Viridien SA

OTC:VIRDY

Earnings Call Transcript

[Operator]

Good day and thank you for standing by. Welcome to the CGG First Quarter 2021 Results Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to CGG management. Please go ahead.

[Christophe Barnini]

Yes. Thank you. Good morning, ladies and gentlemen. Welcome to this presentation of CGG First Quarter 2021 Results. The call today is hosted from Paris where Mrs. Sophie Zurquiyah, our CEO; and Mr. Yuri Baidoukov, our CFO will provide an overview of the first quarter and of the full year 2021 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 plans, strategy and prospects and 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 for the presentation of our first quarter results. Thank you.

[Sophie Zurquiyah-Rousset]

Thank you, Christophe. And good morning, ladies and gentlemen and thank you for participating in this Q1 2021 conference call. CGG was founded in 1931 and we are celebrating this year 90 years, and you'll see us communicate on 90 amazing years through the year.So I'll start on Slide 5 with general comments on our first quarter 2021. We experienced a continuation of the same COVID early recovery market conditions that we saw in late 2020. These were marked by low but fairly stable industry spending. On one hand, the majors maintained their capital discipline while national oil companies and large independents remained more active. As economies continue to recover from the pandemic, which is expected to be more gradual and complex than the downturn, I believe we will see the need for our clients to increase their activity to not only catch up on the work postponed from 2020 but also to compensate for the depletion of their existing reservoirs. In that context, CGG's high-end technology will be a key component of the value chain moving forward. Our Q1, as anticipated, was a slow quarter following the historical low levels of 2020, with soft GGR activity offsetting excellent performance in equipment. Our 3 businesses of Geoscience, Multi-Client and Equipment all have different business models and drivers. Geoscience performed per our expectations based on the backlog that they generated in Q3 and Q4 of last year. Multi-Client performance depends on the level of ongoing multi-client programs, and that's the prefunding and on the commercial sales of our existing data library, that's the after sales. The first quarter was soft with only 1 active project in Brazil and slow after sales, but we did start to see an increase in constructive conversations for both new projects and after sales during the quarter as oil prices strengthened and have maintained at higher levels than expected going into the year. Equipment was very busy in Q1, shipping orders to the Middle East, following strong activity around the end of 2020. Also during the quarter, we completed our restructuring plan with the successful refinancing of our debt. And going forward, this substantially reduces our interest rates and provides us with the flexibility to repay portions of the debt as our cash flow generation would allow. With this, we can now focus on our business and strategic developments with a normalized capital structure. Moving on to the next slide for the Q1 2021 financial highlights. So our Q1 revenue of $213 million was down 21% year-on-year from a high pre-COVID first quarter in 2020 with an unusual mix of business as Equipment represented 53% of our total revenue. Group adjusted segment EBITDA was $39 million, with a 19% margin, mainly due to the business mix. Segment free cash flow, including $73 million of positive change in working capital was $60 million, and the net cash flow this quarter was positive at $28 million. I'll now cover our Q1 2021 operations by reporting segments. The GGR segment revenue was low this quarter at $100 million, down 49% year-on-year, which resulted in a 31% adjusted EBITDA margin. Moving on to the Geoscience business indicators. Q1 Geoscience external revenue was $66 million, down 29% year-on-year as we continued to deliver its backlog. After a year of drastic spending cuts, our clients' priorities in Q1 remain mainly on development projects. It appears that Geoscience has reached the low point in the cycle as commercial activity and contract awards increased in March, especially in North and South America. Backlog as of April 1st stands at $240 million. We have adapted our cost base to market conditions while maintaining the capacity required to capture the growth in the second half of the year as the market continues to gradually recover. Also during the quarter, we strengthened the foundation of our new growth beyond the core initiatives in line with our ambitions. I will speak more about this growth beyond the core initiatives later in the call. If we look at Geoscience operational highlights, which should be on Slide 10. I've been commenting around the growing importance of Ocean Bottom Nodes as a technology that can provide the data required as input for high-end processing to image the subsurface in high definition. Today, most of the applications of no technology are around reservoir development and management, but we're seeing increasing use for step-out exploration and appraisal in complex subsurface environment. This trend is clearly seen in our order intake as 32% is now related to OBN processing. It is also a reflection of our clients' prioritizing production work versus exploration and of our leading market share in OBN processing where we tend to win over 2/3 of the projects on a recurring basis. As IOCs have maintained their capital discipline thus far in the COVID recovery market, I also want to highlight the increasing importance of national oil companies in our revenue mix. In Q1, they accounted for almost 1/3 of our revenue. This trend is geographically diverse with projects coming from in -- around the world, Brazil, Mexico, Norway, Middle East and Asia, as we enjoy stable long-term relationships with this group of clients. Moving on to Multi-Client. Q1 2021 Multi-Client revenue was $34 million, down 67% year-on-year. Q1 2020 was an unusually strong first quarter, supported by an active market with several ongoing projects. Multi-Client cash CapEx was also low this quarter at $30 million, down 56% from Q1 2020 as we only had 1 Marine multi-client program active, which was offshore Brazil. In Q2, we will have 2 vessels working on Multi-Client programs as we have commenced work on a 5-month 3D Multi-Client program in the Norwegian North Sea, in addition to our ongoing Brazil project. The vessel is expected to acquire around 8,000 square kilometer of 3D data in the North Viking Graben in a direction perpendicular to our existing data set. Our clients were impressed by the uplift that our high-end imaging can bring to this additional data and recognize the value that this provides for the management of their existing reservoirs. Multi-Client after sales were low at $19 million this quarter as we have a number of significant opportunities that shifted to later in the year. It's worth noting the emergence of new private equity-backed players, especially in the North Sea that need to buy data to develop their plans and access acreage. Moving on to Slide 12. A large part of our Multi-Client CapEx for the quarter was invested in Brazil, and I would like to update you on the CGG footprint in the prolific pre-salt area. Brazil at current, together with Norway is 1 of the most attractive areas of the world for E&P companies as they present some of the best opportunities and economics. Over the years, we've built a substantial industry unique, high-end contiguous 3D seismic data library offshore Brazil, which enables our clients to develop both a regional and local understanding of the subsurface. This has been complemented by our geology and well packages that enable new engines to access trusted and valuable data and insights very quickly. In addition to our ongoing Nebula acquisition, we have a number of ongoing reprocessing projects that will benefit from our latest processing innovations. Our presence offshore Brazil in the Santos and Campos Basin, were extended by 23% in the last 3 years, and we are currently looking at new Ocean Bottom Nodes programs as they, together with our leading imaging technology, represent the next level of uplift that will enable our clients to unlock new value of their reservoirs in these prolific basins. We believe that our deep knowledge of offshore Brazil, combined with our extensive pre-salt data and our preferred imaging technology will continue to deliver strong business values for years to come. Let's move on to Equipment now. Equipment segment revenue was strong this quarter at $112 million, up 52% year-on-year and heavily weighted towards land as marine acquisition companies continue to delay investments. Equipment adjusted segment EBITDA was $16 million, and equipment adjusted segment operating income was $8 million, at 7% margin. Moving on to Slide 14. In Q1, equipment delivered over 125,000 land channels and 50 vibrators worldwide primarily for large mega crews in Saudi Arabia. Sercel also delivered WiNG land nodes to new clients. Marine equipment sales remained low during the quarter, essentially being for spare parts. We released a new technology called PikSel, which is an integrated and compact solution that enables high-resolution seismic data acquisition inside targeted areas for offshore construction and field development. I would also like to highlight the excellent operational performance of Sercel as they were able to manufacture at full speed and deliver equipment for 2 mega crews in a very short time frame. In total, this represented the deployment of over 160,000 channels of 508 X-Tech and more than 80 Nomad, 65 neo all-terrain vibrators to Saudi Arabia in 5 months. Despite the numerous challenges imposed by the pandemic, we were able to meet all of our delivery, logistical and system commissioning targets. The 2 3D mega crews surveys in Saudi Arabia met their start-up dates and have been reporting outstanding productivity levels from the very start of operations with more than 10,000 VPs recorded based on 12 fleets of 2 vibrators on day 1. Let me now give you a few comments on beyond the core businesses on Slide 15. At CGG, we have a long history of supporting the geothermal, CCUS, Earth Monitoring and Digital Geoscience businesses through our leading geoscience data and expertise, satellite mapping business, Sercel Sensor Technology and Solutions, Multiphysics processing, Geoscience and data science technology in our CGG cloud, which is now well over 250 petaflops of compute power and 250 petabytes of storage. With the global acceleration of 3 key trends, energy transition, environmental awareness and sustainability, along with digitalization, CGG is well placed to expand its business in this rapidly growing areas as they are very near step-outs from our core. During the quarter, we continued to strengthen this growth beyond the core initiatives, which are focused around digital geoscience, monitoring and observation and energy transition. In these areas, we are advancing our trust strategies and technologies while working with our clients and partners on pilots and commercial projects. This page summarizes a few examples of our recent activity, and I am particularly pleased with our dCarbonX strategic agreement that positions us for the assessment of geothermal and underground CO2 and energy storage opportunities in the North Sea. We now comment on Slide 16 with the Data Hub. As part of our growing portfolio of Beyond the Core products and services in the digital geoscience domain, we have developed a complete offering to support our clients' digitalization agendas. With Data Hub, CGG provides the tech solutions required to transform and enrich customer geoscience data into structured decision-ready information. It is based on our extensive geological knowledge, advanced machine learning technology and unique taxonomy and it enables the classification of diverse geologic data in a meaningful and consistent way. With Data Hub, our clients geoscience teams can be more efficient and focus their time on value-add activities. We have completed multiple successful pilots for IOCs, NOCs and independents and are in discussions at current for longer-term commercial contracts. I look forward to providing you with further updates as this tech solution continues to mature. Moving on now to SeaScope on Slide 17. Recently, we also launched SeaScope, an innovative pollution monitoring tech solution as part of our growing portfolio of products and services for environmental applications. It combines expertise in remote sensing science, earth observation data, machine learning and high-performance computing. SeaScope provides critical sea surface oil slick intelligence for a range of industries to better understand and minimize risk for offshore assets, coastal facilities, vessel activity and the natural marine environment. With SeaScope our clients can proactively establish production water baselines, rapidly detect anomalous events and determine the source whether from natural seeps or from third-party pollution. This is 1 of the tech solutions that we are developing for the environmental geoscience space enabling more sustainable operations. I will now give the floor to Yuri for more financial highlights.

[Yuri Baidoukov, Senior EVP & Group CFO]

Thank you, Sophie. Good morning, ladies and gentlemen. I will comment the Q1 financial results. Starting with Slide 19, Q1 2021 P&L. And looking at the consolidated P&L for the first quarter of 2021, Segment revenue amounted to $213 million, down 21% versus Q1 2020, which was the last pre-COVID crisis quarter. GGR revenue was $100 million, a 49% decrease year-on-year with a low 47% weight. Geoscience revenue was $66 million, down 29% year-on-year and Multi-Client sales were at $34 million, down 67% year-on-year on significantly lower CapEx and delayed after sales. Equipment revenue was $113 million, up 52% year-on-year with larger-than-usual 53% weight. Segment EBITDA was $36 million, and adjusted segment EBITDA was $39 million, with a 19% margin due to this unfavorable revenue mix. Our margin was further reduced by negative impact on profitability of equipment, which came from adverse effect on euro-based net P&L exposure, revenues minus costs, with significant depreciation of euro versus dollar from $1.11 a year ago to $1.22 this quarter and unfavorable product mix with delivery of more than 50 lower margin vibrators. Segment operating income was negative $11 million and adjusted segment operating income was negative $12 million. Cost of financial debt was $34 million, including a noncash peak component of $12 million. Net loss from continuing operations was $92 million, including $40 million of costs related to refinancing. Net income from discontinued operations was positive at $11 million, and group net loss was $81 million. Looking at Slide 20, simplified cash flow. Segment free cash flow in Q1 2021 was $60 million, including positive change in working capital and provisions of $73 million on decrease in equipment inventories and collection of receivables from mega crews deliveries in Saudi Arabia and collection of year-end receivables in Multi-Client business. It included multi-client cash CapEx of $30 million, down 55% year-on-year as well as industrial CapEx and R&D costs in our Geoscience and Equipment businesses of $12 million, which decreased 43% year-on-year. Cash cost of debt was $7 million and lease repayments were $15 million. Net cash flow from discontinued operations was positive $1 million. Our cash costs related to the implementation of CGG 2021 plan were at $11 million. Overall, net cash flow was positive at $28 million, increasing by 65% year-on-year and significantly improving from Q4 2020, which was at negative $95 million. Moving to Slide 21, group balance sheet and capital structure. Our liquidity at the end of 2021 increased to $407 million and remains solid. At the end of March 2021, our gross debt was at $1.394 billion or $1.252 billion before IFRS 16 with the following breakdown: $628 million, firstly, in dollar and euro bonds due in 2023; $584 million, secondly, in euro and dollar bonds due in 2024; $40 million other items, including accrued call premiums and interest related to refinancing; and $142 million lease liabilities, including $39 million of Galileo financial lease and $103 million of operating leases under IFRS 16. At the end of March 2021, our capital employed was at $2.07 billion, down from $2.17 billion at the end of 2020. Net working capital after IFRS 16 was at $123 million decreasing from $212 million at year-end. Goodwill was stable at $1.19 billion, corresponding to 57% of total capital employed. Multi-Client library net book value after IFRS 15 was at $495 million, including $425 million of marine and $70 million of land net book value. Other assets were at $408 million, including $248 million of property, plant and equipment down $20 million from year-end and $144 million of IFRS 16 right-of-use assets, of which $39 million related to Galileo financial lease. Also $143 million of other intangible assets and $17 million of other noncurrent assets. Other noncurrent liabilities were at $136 million, down $13 million from year-end. Shareholder equity was at $1.09 billion, including $47 million of minority interest mainly related to [ intern ] JV. Moving to Slide 22, debt refinancing. The main subsequent and very important events in the first quarter was our successful refinancing of all debt, which closed on April 1st. With this refinancing, we delivered the last milestone in our CGG 2021 strategy and normalized our capital structure by issuing new senior secured notes of $1.2 billion equivalent in euro and USD and bringing back $100 million revolving credit facility. As a result, we have also reduced cost of debt with a blended interest rate of 8.17% and eliminated $45 million of PIK interest, extended maturities to 2027, achieving 6 years for the first time. Secured flexibility to repay up to 10% or $120 million per year during the non-call period of 3 years and introduced ESG-linked RCF aligning capital structure terms with CGG sustainability objectives. While we provided for refinancing costs and accrued interest in Q1, the full accounting impact of this transaction will be reflected in our balance sheet in Q2. Now I hand the floor back to Sophie for an outlook for 2021 market environment and our financial guidance.

[Sophie Zurquiyah-Rousset]

Thank you very much, Yuri. Now we're on Slide 24. Looking at the market today and the near-term outlook, the majors have reemphasized their capital discipline as part of their Q1 results. This is in line with the early COVID recovery market that we are experiencing. The national oil companies and large independents remaining more active and given the fairly strong oil price recovery that we are seeing during the quarter and the volume of delayed activity from 2020, I believe we will see increasing spending going forward, particularly in the second half of the year. We consider our Geoscience Imaging technology will continue to play a key role as clients make decisions about their investments. We have a leading position in OBN processing that we will capitalize on as the recovery will be led by increased near field operation -- near field exploration, field development and production where the benefits of OBN technology are more pronounced. We also anticipate demand for our Multi-Client programs and data to strengthen on the basis of our position in the industry preferred mature basins, along with the emergence of new private equity-backed player. Equipment after lower Q2 should deliver a solid H2 driven mainly by continued activity in the Middle East. In this context, we confirm our 2021 financial objectives. With our successful refinancing, we delivered the last milestone of our CGG 2021 strategy and normalized our capital structure. We are now actively developing our CGG 2024 strategy, which is focused on growing our core highly differentiated businesses as the market gradually strengthens and accelerating our growth beyond the core initiative into the rapidly growing digitalization, observation and monitoring and energy transition markets. We will present you our updated strategy and ambitions during the Capital Market Day, which is planned for November 5, 2021. I hope to meet all of you maybe even in person very soon, and I look forward to our further discussions. So thank you for your interest, and we're now ready for questions.

[Operator]

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

[Nikolaos Konstantakis, Analyst of Oil and Gas]

Thank you for taking my questions. I've got a few, if I may, please, and I'll start with Yuri on the financing. I think the rates were slightly higher than anticipated, but I think it is positive if you can repay up to $120 million per year. Do you intend on exercising that option? And how do you intend to finance the process that you have to cover there? And secondly, I was wondering if you could give us some color on the -- on your exploration exposure in Norway. I think 1 of the parties there is contending the current law, which gives the tax offset to -- for exploration, just wondering trying to get an idea of the potential impact on the business? And lastly, Sophie, I don't want to run too much ahead of myself and make you spoil the -- or give too much away on your November CMD. But I would like you to discuss your carbon capture and storage exposure, please. There's a few projects kicking off there. Obviously, I was wondering are you participating in the tendering? And what do you think would be your addressable market as CGG there?

[Yuri Baidoukov, Senior EVP & Group CFO]

Thank you, Nick. So let me start with refinancing. Yes, unfortunately, the rate that we secured was not as low as we anticipated. And obviously, 1 of the reasons for that was the unfortunate downgrade by S&P, who took a contrarian view on the future of recovery of oil and gas industry and in particular in peak CapEx. So that probably cost us in the range of 50 to 75 bps. But that being said, we do consider our refinancing very successful, given obviously the market environment, given the fact that the quantum of the debt was quite high, $1.2 billion. And also given the fact that we were oversubscribed by 2.2x. So with that, you're absolutely right. We did manage to secure this flexibility of repayment of up to 10% of the total issuance during the first 3 years of non-call period, and we intend to use it. But of course, it will depend again on the speed and pace and profile of recovery in the industry and with that, our revenues and cash generation. And -- but we do have this flexibility, of course, and we'll be closely looking at it throughout the year.

[Sophie Zurquiyah-Rousset]

Yes.

[Yuri Baidoukov, Senior EVP & Group CFO]

With that, I'm passing it to Sophie to answer the 2 other questions.

[Sophie Zurquiyah-Rousset]

Yes. Thank you, Nick. So your question to exploration exposure. I'll first make a general statement. The last 3 years, we've avoided any pure exploration investments in our new Multi-Client. We've been quite vocal about the fact that we wanted to position our survey on mature areas and discovered areas, which we have done. And if you look at the case of Norway, we've actually invested in large contiguous survey covering mature areas. So most of the work that the clients are doing in our surveys is to find step-up exploration and to optimize the production of the reservoir. So I'd say we pretty much have no or very little exposure to that exploration. So that's the Norway one. The -- on the CCUS, it's early days and that market is not fully matured. What we think we could do in that space is participate. There is actually a very good report written by Exane. You did that? Okay, excellent report, by the way. And you were spot on saying there's 2 areas that we will participate in. One is the Geoscience side, the understanding of the subsurface. And the second 1 will be the monitoring once that carbon is stored underground, and [ you'll need -- ] with our sensors and our equipment division, we'll be able to provide that part of the value chain. Now it's a little early days and dCarbonX is part of that exercise in making and developing partnership and alliances so that we can become the preferred partner in that space. But just as a data point that might be of interest, we are starting to make quotation for multi-client data with -- for companies that are aiming to identifying those reservoirs where they could be storing energy -- - I mean, carbon and energy at large. So we're starting to see a little bit more activity, although it's not yet very significant for us. It does depend on how fast that market matures.

[Operator]

Your next question comes from the line of Kevin Roger from Kepler.

[Kevin Roger, Research Analyst]

I have 3, actually. I was wondering on the Multi-client activity, Sophie. You say that basically you have some expected revenues that have shifted from Q1 to Q2 and H2. I was wondering if you can precise a bit the magnitude of the revenues that have shifted? The second question is related to the business in the U.S. With the new administration, I was wondering if you can provide us some update on what you see and what you expect with the new administration and the recent decision that they took? And the last one is related to your disposal. I was wondering if you could make an update on the potential disposal of GeoSoftware.

[Sophie Zurquiyah-Rousset]

Sure. Thank you, Kevin. So generally, in the Multi-Client activity, we started the quarter quite softly. Q1 is typically a slow quarter and we didn't have at the point of starting the Q1 really well identified opportunities. When we started going into the end of the quarter, there were more tangible conversation with numbers and quotations being given to clients. Although when I look at that list, which is encouraging because we do have a list of large quotations that we've done, it's not clear whether we'll land them in Q2 or in H2. And the orders of magnitude are such that we still believe we can make the year for Multi-Client. So I'm not sure when they will happen, but we are well positioned in Brazil, which is, again, attracts huge interest, Norway. There are the upper rounds, where sometimes we managed to record the -- get the uplift in Q1. And this year, we believe the upper lift will be in Q2. The other data point perhaps that would be useful that we think definitely Q2 will be way better than Q1 and will be better we think, as well than Q2 last year. If you remember, Q2 was the first post-COVID quarter where clients really put the brakes on any spending. So there will be some level of catch-up in Q2, but we do think -- I do think there will be an acceleration in the second half of the year. So I'll make a comment that might be useful for the rest of you who are listening. As I do think that the current run rate of spending of the clients today is well below their planned spending levels for the year. Most of them have said that they will be flat to slightly up after the year. So if you look at what they've been spending in Q1 and while there'll be kind of that run rate, that if they continue doing the same in Q2 as they're being cautious, they will need some significant level of acceleration, which in the order of 30% acceleration from H1 in H2 if they're going to be spending a flat E&P CapEx from last year. And that's what we're sort of expecting to see happen. I think there was another question. Sorry, on the business in the U.S. I'm assuming that question is more on the offshore side and the moratorium. We don't have a lot of visibility. Right now -- and I'll give you some data points. What we're seeing -- obviously slow activity on anything that's around exploration. And there isn't any lease rounds planned for this year. However, we still see continued activity from those clients that have established production in the Gulf of Mexico, node surveys and then they're remaining quite active. And what we're seeing as well is that we're getting the permits. So they are -- the administration is giving the seismic permits for acquisitions. So those are positives. The other data point I can give you is that our conversations with clients that are still interested in accessing some of our stack size data, for example, which is considered to be in a frontier area. So that -- there is still interest in the Gulf of Mexico and more particularly from the clients that already have an established infrastructure and production in the Gulf of Mexico. Perhaps a quick comment on the land side. Land is fairly quiet. We're not planning on any new projects. Right now, we're looking at more reprocessing some more light investments. But we've not launched a new project this year, and then we'll wait to see for the business to recover to make investments in the land side. Disposal, Yuri, perhaps you can make some comments?

[Yuri Baidoukov, Senior EVP & Group CFO]

Yes. Sure, Kevin. So on the disposal side, yes, we continue actively working on several disposals that we discussed last [ quarter. ] So 1 of them is well known. This is our Geoscience business. So -- sorry, GeoSoftware business, excuse me. The -- on that front, we're making very active progress, and we hope to break some news relatively soon. That's as far as I can say right now. With regard to the other projects. On Multiphysics, we finally managed to secure almost all related government permits from the U.S., and we're very confident that this transaction will be fully closed by the end of Q2. And then on other disposals, again, we're making very good progress on the Galileo building sale [ as she said ], which we expect to close latest early Q4. And of course, we continue to market a 49% stake in our gas joint venture in Saudi.

[Sophie Zurquiyah-Rousset]

So I'll add one thing, Kevin, on the GeoSoftware. We're actually quite pleased with the value that has been offered by the -- that's been put forward, let's say, by the various proposals. One could have expected that given the current -- how the valuations in the OFS have been affected that perhaps the value we could expect would be much lower. And actually, that business has sustained quite well. And we're getting and we're quite pleased with the kinds of offers we're getting. It's not done yet, but at least it's encouraging.

[Operator]

Your next question comes from the line of Christopher Møllerløkken from Carnegie.

[Christopher Møllerløkken, Research Analyst & Analyst of Oil Services]

In relation to Sercel, is it fair to assume that all the equipment to Saudi has been delivered now by end of Q1? Or will there still be some deliveries in the second quarter?

[Sophie Zurquiyah-Rousset]

Yes, Christopher. So for the Middle East equipment, it's been pretty much all delivered. And that's why I mentioned that Q2 will be sort of a bit of a lower quarter because we won't have like the strength of the deliveries that were sort of between Q4 last year and Q1. And we will not have yet some of the large orders with -- that we're expecting for Q3 and Q4 and that's why I mentioned a bit of a lower quarter and then recovery in the second half of the year. But we'll continue. I think the business will be essentially supported and sustained by the land side on the -- in the second quarter. Of course, the third quarter that we do expect to make some significant node sales.

[Christopher Møllerløkken, Research Analyst & Analyst of Oil Services]

You also are calling the trough for Geoscience. But with regards to the recovery there, do you expect a gradual recovery from the level in Q1 or a stronger improvement?

[Sophie Zurquiyah-Rousset]

Geoscience typically doesn't see large swings like we could see in Multi-Client. It is more of a slow moving. And if you remember how we gradually decreased through and I had mentioned that it will continue decreasing through H1. So that is -- it never moves either way very fast. So we're saying like kind of we're at that low point, meaning that we're starting to see signs of a gradual recovery, but it will be slow recovery based on the backlog. So I do expect the second half will be sort of -- second quarter will be sort of similar to slightly up, and then we'll see some acceleration in the second half of the year. That's what our current base plan is based on the backlog.

[Christopher Møllerløkken, Research Analyst & Analyst of Oil Services]

Final question. With regards to the initiatives you are doing on beyond the core like SeaScope, when you book revenues from these businesses, where will they be booked in your accounts?

[Sophie Zurquiyah-Rousset]

So right now, we're not separating, but we intend to start doing so. And the way we started to, I would say, nurture and develop those businesses are within each of the business lines. So within Geoscience, within Multi-Client and within Equipment, just because they are not large enough to be self-standing, and they do need the support of the rest of the organization. And we hadn't historically separated them out to identifying them. But obviously, moving forward, as we're going to start putting targets of growth and wanting to communicate more on that and having those businesses take a more significant part of our revenue, it's part of the work that we're doing for the Capital Market Day is starting to know where we are, which I do expect in the sort of few percent, like 3% to 5% of our revenue is probably linked to, I would say, non-core or beyond the core businesses already. So we're not starting from 0. We have, like I mentioned, the satellite mapping business that's already there. We do pollution monitoring. We do monitor, for example, mining stability -- mine tailings stability. So there's a lot of these businesses. They're not significant yet in revenue. So we'll be able to give that to you at the Capital Market Day in November.

[Operator]

[Operator Instructions] Your next question came from the line of Jean-Luc Romain from CIC Market Solutions.

[Jean-Luc Romain]

My question relates to Sercel actually. How much of the large orders you won at the end of 2020 did you already deliver? That's the first question.And the second is in Marine Seismic. Polarcus has somewhat disappeared or their boats have been actually taken over by some other owners. When do you think finally, modernization of the remaining fleet streamers might happen?

[Sophie Zurquiyah-Rousset]

Yes. [Foreign Language] So thank you for your question. The orders that we -- for the mega crews in Saudi Arabia have all been delivered by now. So this is -- really was the Q4 and Q1 delivery. Of course, we'd all like the marine market to pick up, and we've been talking about it so much that I hate to put a date on it. Of course, we all know that the streamers are aging, and they're not getting any better. So eventually, that replacement cycle would have to happen. I don't think generally that replacement cycle will be very steep as the companies will try and replace portions of their old streamers, not like entire sets in one go, which is actually a good thing for us because that means that cycle will not be as steep but will be longer. Now in terms of what's happened in the marketplace, So I don't think that this replacement cycle will happen until the marine prices go up. And right now, marine prices are just barely getting to that cash breakeven or I would call that sustainable rate that allows for marine companies to invest in their streamers. So we're not there yet. So the clients will have -- end client, E&P clients, will have to pay more for their streamer acquisition for that replacement to happen, although it is needed. So there were, like you say, news in the market that in January, Polarcus ceased activity, and they had 6 vessels. And those vessels were taken over by the bank who sold them to Shearwater. So now Shearwater own those assets, and they did communicate a couple of weeks ago that they would want to use those assets, those vessels to kind of renew or make their fleet -- upgrade their fleet. Let's put it that way. But then conversely, the ex Polarcus team, management team and investors, have created a new company called PXGEO that has bought the assets of SBGS. So it's a combined nodes and marine streamer company, and they have 2 vessels so far with the aim to get 2 more vessels. So we'll have a sort of an equivalent to Polarcus being created through PXGEO. So a bit of a mixed news, I would say, for our marine streamer business, but we're quite pleased to see a new company emerging as a result of the market forces.

[Operator]

[Operator Instructions]

[Sophie Zurquiyah-Rousset]

Okay. I think it was a very good call. Lots of good questions. So thank you very much for attending. Thank you for your trust in CGG, and we look forward to further interactions in the days to come, and hopefully, some of them physical. Thank you very much for your attendance and talk to you soon.

[Yuri Baidoukov, Senior EVP & Group CFO]

Thank you, everybody. Good bye.

[Operator]

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