Our ION Solutions group had a very good year in 2007. On the financial side, ION Solutions generated $173 million in revenues, an increase of 18% versus 2006. Operating income for 2007 was $22 million, down $7 million from the prior year due to some strategic, low margin data library programs, and an exceptionally high number of data library sales in 2006.

Our GXT Imaging Solutions business performed well, driven by a roughly 20% year-over-year increase in data processing revenues. Our implementation of the state-of-the-art reverse time migration (RTM) technique for depth imaging has been especially noteworthy, with the E&P companies benefiting from the improved images that RTM can provide in areas of complex subsurface geology, including sub-salt. While RTM has always been considered the ‘Holy Grail’ of depth migration, its adoption was impeded by its inherent computational intensity. Our scientists have made several step-change improvements in how they implement RTM, which allows ION to deliver differentiated subsurface images to our clients in greatly reduced periods of time. The streamlined turnarounds are extremely important to the E&P companies, which often use the results to high-grade their exploration portfolios in advance of time-sensitive lease sales around the world. Given what we have achieved in the area of RTM, the technique has now become the primary depth migration offering within our data processing portfolio.

Another team at GXT was busy advancing our capabilities for full-wave imaging, including algorithms, workflows, data management engines, and advanced geophysical and reservoir analysis. Their work helped us deliver truly impressive insights to Sinopec for a fractured gas reservoir in XinChang, China. You can read more about XinChang later in this Annual Report, so I won’t get into it here other than to say that the results played a major role in driving the year end, 10,000 station Scorpion sale I mentioned previously. In my opinion, XinChang has become the rallying flag for ION and what our company is capable of when people from across the organization come together to solve problems directly for our oil & gas company clients.

In the marine imaging area, our GXT Imaging Solutions team was awarded a multi-year data processing contract in West Africa. We will be processing data that is acquired using VectorSeis Ocean by RXT on behalf of a supermajor oil & gas company operating in the area. We believe the total contract could deliver in excess of $20 million in data processing revenues over its life, making it the largest single data processing award ever received by ION.

Data libraries have been an important growth engine for ION since the acquisition of GXT in 2004. Historically, our data libraries have centered upon the BasinSPAN™– ultra-deep, basin-scale imaging programs that cover entire petroleum systems. During 2007, we benefited from several programs that were completed in prior years, including IndiaSPAN and ArcticSPAN. Both of these programs, for which acquisition was completed in late 2006, continued to be in high demand by oil & gas company customers looking for new frontiers for exploration. IndiaSPAN has become our largest program in terms of both library size and revenues – you can read more about it later in this Annual Report. We have plans to continue extending ArcticSPAN in the years ahead and are conducting a series of tests on behalf of several E&P companies that envision a new way of imaging the potential hydrocarbon basins believed to exist in the Arctic region.

We launched additional BasinSPAN programs during 2007, including Northeast AtlanticSPAN™ offshore Norway, Ireland, and the Faroes and Shetland Islands, as well as JavaSPAN™ offshore Indonesia. We are in the final stages of originating additional SPAN programs offshore South America and in Southeast Asia. Our Integrated Seismic Solutions (ISS) team is also busy extending our multi-client business in areas beyond the BasinSPAN. For instance, we have been working very closely with a supermajor to design an advanced, full-wave imaging program along the Gulf Coast and have also been working with several groups of E&P companies who are interested in full-wave, multi-client seismic surveys in the Rocky Mountains and the Pacific Northwest.

Many of these potential multi-client programs involve our full-wave platforms – Scorpion, FireFly, and VSO – with our ISS team working to aggregate regional demand among groups of interested oil & gas companies. Our FireFly and Seabed teams have also been working to generate demand for full-scope, full-wave imaging programs on a proprietary basis for E&P companies across the world, including North America, the Middle East, North Africa, China, and Central Asia. As a consequence, we believe that our pipeline of full-wave opportunities continues to expand and that our strategy of building multiple internal and external sales channels is working well.

We expect our growing pipeline of full-wave projects, including FireFly-related surveys, will prove timely as we prepare to release our second version of the system in mid-2008. You can read more about our first two field application projects with BP and Apache later in this Annual Report, but the headline is that the lessons learned from these early field deployments should serve us well as we move to full commercialization. After finishing the second field project with Apache in April 2007, we spent the remainder of the year incorporating the input of both oil & gas companies and their contractors into a version two design. We have been making the necessary refinements to FireFly and feel more confident than ever in our ability to satisfy the industry’s increasing demand for cableless, high station count surveys.