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Edited Transcript of DWSN earnings conference call or presentation 1-Aug-19 2:00pm GMT

Q2 2019 Dawson Geophysical Co Earnings Call

PLANO Aug 3, 2019 (Thomson StreetEvents) -- Edited Transcript of Dawson Geophysical Co earnings conference call or presentation Thursday, August 1, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* James K. Brata

Dawson Geophysical Company - CFO, Executive VP, Secretary & Treasurer

* Stephen C. Jumper

Dawson Geophysical Company - Chairman of the Board, President & CEO

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Conference Call Participants

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* John Thomas Potratz

* Joseph Heintz

* Sam McAllister

Raymond James & Associates, Inc., Research Division - Research Associate

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Presentation

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Operator [1]

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Good day and welcome to the Dawson Geophysical Second Quarter 2019 Results Conference Call.

Statements made by management during this call with respect to forecasts, estimates or other expectations regarding future events or which provide any information other than historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements.

These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in the company's annual report on Form 10-K filed with the SEC on March 6, 2019.

Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in the company's press release issued this morning. And please note that the contents of the company's conference call this morning is covered by those statements.

During this conference call, management will make references to EBITDA, which is a non-GAAP financial measure. A reconciliation of the non-GAAP measure to the applicable GAAP measure can be found on the company's current earnings release, a copy of which is located on the company's website, www.dawson3d.com.

The call is scheduled for 30 minutes, and the company will not provide any guidance. I would now like to turn the call over to Steve Jumper, Chairman, President and CEO of Dawson Geophysical Company. Please go ahead, sir.

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [2]

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Well, thank you, Bethany. Good morning and welcome to Dawson Geophysical Company's Second Quarter 2018 Earnings and Operation Call. As Bethany mentioned, my name is Steve Jumper, Chairman, President and CEO of the company. Joining me on the call is Jim Brata, Executive Vice President and Chief Financial Officer.

Before we start the call, just a few items to go over. If you would like to listen to a replay of today's call, it will be available via webcast by going to the Investor Relations section of the company's website at www.dawson3d.com. Information reported on this call speaks only of today, Thursday, August 1, 2019, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening.

Turning to our preliminary second quarter and 6 months ended June 30, 2019, financial results. For the quarter ended June 30, 2019, the company reported revenues of $24.1 million, a decrease of approximately 33% compared to $36.2 million for the quarter ended June 30, 2018. For the second quarter of 2019, the company reported a net loss of $11.2 million or $0.49 per share loss per -- $0.49 loss per common share compared to a net loss of $5.7 million or $0.25 loss per common share for the second quarter of 2018. The company reported negative EBITDA of $6.1 million for the quarter ended June 30, '19, compared to positive EBITDA of $1.6 million for the quarter ended June 30, '18.

For the 6 months ended June 30, '19, the company reported revenues of $75.2 million, a decrease of approximately 13% compared to $86 million for the 6 months ended June 30, '18. For the first half of '19, the company reported a net loss of $11.4 million or $0.49 loss per common share compared to a net loss of $7.4 million or $0.32 loss per common share for the first half of '18.

The company reported negative EBITDA of $111,000 for the 6 months ended June 30, '19, compared to positive EBITDA for the 6 months ended June 30, '18. During the second quarter of '19, we operated a peak of 5 crews in the United States, including microseismic operations, along with a single small channel count crew in Canada for a very short period of time compared to 4 large channel count crews in the U.S. and 4 large channel count crews in Canada in the first quarter of '19.

Based on currently available information, we anticipate operating 4 to 6 crews in the U.S. during the third quarter and into early fourth quarter of '19 and 2 to 4 crews in the U.S. later in the fourth quarter of '19 with limited activity in Canada in the fourth quarter. The company is currently operating 3 crews in the U.S. with 2 additional crews to be deployed in the next few weeks. As in recent quarters, the majority of our projects are on behalf of multi-client companies in the U.S. with some isolated activity directly for exploration and production companies.

I will now turn control of the call over to Jim Brata, who will review the financial results, and I will return with some final remarks and our outlook in the third and fourth quarters of 2019. Jim?

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James K. Brata, Dawson Geophysical Company - CFO, Executive VP, Secretary & Treasurer [3]

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Thank you, Steve, and good morning. Revenues for the second quarter of 2019 were $24.1 million, a decrease of 33% as compared to $36.2 million for the quarter ended June 30, 2018.

As stated in our earnings release issued this morning, during the second quarter of 2019, the company operated a peak of 5 crews in the United States, including microseismic operations and a single small channel count crew in Canada for a short period of time. That compares to 4 large channel count crews in the U.S. and 4 large channel count crews in Canada in the first quarter.

Based on currently available information, the company anticipates operating 4 to 6 crews in the U.S. during the third quarter and into the early fourth quarter of 2019 and 2 to 4 crews in the U.S. later in the fourth quarter of 2019, with limited activity in Canada in the fourth quarter. As in recent quarters, the majority of the company's projects are on behalf of multi-client companies in the U.S. with some activity directly for E&P companies.

Cost of services in the second quarter of 2019 was $25.3 million, a decrease of 19% compared to $31.2 million in the same quarter of 2018. General and administrative expenses were $5 million in the second quarter of 2019 compared to $3.8 million in the first quarter of 2018. Reflected in our second quarter 2019 numbers is an accrual for $1.45 million for severance and retirement package costs related to recent headcount reductions and executive retirements.

Depreciation and amortization expense in the second quarter of 2019 was $5.3 million, a decrease of 28% compared to $7.4 million in the same quarter of 2018. Net loss in the second quarter of 2019 was $11.2 million or $0.49 loss per share compared to a net loss of $5.7 million or $0.25 loss per share in the second quarter of 2018. We recorded an income tax benefit of $121,000 in the second quarter of 2019, and that compares to an income tax benefit of $126,000 in the same quarter of 2018.

EBITDA in the second quarter of 2019 was negative was $6.1 million compared to a positive EBITDA of $1.6 million in the same period of 2018. An EBITDA reconciliation was provided in our earnings release issued this morning.

Now I'll turn to the 6 months ended June 30, 2019. Revenues for the 6 months ended June 30, 2019, were $75.2 million, a decrease of 12.6% as compared to $86 million for the 6 months ended June 30, 2018. Cost of services for the first half of 2019 was $66.2 million, a decrease of 5.4% compared to $70 million in the same period of 2018.

General and administrative expenses were $9.6 million for the 6 months ended June 30, 2019, an increase of 31% as compared to $7.9 million in the same period of 2018. And as I mentioned earlier, in the second quarter, we accrued $1.45 million for severance and retirement package costs related to recent headcount reductions and executive retirements.

Depreciation and amortization expense in the 6 months ended June 30, 2019, was $11.4 million, a decrease of 29% compared to $16.1 million in the same period a year ago. Net loss for the 6 months ended June 30, 2019, was $11.4 million or $0.49 loss per share compared to a net loss of $7.4 million or $0.32 loss per share in the same period a year ago.

EBITDA for the first 6 months of 2019 was negative $111,000 compared to positive EBITDA of $8.6 million in the same period a year ago. An EBITDA reconciliation was provided in our earnings release issued this morning.

Moving on to our balance sheet. Our balance sheet continues to remain strong. As of June 30, 2019, we had debt, including obligations under finance leases, of approximately $9.4 million; cash and short-term investments of $44.9 million; our current ratio was 2.8:1. And finally, working capital was approximately $44.9 million.

And with that I'll turn the call back to Steve for some comments on our operations.

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [4]

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Well, thank you, Jim. As anticipated in our first quarter press release and conference call, overall crew utilization was lower during the second quarter. We began the quarter with 3 crews operating in 2 microseismic projects that ended the quarter with 2 crews active in 3 microseismic projects.

Channel utilization was markedly lower in the second quarter compared to the first quarter of '19 as several large channel count projects transitioned into smaller count -- smaller channel count projects during much of the second quarter.

Utilization during the second quarter was further impacted by the timing of crew moves and severe wet conditions, primarily in Oklahoma, which limited activity on a large channel count crew for the back half of the quarter. Weather conditions became more favorable in the beginning of the third quarter. We anticipate that both crew and channel count utilization will be improved in the third quarter and into the fourth quarter of '19 in the U.S. as compared to second quarter levels with 4 to 6 crews operating.

In June, we began a large multicomponent project in West Texas, utilizing 44,000 multicomponent units or 132,000 total channels. Our current inventory of multi-component channels is sufficient to meet these needs. The project is anticipated to be completed mid-fourth quarter, at which time the multi-component equipment will redeploy to Canada for the winter season.

Primary areas of operations currently are in the Permian and Delaware Basins, the SCOOP/STACK region of Oklahoma and Austin Chalk region of Southeast Texas. In addition, we have 2 larger channel count projects in Louisiana, Wyoming, each of which is projected to begin in late third or early fourth quarter this year. Bid activity remains intermittent and visibility remains challenging as exploration and production companies continue to evaluate capital spending levels.

Capital expenditures for the second quarter were $1.152 million and total $2.198 million for the 6 months of '19, primarily for maintenance capital items. As Jim has stated, the company's balance sheet remained strong with $44.9 million of cash and short-term investments and $44.9 million of working capital as of June 30, '19. As Jim mentioned, we have notes payable and finance leases totaling $9.4 million as of June of '19.

On June 30, as reported in 8-K, Wayne Whitener, Executive Vice Chairman of the company; and Robert Wood, President of our Canadian subsidiary, Eagle Canada, both entered into retirement. Wayne and Rob and joined Dawson in February of '15 when the legacy Dawson Geophysical merged with TGC Industries, where Wayne was Chief Executive Officer and Rob was President of TGC's Canadian operation, Eagle Canada. Terry Jackson with 40 years of experience in the Canadian seismic industry and 10 years with Eagle Canada, will assume the role as President of our operations in Canada.

In addition, Wayne has retired from his position as a member of the Board of Directors, and the company has reduced the number of active directors to 7. Wayne and Rob had very distinguished careers and were recognized as highly regarded leaders in the seismic industry. Their tremendous contributions to TGC Industries, Eagle Canada and Dawson Geophysical will be sorely missed. On behalf of the board, shareholders, employees and from me personally, we wish them well in the next chapter of their lives.

In closing, we anticipate our third quarter will show improvement over second quarter. We are well positioned going forward as the seismic data acquisition project continued to increase in scale in both multi-client companies and production and exploration and production operators are requesting more channels per project in order to develop a more vivid, robust subsurface image. We believe that Dawson Geophysical, with its industry-leading equipment base, experienced personnel and overall knowledge, is uniquely positioned to capitalize on this growing trend.

And with that, Bethany, I believe we are ready to open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question today comes from Sam McAllister of Raymond James.

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Sam McAllister, Raymond James & Associates, Inc., Research Division - Research Associate [2]

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So first off, I was wondering if you all could give us any color as to the extent of utilization impacts that the Oklahoma wet weather had on 2Q. And you all mentioned that 3Q is looking better on the weather front. But were there any bleed through of weather effects into 3Q from Oklahoma impacts?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [3]

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No. Weather conditions really starting at the end of June began to improve. We've had quite a bit of wet weather that have affected that project for, I would say, the back half to 2/3 of the second quarter. And some weather in East Texas and Louisiana did affect some prep time on some projects going into the third quarter, which delayed us a little bit in getting to one of them and has delayed slightly getting one prepared. But I think we're back on track.

So we had -- the weather impact on the crew, particularly the crew in Oklahoma, was probably somewhat -- the impact was greater than it normally would have been due to the fact that we had overall lower crew utilization and channel utilization. So we effectively got down to a pretty low level there for about 3 to 4 weeks. But we're back up with 3 large crews operating right now and 2 more deploying shortly in both channel and crew utilization and, knock on wood, weather feels better for the balance of the third quarter, into the fourth.

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Sam McAllister, Raymond James & Associates, Inc., Research Division - Research Associate [4]

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Great. And next up, as we get to a larger stage count job contribution in 3Q from the large West Texas job, which accounts for roughly 1/3 of your channel count in one project, how should we think about the effect on margin [versus] a 30,000 to 40,000 channel project. Assumably, the scale will hinder per channel pricing, but cost efficiency should more than offset having an overall accretive effect. Am I thinking about that correctly?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [5]

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Yes. I think so. What's important to remember, Sam, is that -- just a couple of things here. One is, we, as a company and historically, have been a fairly high fixed cost operation. And we've done a lot of work in our company over the last 18 months to reduce that or lower that fixed cost and shift as much cost as we can to variable by how we utilize internal services versus third-party services.

And so I'm setting the background here to say that as we deploy channels in our current environment and as we deploy crews, more so on channels, we should begin to see margin improvement as channels deploy. Because some of the things we've done internally, from an operational standpoint, is allowing us to handle much larger channel count projects without having a linear impact from the expense line or the cost line.

And so where we are right now is that as crew count improves, but more importantly, as channel count utilization increases, we should begin to see margin improvement. Once we're on the ground with these large projects, for the most part, our operational efficiency is very high, which when we're operating at a high utilization level, we believe our financial efficiency has improved as well. I hope that answers your question.

Going back to your comment with the 44,000 channels -- units, that is predominantly full deployment on the multi-component equipment we had and we began that late in the second quarter. That project will continue. We anticipate that project to continue into early fourth quarter or mid-fourth quarter level.

But the single channel or the conventional channel deployment, or excuse me, utilization was very low in second quarter, and the channels that were deployed were affected by weather. So we're going to see more of an impact from the utilization of the single channel units here coming in the back half -- or excuse me, third quarter into early fourth quarter.

Operationally, there's no difference for us between the multi-component channels and the single component. So a 44,000 station multi-component crew is very -- operates very similar to a 40,000 channel -- single channel crew in terms of -- operationally, data handling wise, it's a little bit more intense.

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Sam McAllister, Raymond James & Associates, Inc., Research Division - Research Associate [6]

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Okay. Well, that kind of clears that up. And I know you're not necessarily privy to this information. But to the best of your ability, can you venture to guess exactly how your end users are using your data? And is there a sizable pickup in work associated with frac detection and optimization? Or is it more geared towards geosteering?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [7]

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I think that's a very good question. Of course, we're involved in microseismic work that -- surface microseismic recording, where they're utilizing that information during the pump stages to identify where the energy is going and theoretically, how far into the rock they're actually getting energy. And so that's being utilized more to production side.

In terms of the high-end data that we are providing to the end user, you are correct, we may not always be privy to that, but -- exactly how they're utilizing those data, but I would comment that in certain basins, particularly in the Permian, Midland and some others, we have moved beyond geohazard mapping. We are being utilized, I believe, in geosteering. And I believe through high-end analytics, particularly some, what they would call an inversion process, I believe we're getting to the point where we're able to help end users in conjunction with other science and technologies in place, maybe identify a little bit more about the rock property and what type of rock they should be getting a signature from.

The key part of where we are in the cycle is that we are relatively early on in long lateral drilling and hydraulic fracturing. And while that part of the industry has -- is beginning to mature, getting the information that creates a database and an analog to see how seismic data can be utilized as an indicator, that database is just now beginning to come into more focus. And so I believe we're past the geohazard, I think we're in geosteering and I think we're headed toward more robust involvement with other sciences in terms of forward-looking drilling programs.

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Sam McAllister, Raymond James & Associates, Inc., Research Division - Research Associate [8]

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Okay, great. And my last one for me here, and this is going a little bit bigger picture, but can you address kind of the competitive landscape right now as you see it in seismic, and if we can see any sort of further consolidation or what your view is on equipment attrition playing out on the industry as a whole?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [9]

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The competitive landscape really hasn't changed much since we spoke last. Of course, we had some financial difficulties and a bankruptcy and asset liquidation about a year ago, and those assets were purchased by another company. But the issue going forward, I do believe, is going to be increased channel count. And the ability to deploy large channels is going to be key.

There has not been much new purchase in the seismic space, at least in North America. On new channels, there are some channels that are being developed that are very -- that from a technical standpoint are the very same equipment that we use, they just made the package a little bit different in terms of battery, for example. But in terms of sensor, in terms of GPS tracking, in terms of digital conversion, there's just not -- there hasn't been much change. It's been more involved with how the units are packaged.

And so I like where we are from an equipment standpoint and we're able to deploy equipment on variable crews. Our equipment base is very consistent. And so we can move channels from one crew to another very quickly as channel count requirements on a particular project become more fluid.

So we're well positioned. When we're -- when there is utilization, we are on track to do well. The uncertainty in all this beyond the competitive landscape is just what is the capital spending level going to be from E&Ps that could indirectly or directly flow through to the multi-client guys going forward. And unfortunately, saying that is a -- as is the case that you're experiencing on your side, that's a very difficult thing to get a handle on the back half of the year.

We are headed towards increased spend or decreased spend, I just don't think anybody really knows for sure where we are currently in the cycle. But from a competitive position, from a personnel standpoint, from an equipment standpoint and from balance sheet standpoint, we are well positioned.

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Operator [10]

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And our next question will come from John Potratz of Researched Investments.

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John Thomas Potratz, [11]

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From your -- the overall, it looks like from a business prospects point of view, you've added, it seems like, additional regions like the Louisiana and Wyoming. In a way, it sounds like business has -- there's not a lot of business, but it sounds like you have expanded beyond your typical areas of the Midland, Austin Chalk area. So is that indicative of maybe there's more business coming along the line, but it's...

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [12]

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Yes. Yes, I would comment that the core activity in our space as well, I believe, overall in the energy sector as well as the oilfield service sector continues to be the Permian and Delaware. But we have seen some activity in SCOOP/STACK. We've seen some activity perk up in Wyoming. We've seen some activity in Louisiana.

I believe it's too early to tell, Jay, if that's going to be a trend or if those are lead projects, if they're finish-up projects. We just don't know. And so while we're excited about those opportunities, I think in terms of being able to keep a crew in those particular regions long term, I just don't know that we're there yet in terms of visibility.

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John Thomas Potratz, [13]

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But at least you have them, which you didn't have before. So that's the perspective and that's good for future -- I think, in my sense, for future business. How is pricing? I assume its pricing is competitive as hell?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [14]

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It is. The pricing question -- I've been doing these conference calls a long time, and I'm somewhat evasive on the pricing question because it's very difficult to determine the relative pricing because what we do continues to evolve in terms of number of channels and number of energy sources.

Pricing really in the seismic space, since 2014, when the oil prices collapsed, has never really gotten back to prior levels, I guess, it is a safe way to say it. Whereas other services may have been able to do that, seismic activity continues to be -- demand is spotty. Visibility is weak and -- from time to time. And I think the biggest issue that we deal with, as opposed to some of the other services, is we don't have projects ready to go. They can move on to the schedule very quickly.

And so our near-term utilization is always a factor in pricing projects or such a lead time. It's hard to get a handle on that. But while we continue to have some difficulties in the market, both in terms of utilization and somewhat the pricing level, I will say, that our group, our operations group, has done a very nice job of creating operational efficiencies that are allowing us to lower our overall cost structure going forward.

And so we're attacking the problem from multiple angles. Pricing is important, it always is. But more importantly, the thing that we're going to deal with is utilization. When we have strong utilization, we have a potential to do well, barring weather issues. And when we don't, we're going to have some difficulties. So that's the best way I can answer the question, J.

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John Thomas Potratz, [15]

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Okay. Well, it sounds that's very good that you're approaching that. And really, you've also focused here, I think, on the cost reduction. It doesn't matter what the prices are, it's how you've been able to bring the company into a cost reduction factor and understand it. And I think you mentioned you had a new person on the team out there, implementing new processes. And my basic sense is how would the cost reduction go because one thing is price, but the other thing, as you mentioned, is if the cost of doing business goes down materially, you could have reasonable margins. How is that working and what is your timeline?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [16]

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Well, we continue to make progress. It's a -- there are a lot of variables in those things. And I will say that I believe we are doing a much improved job managing all of our resources, whether they be channels or energy source units, personnel. I believe that we continue to make improvement on how we're managing those resources, which directly affects asset utilization as well as lowering costs. So I am pleased with the entire group and the direction that we're headed from that standpoint.

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John Thomas Potratz, [17]

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It sounds very good. And congratulations on moving ahead on that. And did you have any other -- you mentioned about -- severance packages $1.5 million. Was there other write-off during the quarter, which reduced the net bottom line besides that number we have?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [18]

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No, sir.

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John Thomas Potratz, [19]

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No other thing?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [20]

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No, sir.

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John Thomas Potratz, [21]

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And then -- okay. I'm just wondering -- and under what condition do you think Dawson will become consistently profitable? Just the basic problem here is that the E&P companies just have cut back their budgets and you just need...

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [22]

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Yes, it's just -- it's a tough world out there with spending levels. And it's not just capital budget allotments or levels on the E&P sides, where those dollars are being committed, where they're being committed to drilling or completions or technology that would enhance that. And so to answer that question, I think we just need to see some improvement in the overall demand cycle.

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John Thomas Potratz, [23]

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Very good. And I think you're doing a great job, given the fact that there's been a lot of articles in the Wall Street Journal talking about how E&Ps are cutting back and low natural gas prices. I'm just absolutely amazed at how you're doing given the market.

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Operator [24]

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(Operator Instructions) Our next question will come from Joe Heintz, Fort Washington Investment Advisors.

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Joseph Heintz, [25]

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I just had a quick question on one of the notes you had in your press release here. You had mentioned that there was a shift in terms of channel utilization with a few of the larger channel projects going towards more of the smaller channel. How is that kind of seen by you guys? Is that a trend that you think will continue to occur? Should that threaten your Louisiana or Wyoming projects?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [26]

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No, no, no, Joe. I appreciate the question and happy to expand on the answer. We had a situation. And one of the issues that we deal with is that the timing of the large channel account projects is sometimes beyond our control, and so -- start time, and so we believe that we will continue to see high channel count projects going forward. I don't anticipate us, at this point, seeing an expansion of channel count from where we are today.

But during the second quarter, we had several project -- large channel count projects that did not -- weren't quite ready. They moved into the third quarter. And so we backfilled some of the projects -- or some of the crew utilization with smaller channel count. And so in an ideal world, we would have both large channel count projects and some smaller channel count projects to fill in utilization gaps in the second quarter. Unfortunately, this is something that we've been dealing with for several quarters now. I'll go back maybe a year or so.

We seem to have large channel count projects, and then some weakness, then they had returned. And what we're hoping for is that -- what we know is going to happen is that channel count's going to continue to stay high for the majority of our projects. But we're hoping that the market will -- that maybe even from a conventional standpoint, probably not from an unconventional resource, but from a conventional drilling standpoint, there'll be some smaller projects that will be available to fill in short-term utilization gaps.

And so that was a Q2 issue. We've had the issue in the past. And I think it's something we're going to continue to have to deal with since we don't always have control of this timing. But what I would leave you with is we believe that overall, the industry in North America is going to continue to be what we would consider larger channel count projects, 20,000, 25,000, up to 40,000 channels. And we have an equipment base to handle that. And at this point, we don't think there's going to be a further increase in channel count demands, but we are very confident that we have the equipment base to handle that demand as it shows up.

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Operator [27]

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And it appears there are no further questions at this time.

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [28]

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Well, thank you, Bethany. I want to thank everybody for participating in our second quarter call. I think we have laid out in our press release, in our comments here, that we continue to operate in a choppy market, but I will say that we are in a position, from a channel count, equipment standpoint, from a balance sheet standpoint, and a personnel standpoint, to continue to navigate the situation that we're in.

I want to thank our employees in our operations group in particular for the outstanding work that they're doing. I want to thank our clients for their continued support and trust. I want to thank our shareholders for their continued support and trust. And we hope everybody has a good end of summer, early fall, and we look forward to speaking with you again in about 90 days. Thank you.

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Operator [29]

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And ladies and gentlemen, this does conclude today's conference. We thank you for your participation. You may now disconnect.