Dawson Geophysical Company (NASDAQ:DWSN) today reported unaudited financial results for its third quarter ended September 30, 2016.
For the quarter ended September 30, 2016, the Company reported revenues of $28,122,000 as compared to $62,498,000 for the quarter ended September 30, 2015. For the third quarter of 2016, the Company reported a net loss of $12,416,000 or $0.57 loss per share attributable to common stock, as compared to a net loss of $2,870,000 or $0.13 loss per share attributable to common stock for the third quarter of 2015. The Company reported negative EBITDA of $3,403,000 for the quarter ended September 30, 2016 compared to EBITDA of $7,806,000 for the quarter ended September 30, 2015.
During the third quarter of 2016, the Company operated four to five crews in the United States for most of the quarter. Utilization of several crews was unfavorably impacted by inclement weather conditions in several areas of operation late in the first quarter that continued into the early part of the second quarter, and again during the latter stages of the second quarter that continued into the beginning of the third quarter. In addition to inclement weather conditions, we experienced several client-directed delays over the last several months.
Stephen C. Jumper, President and Chief Executive Officer, said, “Demand for seismic data acquisition services in North America and worldwide continues to be soft in response to low and uncertain oil prices and reduced client expenditures. During the quarter ended September 30, 2016, oil prices averaged approximately $45 per barrel, starting the quarter at just over $49 per barrel, dropping to a quarterly low below $40 per barrel on August 2, and ending the quarter at just under $48 per barrel for West Texas Intermediate. While encouraging, it remains to be determined if the recent strengthening in oil prices can be sustained, and the price increases have yet to result in a meaningful increase in demand for our services. As we experienced uncertainty in oil and natural gas prices during our first two quarters of 2016, our client base continues to take a cautious approach to their capital spending. Based on currently available information, seismic service demand levels and the anticipated winter season in Canada, we believe we will operate five to seven crews through the first quarter of 2017. Visibility beyond the first quarter of 2017 remains unclear. In response to these factors, we will continue our on-going effort to control costs and maintain a strong balance sheet, our experienced personnel and our position as a leading onshore seismic data acquisition company in North America.”
Capital expenditures for the first nine months of 2016 were $6,198,000, primarily composed of replacement recording channels lost in the spring 2015 and 2016 floods in southeast Texas and Oklahoma. These expenditures were funded in part by insurance proceeds received related to those losses. The Company anticipates a capital budget for 2016 to be at maintenance levels below the $10 million approved by our board of directors. The Company’s balance sheet remains strong with $62,513,000 of cash and short term investments, $63,884,000 of working capital and $3,993,000 of debt and capital lease obligations as of September 30, 2016.
Jumper continued, “As mentioned during our second quarter call, 2016 will be a difficult year, and likely the most difficult in my thirty-plus years of experience with the Company and in the industry. That said, the price of oil is up over 70% from the decade low reached earlier this year on February 11. Although we have not seen a meaningful increase in proposals as previously discussed, this positive development is very encouraging. The oil market appears to be slowly working through a rebalancing phase. We believe oil and gas companies will gradually start to put capital back to work, and seismic surveys should play an important role in helping these companies maximize their production economics. Our continuing commitment to maintain a strong balance sheet while operating the largest fleet of state-of-the-art land-based seismic equipment with the most experienced personnel in the industry uniquely positions Dawson Geophysical to successfully respond to the market as conditions improve.”
On February 11, 2015, legacy Dawson Geophysical Company and legacy TGC Industries, Inc. consummated their previously announced strategic business combination. The merger transaction was accounted for as a reverse acquisition with legacy Dawson Geophysical being deemed the accounting acquirer with the results of legacy TGC Industries, Inc. being reflected in the Company’s reported consolidated financial results only for periods from and after February 11, 2015. The merged companies adopted a calendar fiscal year ending December 31. Due to the foregoing, comparative financial results that include periods prior to February 11, 2015 are not comparable to financial results that include periods from and after February 11, 2015. Additional information regarding the business combination and its impact on the Company’s financial position are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the Securities and Exchange Commission on March 16, 2016 and includes the Company’s audited consolidated financial statements (i) as of and for the years ended December 31, 2015 and September 30, 2014, (ii) for the three months ended December 31, 2014 and (iii) for the year ended September 30, 2013.
Conference Call Information
Dawson Geophysical Company will host a conference call to review its third quarter 2016 financial results on November 3, 2016 at 9 a.m. CT. Participants can access the call at 1-888-397-5362 (US) and 1-719-325-2248 (Toll/International). To access the live audio webcast or the subsequent archived recording, visit the Dawson website at www.dawson3d.com. Callers can access the telephone replay through December 4, 2016 by dialing 1-844-512-2921 (Toll-Free) and 1-412-317-6671 (Toll/International). The passcode is 7667218. The webcast will be recorded and available for replay on Dawson’s website until December 4, 2016.
About Dawson
Dawson Geophysical Company is a leading provider of North America onshore seismic data acquisition services with operations throughout the continental United States and Canada. Dawson acquires and processes 2-D, 3-D and multi-component seismic data solely for its clients, ranging from major oil and gas companies to independent oil and gas operators, as well as providers of multi-client data libraries.
