Dawson Geophysical Company (DWSN)

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Dawson Geophysical Company (DWSN)

F1Q10 (Qtr End 12/31/09) Earnings Call Transcript

February 3, 2010 10:00 am ET


Steve Jumper – President & CEO

Christina Hagan – EVP, Secretary, Treasurer & CFO


Collin Gerry – Raymond James

Veny Aleksandrov – Pritchard Capital Partner

Pierre Conner – Capital One Southcoast



Good morning. My name is Cynthia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Dawson Geophysical first quarter 2010 earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions). Thank you.

It is now my pleasure to turn today’s call over to Steve Jumper, President and CEO. Please go ahead sir.

Steve Jumper

Thank you, Cynthia. Good morning and welcome to the Dawson Geophysical Company's first quarter 2010 earnings and operations conference call. As Cynthia said, my name is Steve Jumper, President and CEO of the company. Joining me on the call are Christina Hagan, Executive Vice President and Chief Financial Officer; and Decker Dawson, Chairman of the company; and Ray Tobias, Executive Vice President and Chief Operating Officer.

Today's call will be presented in three segments. Following these opening remarks, Chris will discuss our financial results. I will then return for an operations update, then open the call for questions. As in the past, the call is scheduled for 30 minutes and we will not provide any guidance.

At this point, I will turn control of the call over to Chris Hagan, our CFO, to discuss our financial results.

Christina Hagan

Thank you, Steve. Let’s start with our Safe Harbor provision. In accordance with the Safe Harbor provision 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 materially affect the company's actual results of operations.

These risks include but are not limited to the volatility of oil and natural gas prices, disruptions in the global economy, dependence upon energy industry spending, cancellations of service contracts, high fixed costs of operations, weather interruptions, inability to obtain land access rights of way, industry competition, limited number of customers, credit risk related to our customers, asset impairments, the availability of capital resources and operational disruptions. A discussion of these and other factors, including risks and uncertainties, is set forth in the company's Form 10-K for the fiscal year ended September 30, 2009. 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, Dawson will make reference to EBITDA, which is a non-GAAP financial measure. A reconciliation of this non-GAAP measure to the applicable GAAP measure can be found on Dawson's current earnings release, a copy of which is located on the Dawson Web site www.dawson3d.com.

This morning, we reported revenues of $36,330,000 for the quarter ending December 31, 2009, our first quarter of fiscal 2010, compared to $80,216,000 for the same quarter in fiscal 2009, a decrease of 55%. Net loss for the first quarter of fiscal 2010 was $4,216,000, compared to net income of $7,734,000 in the same quarter of fiscal 2009. Loss per share for the first quarter of fiscal 2010 was $0.54, compared to income per share of $1.00 for the first quarter of fiscal 2009. EBITDA for the first quarter of fiscal 2010 was a loss of $211,000, compared to income of $19,162,000 in the same quarter of fiscal 2009.

The revenue decrease in the quarter was primarily the result of previously announced reductions in active crew count during the second quarter of fiscal 2009, a reduction of four crews; during the third quarter of fiscal 2009, a reduction of two crews; and during the first quarter of fiscal 2010, a reduction of one crew. Revenues in the quarter continued to include relatively 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. We are reimbursed for these expenses by its clients.

I will now turn it over for Steve’s comments.

Steve Jumper

Thank you, Chris. There is no doubt the first quarter of fiscal 2010 was challenging. While we operated nine seismic data acquisition crews during the quarter, down from 16 a year ago, as Chris mentioned, lower utilization rates one the nine crews, excessive downtime for weather on several crews in October and December, along with the typical first quarter seasonal issues negatively impacted our results.

However, beginning in late calendar 2009, we began to experience an increase in demand for our services in numerous oil and natural gas producing basins, including the Marcellus Shale, Haynesville Shale, Eagle Ford Shale, Barnett Shale, Fayetteville Shale, Bakken Shale, and the Permian Basin and mid-continent region.

In response to the increase in demand, we’ve redeployed two existing crews in January. As of today, we are operating two crews in the Appalachian Basin, two in North Dakota, four in West Texas, one in Arkansas, one in the Fort Worth Basin, and one in Utah are bringing our active crew count up to 11. While we remain in a competitive pricing environment and the overall state of our economic in industry remains somewhat uncertain, we believe our order book reflects commitments to maintain operations of the 11 crews through the middle of calendar 2010.

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