PGS v WESTERNGECO (IPR2014-00689)
`WESTERNGECO Exhibit 2090, pg. 1
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`PGS v WESTERNGECO (IPR2014-00689)
`WESTERNGECO Exhibit 2090, pg. 2
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`short-term charters and not owning them, and by focusing exclusively on well(cid:173)
`supported multi-client surveys.
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`Even in this more buoyant market, the challenge for the marine seismic business is
`to extract full value to reflect Its capital investment, technology and expertise. The
`lurking danger is the 'commodity' word. Following the market slump of the late
`1990s, when contractors would buy jobs in order to keep their vessels working
`rather than laid up, It was easy for oil company clients to get the idea that 3D
`surveys were much the same whoever did them, It was just a matter of picking the
`cheapest. It is said that plenty of national oil companies still think this way,
`especially as many want to keep costs to the minimum and may lack the In-house
`expertise to be more discriminating.
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`WesternGeco, under the guidance of Schlumberger, has to be respected for the way
`that it has spent an inordinate amount of money and research resources on
`technology to differentiate itself from Its competitors. Last October the company
`added the Western Regent as the fifth vessel in its growing fleet of QMarlne seismic
`vessels for which it is able to charge a premium price. No one seriously doubts that
`Q-Technology, claimed to be the only fully calibrated, point-receiver marine seismic
`acquisition and processing system, has the potential to produce excellent image
`quality and repeatability. This makes it especially attractive to companies carrying
`out 40 seismic survey work using towed streamers. Last autumn, Petrobras selected
`WesternGeco to carry out the world's largest 40 seismic project to date over the
`Marllm complex, offshore Brazil. The five month survey was to be carried out by the
`Western Pride towing 10 cables each 6000 m long with SOm streamer separation.
`
`WesternGeco's revenue from all QTechnology applications (including land) grew from
`$79 million in 2003 to $162 million in 2004 with similar growth predicted for this
`year, according to Schlumberger's most recent financial reporting on the company.
`Interestingly multi-client sales (mainly in the Gulf of Mexico) also contributed
`substantially to WesternGeco's return to profitability in 2004 with a pretax operating
`income of $124 million compared with a loss of $20 million In 2003.
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`The over-Investment in multi-client marine seismic to keep boats busy, and the
`wildly optimistic accounting of the value of multi-client libraries, were a contributing
`cause to the problems felt by most of the marine contractors a few years ago. Yet,
`there was never anything fundamentally wrong with the multiclient idea, especially in
`the Gulf of Mexico where the licence areas are too small for the commissioning of
`proprietary surveys. Aggressive marketing of multi-client libraries and some new
`surveys can be expected from all the main contractors. PGS, Veritas and CGG all
`have significant multi-client data and can be expected to be on the look-out for
`suitable opportunities to add to their libraries, more often than not with special
`processing packages to bump up the value.
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`Always up with the game, TGS-Nopec Geophysical, which deals only in multiclient
`surveys, last year added NuTec Energy, a Houston processing house, to its armoury.
`Hank Hamilton, CEO of TGS-Nopec, said at the time of the acquisition that NuTec's
`tools would enable the company to provide custom 'add-on' depth imaging solutions
`for existing data licensing customers.
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`More or less unannounced, PGS has vessels to a form of solid streamer. This is
`differentiation of a sort, in that solid streamers are said to provide a more stable set-
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`PGS v WESTERNGECO (IPR2014-00689)
`WESTERNGECO Exhibit 2090, pg. 3
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`PGS v WESTERNGECO (IPR2014-00689)
`WESTERNGECO Exhibit 2090, pg. 4
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