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Letter to Shareholders - 2012

Jean-Georges Malcor
Jean-Georges Malcor

What are your views on 2012?

2012 was a year of growth and development for CGG. Annual
revenue increased by 7% and now exceeds 3.4 billion dollars. Operating performance improved significantly thanks to a healthy seismic market and the positive impact of our Performance Plan launched in 2010.

Our operating income was up 73%, in line with growth and profitability targets. Organically, and through our innovation initiatives, we expanded our technology offering, notably with the launch of Sercel’s Sentinel® RD and the new UNITE cableless acquisition solution and developed cutting-edge seismic acquisition technologies such as BroadSeisTM, BroadSourceTM and StagSeisTM for marine acquisition and UltraSeisTM for land acquisition.

We also signed strategic agreements with high-profile partners, such as Baker Hughes for unconventional reservoir optimization and Saudi Aramco for collaborative high-potential R&D projects.  Innovation and collaboration set us apart; they are significant drivers for our future development. Clearly, the single most defining event of 2012 was our announced acquisition of Fugro’s Geoscience Division, making us a global leader in geoscience.

Why a fully integrated geoscience group?

To better meet clients’ needs, our strategy has been to develop a comprehensive range of integrated, high-value solutions from equipment, acquisition services and processing & imaging to data library, reservoir characterization and high-end geological services. We achieved our objective with the acquisition of Fugro’s geoscience activities.

In line with our strategy and businesses, we have reorganized the Group around three
divisions: Equipment, Acquisition and Geology, Geophysics & Reservoir (GGR). The Equipment division includes Sercel, Optoplan, Metrolog, GRC and De Regt. Acquisition brings together Marine Acquisition, Land Acquisition, and Airborne Acquisition (once it has joined the Group) as well as General Geophysics, Electromagnetic and Gravity & Magnetic Services. GGR includes Subsurface Imaging, Seismic Reservoir Characterization with Hampson-Russell and Jason, Multi-Client & New Ventures, the Robertson brand of high end geologic products and services and Data Management Services.

Additionally, with the Seabed Geosolutions joint venture, CGG and Fugro have created a world leader in ocean bottom acquisition. Our greatest asset, however, is our people. In 2013, with the integration of our new colleagues from Fugro Geoscience, CGG now has over 9,800 employees across the globe, with the same energy, expertise and capacity for innovation, working together with our shared values to bring our clients the best and safest solutions available today.

What are your priorities for 2013?

Our top priorities for the coming year are integrating our teams and activities, developing comprehensive geoscience solutions and implementing our new brand strategy while generating increased free cash flow, delivering operational excellence, improving profitability and optimizing capital employed.

Our new Group is now set for strong growth in 2013, in an expanding market for geoscience, where high-end technologies are in ever greater demand. This is an exciting time for CGG with untold possibilities for development, innovation and differentiation. With our strengths, expertise and values, CGG is uniquely positioned to create value for our shareholders, clients, employees and partners.

I am very confident in our future.

Jean-Georges Malcor
Chief Executive Officer