DAWSON GEOPHYSICAL CO Q3 FY2020 earnings call

• Reduced demand for oil and gas due to the worldwide COVID-19 pandemic negatively impacted third quarter operations, with project uncertainties leading to a substantial reduction in demand for services.
• Companies served have significantly reduced their capital spending plans for the remainder of 2020 and into 2021, though requests for proposals for sizing services continue to flow worldwide.
• The company has taken steps to outsource several ancillary services, resulting in reduced salary costs and lower general and administrative expenses.
• The balance sheet remains strong as of September 30, 2020, with $45.4 million in cash and cash equivalents, a current ratio of 9.9 to 1, and working capital of approximately $54.8 million.
• The oil service industry is beginning to experience slight improvements in some areas, such as an increase in the number of active rigs and hydraulic fracturing crews deployed in the US, but seismic data acquisition is anticipated to somewhat lag behind increases in drilling and completion activities.
• The company is maintaining its focus on cost-saving measures while balancing the ability to respond rapidly when market conditions improve, and the industry trend is fewer crews with higher channel count for a crew.

For the third quarter ended September 30, 2020, Dawson Geophysical Company reported revenues of $8.7 million, a significant decrease of approximately 76% compared to $37 million in the third quarter of 2019. The net loss for the third quarter of 2020 was $7.8 million or $0.33 loss per common share, and EBITDA was negative $3.8 million. For the 9 months ended September 30, 2020, revenues were $77.2 million, a decrease of approximately 31% compared to $112.2 million in the same period of 2019. The net loss for the 9 months ended September 30, 2020 was $5.3 million or $0.23 loss per common share, and EBITDA was $7.8 million compared to $7 million in the same period of 2019.

• The company anticipates operating one data acquisition crew with periods of low utilization for the foreseeable future in the United States.
• Up to 2 crews are anticipated to operate in Canada for the winter season and the late fourth quarter of 2020, and into the first quarter of 2021.

• The worldwide COVID-19 pandemic has led to a reduction in demand for oil and gas, negatively impacting the company's operations.
• Project uncertainties remain high, leading to a substantial reduction in demand for the company's services going forward.
• Oil prices are currently below $36 per barrel and are likely to remain low through the end of 2020 and into 2021, which may continue to weigh on the company's operations.

Q: How is the company keeping crews available for future work and improving efficiency?

A: The company is maintaining key personnel. The industry trend is fewer crews but higher channel count for a crew. While the permitting process is a delay, higher channel count helps with efficiency from a financial standpoint.

Q: Have there been salary cuts for management?

A: Yes, corporate-wide salary reductions were announced in April for certain levels of compensation and above.

Q: Conversations with multi-client and E&P companies?

A: The company continues to have conversations with both multi-client and E&P companies. There are some projects in the works, but requests are slow, with approximately a 50-50 split in conversations currently.

Q: Thoughts on consolidation in the seismic space?

A: M&A activity is more on the E&P side currently. The impact on the seismic space is unclear, and seismic activity is anticipated to lag behind other oil and gas activities in the near term.