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Dawson Geophysical (NASDAQ: DWSN) reported fiscal Q4’11 net income of $2,944,000, or $0.38 per share, compared to a fiscal Q4’10 net loss of $1,411,000, or a loss of $0.18 per share.. Analysts forecast net income to be $0.24 per share. Revenues during fiscal Q4’11 totaled $84,256,000, an increase of 42% when compared to fiscal Q4’10 revenues. EBITDA during the quarter was $12,955,000, an increase of 146% when compared to $5,268,000 in the same quarter of fiscal 2010.

In fiscal 2011, DWSN narrowed its net loss to $3,246,000, or a loss of $0.42 per share, compared to a net loss of $9,352,000, or a loss of $1.20 per share in fiscal 2010. Total revenues for fiscal 2011 were $333,279,000, an increase of 62% when compared to fiscal 2010 revenues. EBITDA for fiscal 2011, including terminated merger costs with TGC Industries (NASDAQ: TGE), increased 112% to $27,861,000 when compared to $13,136,000 in the same period of fiscal 2010.

OAG360 Comments:

Answering the Industry’s Call for Additional Data Crews: Demand for 3-D seismic services significantly increased for Dawson Geophysical during the fiscal year of 2011; the company believes seeing the increased demand carrying over into fiscal year 2012. The company redeployed two data acquisition crews, and sequentially increased revenues both in Q4’11 and fiscal year 2011 by 42% and 62%, respectively – a solid foundation for the transition into 2012. DWSN is currently running 14 data acquisition crews in the lower 48 and we expect this is sustainable well into calendar year 2012. The company’s order book is at its highest level since late fiscal 2008 and activity in the oil and liquids shales remains robust and growing.

Positive Return on Operations: DWSN’s EBITDA margins for fiscal Q4’11 and the full-year 2011 were 15% and 8% respectively providing credit to the company’s observation that demand for its seismic services continues to grow as more companies are exploring the oil and liquids rich plays in the lower 48 states. Annualizing the fourth quarter results for fiscal 2012, Dawson’s future return on invested capital is estimated to be 29% (return metrics calculated using EBITDA).

Investing in Technology: The company reported on the conference call that DWSN will likely purchase its new equipment in the beginning of the year. Click here for the conference call transcript. DWSN approved an initial $20,000,000 capital budget for fiscal 2012 (100% funded from cash flow) to be used to purchase twelve INOVA AHV IV 364 vibrator energy sources units, additional geophones and recording channels for all crews. The company’s current debt-to-market capitalization ratio is 7%, which compares favorably to the 43% ratio for the “Services” group in EnerCom’s 76-company OilService database.

Oil and liquids rich shales, such as the Eagle Ford, Niobrara, Bakken and Marcellus, are driving the need for additional 3-D seismic data. Dawson has crews working with companies exploring and developing these shales, as well as the Barnett, Monterrey, Cotton Valley, Bossier, Woodford and Granite Wash formations. When seismic demand is strong, investors should look at the seismic companies willing to invest capital into purchasing new technology, and obtaining additional equipment to meet client needs. During the fiscal year 2011, DWSN’s CAPEX was $59.4 million which included the purchase of 25,850 single-channel OYO GSR units, 2,000 OYO GSR four-channel units with three component geophones and ten INOVA vibrator energy source units.

Over the previous three years, Dawson’s total capital expenditures were $82.4 million. This investment is important as Dawson’s management team sees increasing backlog of work and increase in project complexity. Steve Jumper was quoted to say: “I am happy to report that the increase in demand we experienced in fiscal 2011 has carried over into fiscal 2012. All fourteen crews are fully deployed and the average channel count per crew continues to grow. The increased channel count per crew is providing our valued clients with improved subsurface resolution while simultaneously providing strong financial results for our company.”


TGE Merger Agreement Terminated: As previously reported, TGC Industries, Inc. terminated the definitive merger agreement pursuant to which Dawson would have acquired TGC in a tax-free stock-for-stock transaction after Dawson and TGC failed to agree on an adjustment to the exchange ratio required as a result of Dawson’s share price falling outside of the designated range specified in the merger agreement, and TGC failed to receive the 80% requisite shareholder vote to approve the transaction at a special shareholder meeting held for that purpose. Dawson shareholders overwhelmingly approved the merger proposal at the Company’s special shareholder meeting on October 27, 2011.

 


Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication.

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.