DWSN

Dawson Geophysical Company (DWSN)

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Exchange: NASDAQ
Industry: Energy
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Dawson Geophysical Company (DWSN)

Q1 2011 Earnings Call

February 2, 2011 10:00 am ET

Executives

Steve Jumper - President, Chief Executive Officer
Christina Hagan - Executive Vice President, Chief Operating Officer

Analysts

Veny Aleksandrov - Pritchard Capital

Luke Lemoine - Capital One Southcoast

Collin Gerry - Raymond James & Associates

Presentation


Operator

Good morning. My name is [Melissa] and I will be your conference operator today. At this time, I would like to welcome everyone to the Dawson Geophysical first quarter conference call. All lines have been placed on mute to prevent any background noise. (Operator instructions). I will now turn the conference over to Steve Jumper, President and CEO.

Steve Jumper

Thank you, [Melissa]. Good morning and welcome to Dawson Geophysical Company’s first quarter 2011 earnings and operations call. As [Melissa] said, my name is Steve Jumper, President and Chief Executive Officer of the company. Joining me on the call are Christina Hagan, Executive Vice President and Chief Financial Officer; Ray Tobias, Executive Vice President and Chief Operating Officer; and Decker Dawson, Founder and Chairman.

As in our prior conference call, we’ll do this in three segments. Chris will come on here shortly and discuss our financial results, I will come back and give you an operations update and then we’ll open the call up for questions.

The call is scheduled for 30 minutes as in the past. We’re having a little bit of weather issue here in Midland. Apparently when the temperature gets down to 10 degrees, we have a hard time keeping up with electricity, so there is a potential of rolling blackouts for Midland today. If we go dead, it’s a power outage here in Midland.

As in the past, we will not be providing any guidance. At this point, I’ll turn control of the call over to Chris Hagan, our CFO, to discuss our financial results.

Christina Hagan

Thank you, Steve. First, let me share the safe harbor provisions. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Dawson Geophysical Company cautions that statements made today in this conference call, which are forward looking and which provide other than historical information, involve risks and uncertainties that may mature the effect of company’s actual results of operations.

This risks include but are not limited to the volatility of oil and natural gas prices, dependence upon energy industry spending, disruptions in the global economy, industry competition, delays, reductions or cancelation of service contracts, high fixed costs of operations, external factors affecting our crude such as weather interruptions and inability to obtain land access rights of way, whether we enter into turned key or term contacts, crude productivity, limited number of customers, credit risk related to our customers, the availability of capital resources and operational disruptions. A discussion of these and other factors including risks and uncertainties is set forth in our Form 10-K for the fiscal year ended September 30, 2010.

Dawson Geophysical Company disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise. During this conference call, we will make references to EBITDA, which is a non-GAAP financial measure. A reconciliation of the non-GAAP measure to the applicable GAAP measure can be found in our current earnings release, a copy of which is located on our website www.dawson3d.com.

Now turning to our reported revenues., today in our release we reported revenues of $72, 653,000 for the quarter ended December 31, 2010 which is our first quarter of fiscal 2011 compared to $36,330,000 for the same quarter of fiscal 2010, an increase of 100%.

Net loss for the first quarter of fiscal 2011 was $1, 667,000 compared to net loss of $4, 216,000 for the same quarter of fiscal 2010. Loss per share for the first quarter of fiscal 2011 was $0.21 compared to a loss per share of $0.54 for the first quarter of fiscal 2010. EBITDA for the first quarter of fiscal 2011 was $4,899,000 compared to a loss of $211,000 in the same quarter of fiscal 2010.

The revenue increase in the quarter was primarily as a result of previously announced redeployment of three data acquisition [crude] during 2010, increased channel count for crude and improved utilization rates on existing crudes.

Revenues in the quarter continued to include unusually high third party charges related to the use of helicopter support services, specialized survey technologies and dynamite energy sources. The sustained level of these charges is driven by our continued operations in areas with limited access such as the Appalachian Basin, east Texas and Arkansas. We are reimbursed for these expenses by our clients.

As previously announced, the company’s Board of Directors has approved a $35 million capital budget for fiscal 2011, which has been used in part to purchase additional OYO GSR equipment that Steve will talk about and 10 vibrator energy source units. The remainder will used to meet necessary maintenance requirements during fiscal 2011. Steve?

Steve Jumper

Thank you, Chris. While inclement weather and shorter days associated with seasonality negatively impacted first quarter results, results which were greatly improved when compared to the first quarter of fiscal 2010, activity on behalf of our clients across the lower 48 states is on the right. Demand for our services continues to grow as the [in peak] companies seek higher resolution sub-surface images in their effort to cost effectively identify, develop and produce hydrocarbon.

Read the rest of this transcript for free on seekingalpha.com