Ladies and gentlemen, thank you for standing by, and welcome to CGG Q1 2023 financial results. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question, you will need to press star one one on your telephone. I would now like to hand the conference over to CGG team. Please go ahead.
Thank you. Good morning and good afternoon, ladies and gentlemen. Welcome to this presentation of CGG's first quarter 2023 results. The call today is hosted from Paris, where Mrs. Sophie Zurquiyah, our Chief Executive Officer, and Mr. Jérôme Serve, our Group CFO, will provide an overview of the quarter results, as well provide comments on our outlook. Let me remind you that some of the information contains forward-looking statements subject to risk 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. Now I will turn the call over to Sophie.
Thank you, Christophe. Good morning and good afternoon, ladies and gentlemen, thank you for participating in this Q1 2023 conference call. We move now to slide five. Let me start with some general comments on the evolution of our businesses and market environment during the quarter. Overall, commercial activity was strong across all our businesses and geographic locations this quarter. Exploration activities are picking up as clients are increasingly looking for new advantage reserves with lower breakeven prices and lower emissions, including IOCs, which we hadn't seen much of in 2022. To respond to projected supply-demand balance, our clients are also continuing to accelerate their field development programs. Many of our clients today are starting to face lack of resource challenges after downsizing their organizations and losing geoscientists to low- carbon divisions.
We have seen the strongest increase of activity in the Gulf of Mexico, Norway, and the Middle East, which all have been very active, and we all started to see increases in other parts of the world, including Asia Pacific. Offshore, particularly offshore deepwater, is attracting a larger share of E&P investments, and as such, high-end geoscience is increasingly required to de-risk subsurface and operational risks. We are well-positioned to support our clients with our high-end technology and integrated capabilities. Looking at CGG in Q1, I am pleased to report that our core business and technology development efforts, as well as our investments in our beyond the core business initiatives, have paid off.
We saw the recent award of three very large integrated imaging projects for NOCs and also achieved our first signature for a commercial HPC and cloud solution services contract outside of the energy industry and academic world, which is a real milestone in the establishment of this new business. We also delivered our first Gulf Coast U.S. CCUS screening study during the quarter. Overall, Q1 was a solid start to the year, with improving performance across three business lines. Geoscience revenue was $79 million, up 5% year-on-year on external revenue. The level of order intake at the end of the quarter was up 31% year-on-year, and this doesn't include the large integrated projects that we were awarded in April. Earth Data had a good quarter, thanks to stable after-sales at $30 million and higher pre-funding at $35 million.
On a pro forma basis, adjusting for the sale of our U.S. land library, after-sales were up 36%. Sensing and Monitoring had a better quarter, thanks to the early delivery of a set of streamers in a market environment that tends to be lumpy and still driven by significant one-off orders. Large tenders in the Middle East and North Africa for land and OBN equipment are positive signals for active Q2 and Q3 quarters. Overall, our Q1 revenue reached $210 million, up 37% year-on-year. Segment EBITDA was $66 million, a 31% margin and up 71% year-on-year. Net cash flow was $1 million. On slide seven. DDE segment revenue was solid this quarter at $144 million, up 21% year-on-year, with growth in both geoscience and Earth Data.
Profitability was impacted by our compensation for underutilization of vessels. Moving on to geoscience on slide eight. Geoscience external revenue was $79 million in Q1, up 5%, with growth coming from all regions. The market is strengthening with a high level of bid submittals worldwide. Backlog is up 22% year-on-year, thanks to order intake value being up 31% from Q1 last year, tracking back to 2019 levels. As mentioned, this increase in backlog doesn't include the three large multi-year integrated projects that were recently awarded to CGG by three different national oil companies. Overall, we see the size and content of projects significantly increasing, with more demand for advanced imaging technologies together with integrated geoscience services.
Historically, NOCs have asked for higher levels of integrated services in their projects, we are starting to see a similar trend with independents and IOCs who are short of resources and trust our highly data-driven products. The total production per head KPI continues to strengthen and is now above 2019 levels. we also are looking to increase our headcount to respond to higher demand for our services, we have gained in efficiencies and are increasingly using advanced AI- driven algorithms to perform some of the previously people- intensive tasks. Moving on to slide nine. In geoscience, CGG has always pioneered new and disruptive technologies, like today with our unique Elastic FWI. It is interesting to realize that today demand for these technologies is utilized more broadly by all customer profiles and across all locations, such as offshore.
Advanced technologies have been most required, also now more and more in shallow water and even on land where precision matters. These advanced algorithms enable our clients to significantly improve their understanding of the subsurface, reduce risk, and increase their drilling success. The image you see here from Southern Mexico is a clear example of improvements that technology can bring. The image offers a seamless view of the subsurface from shallow water to transition zone and land with many critical details. The project includes both onshore and offshore areas covered by multiple ocean bottom cable and land surveys. In transition zone, F ull Waveform Inversion is very challenging due to the limitation of input data. This is where CGG excels with our advanced technology and expertise. The finest image provides a significant uplift over the 2021 legacy data set.
In beyond the core, CCUS screening and monitoring design are two areas with increasing demand. We just completed a study in the Gulf of Mexico, which again, as mentioned earlier, saw first deliveries in Q1. I am particularly pleased with the signature of our contracts with BioSymulitics. Biotechnology is one of our target verticals for offering our specialized HPC and cloud services solutions. I will comment more on a later slide. Going on to slide 10. In UAE, during the quarter, we completed nearly all the processing of the largest ever OBN acquisition program. This OBN acquisition project covered a total area of more than 26,000 sq km. More than 2 million sensors were deployed, resulting in approximately 700 billion recorded seismic traces.
This was a technological challenge that we stepped up to and addressed thanks to our outstanding people and technology, supported by the largest HPC capacity in the industry. The project led to CGG winning another challenging imaging project, which entails the processing of the densest multi-component survey acquired in the world. On slide 11. Back to our new contract with BioSymulitics. CGG will be the exclusive HPC cloud partner of BioSymulitics, a pharma software company that uses artificial intelligence to accelerate drug development. CGG will be providing BioSymulitics with a fully customized cloud HPC solution.
Thanks to our experience of designing, developing, hosting and optimizing scientific workflows on specialized HPCs at an industrial scale, we are very well positioned and have the unique expertise to optimize the required IT infrastructure and software to run more efficiently, allowing BioSymulitics to scale up faster, as well as increase their focus on their expertise while not being distracted by HPC optimization. We have other similar opportunities in our pipeline in biotechnology, generative AI, and with industrial companies faced with new or increasing HPC requirements. Moving on to slide twelve now with Earth Data. Earth Data cash CapEx was EUR 28 million this quarter, down 15% year-on-year. In Brazil, we partnered with TGS in the Foz do Amazonas Basin. In the U.S. Gulf, our re-imaging projects continued to draw increased interest and pre-funding, and we continued the reprocessing of our stack size program.
Pre-funding revenue was solid at EUR 35 million and came mainly from our Norway and Brazil projects. after-sales were EUR 13 million this quarter, stable year-on-year, even with the divestiture of our U.S. land library in Q4 2022, and were mainly driven by the U.S. Gulf of Mexico. The U.S. Gulf of Mexico is clearly attracting interest from an increasing number of clients, including the deeper and more complex areas that have been quite slow in the last few years. The basin does offer a secure and reasonably stable environment with a relatively lower emission profile and a clear go-to market, hence rather remain a priority for many of our clients. Going on to slide 13 now. The Earth Data team had a very active quarter with a few high-profile business initiatives, including a 2D Guyana reprocessing project which is fully pre-funded by clients.
The Suriname project which we completed this quarter and is filling a data gap in the compelling deporter area and preparing for the start of our Northern Viking Graben East-West acquisition project, the continuation of this successful program. We also started preparation for the highly funded Heimdal Terrace OBN project. On slide 14. In the context of extending our Earth Data library, our teams are building a unique, comprehensive database of wells covering offshore Guyana, Suriname, and Equatorial margin. 30 wells offshore Brazil, 70 wells offshore French Guyana, 17 wells offshore Guyana are including in this program, as shown in this map. Thanks to our expertise and business best practices, data rights have been agreed with the local regulators from each country, and then cleaned, processed, interpreted, and integrated.
This type of product has been welcomed by our clients, as they do not have the resources to secure the data, clean it comprehensively, and then analyze it with advanced ML and geoscience technology. This is key for their interpreters to gain the most accurate understanding of new data. Our Guyana-Suriname GeoWells database is part of a global program to gather relevant well data from around the globe to complement our geology and geophysical products and continue to build expertise for our integrated projects. We move to Sensing & Monitoring with slide 15. Our Sensing & Monitoring segment revenue was stronger this quarter at $66 million, up 95% year-on-year. This was mainly supported by marine sales at $34 million, which were higher than previous quarters as we delivered a set of streamers to a research vessel in Asia Pacific.
Sales from beyond the core, which includes Geocom and the active defense sector, were also up at EUR 12 million, mainly driven by our structural health monitoring business. At this level of sales, the EBITDA of the Sensing & Monitoring business was breakeven. Slide 16. During the quarter inland, we delivered seismic equipment in North Africa, West Africa, and Asia. We see significant potential for our GPR300 node, especially in the Middle East, where demand for marine node systems and high-end processing continues to accelerate. During the quarter, we also acquired a small French startup, Morphosense, which complements the structural health monitoring product portfolio of SMO with a cabled system and a digital twin offering. Let me now give the floor to Jérôme for financial comments.
Thank you, Sophie. Good morning and good afternoon, ladies and gentlemen. I will now commence our Q1 2023 financial results. Let me start with the overall Q1 activities. As mentioned by Sophie, our segment revenue was up 37% year-on-year at EUR 210 million, driven by higher SMO sales. You may remember that SMO sales were at a record low last year in Q1. As well as higher EDA sales coming from solid pre-funding revenues from Norway and Brazil. Overall, the respective sales contribution from the core businesses were 38% from geoscience, 31% from EDA, totaling 69% for our DDE segment, and 31% from the SMO segment. SMO representing last year only 22% of our Q1 revenues. Segment EBITDA was EUR 66 million or 31% margin. This is up 71% year-on-year.
Note that as expected, the full stream from increased revenues to EBITDA was negatively impacted by the revenue mix, higher SMO sales bringing lower EBITDA margins than EDA. EBITDA was also negatively impacted by a higher compensation for underutilization of vessel services last year in EDA. Regarding segment operating income, Q1 was $30 million or 6% margin. After IFRS 16 adjustments, Q1 operating income was $7 million. Net income was negative at $16 million this quarter. Moving on to our cash flow. Q1 2023 segment free cash flow was $2 million negative after a negative change in working capital of $4 million and CapEx of $52 million. Versus last year, working capital was impacted by lower collections of Q4 revenues as well as higher end of the quarter sales to be collected in Q2.
CapEx was EUR 52 million, up EUR 10 million versus last year or 23% year on year, mainly from higher industrial CapEx related to the construction of the new HPC data center in the U.K. for EUR 18 million. Research and development capitalized costs were EUR 6 million, almost stable versus last year. Multi-client cash CapEx was EUR 28 million with a pre-funding ratio of 126%. Below the segment free cash flow, main cash item included +EUR 14 million of asset financing from the new U.K. data center, -EUR 12 million of lease repayment, and -EUR 6 million of cash costs linked to the Shearwater idle vessel compensation.
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It's okay. I guess we, I will start back with the cash flow maybe. Yeah. Start from the cash flow. Yes. Q1 2023, segment free cash flow was EUR 2 million after a negative change in working capital of EUR 4 million and CapEx of EUR 52 million. Versus last year, the working capital was impacted by lower collection of Q4 revenues, as well as higher end of the quarter sales to be collected in Q2. CapEx was EUR 52 million, up EUR 10 million or 23% year-on-year. This is mainly coming from higher industrial CapEx related to the construction of the new HPC data center in the U.K. for EUR 18 million. Research and development costs, which are capitalized, were at EUR 6 million, pretty stable versus last year.
Multi-client cash CapEx was EUR 28 million with a pre-funding ratio of 126%. Below the segment free cash flow, the three main cash item were EUR 14 million of asset financing for the new U.K. data center, -EUR 12 million of lease repayment, and -EUR 6 million of cash cost into the Shearwater idle base compensation. Overall, we ended up Q1 with a net cash flow at +EUR 1 million. Moving on to the group balance sheet. The group liquidity amounted to EUR 301 million at end of March, excluding EUR 95 million of undrawn RCF. Before IFRS 16, sorry, gross debt was EUR 1.2 billion, and net debt was EUR 905 million. After IFRS 16, net debt was EUR 994 million.
At the end of March 2023, the segment leverage ratio of net debt to EBITDA was 2.4 times. I will now hand the floor back to Sophie for an outlook of 2023.
Thank you, Jérôme, we are now on slide 22 with business trends. In Q1 2023, it became clear that the oil and gas industry's multi-year upcycle was starting to reach CGG's market. Until recently, it was not certain whether exploration would benefit from increased industry spending. The latest research numbers for offshore exploration now show that exploration spend will increase both in absolute value of the number above 20% and as a proportion of the total E&P spend, which is a first since 2015. IOCs, although more modestly, are starting to increase their exploration spend and in general are being limited by resource availability to ramp- up work.
With the highest-end technology combined with the largest geoscience workforce across the industry, including a broad range of disciplines and our leading imaging technology, CGG is the best positioned as a partner of choice to our clients. Recent fluctuations in oil price is not expected to impact this favorable cycle, especially as years of significant underinvestment. Our clients have all lowered their break-even oil price, which allows them to take a longer-term view. After the GoM that was the first to pick up, we see substantial increase in activity in Norway and more recently in the Middle East. National oil companies have deployed ambitious seismic acquisition projects amongst the most advanced in the world, and look for best-in-class technology to extract the most value from their investments, which CGG can provide.
Geoscience activity is trending towards 2019 levels with higher demand for advanced technologies, OBN processing and large integrated projects. Demand for our Earth Data should continue to be solid, sustained by bid rounds and clients looking to secure new positions as well as demand for our new portfolio as we continue to expand our CCUS library. The Sensing & Monitoring business should grow significantly in 2023, driven by solid demand for land equipment, node system, and the promising beyond the core SHM business. I'm very pleased with the progress of our beyond the core initiatives, especially CCUS and SHM, and also by the continued development of our HPC and cloud solutions business and the recent award of the HPC contract with BioSymulitics.
In this context, I am confident in our ability to deliver our 2023 financial objectives. I am increasingly positive in the longer term outlook for CGG. Thank you for your interest. We're now ready to take your questions.
Ladies and gentlemen, we now begin the question and answer session. As a reminder, if you wish to ask a question, please press star 11 on your telephone. If you wish to cancel your request, please press star 11 again. We are now taking the first question, so please stand by. The first question from Jean-Luc Romain from CIC. Please go ahead. Your line is open.
Good afternoon. I have two questions, if it's possible. The first is on SMO. Would you think the start of increase in deliveries for land products to the big Middle East land surveys will start in Q2, or is it more second half story? That's the first question. The second question is about the Earth Data investment in carbon capture. Would you accept to isolate what was dedicated to the investment which was dedicated to CCS characterization? How do you see it evolving as we are seeing large companies purchase lots of rights, specialized, especially for this, for this sync in the recent deals ones?
Why thank you. Good evening, Jean-Luc. First the question on SMO. In terms of the Middle East, the Middle East land surveys, I think you're referring to the Saudi tenders, which still haven't been awarded. Right now, our provisions are for equipment deliveries to be between Q2 and Q3. If you remember, there are two land crews and three OBN crews to be delivered. Of course, you know, we'll be competing on some of those with competitors. We have right now are planning for deliveries in Q2 and Q3. It should have been awarded by now, and it's still getting delayed. On the Earth Data side, in terms of CCUS investment, call it a single digit, right? It's in the million dollars.
It's not hugely significant. Also keep in mind that we can sell our data, our seismic data as is, and this is what we did last year. Most of our sales last year were really relative to existing seismic data we had. For now, we're constructing data packages with data that we already have, and that's really a single digit number in terms of $ million.
Thank you very much.
Thank you for your question. We are now taking the next question. Please stand by. The next question, call Kévin Roger from Kepler Cheuvreux. Please go ahead. Your line is open.
Yes. Good evening. Thanks for taking the question. So if I missed it, but I joined the call late, would you be able to provide me the backlog that you have maybe at the end of the quarter or maybe sooner at the end of April and maybe some granularity on it? How much of this backlog will be converted into revenue in 2023? The level of the commitments that you have currently on your multi-client CapEx plan, so any color on that side. You completed the conference call saying that you are more and more optimistic about, let's say, the short to mid-term earnings for BN. Basically, the Q1 is much better than what you guided.
You were expecting to be in line with Q1 last year. You arrived well above that. Does it change a bit, not to sound too optimistic, but a bit your expectation for the full year, meaning that you will not expect to arrive in the high end of the range that you were presenting us before? Any color also for the expectation for the full year, please.
Yeah. Thank you, Kevin, for your question. I'll take the second question, and then I'll give the first question on the backlog to Jérôme. I think it's really too early a quarter. As you've seen, remember last year, we were quite volatile from quarter to quarter. We had a slow quarter then followed by a good quarter, and that's related to the lumpiness of the business, which is now actually in SMO and Earth Data. We've got two of our businesses tend to be lumpy now. I wouldn't draw conclusions just on the first quarter, and that's why we are reiterating our guidance. I think it's a bit too early to really draw a conclusion and make a trend. Definitely, in terms of a longer mid to longer term view, I'm getting more confident.
As I was saying, the IOC is definitely resuming more exploration, which was a bit of a question mark even a year ago. There are some positive trends that we're seeing in our market that finally the cycle seems to be coming our way. Unlike previous cycle that we're starting with exploration, this is a different cycle where our clients have been more cautious around exploration. It's coming our way. A bit early to draw a conclusion. I would say let's wait Q2 to have a better view. For now, we're sticking to our full year.
Okay.
Kevin, regarding the backlog, at the end of March, you're at EUR 420 million, which is 33% increase year-on-year. Out of this 420, about EUR 300 million should convert into revenues by end of the year.
Okay. That's basically mostly the certain equipment without the mega cruise in Saudi Arabia that you are still expecting in terms of final investment decision from the client and the commitment for pre-funding on investment. Right?
This is the overall CGG backlog that I gave you, which does not include the after-sales obviously. Indeed, the backlog does not take into account the mega cruise. It's not been awarded yet, you said.
What's not in there are the three large projects that we won from NOCs on geoscience that came into April. We had orders as well that came into April, so of course that's not into it. But yeah, that's at the end of March. Keep in mind that the... as much as I think the on geoscience, the backlog is really a good indicator on how the year is turning out, and that's why we're publishing it, and it's definitely up and it's tracking to 2019 levels. In SMO, typically we don't have the long visibility in backlog. We have about three, four months. Earth Data is a little bit the same story. It's a little bit lumpy, so it's difficult to predict.
In general, we're certainly seeing some of the highest levels of backlog that we've had in many years.
Okay. Thanks a lot for that.
Thank you for your question. We are now taking the next question. Please stand by. The next question is come from the line of Guillaume Delaby from SG. Please go ahead. Your line is open.
Yes. Good afternoon. Maybe I would like to come back on your comments regarding exploration spending. Basically, during the Q1 call from SLB, they mentioned that what was new versus just a few months ago, that exploration was basically recovering. Could you maybe, because I missed some of the data point, you provide, and also if you can maybe give some color, maybe one or two, let's say maybe clients anecdote, that struck you, I would say, over the last maybe few months or few weeks, which basically, confirm what you are saying on exploration? Thank you.
Yes. Good evening, Guillaume. Yes, I've been, of course, watching and listening to SLB comments carefully. I remember they made a comment in Q2 last year as well, and I remember my response was, "Oh, we're not really seeing the same thing." Keep in mind that they have a much broader exposure to the oilfield service than we have. As I suspected last year, the investment starting in the drilling. The clients started to drill the exploration well because they wanted to keep their commitments and make sure they were able to keep their blocks. That's how exploration started. By the way, the numbers I was mentioning come from Rystad.
Rystad has been increasing their view on exploration spend offshore pretty much every month between January, February, and March of this year, because they weren't even three months ago acknowledging the increase. That's good news. In terms of why we think it's coming our way finally, one of the indicators is the percentage, the mix in our Earth Data sales. This is something we've been monitoring since the COVID, because definitely our mix of clients has changed. We had a feel for it, when you look at numbers, it was quite striking. Without giving the precise numbers, the IOCs were divided by two in our client mix. Basically it was NOCs, it was independent. We were losing by half, you know, the IOCs.
I wouldn't say they've come back to that same proportion, but they're definitely up somewhere halfway to where they were. Divided by two, so they've increased a significant portion in the mix of our data sales. I suspect the same would be true with our peers. Another one that perhaps you would see is the activity in the Gulf of Mexico. There was that big round in March, a lot more active, higher bid submissions, definitely another sign, you know, how much companies were willing and the kinds of blocks that they took. The other one as well is another one would be some clients that haven't been active in years in the Gulf of Mexico, for example, are coming back.
Another final data point is we're seeing more interest in our more frontier data from IOCs and clients in general. We have data in Gabon, in Mozambique, and we hadn't had much requests, and now we're starting to see requests and might be making deals over there. Does that help?
Okay. Yeah. Merci, Sophie.
Thank you for your question.
Yep.
We are now taking the next question. Please stand by. The next question from Daniel Thomson from BNP Paribas. Please go ahead. Your line is open.
Hi, good evening. Yeah, I just wanted to confirm, the Shearwater charge during the quarter and what that charge is expected to be for the full year. Just the delta in the net debt quarter and quarter as well, I just wasn't quite clear given the net cash flow was relatively neutral, while there was a bit of an increase in net debt quarter on quarter. Thank you.
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We now have Mr. Daniel Thomson from BNP Paribas. Please go ahead.
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Perfect. Okay. Yeah, I just wanted to confirm on the call, what the charge was for the Shearwater agreement this quarter, and the expectation of that charge for the full year. Then just, what was going into the increase in net debt quarter-on-quarter, given the net cash flow was kind of neutral. Just a bit of color on that, please.
The Shearwater for the quarter, between the penalty and the compensation for idle vessel is about $20 million.
Okay. the expectation-
Sorry.
The expectation for the full year?
Expectation for the full year is more around EUR 50 million.
Okay, thank you.
The cash impact, huh?
Yeah. Daniel, this is the total cash impact, including $21 million for IBC, either sell, less compensation, which is.
Which has already been provided for at the time of the deal, so will not impact the net income.
Yeah. Yes. The $30 million, cash costs, which are in the operational cash cost of the business lines.
The NDMBDA issue, we should talk, yeah, around the customers.
Daniel, of course, this is of what we're planning on, but obviously we're gonna do everything to not have to spend money. We're really working actively on projects and balancing whether, you know, we can find a good project to avoid paying penalty. Idle vessel compensation is a number that's there, and it's gonna be there until the end of the contract in about a year and a half. That's been provisioned for, and then we have to deal with the penalty for not using the 24 vessel months depending on the quality of projects that we're looking at.
Okay.
Regarding the net debt, it was only increased by the asset financing that we have with for the construction of our new data center in the U.K. Top of my mind, I think it's around EUR 27 million.
Okay. Got it. Thank you.
Thank you for your question. We are now taking the next question. Please stand by. The next question in from Baptiste Lebacq from Oddo. Please go ahead. Your line is open.
Yes. Thank you. Good evening. I have two questions. The first one is regarding the pre-funding rate, which was very impressive in the first quarter. What could be the best bet or guess for Q2 and the rest of the year? I try the question. The second one is regarding your investment for the U.K. HPC data center. You had $19 million of CapEx, industrial CapEx in Q1. Can you give us an idea regarding when this data center will be on a startup mode? Are you still comfortable with your industrial CapEx budget of $70 million for 2023? Thank you.
Good evening. Thank you for the question. On pre-funding rate, it's very difficult to look at on a quarter-to-quarter basis. Really it has to be a full year. If you remember, we always said, you know, 70%-75% budget-wise is what we're targeting. Of course, we were trying to get as much as we can, and typically we've been getting 80%+, and that would be our ambition. In terms of commitment, we're saying, you know, we want to reach that 75% pre-funding. We're taking this year a bit more cautious approach in terms of quality of the project and pre-funding.
That's why you're seeing a CapEx a little lower on the Q1 and really pushing hard on the pre-funding. On the U.K. HPC data center, the project is pretty much going per plan. There isn't any surprises on that project, and we're looking at go live in September. It's very advanced. I actually have visited it in January. It looks very impressive, and it can add to us for us about 100 petaFLOPS. Remember, we're at 350 petaFLOPS. Yeah, no surprises on the budget, we'll stick to our budget numbers. There is another number. Was there another question on how much or? Yes. We are fine. Yes. Fine. It's confirmed. It's confirmed. Yeah. It's within the envelope that was planned. It is Thank you.
It is a very large infrastructure investment and the kind of investment that you do every 20 years. We hadn't done any such investment actually during my time. We've been living off really aging infrastructure and pushing it hard. It's infrastructure is different from actually the compute itself. What we're investing in is an infrastructure that will allow us to grow significantly our computing power. Okay. Thank you very much.
Thank you for your question. We are now taking the next question. Please stand by. The next question from Daniel Thomson from BNP Paribas. Please go ahead. Your line is open.
Hi again. Sorry, I just wanna throw in another one there. On the sort of recovery in demand that we spoke about in terms of data from the IOCs and your other clients, is there any sort of shape to late sales that we should anticipate, you know, going through the rest of the year? I know, you know, four Q is normally a high point. You know, should we be assuming a gradual increase over two Q and three Q with four Q, the high point again? Thanks.
Yeah. Thanks for that question. I guess this is what the question you're asking is the most difficult one to predict. If I look back at Q1, even some of those late sales appeared literally a few days before the end of the quarter. A lot of it was driven by the Gulf of Mexico activity. It really is depends on where we or where the data is and where the client's interest is. At the macro level, I would expect that the clients spend more money on after-sales overall. Where does the money go? It will depend a little bit on the areas of interest from the client.
I think we'll get our fair share of it because of our footprint and our position in some of the key, you know, basins where the clients currently invest. At the macro level, over the full year, I would expect that we would see a good outcome. If you're gonna look at year-over-year growth, at least the way we look at it, is last year there was a bit of exceptional associated with transfer fee. In this specific case of CGG, we had land, and the land was about $18 million of after-sales, right. Within that, you know, to kind of correct for some of the exceptional and the land, you know, we definitely should see some growth.
The other data point I can give you is typically, historically, DDE used to be tracking more or less the E&P CapEx dynamics. We would be sort of the two of them together would kinda tend to follow E&P CapEx dynamics. I see no reason it should be different. The quarterly-
Okay.
View is actually very difficult to predict. Right now I don't have, for example, the visibility on Q2 after-sales. I have the visibility on pre-funding because there's a certain level of backlog, and possibly we'll get more pre-funding through the quarter on some of our ongoing projects. Typically the after-sales are just more difficult to predict.
No, I appreciate that. Thanks for, thanks for providing what you can. Thanks.
Sure.
Thank you for your question. There are no further question at the moment, but if you wish to ask a question, please press star one one on your telephone. There are no further question. I will hand back the conference to the CGG team for closing remarks.
Yes. Thank you very much. Thank you for attending. Apologies for the complexities, the difficulties we've had with the connection. I hope we haven't missed too much of our talk. I look forward to seeing you, one-on-ones, and thank you for attending, and have a good evening. Thank you, or a good rest of your day if you're not in Europe. Thank you. Thank you.
That concludes the conference for today. Thank you.