Dawson Geophysical (NASDAQ: DWSN) reported financial and operating results for the quarter ended December 31, 2011, the company’s fiscal first quarter of 2012.

DWSN reported net income for fiscal Q1’12 of $3,231,000, or $0.41 per share, compared to fiscal Q1’11 net loss of $1,667,000, or a loss of $0.21 per share.

OAG360 Comments:

Dawson Geophysical operates in the fiercely competitive U.S. land seismic market. With a total of 14 data acquisition crews fully deployed throughout the continental U.S., Dawson is the country’s largest seismic operator. Thirteen of the 14 crews are working in oil/liquids-rich basins.

On February 1, 2012, Dawson reported fiscal Q1’12 results. Net income for the period increased 294% to $3,231,000, or $0.41 per share from a net loss of $1,667,000, or a loss of $0.21 per share. Revenues for fiscal Q1’12 totaled $92,382,000, an increase of 27% when compared to $72,653,000 for the same quarter in fiscal 2011. EBITDA for fiscal Q1’12 increased 125% to $11,028,000 when compared to fiscal Q1’11 EBITDA of $4,899,000. In the news release, Dawson noted “The revenue increase in the quarter was primarily the result of the previously announced redeployment of two data acquisition crews during fiscal 2011, increased channel count per crew, more favorable contract terms, and improved utilization rates and productivity on all crews. Revenues in the quarter continued to include high third-party charges. These third-party charges are related to the Company’s use of helicopter support services, specialized survey technologies and dynamite energy sources in areas with limited access. The Company is reimbursed for these expenses by its clients.” Gross operating margins were 14.7%. The company has $72 million of working capital and less than 1% net debt ratio. Comparably, Global Geophysical’s (NYSE: GGS) net debt ratio is 67%.

Equally important, was the Company’s continuing investment in technology. Having a clear understanding of the sector and equipment shortages that often plague the industry, Dawson made a strategic decision to invest heavily in key operating equipment in 2011, as well as into fiscal 2012. In fiscal 2011 Dawson Geophysical added 25,850 OYO GSR single-channel units and ten INOVA vibrator energy source units. In fiscal 2012, the Company’s Board of Directors approved a $20,000,000 capital budget which has been used, in part, to purchase twelve new INOVA AHV 364 vibrator energy source units and additional geophones. The robust inventory is likely to position the Company to serve more clients, increase its channel count per project and drive margin expansion going forward.

Management reiterated that its current order book is sufficient to fully sustain all 14 data acquisition crews well into fiscal 2012.

What to Look For During 2012

The good news is that Dawson’s typical fiscal first quarter issues (hunting season, harsh weather, etc) are behind them, and despite these problems, DWSN still managed to grow revenues, EBITDA, and report solid earnings. With 14 active data acquisition crews expected to work through the majority of fiscal 2012, and E&P companies exploring new oil and liquid-rich plays like the Utica Shale and Mississippi Lime, we believe DWSN is poised for busy fiscal 2012.

While the seismic sector is tightening, Dawson’s robust inventory should position the company to capture in increasing share of project activity. Look for Dawson to continue to expand its position in key oil and liquid-rich plays like the Bakken, the Eagle Ford and the Niobrara. Expect the Company to maintain its focus on projects that require higher channel counts per project to achieve increasing efficiencies and drive margin growth. And anticipate that management will maintain its bent toward conservative fiscal management with an exceptionally strong balance sheet.

Dawson will present at EnerCom’s The Oil & Services Conference™ 10 in San Francisco on February 21, 2012. Investors interested in visiting with management in San Francisco should contact EnerCom, Inc. for additional information. Click here for the website.


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