Dawson Geophysical (DWSN) Reports Q1 Loss of $0.22, Revenues Miss

Dawson Geophysical (NASDAQ: DWSN) reported Q1 EPS of ($0.22), versus $0.04 reported last year. Revenue for the quarter came in at $11.75 million versus the consensus estimate of $36.98 million.

Stephen C. Jumper, President and Chief Executive Officer, said, "Since the onset of the COVID-19 pandemic over a year ago, the seismic data acquisition market along with other oil field services remain challenged in the U.S. and Canada. While there are encouraging signs of recovery in certain oil field services, such as drilling and completion services, current demand for seismic related services remains at very low levels. In recent months, oil prices have improved to the $60 per barrel range as oil demand has increased with states beginning to further open businesses, air travel increasing and the rollout of the COVID-19 vaccines. The U.S. rig count, currently at 448, is steadily improving, as is the number of hydraulic fracturing crews. Based on currently available information, we anticipate seismic data acquisition activity in the lower 48 to reach a low in the second quarter and into the third quarter of 2021 with slight improvement later in 2021.

As we have stated in prior earnings releases, demand for seismic data acquisition in recent cycles lags behind the recovery in drilling and completion activity as Exploration and Production companies initially deploy capital into such services and work through their inventory of drillable projects. The same is true on the front side of a downturn as drilling and completion services are scaled back, while currently active seismic related projects continue, as seen in 2020 where our activity levels remained relatively high through the second quarter and into the third quarter after the onset of the COVID-19 pandemic. The timing of a return to an increase in demand for seismic services in 2021 is further delayed due to the depth of the most recent downturn, slow recovery of capital budget increases as oil prices remained depressed into 2021, a larger than typical post downturn inventory of drilling projects, and slower recovery of rig count to work through the inventory back log.

During the latter part of 2018 and continuing into the first half of 2020, the Company successfully acquired multiple high density, large channel count projects in certain areas of the Permian Basin. These fully processed data sets first became available to the industry in late 2019 and continue into 2021. Early results of these data sets indicate substantially improved subsurface image quality compared to prior seismic data sets, examples of which are just beginning to become public. The increases in data quality and imagery are currently being utilized for improved well planning, geo-steering of long lateral well bores, geo-hazard identification and avoidance, enhanced reservoir definition and rock property description between well data samples and strategic placement of disposal well locations. As the industry begins to recognize and appreciate the value of these high density, large channel count surveys, we believe demand for such surveys will improve. The Company's state-of-the-art equipment base allows us to deploy multiple large channel count crews when demand does improve."

Jumper continued, "In our continuing response to these difficult times, the Company significantly limited capital budget spending, reduced fixed and variable operating expenses, and implemented a comprehensive equipment maintenance program in preparation for a rapid response to increased activity levels. In addition, the Company maintains its commitment to its robust Health, Safety and Environmental program, ongoing client relationships and product quality."

For earnings history and earnings-related data on Dawson Geophysical (DWSN) click here.

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