2010

Performance ■ Innovation ■ People ■ Integrity

Annual Report
 Contents
Chairman’s Letter & Message from the CEO 02

Key Figures 04

Operational Overview 08

Foundations 12

Shareholder Information 16

1
 Chairman’s
Letter

Since the company’s creation in 1931, we have consistently important role that seismic and especially high-end
been at the forefront of geophysical advances, providing seismic plays in lowering finding and producing costs
our clients with clearer images of the subsurface than ever along with the potential future role that seismic can play
before possible. for drilling and producing in a more sustainable manner,
places CGGVeritas in an excellent position for continued
This, together with our dedication to health, safety, growth well into the future.
environment, social responsibility and long-term client
relationships, has elevated CGGVeritas to the world’s CGGVeritas management along with the Board of
leading geophysical company. Our success relies on these Directors will continue to give our full effort to enable
foundations and they are at the heart of our values and our CGGVeritas, through its values, to achieve its vision.
operations throughout the world. This is a commitment we make to our shareholders,
clients, employees and the local communities where our
To further strengthen CGGVeritas for the years to come, people live and work.
in 2010 we implemented a planned change of gover-
nance, with the Board of Directors confirming in June a Robert Brunck
split of Chairman and Chief Executive Officer functions
with Jean-Georges Malcor becoming CEO, and my role Chairman of the B
Board
d
as Chairman continuing. At the same time we stream-
lined our organization around five Divisions and six
Functions to increase client proximity, service excellence,
technology differentiation and operational efficiency.

Additionally, our Board of Directors in 2010 established

an HSE and Sustainable Development oversight commit-
tee chaired by Director Kathleen Sendall, and we forti-
fied risk management with a dedicated team to ensure
consistent and optimized management of our risk profile
and reputation.

The continuing development of CGGVeritas, combined

with an outlook of growing global energy demand, the
2
Message
from
the CEO

Following reduced levels of oil and gas activity in 2009, equipment, technologies and solutions. This should be
global energy demand was strong in 2010 and seismic favorable for CGGVeritas.
demand increased in most regions. Increased interest was
confirmed for high-end technology as exemplified by the The seismic market should follow this trend, gradually
performance of Sercel and for our advanced solutions such absorbing vessel oversupply in the second half of the year.
as wide-azimuth, ultra high resolution and BroadSeisTM and Vessel utilization rates are expected to be low early in the
EmphaSeisTM, our marine and land broadband solutions. year before progressively strengthening.

Strengthening conditions first benefited the equipment With its extensive coverage of the seismic value chain,
market with increased regional activity, demand for high CGGVeritas has a major role to play in the traditional
resolution and preference for Sentinel® solid steamers and exploration and new discoveries markets but also in the
Nautilus® steering systems. Sercel revenue grew 17% to unconventional and shale gas plays as well as in reservoir
$1.0 billion with strong operating margins at 29%. optimization and monitoring.

In Services, revenues were down 12% to $2.08 billion and With our performance plan and continuous commitment
operating margin was 2% as growing demand was insuf- to our clients and to attracting, retaining and motivat-
ficient to offset difficult market conditions especially in ing our people, along with our dedication to HSE and
marine, with overcapacity due to vessel new builds and sustainable development, I am more confident than ever
the impact of reduced Gulf of Mexico activity. that we are building a solid foundation for the future.

2010 Group revenue was $2.9 billion and operating Jean-Georges Malcor
margin was 8% with a particularly strong seasonal effect
in the fourth quarter. Chief Executive Officer

During the year we launched an ambitious performance

plan, which will remain a top priority going forward,
focused on cost reductions, technology and commercial
differentiation and performance improvements.

Looking forward, E&P spending is expected to increase

in 2011 with strengthening demand for high-end seismic
3
 Key
Figures
2010 was a year of transition and E&P spending accelerated in most regions. As anticipated,
the strengthening market first benefited the equipment market while in services, volumes
were up significantly and revenues were down as marine overcapacity extended longer than
originally expected.

2186 M€
4%
Consolidated Breakdown of 90% 6%
Operating Revenue Capital

■ IFP

■ FSI
596 M€ ■ Floating USA/Europe

EBITDAs

67 M€ Breakdown of
Revenues By Region
27%
Operating Income ■ Latin America 40%

■ North America
13%
■ EAME
-44 M€ 20%
■ Asia Pacific
Net Income

Breakdown of
450 M€ Revenues By Activity
13%
13%
■ Marine
Cash Flow From Operations
■ Land 28%
27%
■ Processing, Imaging & Reservoir

41 % ■ Equipment 19%

■ Multi-client
Net Debt to Equity Ratio
4
Consolidated Operating Consolidated Operating Number of Employees
Revenue (Million Dollars) Revenue (Million Euros)

2010 2904 2010 2186 2010 7264

2009 3109 2009 2233 2009 7500

Net Income (Million Euros) EBITDAs (Million Euros) Operating Income

(Million Euros)
22 2010 2010 621 2010 166

-44 596 67

79 2009 2009 716 222

2009

-259 659 -161

■ Before Restructuring & Impairment

Capital Expenditure Balance Sheet Financial Structure ■ After Restructuring & Impairment
(Million Euros) (Million Euros)

2010 445 2010 1150

421 2812
2009

2009 919 ■ Net Debt

■ Equity
2661

5
 Optowave
Exploration
Hampson-Russell

Permanent Reservoir Monitoring

Broadband SeisMovie

Unconventional Resources

EmphaSeis
BroadSeis
Innovation/R&D

Life-of-Field

Nautilus

Solid Streamer
X-Bow Production
TTI-RTM

geovation HPVA
Q-PSDM
Arctic SeaRay
HD

7
UNITE Trilobit
 Operational
Overview
Seismic, especially high-end seismic, has the ability to lower oil and gas finding costs and improve
the extraction of reserves from known reservoirs. With this, seismic continues to be an ever more
important tool for the safe and effective search, discovery and production of oil and gas.

Sercel Services Sercel

Sercel revenues increased 17% to Contract Marine Acquisition

$1.0 billion.
Global demand for Contract Marine was
Worldwide interest for geophysical up in volume close to 20% while revenue
equipment increased on growing marine decreased 28% to $778 million as over-
demand for new-build vessels, technol- capacity remained throughout the year,
ogy intensity requirements for increased maintaining pressure on prices.
resolution acquisition, as exemplified
by our high-channel-count super-crews Fleet availability was 88% and production
in the Middle East, and land technol- was 91% for the year with 83% of the 3D
ogy replacements and upgrades in lo- fleet operating on contract. The first of
cal markets, such as Russia and China. our two large X-BOW seismic vessels, the
Demand for land equipment declined in Oceanic Vega, was commissioned in July.
North America in general and increased
worldwide for SeaRay®, our ocean bot- We continued performance upgrades of
tom cable (OBC) technology, confirm- our seismic vessels including steerable
ing Sercel’s leadership in the expanding streamers for four vessels. Upgrades of the
OBC market. Endeavour and Master were initiated in
December 2010 to enhance their propul-
sion systems, add power and increase seis-
mic capabilities.

January February Marc

 Ultra-high channel count survey

In June of 2010 we launched our break- An average of fifteen crews, including

through broadband marine solution, ARGAS in Saudi Arabia, operated world-
BroadSeisTM, and have seen tremendous wide. Interest for ultra high-density high
interest. resolution in the Middle East, including
our industry-first 40,000-channel-count
Contract Land Acquisition survey, continued to strengthen. Our
super-crews set production records and
Global demand for Contract Land ac- early results provided finer detail of the
quisition increased moderately in 2010 reservoir than previously obtained.
with strong disparities. The specialized
high-end challenging geologic and op- Multi-Client
erational markets such as the Arctic,
Middle East and transition zone envi- In multi-client we remained focused
The Oceanic Vega ronments were robust while the more on our strategy of investing in high-
accessible commodity market, such as potential core areas, leveraging our
the North American summer season, technology portfolio and extending
remained competitive with lower levels the value of our library. In 2010,
of activity. multi-client sales were $534 million de-
spite reduced multi-client Capex of $291
Revenue from Contract Land was stable million. Sales were slow in the first three
at $381 million. quarters of the year and then dramati-
cally increased in the fourth quarter as
CGGVeritas continued to focus on se- short-term visibility in the Gulf of Mex-
lect markets where high-end technology ico increased and long-term confidence
and techniques are required and our lo- in future E&P programs grew.
cal excellence is widely acknowledged.

rch April May June July

 Operational Overview

Santos Basin, Brazil

Marine Multi-Client processing centers, thirteen of which Latin America

were dedicated to specific clients and lo-
Revenue was $388 million, a decrease of cated in their facilities. The Group had a strong position in
6%. We continued to develop our wide- Mexico, notably through its long-term
azimuth position in the Gulf of Mexico Our Reservoir teams, deploying relationship with PEMEX. Our Con-
and, despite significantly reduced seismic Hampson-Russell software, the indus- tract Marine operations in the Mexi-
activity following Macondo, prefunding try-preferred advanced geophysical tech- can deep waters of the Gulf of Mexico
progressively increased to 79%. Outside nology for understanding reservoir rock achieved good results with the contin-
of the Gulf of Mexico, CGGVeritas in- properties, continued to see increasing ued operation of the Alizé with Sentinel®
vested in select basins in the North Sea interest. solid streamers and Nautilus® streamer
and in Brazil. steering technology, on her four-year
North America program, and the contract extension of
Land Multi-Client over $150 million for the largest wide-
Contract Land saw reduced levels of activ- azimuth acquisition project to date in
Revenue was $146 million, an increase ity in North America during 2010 with Latin America.
of 44% as interest in our shale gas pro- operations mostly in the Arctic, oil sand
grams continued to sharply increase. provinces in Canada and the shale gas Our Contract Land operations re-
Acquisition was focused mainly around plays in the United States, all of which re- entered the Latin American market
Haynesville, where we acquired ap- mained very active. Multi-client in the US through local partnership with the
proximately 2,000 square miles of grew, with strong interest in our shale gas award of large 3D heliportable programs
data, and the Marcellus basin where we programs. in Peru and Colombia.
acquired the first phase of a two-year
1,800-square-mile program. Both pro- In the Gulf of Mexico, three of our high- In Brazil we extended our multi-client
grams will continue in 2011. capacity vessels were mobilized on a mix coverage in the prolific Santos Basin.
of contract and multi-client wide-azimuth
Processing, Imaging projects. Our wide-azimuth library now Sercel was active throughout 2010 sup-
& Reservoir has a footprint of around 48,000 km2. plying its Latin American customers
with the latest-generation land-based
Processing, Imaging & Reservoir rev- While the drilling moratorium in the acquisition equipment including the
enue was $389 million, a slight decline Gulf of Mexico, following Macondo, did DSU3-428 digital sensor system and
of 3%. The market remained relatively not directly affect our ongoing operations, UNITE, the cable-free acquisition sys-
flat, with growing data volumes as in- seismic activity in the Gulf of Mexico dra- tem.
terest in wide-azimuth and high-den- matically slowed.
sity acquisition continued to increase.
CGGVeritas performance remained ro- In Processing, Imaging & Reservoir, activ-
bust, in the price-sensitive market, based ity was sustained throughout the year in
on our clear and recognized technologi- Houston and Calgary.
cal leadership, particularly for depth and
wide-azimuth imaging, the expertise of
our geophysicists and researchers, and
our worldwide network of forty-two

uly August September Octo

 Singapore

Europe, Africa and the Asia-Pacific

Middle East
Sercel manufacturing sites and sup-
Sercel’s headquarters are based in Nantes, port centers are located in key areas in
France and the main land equipment China and Singapore to best address lo-
manufacturing facilities are also in cal equipment needs and related quality
France, located in Nantes and Saint- support requirements.
Gaudens, both of which saw higher pro-
duction. Contract Marine was very active in the
region with six high-capacity seismic
Contract Land in the Middle East, espe- vessels deployed. India, followed by In-
cially in Oman, Saudi Arabia, Qatar and donesia, remained the most active mar-
Egypt, remained high throughout the kets in Asia-Pacific for CGGVeritas,
year. Shallow water and OBC activity ac- with a number of surveys completed.
celerated with the start of two multi-year
programs in Saudi Arabia, both using In Processing, Imaging & Reservoir,
Sercel SeaRay® OBC technology. market pressures intensified in the re-
gion, but the Group maintained a strong
In the North Sea we implemented the presence mainly through technology
industry’s first fiber-optic OptowaveTM and services provided by our regional
life-of-field solution. hub in Singapore and our large centers
in Kuala Lumpur, Perth and Mumbai.
Contract Marine activities were mainly
concentrated in the North Sea during the Near the end of the year we signed a
summer season and split between Africa term sheet with Petrovietnam Techni-
and the Mediterranean in the winter. cal Services Corporation to create a ma-
rine joint venture operating 2D and 3D
Three high-capacity vessels were de- marine vessels primarily in Vietnamese
ployed in North West Europe for an ex- waters.
tended season which included a mix of
multi-client and contract projects.

Two vessels were fully committed most of

the year to Contract Marine projects in
East and West Africa.

Processing, Imaging & Reservoir activity

was sustained at our centers including our
network of dedicated centers directly sup-
porting our clients.

Sercel 11

tober November December

 Foundations
Our focus on performance and passion for innovation are powered by people and
delivered with integrity.

Our People CGGVeritas University is built on the

foundation of learning and was created
Peak performance can only be reached
through shared values and leadership at
The core CGGVeritas values of perfor- to provide the absolute best in techni- all levels. At CGGVeritas, we are com-
mance, innovation, people and integri- cal and leadership education both to our mitted to our vision, values and our
ty are at the heart of our company and employees and others within the oil and people and ensuring they have the best
our dynamic and coherent manage- gas industry. environment and opportunity for con-
ment of human resources. With nearly tinued development and success.
7,300 employees, CGGVeritas strongly From our intensive 12-month GeoRise
believes that our reputation in every- springboard program for new hires, Innovation and
thing we deliver hinges on our people. to our advanced Graduate Diploma of
As the international leader in geophys- Petroleum Studies, and our leadership Technology
ics, we are at the forefront and actively model that stresses the qualities of lead-
Innovation is the driving force of
seek in our colleagues strong personal ership, people, teamwork and perfor-
technological advancement and at
integrity and technical excellence com- mance, CGGVeritas University provides
CGGVeritas we provide an environment
bined with a true team spirit. an excellent environment for personal
that is conducive for our scientists to
and professional development.
create innovative solutions to difficult
Through our diversified recruitment
problems.
and individualized development pro- To meet the needs of our staff members
grams, we encourage and advance our and clients, CGGVeritas University has
future talents from the outset. Starting locations worldwide including Paris, CGGVeritas has research centers that are
with an induction program and con- Houston, Singapore, Calgary and Villa- distributed around the world, dedicated
tinuing throughout their career, each hermosa and delivers customized train- partnerships with leading universities
CGGVeritas staff member has access to ing sessions, including classroom, con- and other research organizations such as
training programs in the technical and ference and e-learning. the Western Australian Energy Research
managerial domains. Alliance, and Technology Cooperation
Agreements with our clients, such as with
Petrobras and BG, both of which were
initiated in 2010. Together with our tal-
ented and dedicated teams of scientists,
engineers and software programmers,
CGGVeritas has maintained an 80-year
history of pioneering next-generation
geophysical equipment and technology
for exploration, production and enhanced
recovery.

After months of preparation,

17 of our UK lady employees took part in the
12 annual Cancer Research UK ‘Race for Life’
 Qatar

With this unique and worldwide R&D In marine acquisition we brought responsibility principles are deeply inte-
network and our continued invest- BroadSeisTM, our breakthrough broad- grated into our business.
ment of around 5% of revenue towards band solution, to market. BroadSeisTM
our research and development efforts, combines Sercel solid streamers, with a Our Code of Ethics establishes our com-
CGGVeritas has the ability to develop unique acquisition technique and a pro- mitments to our clients, shareholders,
and offer unequaled technological solu- prietary processing algorithm to deliver employees and partners. Our Business
tions to meet our clients’ needs. the highest-resolution images possible of Code of Conduct sets out the Com-
the subsurface. pany’s expectations for every employee
In 2010 we had numerous successes in concerning compliance with laws and
R&D. We also continued to advance the science regulations, prevention of conflicts of in-
on land by increasing resolution both spa- terest, respect for persons and respect for
In Equipment, Sercel continued to devel- tially with an industry-first 40,000-chan- the environment, protection of company
op a new generation of products includ- nel-count acquisition project in Qatar assets, financial security and transpar-
ing OptowaveTM, our fiber-optic technol- and temporally with the commercial- ency, internal verification and the role of
ogy for permanent reservoir monitoring ization of EmphaSeisTM our land-based Internal Audit.
which was industrialized on a large scale broadband acquisition solution.
for the Ekofisk field in the North Sea, On this foundation of ethics, we con-
MaxiWave®, our downhole tool, which In Processing, Imaging & Reservoir, our tinue to strengthen our governance
saw first sales in China, SeaPro Nav, innovative Reverse Time Migration, with framework to assure compliance and
our offshore marine navigation system, angle and azimuth stacks, was an indus- ever greater transparency and diversity.
which was successfully commercialized try reference and provided a differenti- CGGVeritas complies with the AFEP-
and Nautilus®, our streamer positioning ating advantage in a highly competitive MEDEF code of corporate governance
device, which was implemented on the market. for companies listed in France. The
CGGVeritas fleet. majority of Directors are independent
Finally, the deployment of our new and all the Directors on the Audit Com-
geovation platform in our various mittee are independent. The company’s
CGGVeritas centers continued accord- corporate governance practices and fi-
Nautilus® ing to plan. This processing and imag- nancial controls meet the requirements
ing platform was rated as the best in a of the French Loi de Sécurité Financière
benchmark test comparing other prod- (L.S.F.), the U.S. Securities and Ex-
ucts on the market. change Commission (S.E.C.) and the
U.S. federal Sarbanes-Oxley Act.
Governance and
Our governance framework was
Ethics strengthened in risk management with
greater oversight of risk at Board level
CGGVeritas is driven by a commitment and the development of a global En-
to high ethical standards, responsible terprise Risk Management function at
governance, global citizenship and pro- Group level.
viding a safe and appealing workplace.
At CGGVeritas our corporate social
13
 Foundations

CGGVeritas participating in
Run Against Hunger in India

Global Citizenship CGGVeritas also supports and encour-

ages our staff to be active contributors
CGGVeritas is a global citizen, playing to the communities in which they live
a positive role in the countries and com- and work.
munities in which our people live and
work. We establish long-term partner- The company supported numerous in-
ships at the local level. Our long-term ternational relief, educational and local
Joint Venture in Saudi Arabia, ARGAS, development projects in 2010, seek- CGGVeritas has been a member
allowed us to take on two ambitious ing out projects and charities where of the United Nations
shallow water projects in 2010, while CGGVeritas employees are engaged and Global Compact since 2007
our Joint Venture Ardiseis completed, in play a leadership role.
Qatar, one of the largest and most com-
plex projects ever undertaken in land The Group Total Recordable Case Fre-
seismic acquisition. We now embark on quency (TRCF) per million exposure
new partnerships through our marine hours was 3.04, an improvement over
Joint Ventures with Petrovietnam, Geo- the TRCF of 3.14 recorded in 2009,
tech in Russia and Elnusa in Indonesia. mostly driven by the performance of
our Equipment Division. Our Group
As a leader in our industry, we deliver Lost Time Injury Frequency Rate
technologies and operational methods (LTIFR) per million exposure hours
that reduce our environmental footprint. in 2010 was 0.39, relatively flat, with
As examples, in the Arctic we continued Our travel guide in seven languages
0.36 recorded in 2009, mainly linked to help our employees travel safely
in 2010 our relentless efforts to assure to lower performance in services than in
that our onshore operations left no trace 2009, which was our best performance
and offshore we continued to upgrade to date.
our vessels to the ultra low impact Sercel
solid streamers and ushered in the first At CGGVeritas we are committed
of our “Clean Design” X-BOW vessels. to protecting the well-being of our em-
CGGVeritas has been a member of the ployees, our subcontractors and the com-
United Nations Global Compact since munities where we live and work. We
2007. In September 2010 the Com- continue to focus on lowering the injury
pany issued its “2nd Communication rate of our employees and subcontrac-
on Progress”, reporting our activities tors. In 2010 we launched initiatives in
and progress in the areas of economic Health, Safety and Environment (HSE)
development, community involvement, focused on leadership and management
environmental protection, human rights engagement in HSE, behavior-based
labor standards, and anti-corruption safety, transportation safety, subcontrac-
efforts. tor management and security planning
and implementation.

14
 15
15
Leaving only our fleeting footprints and a better local community
 Shareholder
Information
CGGVeritas Share Price
Paris Stock Exchange (Euronext)
Minimum 2010 share price: €12.93
Maximum 2010 share price: €24.98
Closing price, 31/12/2010: €22.78

New York Stock Exchange (NYSE)

Minimum 2010 share price: $16.42
Maximum 2010 share price: $33.39
Closing price, 31/12/2010: $30.59

Stock Exchange
Listing
CGGVeritas stock is listed in Compartment
A (CAC Next 20) of Euronext Paris (code Dividends
ISIN FR0000120164), and on the New There are no plans to propose the payment of a dividend for the 2010 fiscal year at the
York Stock Exchange in the form of Ameri- Annual Shareholders’ Meeting.
can Depositary Shares (ADS), where one
ADS represents one ordinary share. ADS Investor Relations
are issued by the Bank of New York Mellon
and have been listed under the ticker symbol A copy of the 2010 annual report filed with the Autorité des Marchés Financiers (AMF) and
‘CGV’ since 15 January 2007. Form 20F as filed with the Securities and Exchange Commission (SEC) and other available
company documents will be sent free of charge to any investor on written application to the
As of December 31st 2010, CGGVeritas CGGVeritas Investor Relations Department.
stock was trading at € 22.78 and one ADS
was worth US$ 30.59. Group financial information is also available on our website at www.cggveritas.com

Share Capital Statutory Auditors

As of December 31st 2010, the Group’s Ernst & Young Mazars
share capital totaled € 60,602,443 compris- 41, rue Ybry 61, rue Henri Regnault
ing 151.506.109 shares with a face value of 92576 Neuilly-sur-Seine Cedex 92400 Courbevoie
€ 0.40. France France

2011 Annual This document has been drawn up for the general information of shareholders and its
content shall in no way be seen as an offer to purchase or an incentive to acquire
Shareholders’ Company shares. Nor does it constitute a Company guarantee of the value of its shares.

Meeting
The Annual Shareholders’ Meeting will CGGVeritas Investor Relations
take place on May 4th 2011 at 9:30 am at the
Maison des Arts et Métiers - 9 bis, avenue Tour Maine-Montparnasse - 33, avenue du Maine - BP 191,
d’Iéna PARIS 16th, France. 75755 Paris Cedex 15 - France
16 Tel.: +33 1 64 47 38 31
e-mail: [email protected]