Good day and thank you for standing by. Welcome to the CGG 2021 and Q4 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question -and -answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I must advise you that this conference is being recorded today. I would now like to hand the conference over to the company. Please go ahead.
Yes, thank you. Good afternoon or good evening, ladies and gentlemen. Good morning as well. Welcome to this presentation of CGG Fourth Quarter and Full Year 2021 Financial Results. The call today is hosted from Paris, where Mrs. Sophie Zurquiyah, our Chief Executive Officer, and Mr. Yuri Baidoukov, our Chief Financial Officer, will provide an overview of the fourth quarter results, as well as provide comments on our outlook. 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 fourth quarter and full year and of the 2022 market trends and financial guidance, we will be pleased to take your questions. Now I turn the call over to Sophie.
Thank you, Christophe, and good morning, good afternoon, good evening, ladies and gentlemen. Thank you for participating in this Q4 and full year 2021 conference call. Starting with slide five. First, I want to say I'm deeply concerned about the crisis unfolding in Ukraine and the consequences of it on people and their family and that what they will suffer from. CGG has no employee, no business with Ukraine, and we have around 70 Russian employees in Russia, which we are doing our best to support. We have a small processing center that works locally and a sales office for our equipment business. CGG will comply with the regulations, and we're monitoring the evolution of the sanctions against Russia and their implications. Let me start now with some general comments on our market environment.
We operate today in a favorable macro environment, as Brent oil price is now well above the 90 mark. We're entering a favorable cycle that was created by sustained underinvestment in exploration and production, combined with a solid rebound in demand. Overall, as expected during the fourth quarter, our markets continued to recover, and that was signaled by more client engagement and clearer perspective. While national oil companies and independents drive our activities, we're starting to see regained interest in imaging and multi-client data from the international oil companies. Our strong Q4 performance, and particularly in multi-client, gives us confidence that our clients are planning to increase their activities and are contemplating a longer timeframe for bringing new oil and gas on stream to compensate for depletion. In 2021, we extended our leadership and technology differentiation and increased our market share.
For all our clients' activities that are focused on optimizing production from their current reservoirs to meet the growing demand for hydrocarbons, CGG's high-end technology is the clear choice and an important element of the value chain. Moving on to slide six. Our Q4 revenue of EUR 301 million was up 7% year-on-year and up 12% sequentially. Segment EBITDA was EUR 154 million, a high 51% margin that was driven by the business mix and increased revenue on the strengthening market. Segment free cash flow was EUR 81 million, mainly due to the positive impact of EUR 95 million in proceeds from the sale of our geo software and physical data storage businesses. For the full year, net cash flow was positive at EUR 19 million before EUR 14 million refinancing cash costs. We did strengthen our balance sheet in a difficult environment. Slide seven.
We have summarized here some of the key ESG achievements for 2021. There are a lot more details in the URD that will be coming out shortly. On the environmental dimension, beyond the absolute Scope 1 and 2 numbers, we are looking at the carbon intensity of our operation through two numbers: the Scope 1 and 2 of our GGR operations per petaflop and the Scope 1 and 2 of equipment per $1 million of revenue. Both have reduced since we started to track those numbers in 2019. On the social responsibility dimension, we track our health and safety performance. Our LTI, lost time injury, is well below the benchmarks for each of our three businesses. The percentage of women in our most senior position has increased to 24%.
Finally, on the third dimension, regarding the corporate governance, we can be very proud for having a very engaged, diverse, and independent board. Moving on to slide nine. GGR segment revenue was very strong this quarter at EUR 207 million, up 17% year-on-year, thanks to a solid Q4 geoscience and good multi-client sales in Q4. As a result, adjusted segment EBITDA margin improved to 69%. Looking at the full year, the overall adjusted EBITDA margin of GGR was down year-on-year because of the mix between geoscience and multi-client, offset by significant savings from our cost reduction plan launched in 2020. However, adjusted operating margin significantly improved. On slide 10 now.
Geoscience external revenue was EUR 93 million in Q4, up 24% year-on-year, sustained by increased demand for sophisticated seismic imaging as well as the sale from a large multi-year Geovation imaging software and support contract. Pro forma segment revenue, excluding geo software and the physical data storage business of Smart Data Solutions was EUR 88 million, up 19% year-on-year. Year-on-year backlog is stable despite stronger market outlook perspective. This is due to the size of the contracts becoming smaller while the volume is increasing and therefore providing slightly reduced long-term forward coverage. We're quite confident that demand for our imaging business is in fact increasing. The total production per head KPI has significantly improved year-on-year, thanks to the full impact of the cost saving plan. Our high performance computing capacity is now around 300 petaflops.
This large and cost-effective HPC capacity is today a key technology enabler for our geoscience business that requires more compute power to run the advanced algorithms needed to provide ever clearer images of the subsurface. This expertise in HPC, which has been developed for our internal users, is well in advance of competitive metrics, is now being offered to our clients both in and outside the oil and gas business that are considering outsourcing their specialized HPC requirements. Slide 11. Strong Q4 revenues were driven by global increase in demand for best resolution imaging of the subsurface, especially in geologically complex basins such as the Gulf of Mexico, North Sea, and Brazil, where application of our time-lapse Full- Waveform Inversion and elastic time-lapse Full- Waveform Inversion technology provides step improvements in the resolution of layers and boundaries.
Until recently, it was not possible to commercially run an elastic Full- Waveform Inversion algorithm because it demanded too much compute power and would have taken too much time as well as cost too much. We're the first company to be able to offer this solution commercially thanks to our unique and specialized HPC capabilities. Geoscience market remains solid worldwide, driven by our differentiated technology and our excellent service. As marine nodes take a larger share of the total data acquired, this benefits us as this data density requires the most advanced technology to ensure value from the investment. I mentioned earlier our large Geovation contract that further enhanced Geoscience's performance. We see a favorable trend of clients wanting to procure our imaging software as a complement to their internal solutions, which should continue through 2022.
Beyond the core, geoscience has been busy in the energy transition space with the release of our North Sea CCUS screening tool and the launch of TailingsPulse for mine site tailing facilities monitoring and risk management. With the increasing interest in renewables, we're also involved with several global assessments for geothermal and geothermal lithium. In environmental science, we successfully completed a project to characterize micropollutants and microplastics captured by domestic and industrial filters. On a side note, CGG was invited to participate in a recent episode of the BBC Countryfile based on a microplastics study that we completed on Mount Snowdon in the U.K. Moving on to slide 12. Multi-client revenue was EUR 114 million, up 13% year-over-year. Multi-client cash CapEx of EUR 37 million this quarter was dedicated to the Nebula Area B and C marine multi-client project offshore Brazil, along with five reprocessing projects.
Our prefunding revenue of EUR 59 million for our new projects allowed us to end the year with an 89% prefunding in line with our expectations. Multi-client after sales were much stronger this quarter at EUR 55 million, up 77% year on year. Our client mix in 2021 included more national oil companies and small independents than we saw historically. Towards the end of the year, we started to see IOCs modestly regain interest in data. The cash on cash ratio, which is sales over CapEx, was 1.6 x at the end of 2021, a significant improvement compared to the 1.4 the prior year. Slide 13 now. In Brazil, we completed our very successful Nebula program and started our new survey, Antares.
Antares is designed to extend and enhance our data library in the Santos Basin of Brazil and will improve existing imaging over challenging geology by providing a second azimuth for longer offsets with longer offsets. This area is highly prospective but underexplored, and there is substantial interest in the pre-salt blocks that should be offered in the next bid round later this year. U.S. land activity this quarter was supported by clients' growing interest in U.S. onshore gas assets and by M&A. We also made some sales for CCUS applications. In the Gulf of Mexico, our re-imaging projects continue to draw interest given the uplift to the data and the drive for near field exploration. Finally, we're making significant progress with our data platforms.
Versal was launched to provide clients with a single point of access to seismic data across vendors, and our GeoVerse geology and well data library is now accessible as a service. Moving on to equipment on slide 15. Equipment segment revenue was EUR 94 million in Q4, down 12% year-on-year, but still very solid, giving us an overall 23% growth in 2021 year-on-year. This growth is mainly coming from marine node sales, which we see remaining very active throughout 2022 and beyond. At this level of activity, the equipment business delivered a 16% adjusted EBITDA margin in Q4. Now in slide 16. This quarter, we delivered land equipment to Russia and North Africa. Within the sales mix, we see a strong take-up of our land wireless node WiNG.
Marine equipment sales were supported by the remaining deliveries of the GPR300 nodes to the UAE. These nodes are in high demand as E&P companies focus on their reservoirs and want to have precise baselines to engineer field development and optimize recovery. Beyond our core businesses, in infrastructure monitoring, we are making progress in piloting our solutions to address the very large North American structural health monitoring market. I will now give the floor to Yuri for more financial highlights.
Thank you, Sophie. Good morning, good afternoon, and good evening, ladies and gentlemen. I will comment on the Q4 and full year 2021 financial results. Slide 18, Q4 and full year 2021 income statement. Let me first comment on the overall 2021 activity. 2021 was a year of contrasts. First half of the year revenue was lower at EUR 370 million, while H2 revenue was strong at EUR 571 million, up 54% sequentially. EBITDA increased by more than three times between H2 and H1, and adjusted operating income margin was at 19% in the second half of the year. We have also successfully strengthened our balance sheet by refinancing our debt, normalizing capital structure, and securing EUR 100 million RCF in March last year, capitalizing on a favorable market window.
Looking at the consolidated P&L for Q4 2021, CGG segment revenue was EUR 301 million, up 7% year-on-year. It was a very solid quarter and the best quarter of the year for CGG as the gradual market recovery started to manifest itself during the second half of the year. In Q4, Geoscience performed very well. Multi-client sales were strong, driven by high prefunding and increased level of after sales, and equipment sales were solid. GGR segment revenue was EUR 207 million, up 17% year-on-year. Geoscience segment revenue was EUR 93 million, up 24% year-on-year. Multi-client segment revenue was EUR 114 million, up 13% year-on-year. Prefunding revenue of our multi-client projects was EUR 59 million, down 16% year-on-year, primarily due to lower CapEx at EUR 37 million, which was well prefunded.
Client after sales were at EUR 55 million this quarter, up 78% year-on-year. The equipment segment revenue was EUR 94 million, down 12% year-on-year. The respective contributions from the group businesses were 31% from geoscience, 38% from multi-client, 69%, for the GGR segment, and 31% for equipment. Segment EBITDA was 154 million this quarter, up 33% year-on-year, a high 51% margin. Adjusted segment EBITDA was EUR 150 million at 50% margin. Segment operating loss was EUR 57 million.
It included EUR 23 million fair value adjustment of one multi-client survey in the U.K. North Sea, where market conditions for exploration have changed in 2021, as well as EUR 102 million impairment of the multi-client goodwill, where we revised downwards the near term cash flow forecast after two years of lower than expected multi-client after sales in 2020 and 2021, and therefore, with the ongoing recovery starting from a lower base. Adjusted segment operating income was at EUR 78 million, up EUR 62 million year-on-year with 26% margin. After cost of debt of EUR 26 million, tax credit of EUR 22 million, and net loss from discontinuing operations of EUR 1 million, group net loss was EUR 28 million this quarter.
Looking at the full year 2021, our segment revenue amounted to EUR 941 million, down 1% year-on-year, with a 62% contribution from GGR and 38% from equipment. 2021 segment EBITDA was EUR 344 million at 37% margin, and adjusted segment EBITDA was EUR 337 million margin. 2021 segment operating loss was EUR 49 million, and adjusted segment operating income was at EUR 78 million, up 56% year-on-year with 8% margin. Group net loss was EUR 180 million, a reduction of 2.4 x compared to 2020. Moving to slide 19, simplified cash flow.
Q4 segment free cash flow was EUR 142 million after EUR 46 million negative change in working capital on strong Q4 revenues, EUR 55 million CapEx, and EUR 95 million of proceeds from the sale of geo software and physical data storage businesses. Q4 CapEx was flat year-on-year and included industrial CapEx of EUR 12 million, research and development CapEx of EUR 6 million, and multi-client cash CapEx of EUR 37 million. Q4 net cash flow was EUR 81 million after EUR 13 million lease repayments, EUR 53 million paid cost of debt, EUR 8 million CGG 2021 plan cash costs, and EUR 13 million positive free cash flow from discontinued operations. For the full year 2021, segment free cash flow was EUR 201 million after EUR 2 million negative change in working capital, EUR 227 million CapEx, and EUR 90 million net proceeds from disposals.
2021 CapEx was down 25% year on year and included industrial CapEx of EUR 29 million, research and development CapEx of EUR 30 million, and multi-client cash CapEx of EUR 168 million. Net cash flow for 2021 was positive at EUR 19 million before EUR 40 million refinancing cash costs and included EUR 57 million lease repayments, EUR 90 million paid cost of debt, EUR 33 million CGG 2021 plan cash costs, and EUR 2 million negative free cash flow from discontinued operations. This was a very significant improvement compared with EUR 247 million negative net cash flow in 2020. Moving on to slide 20, group balance sheet and capital structure. At the end of December 2021, group liquidity amounted to EUR 419 million, including EUR 319 million cash liquidity and EUR 100 million undrawn RCF.
Group gross debt before IFRS 16 was EUR 1.18 billion, and net debt was EUR 866 million. Group gross debt after IFRS 16 was EUR 1.3 billion, and net debt was EUR 989 million. Our gross debt included EUR 1.16 billion senior secured notes due in 2027, EUR 22 million other items, mainly accrued interest, and EUR 123 million lease liabilities. Capital employed was at EUR 2 billion, down EUR 172 million from the end of December 2020. Net working capital after IFRS 15 was at EUR 229 million, slightly up from EUR 212 million at the end of December 2020, primarily driven by a reduction in net accounts receivable, inventories, and current provisions, partially offset by significantly lower deferred revenue liability from IFRS 15.
Goodwill was down at EUR 1.1 billion, corresponding to 54% of total capital employed. Multi-client library net book value after IFRS 15 was down at EUR 393 million, including EUR 357 million of marine and EUR 36 million of land net book value. Non-current assets were at EUR 386 million, with EUR 212 million of property, plant, and equipment, down EUR 56 million from year-end 2020, and included EUR 118 million of IFRS 16 right-of-use assets, as well as EUR 90 million of other intangible assets, down EUR 26 million from year-end 2020. Non-current liabilities were at EUR 100 million, down EUR 49 million from year-end 2020, and shareholder equity was at EUR 1 billion, including EUR 44 million of minority interests mainly related to Sercel.
Now I hand the floor back to Sophie for an outlook for 2022 market environment and presentation of CGG new beyond the core businesses, business perspectives and 2022 financial guidance.
Thank you, Yuri. We're now on slide 22. Looking forward at the macro environment level, we see the effects of several years of reduced and delayed E&P investments, which are translating into high commodity prices. Yet the correlation between oil prices and E&P investments is different than in the past, as some of our clients, especially the IOCs, remain particularly cautious when considering longer term opportunities to replace reserves and maintain production. I think the void left by the IOCs will be taken by national oil companies and independent companies who continue to be more focused on oil and gas. We see this clearly in the mix, the new mix of our clients buying data. However, IOCs will also have to reload their exploration portfolios and accelerate field developments in order to meet their future production targets.
As a result, we anticipate the period of 2022 to 2025, a continued increase of E&P spending, starting with production and steadily progressing into exploration. Currently, we expect oil companies will increase their offshore E&P spending by around 11%. On slide 23. Over our 90 years of existence, we have developed unique technologies and long-term leading capabilities in high-performance computing, digital and geoscience technologies, sophisticated algorithms, earth data library, and sensor solutions. In 2021, we pursued our efforts to leverage this portfolio and find new areas of growth beyond the core, aligning with current global market trends. The growth markets we identified are related to energy transition, digital and environmental sciences, and infrastructure monitoring.
We made substantial progress, organically growing to around 150 engineers, and in 2021, these new businesses represented approximately 5% of CGG's group revenue, a solid foundation for accelerated growth. On slide 24, as we continue to transform the CGG business profile into a technology company, we have the ambition to become a leader in specialized digital sciences, energy transition technologies and services, and observation and monitoring solutions. Each of these markets is expected to see significant growth rates over the medium and long term. The digital sciences market includes the hardware, middleware, and software services that are required to cost-effectively support specialized high-performance computing workflows and data transformation services. We plan to leverage our specialized cost-effective high-performance computing solution of around 300 petaflops and associated cloud offerings to first serve the oil and gas market and then expand into other domains.
Today, we have multiple projects active in oil and gas as well as renewables. In data transformation, we have already performed several pilot projects, and we see significant client interest to move to full-scale projects. The energy transition market includes carbon capture utilization and storage, CCUS, geothermal, environmental sciences, and minerals and mining, among others. CCUS will, in particular, see significant growth given the focus from governments and IOCs as the only method to decarbonize high-emitting industries in the short and medium term. We made several sales of multi-client data in 2021 for CCUS applications, and I am confident that this trend will accelerate. The monitoring and observation market includes advanced sensor technology and acquisition solutions designed to gather massive amounts of data, analyze these datasets, and through our cloud computing capability, deliver key insights directly to the engineer's desk in near real time.
You already know about our structural health monitoring offerings for bridges, dams or large critical structures, our earthworks monitoring offerings for railway stability, for example, but we also have other offerings such as underwater acoustic solutions for the defense sector. Moving on to slide 25. We believe that we can deliver a differentiated offering in the rapidly growing markets of digital sciences, monitoring and observation, and energy transition with the ambition to represent above 20% of CGG's revenues in 2025. Obviously, several of the markets we're targeting are not mature, and some could take longer to accelerate than we have planned. However, we believe our assumptions are fairly conservative and are comfortable with our ambition. Slide 26. Let me spend a few minutes on CGG HPC cloud ecosystem.
With the growing size of data available and the need for modeling across all industries, many industries, including oil and gas, want access to HPC on the cloud, either for additional capacity or for their entire needs. Not only can we provide the infrastructure layer with the environment and the compute power, but we can also provide the support and the services to design the right infrastructure and run the code optimally. We can provide this on the cloud or on the client's own systems. Our traditional clients are faced with having to reinvest in their HPC infrastructure at high dollars or turn to external providers. Today, the large cloud players are not set up to provide these specialized services, and this is where our opportunity lies.
We are positioning CGG as a customized cloud solution provider that offers its high-performance computing as a service along with professional services and software to energy company and to other industries. Moving on to slide 27. I'd like to wrap up with our 2022 perspective, starting with the business outlook. Geoscience should continue its recovery, sustained by a global need to better understand complex subsurface and reservoir for near field exploration and production optimization. Multi-client projects in key basins should continue attracting interest while new licensing rounds activity and M&A should trigger higher after-sales. In equipment, land activity is expected to remain solid, driven by increased onshore seismic activity in our traditional markets such as the Middle East and North Africa. Marine and land nodes are also expected to be in demand.
Supply chain continues to be challenging, but so far has not disrupted our plans and deliveries to clients. Beyond the core, new businesses will be mainly driven by digital sciences and infrastructure monitoring. Energy transition markets are still relatively immature, and we expect those to further materialize further down the road. Slide 28. In conclusion, we strongly believe that we are entering a very favorable positive cycle and that CGG has a unique opportunity to continue expanding in its core domains while developing new businesses. Therefore, in 2022, we will accelerate our business initiatives and cash investment plans to accelerate the repositioning of CGG to a technology company. In 2022, CGG segment revenue is expected to increase by around 10%, sustained by around 18% GGR growth and stable equipment. First quarter revenue will be slow due to lower equipment sales year-on-year and the usual seasonality in multi-client.
We are closely monitoring the implications of sanctions on Russia. We have around 4% of our revenue at stake, coming mainly from the equipment sales to Russia. CGG 2022 segment EBITDA margin is expected to increase to around 39%-40% on full impact of cost savings, revenue growth and favorable business mix. We are expanding our hiring program to support the development of our beyond the core businesses. CGG's 2022 CapEx will increase to capture the favorable cycle and accelerate the development of our beyond the core businesses. Multi-client cash CapEx is anticipated to be around EUR 200 million, including new offshore programs in Latin America and the North Sea. Industrial and R&D cash investment is anticipated to be around EUR 70 million, including notably up to 100 petaflops of additional cloud high-performance computing capacity.
I am very excited by the range of opportunities that are in front of us, thanks to our unique and differentiated technologies. We will capture the growth of our core markets while developing meaningfully our beyond the core businesses. The next couple of years will be transformational for our company, and we are very well positioned to benefit from current global trends. We hope you will join us on this journey. Thank you very much for your interest, and we're now ready to take your questions.
Thank you. We will now begin the question and answers session. If you wish to ask a question, you will need to press star one on your telephone. To withdraw your request, please press the pound or hash key. Please stand by while we compile the Q&A queue. The first question comes from the line of Mick Pickup from Barclays. Please go ahead.
Good evening. Thank you for taking my question. Sophie, can I just ask you about the library and sales in the turnaround and others are showing up. What are the conversations you're having with the IOCs? They've historically been a big portion of sales and clearly moving parts. Do you think they will eventually start purchasing from global partners?
Sorry, Mick. Nice to talk to you. Your line is slightly breaking up, but I think I understood your question, which is about the conversation we're having with IOCs on the data library. You're absolutely right that historically IOCs have represented somewhere, I would say, around 40% of our revenue mix. Actually, you have to remember that because of our positioning in Brazil and Norway, maybe, you know, we are a little bit more, have been historically more skewed towards other client types than perhaps other competitors that are more, you know, geared towards frontier. Anyways, definitely they've dropped in the last couple years. I definitely think they're getting ready to reload sort of the exploration portfolio, and eventually they will need fresh data to do that.
If you think about it, they've come through a phase of refocusing. They're refocusing, they're starting to prioritize, and I think they're just getting in order, everything, the house in order to restart and reload that exploration portfolio. Clearly they're interested in those hot basins, right? The Equatorial Margin, Brazil, wherever they already have positions.
Okay. A question for you, if I may. Obviously a big chunk of this year's cash was on the disposals. Can you remind me what else you've got disposals-wise to come in in 2022?
Yes, Mick. Good evening. Basically in 2022, and you will see it in the press release, it's only one remaining element, and this is Galileo headquarters building sale and leaseback. We already signed a binding offer, and we expect it to close at the end of this month or April, basically, latest, I would say. The net proceeds from that is about $32 million.
Okay. Thank you. Cheers.
Yeah. Thank you.
Thank you. Next question comes from the line of Kevin Roger from Kepler Cheuvreux. Please go ahead.
Yeah, good evening. Thanks for taking my question. The first one is relating to the guidance that you issued in the GGR business. I was wondering what kind of multi-client sales, late sales you have baked in it. Because when I look at your communication and the messages, basically it seems that you increased the CapEx by 20%. Assuming that the funding rate remains equal, you will have a +20% in prefunding. If you look at Geosciences, just multiplying the Q4 by four, you have an embedded growth of something like 15%. I was wondering what kind of late sales you have baked in this guidance, because late sales were very low in 2021. It seems that levels of discussion are improving, et cetera.
If you can give us some information on that, please, Sophie.
Yeah, I think, yeah, you're trying to fit, perhaps, you know, making it too exact. First of all, the Q4 times four in geoscience, it doesn't work exactly that way. There's some seasonality to the geoscience, and I pointed you to a significant software sales contract that happened in Q4, and that's not gonna be necessarily recurring. As I mentioned through the downturn and now the kind of the moving up, geoscience doesn't, you know, move kind of slower. It doesn't have the amplitudes that you'd see in geoscience and in equipment and in the multi-client side. Yeah, first of all, that geoscience calculation you're making is probably not quite exact.
When we do our budgets, typically we don't necessarily always plan for that high of a prefunding, which we end up achieving. When we kind of look at our guidance and budget, we always wanna shoot above that 75% mark, which is sort of our floor. We end up doing more. We did build in our budget higher after sales. Perhaps the way you're doing it, you're looking at historical prefunding ratios, but when we build our budget and we provide our guidance, we don't build such a high number. We just always go back to the floor because that's the minimum we commit to.
Thanks, Sophie. Maybe a tricky one. Probably you have worked on the business plan several weeks ago. Now that you look at the situation with, let's say, the International Energy Agency that have revised up the baseline in terms of consumption that you have now the war in Ukraine, Russia and oil prices, etc., going up strongly, would you consider that it's very likely at the end that those oil and gas companies that Mick was just mentioning will maybe push a bit more on the data? Meaning that for them, maybe EUR 15 million-EUR 20 million in that environment is nothing but for you it would be a big change.
Yeah, I mean, it would be. You would think it is logical, right? When I gave you sort of my projection, that's certainly what's gonna have the priority is that sort of development. You're seeing it clearly with the companies, the likes of TechnipFMC, that are really loading their backlog into development of new fields. Probably the CapEx will be going first to that, but eventually it has to go towards exploration and data. Keep in mind that the data that we're selling as well is not just for exploration. That's the beauty of our position compared to others, is that we are in those mature basins. For example, the survey that we're gonna start this summer, and we have pre-commitment already. It's gonna be a good survey in a way. I'm quite excited.
We're gonna do a second azimuth to our Northern Viking Graben survey to the southern part, and then we're adding some sparse nodes to define the velocity model. It'll be a combination of production optimization and step-out exploration. I think that's gonna be what's where clients will be focusing first. Now, if you look at the announcement of, you know, the recent announcement of all of our clients, they're still talking about dividend, share buybacks, you know, kind of returning money to shareholders, and they're saying sort of CapEx comes after that. Eventually, as you know, production goes down, commodity prices stay up, naturally will, I mean, they will have to turn to more exploration. I think so. I mean, that's at the very senior level, this is the kind of conversations we have.
You know, it has to come back. The question is when. I would say, you know, certainly H2, maybe, you know, again, starting the year. For example, I could say that the first quarter is gonna be slow, kind of seasonality, and we're guiding you to a slow first quarter. Yeah, I do expect the second half of the year could be stronger than even what we've planned.
Okay.
But it's hard to-
Okay. Thanks a lot.
Yeah. It's difficult to say because they're so disciplined and still the message is around basically returning cash to shareholders, de-leveraging. The exploration department is still there and still very active.
Okay, fair enough. Thanks a lot.
Thank you. There are no more questions at this time. Please continue. We have one more question if you would like to take it.
Yes, sure.
Sure? Oh, sorry. The next question comes from the line of Kevin Roger from Kepler Cheuvreux. Please go ahead.
Yeah, if there is no additional question, I would maybe follow with one trailing to the cash flow generation. That will probably be a key focus from investors for 2022. You do not provide guidance for the cash flow in 2022. Can you give us, let's say, the key elements for the cash flow generation in 2022, please, Yuri?
Yes, Kevin, good evening. The first and foremost, our objective and target as always is to be at, as a minimum, cash breakeven, right? That's the starting point. Now, if we look at the kind of guidance for 2022. Obviously you have the key elements, like EBITDA, right? EBITDA dollars, as well as the guidance for CapEx. Within that, when it comes to working capital, it depends again on the sequencing of our revenue throughout the year, right?
As Sophie was just mentioning, if we have a strong Q4 at the end of the year, then like always, we might finish the full year with say some negative change in working capital on the back of the growing business. Of course, it will be good news because it means like always, that we'll be collecting those receivables in the first quarter of the following year. In terms of other elements, obviously cash cost of debt is well known and fixed. It's around EUR 100 million, depending on the euro exchange rate. By the way, P&L and cash cost of debt following refinancing is the same because we no longer carry the peak component in our debt.
Discontinued operations should be close to zero. We still have idle vessel compensation, which is about EUR 20 million per year. But on the other hand, we continue to negotiate with ONGC, yeah, to reach a settlement for those very old receivables as well. Basically the net impact or the net discontinued operations should be around zero. Then tax line in terms of cash, we're looking at probably EUR 10 million-EUR 15 million in terms of net cash flow. I think I covered kind of the main elements.
Yuri, if I look at the situation, basically taking implicitly your guidance in terms of top line and EBITDA margin to mean that EBITDA will probably be, let's say, slightly above $400 million, then you have $270 million of CapEx, $100 million of debt costs, and taking the tax plus the potential base of compensation to be prudent, it means that with all of that, you are at net zero, right?
Yes. I already mentioned answering to Mick that we also have $32 million of net proceeds from the Galileo sale and leaseback, which we will close end of this quarter, early Q2.
Okay, thanks.
Thank you. Next question comes from the line of Mick Pickup from Barclays. Please go ahead.
Hi, if Kevin gets two questions, I'm having two as well. Can you just talk HPC cloud service? Obviously, you're investing in it at the moment. Will that need continual investments as the business takes off?
Mike, I think you broke up. Is that, are you asking the question about investment in beyond the core businesses?
Beyond the core.
Yeah. No, investment in the HPC cloud.
In HPC cloud. Yeah.
Clearly, as that takes off, will you need to keep investing in it to if it matures as a business?
I would definitely, the answer is yes. Right now what we're doing, we have to replace our aging data center in the U.K. We're making an investment to sort of be able to double the size. Of course, we're not committing to the doubling right now. We're just preparing, putting ourselves in marching orders to be able to do it once, you know, we get the contracts and the orders. That's one thing we're doing right now, and it's part of sort of our normal cost of operation because we needed to do it anyways for our core business, but sort of preparing for a potential expansion. That's an area where it would be relatively easy once we have a long-term contract.
Usually, those HPC contracts, we would expect there will be multiyear contract, kind of with recurring revenue, that it would be very easy to finance. Basically, we're not too concerned about the cash side of the equation because once we have the contract. We've been able, by the way, over the years, to get leasing for our GPUs and CPUs and for our hardware. I would expect that would be the case. I would be able to find, you know, once we have the contract that we would be able to find the financing for it.
Okay. Thank you.
Sure.
So reminder, please press star one if you wish to ask a question. There are no more questions at this time. Please continue.
I think we've covered a lot. Thank you very much, and I look forward to following up with you. I'm sure you'll have more questions that come up, and look forward to seeing you soon. Thanks a lot.
Thank you, everybody. Have a good evening.
Bye. Have a good evening.
That does conclude our conference for today. Thank you for participating. You may all disconnect.