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Edited Transcript of DWSN earnings conference call or presentation 1-Mar-18 3:00pm GMT

Q4 2017 Dawson Geophysical Co Earnings Call

PLANO Jun 12, 2019 (Thomson StreetEvents) -- Edited Transcript of Dawson Geophysical Co earnings conference call or presentation Thursday, March 1, 2018 at 3:00:00pm 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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* James Marshall Adkins

Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Energy Research

* Richard Dearnley

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Presentation

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Operator [1]

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Good day, and welcome to the Dawson Geophysical Fourth Quarter and Year-End 2017 Results Conference Call.

Statements made by management during this call with respect to forecasts, estimates and 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 result -- 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 13, 2017.

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 may -- will make reference to EBITDA, which is a non-GAAP financial measure. A reconciliation of the non-GAAP measure to the applicable GAAP measure can be found in 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. As a reminder, this conference is being recorded.

I would now like to turn the call over to Steven 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, Don. A good morning, and welcome to Dawson Geophysical Company's fourth quarter and year-end 2017 earnings and operations conference call. As Don said, 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.

And before we start the call, just a few things to cover. If you 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 of, only of today, Thursday, March 1, 2018, 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 fourth quarter financial results. We are encouraged by our second-half year-end results as we finished the year with positive full year EBITDA of $2.5 million. We overcame a negative EBITDA of $7.3 million for the first half of 2017 by generating positive EBITDA of $9.8 million during the second half of '17.

Operating revenues increased 30% to $39.1 million in the fourth quarter of '17 as compared to $30.1 million for the same period in '16. During the fourth quarter of 2017, as anticipated, we experienced a temporary decline in crew utilization, primarily due to project readiness issues. We began the fourth quarter operating 7 crews in the U.S. and 2 in Canada and ended the quarter operating 6 crews in the U.S. and 3 in Canada. The fourth quarter in the U.S. historically has been challenging due to shorter work days and holiday season. We are currently operating 7 crews in the U.S. Based on currently available information, we anticipate operating up to 7 crews in the U.S. in the third quarter of 2018, completing 2 U.S microseismic projects during the first half of 2018 and operating in -- 4 crews in Canada through the end of the winter season, which concludes at the end of the first quarter of 2018. Despite the improved operating environment, we've continued to maintain a conservative approach at Dawson Geophysical. We remain committed to maintaining a strong balance sheet and positioning ourself as the leader of onshore seismic data acquisition services in North America.

I will now turn control of the call over to Jim Brata, who will review our financial results. Then I'll return for some final remarks and our outlook going into the first quarter of '18. Go ahead, 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 from the fourth quarter of 2017 were $39.1 million, up 30% compared to $30.1 million for the quarter ended December 31, 2016. As stated in our earnings release issued this morning, the company began the fourth quarter operating 7 crews in the U.S. and 2 in Canada and ended the quarter operating 6 crews in U.S. and 3 in Canada. The fourth quarter in the U.S. has historically been challenging due to shorter work days and the holiday season. Our company is currently operating 7 crews in the U.S. Based on currently available information, the company anticipates operating up to 7 crews in the U.S. into the third quarter of 2018 and completing 2 U.S. seismic projects during the first half of 2018. And operating 4 crews in Canada through the end of the winter season, which concludes at the end of the first quarter of 2018.

Cost of services in the fourth quarter of 2017 was $31.5 million compared to $27.5 million in the same quarter of 2016. General and administrative expenses were $3.9 million in the fourth quarter of this year compared to $3.6 million in the same quarter of 2016. Depreciation and amortization expense in the fourth quarter of 2017 was $9.5 million compared to $10.3 million in the same quarter a year ago.

Net loss for the fourth quarter of 2017 was $4.5 million or $0.21 loss per share as compared to a net loss of $7.2 million or $0.33 loss per share in the same quarter last year.

We recorded an income tax benefit of $680,000 in the fourth quarter of 2017 compared to an income tax benefit of $2.7 million in the same quarter a year ago.

EBITDA in the fourth quarter of 2017 was $4.3 million compared to EBITDA of $313,000 in the same period a year ago. An EBITDA reconciliation was provided in our earnings release issued this morning.

Now I will briefly highlight some full year results. Revenues for 2017 were $157.1 million, an increase of 18%, as compared to $133.3 million in 2016.

Cost of services for 2017 were $139.2 million compared to $121.7 million last year. As a percentage of revenues, cost of services was 88.6% in 2017 compared to 91.2% in 2016.

Gross profit for 2017 was $18 million compared to $11.7 million in 2016. Gross margin in 2017 was 11.4% compared to 8.8% in 2016.

General and administrative expenses were $16.2 million in 2017 compared to $16.8 million a year ago. Depreciation and amortization expense in 2017 was $39.2 million compared to $44.3 million in 2016. We reported a net loss of $31.3 million or $1.44 loss per share in 2017 compared to a net loss of $39.8 million or $1.84 loss per share in 2016.

EBITDA for the full year of 2017 was $2.5 million compared to a negative EBITDA of $2 million in 2016.

Now I will highlight some balance sheet items. Our balance sheet remains strong. As of the end of the fourth quarter of 2017, we had debt, including obligations under capital leases of approximately $7.9 million, cash and short-term investments of $38.6 million, our current ratio was 4.3:1 and finally, working capital was approximately $59.3 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 stated in our earnings release issued this morning, while we continue to experience lower-than-historical demand in the somewhat difficult environment, we encountered a moderate increase in demand for our services for the year 2017 when compared to 2016. This resulted in improved productivity and crew utilization, primarily during the second half of the year. The recent rise in oil prices, combined with forecasted oil price increases through '18, has resulted in increased demand for our services and brought about a return to positive EBITDA. At the same time, the oil and gas industry's renewed focus on profitability as well as production growth has further driven an increase in requests for proposals. As more E&P operators seek to lower drilling and completion costs as well as maximize production through the integrated use of seismic data into their development plans. While still well off the demand levels experienced in 2015 and prior years, the recent increase in bid activity is encouraging. As we experienced in the third quarter of 2017, the majority of our projects continue to be driven by multi-client data library companies, a model we do not actively participate in, but we do serve as a contractor for several of the largest providers. The competition between various multi-client providers continues to remain strong and affects project timing as seismic programs are put together with multiple participants, a situation which is beyond our control. It is our belief that seismic data acquisition activity will increase in producing basins outside of the Permian and Delaware, the primary areas of activity in the U.S., as commodity prices improve and those basins become more economic.

As reported during the third quarter of 2017, the company's Board of Directors improved (sic) [approved] an increase in our capital budget from $10 million to $16 million in response to an attractive opportunity to acquire 19,000 units of multi-competent seismic data acquisition equipment, including 57,000 additional cable-less recording channels to better serve our valued clients in both the U.S. and Canada. We believe that we field the largest fleet of multi-component equipment in North America, which continues to be fully deployed. We now own and operate nearly 250,000 cable-less recording channels, which provides a competitive advantage by enabling us to respond to client demand quickly and efficiently. With nearly 250,000 cable-less recording channels, we believe, it is the largest fleet of cable-less channels in North America. As Jim said, our balance sheet remains strong with $35.6 million (sic) [$38.6 million] of cash and short-term investments, working capital of 52.3 -- excuse me, $59.3 million. We have capital lease obligations totaling approximately $7.9 million as of December 31, 2017.

In closing, management has an optimistic outlook for 2018 provided that oil prices remain or maintain at current levels. As stated earlier, while the Permian and Delaware Basins remain the primary areas of activity, we are beginning to see a modest uptick in bid activity and interest levels outside of those regions.

We continue to be well positioned to meet the needs of our shareholders and clients as we deliver the best-in-class, high-resolution, subsurface images that enable our clients to reduce costs and improve operating efficiencies.

And with that, Don, I believe, we have concluded with formal remarks and are ready for questions, sir.

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Questions and Answers

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Operator [1]

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And we will take our first question from Marshall Adkins with Raymond James.

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James Marshall Adkins, Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Energy Research [2]

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Before I get started with questions, I just want to note the passing of Mr. Dawson, we sure will miss him and he was an industry icon, who built the hell of a company. So I guess, I don't get to pick on him on this call, so I'm going to pick on you, with a few extra questions here.

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

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He certainly handled it better than I do. But that is a -- thank you, Marshall for that. He did pass February 6. And he was, as most people listening now, he's just a wonderful individual, great industry leader and a tremendous man in the community and family man. So thank you for that, Marshall.

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James Marshall Adkins, Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Energy Research [4]

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You bet. All right. So we've heard a lot of companies, that have reported, talk about weather particularly in Texas. You mentioned your project readiness kind of slow things down a little bit. How big of a deal is weather this quarter for you?

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

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I don't think weather was a huge impact, Marshall. The -- most of the areas where we were operating, we were primarily in West Texas. And certainly in the areas that we were operating, I don't think that the weather was any more of an impact than normal for us.

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James Marshall Adkins, Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Energy Research [6]

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All right. So you had the problems with project readiness, but you put up better margins than we've been seeing. So what's going on there, was it a mix issue or have you -- was it just better utilization with better throughput, or you've streamlined cost? Help me understand what happened? Why margins are so much better? And I guess more importantly, how sustainable do you think those are going forward?

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

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Okay. Now you're asking me to look forward.

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James Marshall Adkins, Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Energy Research [8]

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Yes.

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

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Nice move. First of all, I would remind, in regards to margins, certainly, our gross margins on the back half of the year significantly improved, went from single digits or negative up to upper teens, close to 20%. That the back half improvement was clearly, utilization, crew deployment, those types of things. I would comment that something we probably haven't talked about and now here in recent quarters is that, we carry a third-party reimbursable charge in our -- both our revenue and expense line. Historically, that reimbursable level, as a percentage of revenue, has been 25% to roughly 35% of our total revenue line. I think we've been in that range certainly for a while. But I think here in the last half of the year, we were probably on the lower end of that range. And so that can affect the margin level at some point. With regards to the drop in utilization in the fourth quarter, these projects, as we've talked about, are very large in the scale these days. They're typically hundreds of square miles in scope. We have one in particular that's roughly a 1,000 square miles in scope and so. When we're working for a multi-client provider and they are putting together several operators to get that project going, some times that can just put a hiccup in the schedule and so. I think we experienced a little bit of that in the fourth quarter, just projects from a permit standpoint weren't ready and so we had to pull-off. In regards to the efficiency question, I think we're certainly better at that as a company. We've talked about this for several years. This channel count expansion just continues to grow. It's not uncommon for us to have 15,000, 20,000, 25,000 channels per crew today, whereas 2 years ago, they would be in the 10,000 to 15,000 range. And before that, they were in 5,000 to 10,000 range. And so I think, logistically, we're doing a much better job of keeping equipment assets moving, where we're maximizing actual recording time. I think we're doing some things with fewer people on a per crew basis. So I do think there are some efficiency and throughput that will -- that's in the system, just overall logistics improvement. Going forward, I am very optimistic. I still don't think that we have hit what I would consider a full stride. We still have with our channel count level the way it is, our ability to get out ahead of a next project and have equipment on the ground and ready to go as the prior project is finished, that's where there really can be some difference made in that. While we've done a much better job through circumstances and operationally of improving that, we still haven't hit that stride where we're really not just maintaining crew utilization but real strong crew efficiency and so. Given steady oil price and given steady demand as we're currently experiencing, I'll remind you that it's not record-setting, it's not like it was in '13, '14, but it's certainly improved. I think there is certainly upside in what we can do.

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James Marshall Adkins, Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Energy Research [10]

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So when we get into the summer months, you're going to have more daylight hours that, that helps you, may be some of these project readiness things fades. So it sounds like that helps your margins modestly. How big of a deal is the Canadian fall off in the second quarter? I'm trying to think how we should model and think about that? U.S. sounds like it keeps getting stronger as we go into the second quarter, but we all need to make sure we model a falloff in the second quarter from Canada, is that the right way to think about it?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [11]

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Historically, Marshall, we don't have as Dawson Geophysical a long history in Canada. Now, we had a small Canadian operation from about 2012 until the merger with TGC in 2015. And our Canadian operation never -- honestly never was much of an impact on our -- on Dawson's financials. Now on the TGC side, with their brand, Eagle Canada, up in the Canadian market, you would see if you were back and looked at TGC standalone financials prior to the merger in 2015, you would see a significant impact of both revenue and EBITDA in their Q1. The Canadian market post-merger for us is still well behind I would say any improvement as opposed to what little bit of improvement we're seeing in the U.S. And so I would say, where we are today that the Canadian market for and a variety of metrics is not as strong as it has been in the past and has not recovered even to the level that the U.S. has. So I would not expect that drop off after Q1 to be as impactful as it would have been in prior years for the legacy TGC financials, if that make sense?

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James Marshall Adkins, Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Energy Research [12]

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Okay, all right. So we've had this move up in oil prices, normally the rig count lags in moving oil prices by 4 or 5 months, is that similar in your business, because I certainly sense more optimism from you in terms of the outlook increase et cetera. And wondering that across 4 rigs and everything else, but is that the same kind of lag that we should think about between an oil price move and when your customer actually gets your crews active?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [13]

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Two points there, Marshall. And I hope I can articulate this the right way. I think in the last several years, we've probably been as an industry somewhat disconnected from the rig count movement. The seismic activity has been so scattered that I don't necessarily think there has been a very strong correlation with rig count and certainly not like it was back, let's say, 15 years ago. Our lead time on its own, within our industry is 3 to 6 months, anyway. And so if a project hits the door today, it is very rare that a project hits the door that is ready. If you're a drilling contractor or pressure pumper, you typically have plenty of locations to go to in an up and moving market. We typically have a lead time of 3 to 6 months just to get the job permitted and ready and so. We don't really know what that lead time change is going to be going forward. We have better visibility in the U.S. right now than we had last year. We have visibility of up to 7 through well into the third quarter. There are some projects out there that, that feel like they are making some progress. Particularly, in may be some areas outside of the basins, the Permian and Delaware Basins. And so we are optimistic. We're -- certainly feel like we're in a better position than we've been in. But there is still some lions and tigers and bears out there that we're watching closely.

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James Marshall Adkins, Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Energy Research [14]

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Last question for me. Yes, I ask this on most calls, but I'm going to keep asking it. Update us on the competitive landscape, number one. And number two, you mentioned microseismic in kind of increasing activity related to that. Is that a trend that, that we should expect to continue? So competitive landscape and give us some commentary on microseismic and your outlook for that is, in terms of its relevance going forward?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [15]

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Sure. The market continues to be a very competitive market. Unfortunately, years ago, world geophysical moves and some other entities would actually tracked to the best of their ability, some level of crew count activity and so there's not a -- something like the Baker Hughes' rig count that has that. So we just have to base that on what we know. And I think our market share still stays in North America somewhere around 50% range, something like that based on active crews. There is no question that the geophysical industry has gone through some real serious shakedowns and issues in the last 3, 4 years, and we're fortunate enough to be in the position that we're in. But there continues to be very competitive market even with the fact that you have to consider that, that even though things are improving all across the oil patch, E&P companies are still very cost sensitive and still working on spending dollars is still an important thing for them. So we continue as an industry that have to work within those constraints regardless of the number of competitors. But there is still solid competition out there, most of it's private. From a public standpoint, there is 1 or 2 that are out there, but Schlumberger announced a few weeks back that, for example, that they've gotten out of the seismic part of -- or seismic operation worldwide and so we'll see how that, that's not would be an impact in the States, we'll see what happens in the marine world and the international world so. We're clearly in a great position financially, from an equipment standpoint and from a people standpoint, client relationships, but we still are going to have continue to provide high-quality services to our client base to stay in the game and we're well aware of that. Microseismic is interesting. We deal strictly in the surface microseismic recording world. And so we're putting sensors on the ground and listing to hydraulic fracturing. That as opposed to others that are doing it from well bore-to-well bore, there is a host, whole host of companies that do down hole microseismic. I think it's an improving technology. I think it's something that more and more operators are beginning to utilize, helps them understand where energy may be going from the frac and if they are losing, we've seen some examples, if you are losing fluid or something then we can generally in some areas, kind of, tell you, okay, you are in a false zone here and it's going up this false plain and so. Whether or not people are actually adjusting fracturing plans as they frac a well is still yet to be determined. We're starting to do some of those real time, where we're giving information to the opt -- to the pressure pumping company within 10 to 15 minutes after a cycle. It's primarily Eagle Ford for us. And the SCOOP, STACK, unfortunately, as an industry, we've had a little bit difficult time having a whole lot of success with microseismic activity in the Permian and Delaware. The signal-to-noise ratio and geology just makes it difficult. I tell people signal-to-noise ratio is like talking on your cell phone. If you're in a very quiet environment, you can hear the conversation well, but if you're outside in the wind, you've a hard time picking up on the conversation, even though the phone is transmitting strong signal. Well, if you think about -- if you take that very crude analogy and apply it to microseismic of the Permian, Delaware is kind of like talking in the wind and Eagle Ford, SCOOP, STACK are talking in a quiet room. So I think there is some upside there and there is some potential. And we're just going to have to find a way as an industry on the side, side to improve that product in the Permian.

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James Marshall Adkins, Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Energy Research [16]

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Well, there is lot more wind in West Texas. Steve, thank you for your insights.

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [17]

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It blows every day here. So I appreciate it.

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Operator [18]

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We'll take over next question from [William Touche] with (inaudible) Capital.

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Unidentified Analyst, [19]

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Great. You answered my question with on competitive landscape and you pretty much covered that with Marshall's q&a part there. But a few years ago, talking about your end-customer base, you used to -- they have about 50-50 split between independents, the super independents and the majors. What does that look like today? Is that any change in -- does it vary by basin or could you give me a little bit of color on that split?

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

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Sure. I would say that the majority of our work today is with the multi-client data library providers. Now the companies that are behind those projects that are very large in scope are companies of all sizes. You've got some majors that are participating in those surveys. You've got the large publicly-traded independents that are participating in those surveys and then you have some of the smaller private independent operators. And so when you look through the lands of a multi-client library, Bill, I think it's fair to say that, that can -- that, that mix continues to be in play. When you think about the Permian and the Delaware and what's happened in the last 5 years or so is the individual operators have taken very large lease positions. And their lease positions typically are not contiguous. They are typically interlocked with another operator. And so in order for them to get an image over their area the clouding of image to help them with geo-hazard assessment as well as the potential geo steering that got to acquire survey that they may only own 30% of the acreage. And so they've got to cover offset operators. And so the multi-client guys are -- do a good job of coming in and putting together those multiple operators into one shoe. That hopefully gives the whole group the data that they need. And so we still do proprietary work for a whole host of companies. But I would say the majority of our work for the multi-client guys and behind them are operators of all sizes including top 2 majors.

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Unidentified Analyst, [21]

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I would think the margins associated with your participation in a multiplant data library area is less than the old days when you used to have just proprietary deals with the maybe Anadarkos, Apaches or the majors? Is that a fact?

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

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It's all market-driven, Bill. The -- we're still in a very tough market. Pricing is, although, we don't talk a lot about pricing, there is no doubt that there continues to be pressure on pricing, all across the space. I mean, particularly the seismic side. And there is still a competition for dollars. More companies are utilizing seismic data to aide in their plans. However, there is still continues to be lot of drilling activity. And so I think from a margin perspective, I don't think given the market where it's today, I don't think there is a whole lot of difference. I think that certainly from the user side, they're getting more data for the same dollar on the E&P side. And the advantage to the multi-client project is their scope and there's -- the good news is they're big projects. The bad news is they're big projects. They're big projects and that they're big enough that usually get on and you got running room for several months of a crew with urges with a hit of stride. The bad news is, because of their size, sometimes they slip in the schedule which hurts us from a utilization standpoint. The thing it is really missing in the market right now is that mid -- all-size 3D survey that are great to have when they fill-in gaps on large projects. That market has not reemerged. That market probably has a better chance to reemerging it today outside of the Permian and Delaware, which tend to be driven by very large land positions. And so I would say at the end of the day, the thing that we would probably need to -- that would really help as a reemergence of the small- to mid-size 3D survey, which is not there at this point in time.

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Operator [23]

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We'll take over next question from Richard Dearnley with Longport Partners.

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Richard Dearnley, [24]

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There has been a rediscovery in the E&P sector about parent-child interference in wells and, sort of how the other child has degrading relative to the parent you are. Is that having an effect on microseismic use? Or any other effect on seismic?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [25]

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I can't answer that question, I'm certainly not an expert in that area. So I'm -- really don't have a good answer for you. I guess, I really don't understand.

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Richard Dearnley, [26]

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Yes. Well, I don't either. But it occurred when everyone was talking about microseismic that, that might seem to apply if you want to measure the length of the frac and whether it's getting over into the next child well or into the parent well or whatever?

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [27]

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Okay. Yes, yes, yes. Now, I'm with you. Yes, I think that particularly when you're looking at -- and first of all, let me apologize for not understanding the question.

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Richard Dearnley, [28]

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I didn't -- I don't understand it either. I am...

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [29]

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And let me apologize for answering the question I probably should understand the wrong way. But here is what I think you're asking is, you've got a complex of laterals that could be, let's say, either stacked or staggered or both or just same plain and you want to frac those wells. As I understand it, And I'm by no means an expert, you don't want communication between the 2 wellbores. And so, well, I think there is a whole lot of engineering that goes into that. I do think that microseismic particularly in some of the basins we've been in, I believe, you can see to a certain level the extent of a how far they fracked and did you get them far enough or you had a greater reach but not so far that you communicated with an adjacent well bore. And we've actually been involved with some real time examples, where people have actually maybe changed the -- not the frac parameters within the well bore, but maybe change the order in which they fracked to maximize energy movement. So, yes, I think that, that's part of the intent for both down whole and surface microseismic. But I am by no means an expert in that area. And so I don't know if I put a whole lot of stock in my comments.

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Operator [30]

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That concludes today's question-and-answer session. At this time, I will turn the conference back to Mr. Steven Jumper for any final remarks.

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Stephen C. Jumper, Dawson Geophysical Company - Chairman of the Board, President & CEO [31]

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Well, thank you, Don. I appreciate everyone taking the time to listen into our fourth quarter and year-end conference and operations update call -- earnings and operations update call. Obviously, we're very pleased with our second half of '17 results. We overcame as we stated a very large deficit in the EBITDA range. We'll just conclude with, we're optimistic, we feel better about the market and we would remind everybody that the market remains challenging and that things can change very rapidly. I want to express my appreciation for our great employee base that continues to improve our product and work hard every day for our shareholders and our clients. Certainly want to thank our shareholders for their continued support and want to thank our clients for their trust in our services. And we look forward to talking to you again, probably sometime in May with our first quarter results. Thank you for your time.

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Operator [32]

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This does conclude today's conference. Thank you for your participation. You may now disconnect.