market recovery and achieve stronger financial performance in 2021, we are well on track with the implementation of the cost reductions that are required to align CGG with a rebased level of activity in the industry and to protect our cash going forward. Thank you very much for your interest, and we're now ready for your questions.

[Operator Instructions] Your first question comes from the line of Nick Konstantakis from Exane.

One for Yuri to start with. I mean you have a decent amount of cash on the balance sheet. Are there only options you have around your debt to retire any part of it? And are you considering any other usage for this cash? And then I guess related to that, what are your current thinking around refinancing? What are the conditions you are seeing in the market right now? I appreciate we're coming out of a very difficult period so any color would be appreciated. And then one for Sophie. You follow the -- your client results quite closely. You speak to them every day. It seems to be the refocus towards more mature basins and less on frontier plays well with the repositioning you guys have done. I appreciate it's quite early to ask this, but when you think about a few years out, what do you think would be a good run rate Multi-Client sales when you think about the mix of the business going forward?

Okay. Yuri, let's start.

Good morning, Nick, and thank you for your questions. You're absolutely right about our level of liquidity. Unfortunately, with the current covenant package that we have around the first and the second lien bonds, and to remind you, the current capital structure, of course, was the result of CGG exiting from bankruptcy and restructuring in February 2018. So these covenants prevent us from extinguishing the -- or at least trying to reduce the second lien bond, which is the most expensive with its big component of 8.5%. This is yet another reason and another driver for us to refinance both the first and the second lien bonds in the near future. Now there is one element in relation to the second lien bonds, and this is the call premium of 12.5%, which drops to 0 in February of next year. So that results in significant reduction in cash that we will need to be upfront. And with that, our objective remains the same. It remains unchanged. So we are working on preparing for potential refinancing of both the first and the second lien bonds as early as March next year. And that work includes ensuring that we'll be in a position to not only publish our annual results but also publish our URD or annual report at the same time. And in this refinancing exercise -- or another objective, of course, will be to move to the normal covenant package, and no longer have restrictions similar to what we have currently, unfortunately. Now that being said, of course, the -- this will depend on the market environment early next year. Now if we look at our first lien bonds as they're trading today, they have been stable at a slightly above par, which is a good indicator that in the current environment, we should be -- even in the current environment, we should be able to tap into the markets. But again, we'll wait until March because of this $67 million to $68 million of call premium associated with the second lien bonds, which will become 0 in February of next year. And I will pass it now to Sophie to answer your second question.

Yes. Thank you. Hi, Nick. The -- so Multi-Client revenue is a mix. I mean you have to understand where the revenue comes from to be able to respond to your question. So there are 2 revenue streams. One is the pre-funding, which is highly correlated to the CapEx. And then the other one is the aftersales, which is selling the data that we have on the shelf. So obviously, that revenue stream, if you look at CGG past revenue, was almost equivalent between the pre-funding and the aftersales. And again, that prefunding was linked to the investment that we were making. So I think the future -- so that's one point. So the revenue that we'll take will depend on our ability to invest or our willingness to invest and our ability to find good projects. And then the other element that you have to consider is the appetite from the other players in the market and the relative market shares that CGG will have in the future. If you look at what's happened more recently, we've increased our market share a bit naturally with the fact that we've invested less in those frontier areas. So the market -- the total market for Multi-Client was around $2 billion to $2.5 billion pre-COVID-19. And that market is reduced by around, let's say, 30%, so somewhat in line with the exploration and production CapEx. I would think that typically, as things improve, we see a recovery first in the aftersales. And if you look longer term, I -- my ambition would certainly to bring back the Multi-Client revenue closer to where we were, which is around that $500 million mark, with all the caveat that I explained that it depends on the CapEx, it depends as well on what other players will do. Does that answer your question?

Yes. Yes. I was going for the late sales. Thank you.

And your next question comes from the line of Kevin Roger from Kepler.

Yes. I hope that you are doing well. The first question would be related to the movement in the working cap that you faced this quarter. So you mentioned that this is basically related to future Equipment sales. I was wondering if you can precise us, let's say, a bit the environment around those sales? And let's say, that is it related to the Saudi Aramco mega-crews that you were expecting? Does it mean that you will have deliveries in Q4 and that based on that, what will be the impact on your Q4 sales, please? So if you can precise us the environment around this movement in working cap. And the second question is more broadly, Sophie, it seems that based on the comment that you did during the presentation, it seems that maybe Q3 was, let's say, the low point in terms of revenues and margin because you seem to expect, if I well understand, the kind of improvement in the coming quarters. Can you maybe give us a bit more information in terms of dynamics that you expect in terms of top line and margin, let say, for the next maybe 2 to 3 quarters in terms of dynamics, please?

Thank you, Kevin. Bonjour. First on the equipment sales in Q4, typically in equipment, we build based on a manufacturing plan, because the clients come in and expect deliveries within 3 months typically, 3 to 4 months, where the manufacturing cycle is longer than that. It is somewhere around 9 months. So we cannot wait to get the order to start the manufacturing. So this is like the way equipment works. And we've been building equipment in anticipation of stronger deliveries in Q4, and that has definitely had an impact on our inventory. But I want to say as well that this inventory that we're building is standard equipment. So this is what we sell to India, to Russia, to Middle East. And yes, we are expecting to -- that we are building based on our expectation to be selling equipment to Middle East in Q4 and in Q1. But it is -- we're still in negotiation, and it is a bit early to share more precise news at this point in time, although I did mention that we're having encouraging conversations. So that's the one on the equipment. Now I did mention that we're at the low point. You've seen the clients have said that they're reducing their CapEx of 30%. And basically, what I'm saying is that that's where we are. And then I do expect that we'll be staying in that environment, probably first half, if not the whole year in 2021, which means that going into Q1, we'll see a Q1 rebased to that new environment compared to the Q1 last year. So we had that -- we sort of rebased at that low point, and I do expect we'll see a similar environment in the next few quarters. Keep in mind, when you look at the margins that it is highly dependent on the mix between the 3 businesses. We've got 3 businesses that have very different EBITDA margins between the Multi-Client very high EBITDA margin, the Geoscience somewhere in the middle, and then Equipment with lower EBITDA margin. So that aggregate EBITDA will highly depend on the mix. I hope that answers your question. But I do definitely see that we're at that $200 million level for the quarter. I do not expect moving forward that we'll get lower -- I mean significantly lower from that number and that we should be seeing improvements. But again, the margin will depend on the mix.

[Operator Instructions] Your next question comes from the line of Christopher from Carnegie.

Yes. This is Christopher Møllerløkken from Carnegie. Regarding the equipment you are building on the balance sheet. Are you saying that you're building this on speculation? Or are you confident that you will be able to sell this? And if so, what do you expect the working capital development to be in fourth quarter and first quarter next year?

Yes. So If I'm -- like I said, we always -- it's not like something new that we're doing now. It has always been the model of that equipment business. There's been -- there is a close conversation or discussion between the salespeople and then the manufacturing that drives our manufacturing plans. So if we are building this equipment or increasing our inventories that we have high hopes that we'll be able to sell that equipment. And again, it is standard equipment. So it's not like we're building custom-built equipment for a particular client or project. It is standard equipment. So yes, I mean, the answer is that we have high hope of doing those sales. Otherwise, we wouldn't be building and spending working cap for that. Any...

Regarding the outlook -- yes, and good morning, Christopher. Regarding the outlook or the dynamics of change in working capital. So this quarter, one element was inventory enter sales or the equipment sale. But the other element was also increasing revenue in Multi-Client as well. So that was kind of $2 million contributing factors to the negative change in working capital. Looking at the fourth quarter, what we expect, we -- because the delivery of the equipment most likely will start towards the end of the quarter, that will translate in the increase in accounts receivable. But then, of course, subsequently, these receivables -- and by the way, this will continue -- sales will continue into Q1 as well. But of course, it's -- these receivables will be collected in the first half of next year. And secondly, as Sophie has mentioned, we still do hope that there will be a so-called Christmas aftersales on the Multi-Client side. Of course, the magnitude of them will not be the same as last year, but we do have some early indications from some of the customers that they didn't spend even their reduced budgets so far. So -- and they will need data to feed into their Geoscience teams. So with that, there will be the same phenomena on the Multi-Client side as well, where basically Multi-Client receivables will go up as well. So hence, there will be also negative change in working capital. But of course, again, this will be collected in the first quarter of 2021. I hope we answered your question.

Yes. With regards to the nonrecurring charges in Q3, could you say how much of that was cash costs? And then the second question would be, could you also provide some guidance for charges going forward, both for Q4 and then for 2021? And how much of that will be cash?

Sure. So the -- when it comes to cash costs in the third quarter, in relation to costs related to exit from acquisition business, what we call CGG 2021 Plan, we have $19 million of cash costs this quarter, and in Q4, it will be around $12 million. So with that, the total cash cost for the year, will stay around $80 million as we kind of guided previously. Now there is also this new severance costs that we're incurring on the back of reducing our headcounts and reducing our cash costs. And that amounted to $7 million of cash severance payments in the third quarter, and we anticipate in the range of about $5 million in Q4. So with that, the cash sequence for new severance will be around $15 million overall in 2020. And the remaining $35 million will be paid mainly in the first half of next year because we have -- we're continuing basically with our headcount reductions. So that is the sequence, Christopher. Yes, but of course, again, those -- this severance costs -- new severance costs will generate significant cash cost savings, again, as we discussed during our second quarter call and we reiterated it in our adaptation plan, we'll be reducing our fixed cash costs by $90 million annually.

Our next question comes from the line of Philipp Duffner from Aurelius.

I just had 2 questions. The first one is on the cash flow statement. It shows a $5.2 million repayment of long-term debt. I was wondering which debt you repaid during the quarter? And then in press release, you mentioned you're making progress towards adjacent fields. Could you talk a bit about like how large the revenue potential for these adjacent fields is in the future?