Viridien Société anonyme (VIRI) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the CGG Q3 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to CGG. Please go ahead.

Thank you. Good morning and good afternoon, ladies and gentlemen. Welcome to this presentation of CGG's Third Quarter 2023 results. The call today is hosted from Paris, where Mrs. Sophie Zurquiyah, our Chief Executive Officer; and Mr. Jerome Serve, our Group CFO, will provide an overview of the quarter results as well as provide comments on our outlook. Just let me remind you that some of the information contains forward-looking statements 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 and good afternoon, ladies and gentlemen. Thank you for participating in the Q3 2023 conference call. We're on Slide 5 now. And before reviewing the quarter and market perspective, I'd like to start by highlighting the particularly strong ESG rating of CGG. After confirming our high MSCI and Sustainalytics rating, we received a silver sustainability rating from EcoVadis from their evaluation of a reduction of greenhouse gas emissions throughout the value chain. We prioritize ESG and are pleased to see this recognized in our performance. Macro oil and gas trends over the quarter have been fairly stable with increasing realization that all sources of energy will be required to optimally manage across the energy transition for decades to come. Our clients are trying to find the right balance between meeting the increased requirements for future production and managing long-term risk. To address this, we see progressively increasing interest in exploration, yet in lower time-to-market locations. As an example, in frontier areas that already have discoveries or invasive where infrastructure is already in place. This not only lowers risk but importantly, shortened cycle times. Good data and high-end imaging are fundamental to reduce exploration risk and maximize [ store ] production. We are in a favorable cycle for CGG, where quality and precisions increasingly matter and our clients, especially [ LOCs ], turn to best-in-class organizations capable of delivering integrated geoscience. I expect a continued trend of sustained higher levels of E&P CapEx, especially offshore and in the Middle East, both key markets for CGG. Looking at our Q3, we had an excellent quarter, both in terms of operational and financial performance. Geoscience revenue was $78 million, up 13% year-on-year, driven by innovations in higher imaging. Earth Data sales were $107 million, up 74% year-on-year, with solid after-sales at $52 million, up 21%. Prefunding revenue was $55 million with a 111 prefunding rate. Sensing and monitoring sales were $122 million, up 42% year-on-year. Overall, our Q3 revenue reached $307 million, up 42% year-on-year. Segment EBITDA was $109 million, up 41%, including our payment this quarter of $20 million to Shearwater to compensate to the nonutilization of their streamer vessel. Q3 net cash flow was positive at $63 million, and we had $370 million of liquidity at the end of September, including $9500 million of undrawn RCF. We'll change to Slide 7 now. DDE Segment revenue was $185 million in Q3, up 41% year-on-year with double-digit growth in Geoscience and stronger data sales. Profitability was solid despite the $20 million impact of nonutilization compensation fees to Shearwater for their steam investment. Slide 8. Geoscience's external revenue was $78 million in Q3, up 13% year-on-year, with growth coming from all regions. The Geoscience business remained solid, supported by strong demand and by our technology differentiation, particularly valuable for OBN module. Backlog is up 3% year-on-year, mainly due to delays in the award of large projects for MMC. We continue to increase quality and extract more efficiencies as our work becomes more and more data driven and less people intensive. Slide 9. In Geoscience, demand for our unique elastic way form inversion is very high, driven by North America and expanding worldwide. To support the ramp-up of our activities, we are recreating top talent from the best calls globally and remain highly adjusted because of CGG's culture, advanced technology and focus on innovation. Our new highly specialized U.K. HPC hub is coming online to support running the most fit intensive algorithms as demand for our advanced technology is picking up in the Eastern Hemisphere. The picture on this slide is a very nice example of CGG imaging added by CCUS project. You can see the subsurface in the shallow waters of the Gulf of Mexico. Thanks to our unique high-frequency TLFWI Velocity imaging technology, we can show the reservoir pressure differences across the fault and identify high-pressure areas which are not optimal for carbon storage. The range of our offerings in Carbon Sequestration is expanding with more projects targeting the monitoring phase, which is the most sensitive from a regulatory standpoint and offer longer-term business opportunities. As scope of involvement in minerals and mining covers a broad spectrum from exploration, such as a recent contract for Lithium mining in Mongolia, all the way to production where we provide services to assess mine stability. Overall, our quarterly revenue stream for these low carbon services is showing a positive dynamic as more companies acknowledge the need of high engine science as an example, to explore for new mineral deposits barriers in the subsurface that are needed for energy transition or to characterize reservoirs to CCUS and better understand their long-term behavior. We'll go to Slide 10 now. The most recent implementation of our Full-Waveform inversion algorithm bring the higher geological fidelity to success images. And this, together with our machine learning and AI techniques, is enabling a much more rapid and accurate interpretation of the data. As such, we are becoming increasingly involved in supporting activities that were historically performed exclusively by our clients and are expanding the scope of our services. Results are particularly striking with OBN data, and this is a key reason our clients are increasingly using OBN technologies together with the high-end imaging, even though it is multiple times more costly than streamer acquisition. Processing is more complex. And with our differentiation, clients tend to use our unique and leading technology to extract the most value from the OBN acquisition investments. The images you see on the slide are 5 years apart and the 2023 image is based on the most advanced acquisition and imaging technology. You can see that the details of the [indiscernible] are defined much more clearly, especially at the reservoir level. Slide 11. In early October, we opened our new U.K. high-performance computing hub in the Southeast England. The initial capacity of the center is 100 petaflops, bringing CGG's global total to just over 500 petaflops. The highly optimized environment, together with the hard use of 100% renewable energy reflects CGG's commitment to sustainably meet the massive computing demand required by high-end scientific and AI applications. I expect the trend of increasing our computing capacity to continue in the future, possibly accelerate as we not only support our traditional imaging business, but also our new and growing businesses in digital and data transformation as well as new verticals. We announced this morning another new client, LightOn, a pioneering artificial intelligence AI company to our emerging HPC business. Our highly optimized and sustainable AI and HPC solutions will help LightOn optimally evaluate and set large language model to support the industrial deployment of AI. Ultimately, our outcome-driven specialized approach, combined with our proprietary technology enables companies such as LightOn to accelerate and maximize the return on investment through evaluation, testing, scaling and commercial production. This unique HPC AI solution brings tremendous value to our internal and external clients. We'll move to Slide 12 with Earth Data. Q3 Earth Data revenue was $107 million, up 74% year-on-year. Prefunding revenue was solid at $52 million, bringing the prefunding rate for the first 9 months to 93%. And I am confident that we will finished the year above 90%. Earth Data cash CapEx was $50 million this quarter, down 31% year-on-year and after-sales were $55 million, up significantly year-on-year. Overall, we see a strong improvement in prefunding, and we have been more selective on projects this year to focus on shorter-term cash return. Slide 13. In Norway, we completed the Sleipner 1200 square kilometer OBN acquisition and the 2023 NBG East-West is now in the processing phase. We have several reprocessing projects ongoing across the globe to revitalize our library where clients are interested. This reflects the trend of renewed interest in more frontier areas where risk and time to market are lower. All these projects have industry prefunding. The [indiscernible] in Norway was closed on August 23, with 25 companies submitting this. Results will be announced in Q1 2024. In Brazil, the Permian offer bid run was launched in August, and we expect the big round to be closed in December. Uncertainty remains around the timing of the Gulf of Mexico lease sales, which typically trigger after sales. However, we expect clients might still decide to buy data as part of the year-end budget. Going to Slide 14. I'd like to highlight 2 new projects that started in Q4. The Selat Melaka 2D multi-client seismic program over the Langkasuka Basin offshore Malaysia. This project of 8,000 kilometers will take about 80 days to complete and is well prefunded. It is our first project in Malaysia, a country where we see increase in activity. Second project, we kicked off a large-scale CCUS screening study in Southeast Asia, covering Indonesia, Malaysia, Thailand and Vietnam. Interest around Carbon Sequestration growing in Asia, driven by both IUCs and NUCs. Now moving on to Slide 15. Our Q3 Sensing and Monitoring segment revenue was high at $122 million, up 42% year-on-year. Land sales at $58 million were driven mainly by deliveries of high number of vibrators. Marine sales at $45 million more than doubled year-on-year, supported by the sales of OBN to the Middle East. Sales from Beyond the Core were also up at $13 million, mainly from structural health monitoring project. The profitability of SMO was exceptionally low this quarter, but we expect the profitability of the SMO business and back to normal in Q4. Slide 16 for highlights. Q3 was another quarter of very high delivery, both inland and marine driven by stronger activity in North Africa and the Middle East. Given the success of our shallow OBN GPR300 that features the best sensor in the industry, we are launching the full range of products to address deeper water market. We are also progressing our range of sources to offer broadband and solutions that over any potential impact on the environment. Our MetaBlue product offers value-added solutions that complement our marine acquisition systems and make our clients more efficient, both in planning and acquiring this survey. In BTC, we are proud of our first commercial successes in Saudi Arabia for the identification and monitoring of sinkholes among railways. This is a multiyear contract, which covers an initial phase of analysis and subsequent monitoring. We are also active in the space of winter line monitoring. Let me now give the floor to Jerome for more financial details.

Thank you, Sophie. Good morning, good afternoon, ladies and gentlemen. Let me start with the income statement on Slide 18. As previously highlighted, Q3 was a solid quarter with our segment revenue growing 41% to $307 million, mainly driven by SMO higher equipment deliveries for land and OBN mega crews as well as a strong prefunding for our Earth Data business. Segment EBITDA reached $109 million, up 41% versus last year. This translates into 35% margin, including a negative impact of $20 million extra costs linked to the Shearwater agreement as well as dilutive business mix coming from SMO. Regarding segment operating income, Q3 was at $33 million or 11% margin. After IFRS 15 adjustment, Q3 operating income was $42 million. Net income for the quarter was positive at $8 million. Moving on to the cash flow statement on Slide 19. Q3 segment free cash flow was positive at $85 million after $31 million positive change in working capital. As mentioned during our Q2 results, the high level of SMO revenues booked in May and June, coupled with an inventory kept under tight control, did translate into a strong cash generation for SMO this quarter. Regarding Q3 year-to-date CapEx, they stand at $190 million, $20 million lower than last year. This is mainly coming from our multi-fund CapEx decreasing from $180 million last year to $142 million year-to-date, but with a prefunding ratio increasing from 38% last year to 93% year-to-date. This year, we have indeed been -- sorry, this year, we have indeed been more selective in the way we have invested into new multi-plan surveys, scrutinizing both the prefunding and cash-on-cash ratio as well as balancing the potential extra cost paid to Shearwater. Overall, the Q3 23 net cash flow was positive at $63 million. Looking at our full year guidance, we expect to reach net cash flow breakeven after change in working capital, and this despite a potential unfavorable euro dollar and euro GDP exchange rate. Moving on to Slide 20, the group balance sheet and capital structure. The group liquidity amounted to $370 million at end of September, including $95 million of undrawn RCF. Before IFRS 16, group gross debt was $1,197 million, and net debt was $921 million. Net debt is actually $60 million higher than as of December '22, mainly from the negative net cash flow over the 9-month period, $24 million of debt interest due end of September as well as circa $20 million of asset financing for [indiscernible] data center. After IFRS 16, gross debt was $1,283 million, and net debt was just above $1 billion at the end of September '23. Segment leverage ratio of net debt to EBITDA was 2.3 multiple at the end of September. Now I hand the floor back to Sophie for conclusion.

Thank you, Jerome. Now we're on Slide 22. This quarter confirms the positive market trends that we saw during the first 6 months of the year. A favorable cycle is clearly shaping up for our industry as clients continue to look for ways to optimize production from their producing fields and increasingly prioritize new reserves to meet demand. The cycle together with our technology differentiation has already driven the Geoscience business back to pre-COVID levels. In Earth Data, as our clients have started to increasingly prioritize the rebuilding of their portfolio of opportunities, the cycle is still emerging and has not fully materialized. Looking forward, we do see growing interest in exploration, which is positive for Earth Data. SMO, together with Geoscience, will benefit from OBN becoming a reference technology for optimizing the production of mature reservoirs as well as for lowering the risk of new field exploration opportunity. [ Demand ] business in SMO will continue to be driven by the national oil companies, especially in the Middle East, who are taking a longer-term view on the cycle. It is expected that timing of the Middle East mega-crews will create third quarterly volatility. In this context, our core businesses are doing well and should continue to strengthen in 2024, where we already have improved visibility. Our beyond the core business activities continue to mature, and we are gaining experience and progressively building our commercial business as we participate in more streams of the value chain and especially around low carbon and digital. Our new contract for HPC applied to GenAI strengthened our credential in this growing sector, and we expect continued success moving forward. Finally, we're very pleased to see our structural health monitoring business continued to grow with the successful expansion into the Middle East. In summary, we are on track to meet our 2023 objectives and continue to see a supportive outlook for our business moving forward. Thank you very much for your interest, and we're now ready to take your questions.

[Operator Instructions] We will now go to our first question. And your first question comes from the line of how is Papa Uplus from Bank of America.

Can you hear me?

Yes.

I have 4 actually, please. First one, could you perhaps give us an indication of working capital for the fourth quarter?

Harry, sorry. Can you repeat your question? I didn't catch it.

Yes. I was just wondering, could you perhaps give us an indication of working capital for the fourth quarter?

Oh, working cap for the fourth quarter. That's a question for you, Jerome.

Will be slightly negative, around $10 million.

Okay. And then on the SMO business, I appreciate margins here were exceptionally low this quarter. How should we think about it for the fourth quarter?

Yes. I did. Yes, interesting question. Again, that leads to some of the mix of [ deliveries ] we had this quarter. But what we did say is that we expect if you see where we are year-to-date, we'll probably stay around that number. So Q4 will be around the sort of average for the year year-to-date. So will you catch up and have the normal - back to the normal profitability in Q4.

And sorry, back to my first answer. It's -- as you know, the working capital depends very much on the lay itself, so the sales that we will be booking in November, December and especially our data after-sales, which have a tendency to be booked more in December time -- we -- I mean, what we just said is -- we ambition, as we already mentioned it in Q2 to have a cash flow generation breakeven, including working capital variation, although the guidance we have made earlier this year was excluding working capital.

Okay, Jerome. And then thirdly, I appreciate your liquidity target, I remember it was $150 million. This means that you currently have a large cushion over that. Would you perhaps consider using your 10% special with [indiscernible] or something like that.

It's been communicated in the past that we needed $150 million to operate minimum. And depending on our for 2024, that's something that will indeed we may consider paying down, reimbursing out of our debt.

And then finally, perhaps again on the capital allocation front, how should we think about M&A?

So the question is about where we are with M&A. Is that correct?

Yes.

As we keep cash for M&A, we don't have like a large M&A inside, but we're always optimistic like we had last year. So we like the bolt-on M&A in that range of $20 million that our technology adds to what we have. Right now, we're actually not working on any, but yes, but we feel organically some really can [ afford ].

We will now go to our next question. And your next question, go from the line of Mick Pickup from Barclays.

Good day, it's Mick here. Just a couple of questions. Can I just check the [ A&DDE ] that increasing cost base, that's all the Shearwater payment that we've seen in the quarter?

Yes. Thank you, Mick, and thanks for the question and for the benefit of everyone, that is the reason. And we've seen the design revenue per head continued to increase. We're actually increasing productivity. So actually, what hiding, if you want the increases of the good performance and profitability in those payments. And they've been significant enough that we've been flagging them for the last 2 quarters.

Perfect. That's clear. Next one is, can I just talk about on the Multi-Client business? Obviously, your investments appear to be running a bit lower than I think you were looking for after the year, and you mentioned that it's much higher prefunding. Just wondering how you balance that going forward with your clients wanting to rebuild their inventory of prospects. And clearly, that would suggest spending more going forward, but you're on the path of trying to spend a bit less at the moment. I wonder how this all balances out.

I mean what we look at, and this is not new, we look -- we manage Multi-Clients from the cash outlet, which is the -- basically how much CapEx we basically prefunding ratio way, right? So this is the CapEx minus the prefunding revenue and we look at how much we're sort of willing to invest, and that number has been over the years like a $15 million. This year, it's going to be less but we've been going all the way to $15 million. So we look at the project -- project by project on the merits of -- if we see prefunding or not and when that refunding might be coming. So this year, I would say, if we had a compelling project, we would have invested provided that we saw on the prefunding. And that's the reason that, in particular, there was a couple of projects in Norway that we decided to delay until 2024 because we knew and the client has told us they didn't have the budget this year. So we didn't see a point of putting more cash out and wait until next year to get the prefunding. So we're trying as much as we can to line up the investment with the prefunding just to manage the cash basically. So I don't think you should read much into the level of -- the level of CapEx, it just depends a little bit on client interest and quality of the projects. So I do expect and I hope we will invest, for example, in OBN in the Gulf of Mexico. So that might drive some of the CapEx up in 2024.

Okay. And then just finally, obviously, a low margin in Sensing and Monitoring and you're saying low-margin equipment, but 10% is a big step down from what 20-odd-percent you did last quarter. So can you just talk me through exactly what's driving it because you suggested [indiscernible] very low margin.

Yes, it is low, and we were very disappointed. I mean it's very simple. It's the vibrators -- so those are the vibrators and we've sold a large number of vibrators to Saudi Arabia. And that just -- they just typically the equipment and have seen those vibrates or trucks over the years, typically attract a lower margin, kind of lower value add if you want, and it's just an unfavorable mix this quarter. But the GPR products, for example, have the typical SMO high margins. So that's why it was just, again, a bit of a volatility it all happened in that quarter, but next quarter, we're confident that we will be back.

Okay.

We will now go to our next question. And your next question comes from the line of Baptiste Lebacq from ODDO.

Yes. Just a very quick question regarding the, let's say, potential merger between Exxon and Pioneer and Chevron and Hess in this context. Can you benefit into '24 of transfer fees if the mergers are done?

Yes. So Exxon, Pioneer is clearly land onshore U.S. And if you remember, we sold our land onshore data business last year at the end of last year. So we're not going to benefit any of that. Chevron, Hess. There is definitely a potential for transfer fees that will be, I would call them in the mid-range. If you remember, the OX1 was in a higher range. So we're sort of -- it's going to be significant, but not as significant, and that would happen at the moment of closing. And of course, it always depends on the appetite of the buyer to transfer the data. So that means we're in the process of identifying which data they don't have that likely they might want to transfer, but they could still make a decision not to transfer the data. So I don't have the final numbers until those conversations take place. But we should definitely Exxon, Pioneer has nothing on that side and in Chevron should be something. Just to remind everyone on the line, the U.S. land library last year generated around $18 million of after-sales. And so when you compare the year-on-year after-sales from 2022 to 2023, you have to take into account the quiet change.

Year-to-date?

Year-to-date [indiscernible].

And maybe still one question, if I can regarding M&A, let's say, 2 of your competitors or clients, it depends on where you stand, want to merge. What is your view? Can you share with us your view? Is it for you positive? Or are you afraid by, I don't know, bigger competition because they are by far bigger now than previously?

Yes, sure. So in terms of decline, I think generally speaking, this client is not necessarily good. Now it depends who is the buyer and who is the company that bought and how what our position with them. So there's a lot of consideration in that. But in general, we benefit when there's a larger client base for that general churn of MMBA amongst our client base, we will benefit in the short term. We're trying to feed -- but in the long term, I would rather have more clients. Now the good news is that there are some startups, private equity-backed companies that are creating some of the basins and the mature basins. And what we're seeing as well, which is also a good thing and new trend is NOCs are trying to go more international. So that kind of opens up and a from a new client base, if you want. The second one is on our competitor. Probably you're referring to the TGS PGS merger. I would say it's relatively neutral in the sense where it gets a big competitor -- a large competitor in the Multi-Client space. The Multi-Client is not really about scale, it is more positioned. And so in that sense, whether you're midsized like us or larger size, it doesn't make a huge difference. And then on the processing side, they were both quite small. So the combination remains small, so nothing on that side. And on the acquisition business, it's just moves from one player to another player, but it's the same business in the end. So that particular consolidation it's fairly neutral for us.

[Operator Instructions] We will now go to the next question. And your next question comes from the line of Jean-Luc Romain from CIC Market Solutions.

You had a very strong first quarter in SMO and a very strong year so far. How should we expect at the end of the year compared to the past quarter as good or even better? And how do you see from today 2024, you mentioned quite a few possibilities of mega crews? Do you see a higher 2024 ready for SMO?

Thank you, Jean-Luc, for the question and good evening. So in terms of year-end, I mean, I think we're going to be on the trend of a high quarter. Hard to give you the comparison on Q3 or Q1 and Q2, but every quarter has been fairly high above the $100 million mark, and that's kind of the range that we expect in Q4 results will be a very good year. But keep in mind that the business of SMO is composed of 2 revenue streams. If you want a certain recurring revenue stream, which is linked to our installed base, a replacement, if you want. And then there's those mega crews that create volatility from a quarter basis. So to date, we only have -- we have one mega crew identified in Saudi Arabia, I would call it a supermegacrew in the sense that it's equivalent to 2 traditional mega crews. So it's fairly significant. Now the -- if you remember this year, the bid was being delayed, then there's been a lot of delays. So right now, it seems like deliveries would be targeted to Q4 last year -- next year, meaning that it could easily slip from Q4 to Q in 2025, right, creating some volatility. So that's for the supermegacrew in Saudi Arabia. We have in mind as well some large crews in North Africa that we'll be pursuing. And on the node side, it looks like it might be more deeper water request, but it's not like associated to specific mega crew, it's just general increasing demand for OBN.

Our company is doing very [indiscernible] finally starting to replace streamers, which should be quite hard right now?

Yes. But we are always looking at the age of our streamer base. So the age of our streamer base is like somewhere around 11 years old. So you think that by now, they're definitely going to replacement cycle. What we're seeing is more -- I told you, the replacement cycle is taking a different shape than we anticipated in the sense that our clients are replacing portions of the streamer set. So they're doing a mix and match between old streamers and newer streamers. They're trying to refurbish as well. Now eventually, all these streamers will have to be replaced, and we're definitely seeing requests for quotation but not really a significant increase in orders. It is a still at that recurring level, not at that sort of forward placement level yet. I mean I would expect that at least that replacement level sits at the higher level.

We have one further question. And the question comes from the line of Guillaume Delaby from Societe Generale.

[Foreign Language]. One question for Jerome, basically, I would like to come back on the working capital dynamics to be sure to really understand the different moving parts. So that is the change in working capital after 9 months is minus $23.5 million. If I understood correctly, and we all know that forecasting change in working capital is highly difficult exercise. But I understand that it might be $10 million more. So let's say, minus $33 million at the end of the year. Your guidance at the beginning of the year was neutral free cash flow, excluding changes in working capital. And now you are saying natural free cash flow, including. So just to be really sure, is it -- I would say, given the fact that you are more or less implicitly forecasting a minus $33 million. So is it, I would say, some kind of increase in guidance, just to be sure?

Yes, let's cue that way because the guidance was excluding working capital and here we ambition to be breakeven or inclusive, so yes.

So okay. No, no. I just wanted to be sure because -- thank you. I turn it over.

Yes, Guillaume, just to add, when we -- as you know, it's difficult to plan for working cap. And that's why when we guided for the year, we wanted to exclude the working cap. But now we are fairly investing a year and have a good visibility on that and so we are more confident. But we always told you last quarter that our aim was always to have it all inclusive and that's the number we look at the net cash flow, including everything. And by the way, including at year-end around [ $60 ] million of payments to Shearwater between the $21 million [indiscernible] is exceptional, which is going to low and then the $47 million that will be included in the EBITDA. [Foreign Language].

We have another question. And the question comes from the line of Daniel Thomson from BNP Paribas.

Just one question on late sales. Obviously, we had improvement this quarter. But of course, we had $20 million sort of which was delayed from 2Q to 3Q coming in this quarter. So underlying are probably not as robust as you want it to be. I think you mentioned last quarter that you saw improvement in order intake trends related to this in the year-to-date figures. So can you just talk about order intake trends in the third quarter? How it's progressed and how it's looking over the first 9 months?

Yes. So I'll comment first on Earth Data. So I did so in terms of order intake and you see it through the prefunding, I mean the prefunding has been very sustained this year and that's the reason also is we've invested less in CapEx. But in terms of after-sales, I did mention that last quarter, we were looking at kind of thinking it's around that 10%-ish improvement year-on-year. But outside, keep in mind that exceptional transfer fee that we had last year and our footprint change of demand in U.S. So corrected for that, we're sort of trending 10% up year-to-date, and we look at it on a rolling basis, and that's pretty much where we are at. So it is improving, but not as much if you take as a reference, 15% -- 15%, 17% exploration CapEx offshore improvement in '23 over 2022. The Earth Data is sort of a little down, down from that macro trend, if you want. And that's when -- where the conclusion I said, well, producing is fully sort of materializing, where for Earth Data were somewhat lagging. And I think the difficulty of Earth Data, its clients are struggling with the projecting themselves beyond, say, 2035, 2040. And they're really looking for projects that they think can become material and have an impact on production in the shortest term possible. But at the same time, we're seeing on more demand for our data that is not in the core basin than we saw when we're launching the project in Malaysia for example. So we're doing and we're going basically what the prefunding is. So in general, correcting for those exceptional, it's trending up, but not as high as the macro number or data. But in Geoscience, we're definitely trending along those lines of the [ source ] and macro trends --and SMO as being difficult to project because it has that volatility of specific deals that could be positioned in a quarter or another or even from a year to another year. I think I mentioned as well somewhere that perhaps on the backlog of Geoscience and the reason why it was that 3% year-on-year is because there are 2 large contracts for NOCs that are pending signature and that we haven't put in our backlog. So they're fairly significant that we had them in there, we would see the kind of significant increase in backlog year-on-year. So we're not concerned that -- that Geoscience is definitely on that uptrend.

Okay.

Sure.

here are currently no further questions. I will hand back to CGG for closing remarks.

All right. Well, thank you very much. Thank you for the lots of questions and really good questions, and thanks for your time and your interest, and we'll be in touch in the next few days or weeks. Thank you, again. Good evening.

Thank you, and good evening.

This concludes today's conference call. Thank you for participating. You may now disconnect.