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spk06: Statements made by management during this call with respect to forecast estimates or other expectations regarding future events or which provide any information other than historical facts may constitute forward-looking statements within the meeting 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 of 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 filing with the SEC, including in the company's annual report on Form 10-K filed with the SEC on March 6, 2020, and any subsequent quarterly reports on Form 10-Q filed with the SEC. 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, we'll 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 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. Today's call is being recorded, and I would now like to turn the call over to Stephen Jumper, Chairman, President, and CEO of Dawson Geophysical Company. Please go ahead, sir.
spk05: Well, thank you, April. Good morning, and welcome to Dawson Geophysical Company's fourth quarter 2020 earnings and operations conference call. As April said, my name is Steve Jumper, Chairman, President, and CEO of the company. Joining me on the call is Jim Bratta, Executive Vice President and Chief Financial Officer. Before I start the call, just a few things 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 report on this call speaks only of today, Thursday, March 11th, 2021. And therefore you are advised that time sensitive information may no longer be accurate as at the time of any replay listening. Turning to our preliminary fourth quarter and 12 months ended December 31, 2020 financial results. For the fourth quarter ended December 31, 2020, the company reported revenues of 8.9 million a decrease of approximately 74% compared to $33.6 million for the quarter ended December 31, 2019. For the fourth quarter of 2020, the company reported a net loss of $7.8 million or $0.33 loss per share of common stock compared to a net loss of $5.8 million or $0.25 loss per share of common stock for the quarter ended December 31, 2019. The company reported negative EBITDA of $4.2 million for the quarter ended December 31, 2020 compared to negative EBITDA of $788,000 for the quarter ended December 31, 2019. For the year ended December 31, 2020, the company reported revenues of $86.1 million, a decrease of approximately 41% compared to $145.8 million for the year ended December 31, 2019. For the full year of 19, the company narrowed its loss to $13.2 million or $0.56 loss per share of common stock compared to a net loss of $15.2 million or $0.60 loss per share of common stock for the year ended December 31, 2019. That should have been full year 2022. The company reported EBITDA of 3.7 million for the year ended December 31, 2020, a decrease of approximately 41% for the year ended December 31, 2020, compared to 6.3 million for the year ended December 31, 2019. During the fourth quarter of 2020, the company operated one data acquisition crew with periods of low utilization in the United States. The one crew was inactive for the latter part of the third quarter and well into the fourth quarter. Based on currently available information, the company anticipates operating one crew in the U.S. through the first quarter of 21 with likely sustained periods of downtime and one crew in Canada for the winter season ending at the end of the first quarter of 2021. While visibility remains limited beyond the first quarter, The company maintains the ability to deploy additional crews on short notice when market conditions improve. Reflected in both the fourth quarter and year end results is a non-cash impairment of approximately $1.6 million related to a note receivable and a bad debt expense. I will now turn control and call over to Jim Brada who will review the financial results. Then I will return with some final remarks and our outlook in the first quarter of 2020.
spk04: Thank you, Stephen. Good morning. Revenues for the fourth quarter of 2020 were $8.9 million, a decrease of approximately 74% compared to $33.6 million for the quarter ended December 31, 2019. As stated in our earnings release issued this morning during the fourth quarter of 2020, the company operated one data acquisition crew with periods of low utilization in the U.S. The one crew was inactive for the latter part of the third quarter and well into the fourth quarter. Based on currently available information, the company anticipates operating one crew in the U.S. through the first quarter with likely sustained periods of downtime and one crew in Canada for the winter season ending at the end of the first quarter of 2021. Lots of services in the fourth quarter of 2020 were $10.8 million, a decrease of 65%. compared to 30.8 million in the same quarter of 2019. General and administrative expenses were 2.7 million in the fourth quarter of 2020, a decrease of 28% compared to 3.8 million in the fourth quarter of 2019. Appreciation and amortization expense in the fourth quarter of 2020 was 3.8 million, a decrease of 27% compared to 5.2 million in the same quarter of 2019. Net loss for the fourth quarter of 2020 was 7.8 million or 33 cent loss for common share compared to a net loss of 5.8 million or 25 cent loss for common share in the fourth quarter of 2019. We recorded income tax expense of 9,000 in the fourth quarter of 2020 compared to an income tax benefit of 93,000 in the same quarter of 2019. EBITDA in the fourth quarter of 2020 was negative 4.2 million compared to negative EBITDA of 788,000 in the same period of 2019. And EBITDA reconciliation was provided in our earnings release issued this morning. And now I'll highlight some results from the year ended December 31st, 2020. Remedies for the year ended December 31st, 2020 were 86.9% 86.1 million, a decrease of 41% compared to 145.8 million in the year ended December 31st, 2019. House of Services for the year of 2020 were 69 million, a decrease of 44% compared to 123 million for the year ended December 31st, 2019. General and administrative expenses were 13.9 million for the year ended December 31st, 2020, a decrease of 19% compared to 17.2 million for the year ended December 31st, 2019. Appreciation and amortization expense for the year ended December 31st, 2020 was 17.2 million, a decrease of 21% compared to 21.8 million for the year ended December 31st, 2019. We narrowed our net loss for the year ended December 31st, 2020 to 13.2 million or 56 cent loss per common share compared to a net loss of 15.2 million or 66 cents loss per common share for the year ended December 31st, 2019. EBITDA for the year of 2020 was 3.7 million compared to EBITDA of 6.3 million for the year of 2019. A PIVA direct reconciliation was provided in our earnings release issued this morning. And now I'll highlight some balance sheet items. Our balance sheet continues to remain strong as of December 31st, 2020, we had debt including obligations under financing leases of approximately 138,000. We had cash and short-term investments of 46.5 million. Our current ratio was 7.9 to one and working capital is approximately 51.1 million. And with that, I'll turn the call back to Steve for some comments on our operations.
spk05: Well, thank you, Jim. I stated an earnings release issue this morning. Fiscal 2020 was a year of unprecedented adversity. The company started out the first half of the year with its best financial and operation results in many years. We operated three large channel count crews in the U.S. and up to three crews in the Canadian market during the first quarter of 2020. The company continued profitability in the second quarter with the operation of two large channel count crews. As reported in our second quarter earnings release, the company began to experience a dramatic impact of the COVID-19 related economic lockdowns in late spring and early summer. As oil prices began to trade at significantly low levels, Exploration and production companies reduced their capital budgets in spending, which in turn negatively impacted demand for our services. As a result, crew deployment lessened and utilization of our existing channels dropped. Utilization levels went from strong and promising in the first half of the year to weak for periods of time in the second half of the year. Even though we have seen some gradual uptick in oil prices, current requests for proposals for our services in both the U.S. and Canada remain challenged. We are beginning to see signs of modest recovery in the oil service space as the oil and gas industry has experienced slight economic improvements in the number of active drilling rigs and hydraulic fracturing crews deployed in the U.S. On a different note, the decrease in overall activity and financial difficulties led to an increase in M&A activity as some E&P companies have chosen to consolidate with others. At this time, we are unable to forecast the impact that this activity will have on the demand for our services as E&P companies reevaluate their capital spending projects. However, this recent M&A activity indicates E&P companies will continue their focus on shareholder returns and disciplined capital spending as they seek to develop and produce oil and natural gas with increased efficiency by prioritizing their most economic drilling locations. This need for increased efficiency promotes demand for seismic data acquisition services and the services we provide. As in the most recent down cycles, we anticipate recovery and seismic data acquisition to somewhat lag behind increases in drilling and completion activities. In response to these difficult conditions, we are maintaining our focus on cost-saving measures while balancing the ability to respond rapidly when market conditions improve. As reported in our previous press releases this year, we have taken steps to outsource several ancillary services. These steps, including permitting a survey, have resulted in reduced salary costs and lower general and administrative expenses. Moreover, as previously reported in our second quarter 2020 earnings press release, the company anticipates approximately $4.3 million in annual cost savings as a result of these previously enacted cost saving measures. Capital expenditures for the fourth quarter were $25,000 in total, $2.8 million for the 12 months ended December 31, 2020, primarily for maintenance capital items. The company's board of directors has approved the initial capital budget of $1 million for 2021. Despite the setbacks thrust upon us by the worldwide COVID-19 pandemic, we are determined to press forward and deliver the highest quality services for our clients. Our state-of-the-art equipment inventory, our strong and unleveraged balance sheet, and our dedicated workforce positions us for healthy recovery when market conditions improve. As mentioned above, conditions are difficult and will remain so for the near term pending continued improvement and stabilization of oil prices. But I'm confident in the future and that we are properly focused on upcoming opportunities. I thank all of our hardworking employees, our valued clients, and our trusted shareholders as we work toward better times ahead. And with that, April, I believe we are ready to take questions.
spk06: Thank you. If you'd like to ask a question, simply press the star key followed by the digit 1 on your telephone keypad. Also, if you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, press star 1 at this time.
spk01: We'll pause for a moment. And we'll first hear from John Pertratz of Research Investments.
spk02: Good morning, Steve. It did very well for the quarter, given how everything's going. Just wondering on business prospects. The Wall Street Journal, they talked about Exxon going into using CO2 storage in the ground. Does this raise the prospects for seismic activity, given that it's putting CO2 back in the ground? And versus drilling for oil and gas, is this a different size of data and more business for you?
spk05: Jay, appreciate your interest and your question as always. We have been involved over the years in several isolated what you would consider or call CO2 sequestration projects. The ones that we have been involved with to date, as I understand it, have involved a commercial aspect, an academic aspect or component, as well as some government funding to look at the CO2 projects. And so we've done, we actually did one probably, I don't know if it was late third, early fourth quarter of 20, where we did a fairly small 3D survey that was academic driven. The intent is to get an image of the subsurface and see if you can identify a secure location to inject CO2 back in the ground and hold. It's a different process than what we, it's the same science, but it's a different application. What we typically do day to day is build geologic images and we look for places that are earth models that are conducive to the accumulation of hydrocarbons. And so this takes our imagery and looks to see if they can find a secure, closed, reservoir to inject CO2. We have had some projects recently, most of them small in nature, that have come across that are primarily commercial related. There are some companies out there over the years that specialize in this, and we've been exposed to some of the CO2 type work in the past. And so the answer to the question is yes, I think it is an opportunity. uh that will present itself going forward but the projects from a co2 standpoint tend to be smaller in nature and a little more isolated than what you would get from a typical emp exploration and production project but still it's a new business respectively for from someone like exxon to give you more business which you have the crews available to do the work correct correct um you know we Yes, correct.
spk02: And right now with the crews being down, not working, this is good work to have.
spk05: It is. And, you know, we're certainly looking at several of those projects currently, and they typically have a little bit of lead time because there's quite a bit of geologic work that has to go in behind them or in front of them.
spk02: Okay, but at least it's work. Okay, I noticed like my question is that Biden canceled leases on federal land. Did a lot of your customers locked in drilling have the ability to do more scientific work? Did they lock it in before Biden closed it down so that they have the ability to hire you later, that they have the ability to get the geophysical areas?
spk05: Yeah, that's something that, Jay, that we're a little uncertain on at this time as to how that process works. I'm confident that when we're dealing with federal lands, which typically occur or are located in the western U.S., New Mexico, Utah, Wyoming, Colorado, places like that, I'm confident that many of our customers have their leases in position, and I'm confident many of them are sitting on drilling permits for years to come. And so the delay is going to affect some new entry and new permits, but it's not going to, in my opinion, stop that activity completely. However, When you go in to do a seismic project in advance of drilling, you still have to go through a permit process with the several federal authorities, the Bureau of Land Management, Fish and Wildlife, and agencies like that. And so we don't currently have anything in the pipeline that is on federal lands. We don't anticipate it to be a huge issue other than what it's typically been in the past where it's just taking time and making sure you're doing the right things and getting the necessary approvals and studies and those types of things done in advance. But how it's going to affect actual seismic permits at this point, we're unclear.
spk02: But at least they have the land that they could essentially do drilling And all you have to do is get the permits. They do have the basic permits in place to be able to do the work.
spk05: Yes. And as I understand that executive order, and I'm by no means an expert on it, as I understand it, it just put a moratorium of 60 days on new leases and new drilling permits. And so... As I understand it, most of the E&P companies that have access or have operations on federal lands will have permits well in advance of drilling. So I think from a drilling permit and leasing standpoint, I think there'll be continued activity. As I said, how it affects an upfront, I don't think it'll stop it, but how it affects an upfront seismic project is yet to be determined. We've worked on federal lands for forever. We have a good relationship with the federal land folks. We know what needs to be done the right way. We know what surveys need to be done, and we take great care on federal lands as we do on private lands to make sure we're doing all the right things. So I'm confident, but we're just unclear as to what effect that's going to have in the near term.
spk02: Okay, but at least it looks like it's not a big constraint for future seismic work in the West because people have anticipated it and the relationships are still there.
spk01: Correct.
spk02: Sounds great. There have been several recent 13G filings. It's amazing. Why did so many people become attracted to you lately?
spk05: Well, I think most of the 13G filings that you're seeing out there are many of our long-term shareholders that have held greater than 5% of our company for quite some time. And I think what you're seeing for the most part today are just updated routine filings.
spk03: Oh, okay.
spk05: Yeah.
spk03: Very good. Thank you very much. Next question from someone else. Thank you.
spk01: As a reminder, star one to ask a question or make a comment. We'll pause for a moment. And it appears there are no further questions at this time.
spk05: Okay, April, thank you. I want to take this opportunity to thank everybody for listening in. As I said earlier, I want to take this opportunity to thank our employees who are working very hard and diligently on behalf of our clients and our shareholders. I certainly want to thank our clients for the opportunities they provide and really want to take this opportunity to thank Thank our shareholders for their trusted support through these difficult times. We are, as we've said in our press release and on this call, it continues to be a very challenging time, probably the most challenging I've been through. We are encouraged. We're encouraged with the recent uptick in oil prices to $65. We will see how the improvement in oil prices flow through. the capital budget plans and spending plans of our E&P customers. We are seeing some uptake in drilling and the completions, which certainly are encouraging. We really had about a year-long standstill, more or less, on drilling and completion. So there's some catch-up work to be done in 21 on behalf of our E&P customers. But we're optimistic about the future. of our company and our industry. Our balance sheet remains strong. We have had significant cutback in cost-saving measures, but we maintain the ability to respond very quickly, and our equipment is in good shape and ready to respond when things turn around. And with that, I'll close this call. Thank you again for your time and your interest, and we'll talk to you in about 60 days. Thank you.
spk06: That does conclude today's conference. Thank you all for your participation. You may now disconnect.
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