Dawson Geophysical Company

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 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 and 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 filings with the SEC, including in the company's annual report on Form 10-K filed with the SEC on March 16, 2021, and in the 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 the company's press release issued on October 25, 2021, regarding the merger agreement with Wilkes Brothers LLC, 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 in the company's current earnings release. a copy of which is located on the company's website, www.dawson3d.com. Management will discuss the pending TRAX action with Wilkes Brothers LLC, including the tender offer, during this conference call. For further information regarding the tender offer and merger with Wilkes Brothers LLC, please refer to the Schedule TO filed by WB Acquisitions, Inc., a subsidiary of Wilkes Brothers LLC on November 1st, 2021. The company's solicitation recommendation statement on Schedule 14D9 filed on November 1st, 2021, and the full text of the merger agreement, which was filed as an exhibit to the company's current report on Form 8K on October 25th, 2021. This call is scheduled for 30 minutes and the company will not provide any guidance. Today's call 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.

Well, thank you, Paula. Good morning and welcome to Dawson Geophysical Company's third quarter 2021 earnings and operations conference call. As Paula said, my name is Steve Jumper, Chairman, President, and CEO of the company. Joining me on the call is Jim Bratta, Executive Vice President, Chief Financial Officer. Later during this call, I will touch on the recently announced tender offer for all shares of Dawson made by Wilkes Brothers LLC. Before we start the call, just a few things to cover. 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, November 4, 2021, 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 third quarter-ended September 30, 2020 financial results. For the third quarter-ended September 30, 2020, the company reported revenues of $1.9 million, a decrease of approximately 78% compared to $8.7 million for the quarter-ended September 30, 2020. For the third quarter of 2021, the company reported a net loss of $7.9 million or $0.33 loss per common share compared to a net loss of $7.8 million or $0.33 loss per common share for the quarter ended September 30, 2020. The company reported EBITDA of negative $4.7 million for the quarter ended September 30, 2020 compared to EBITDA of negative 3.8 million for the quarter ended September 30, 2020. Activity levels during the third quarter of 2021 remained depressed as the company had one seismic data acquisition crew operating in the lower 48 with extended periods of low utilization. The company's one active crew was idle from early September to mid-October. The near-term outlook for onshore seismic data acquisition activity in the U.S. remains challenged, notwithstanding the currently elevated prices for oil and natural gas. Based on currently available information, the company's one active lower 48 crew resumed operation in mid-October on a small few thousand channel count project with a duration of approximately seven days and is further scheduled through early February of 2022 with current projects of various sizes and channel count requirements, the largest of which is 65,000 channels with a duration of approximately 45 days. The Canadian season began earlier than in recent years. The company expects to operate two crews in Canada in the back half of the fourth quarter of 2021 through the end of the winter season, which concludes at the end of the first quarter of 2022. The company has or anticipates to be awarded several additional mid-sized projects in the lower 48, each of which will be pushed into late 2022, primarily due to land access issues. Mid-activity remains at historically low levels, and visibility into 2022 is limited in the lower 48. Due to a lack of demand for onshore seismic data acquisition projects in both Canada and the lower 48, prices for our service has softened in the last quarter. I will now turn control of the call over to Jim Braddock, who will review the financial results. Then I will return with some final remarks and our outlook into the fourth quarter of 2021 and first quarter of 2022. And I will touch on the recently announced tender offer for all shares of Dawson made by Wilkes Brothers LLC. Jim.

Thank you, Steve, and good morning. Revenues for the third quarter of 2021 were $1.9 million. a decrease of approximately 78% compared to 8.7 million for the quarter ended September 30th, 2020. As stated in our earnings release issued this morning, the company's one active crew was idle from early September to mid-October. Cost of services in the third quarter of 2021 was 4 million, a decrease of 58% compared to 9.4 million in the same quarter of 2020. General and administrative expenses were 2.4 million in the third quarter of 2021, a decrease of 25% compared to 3.3 million in the third quarter of 2020. Depreciation and amortization expense in the third quarter of 2021 was 3.2 million, a decrease of 21% compared to 4.1 million in the same quarter of 2020. Net loss for the third quarter of 2021 was 7.9 million, or 33 cent loss per common share compared to a net loss of 7.8 million or 33 cent loss per common share in the third quarter of 2020. EBITDA in the third quarter of 2021 was negative 4.7 million compared to EBITDA of negative 3.8 million in the same period of 2020. And EBITDA reconciliation was provided in our earnings release issued this morning. Now I will cover some results for the nine months ended September 30th, 2021. Revenues for the nine months ended September 30th, 2021 were $13.9 million, a decrease of approximately 82% compared to $77.2 million for the nine months ended September 30th, 2020. Cost of services for the nine months ended September 30th, 2021 was $18.2 million, a decrease of 69% compared to $58.2 million in the same period of 2020. General and administrative expenses were $8 million for the nine months ended September 30th, 2021, a decrease of 29% compared to $11.2 million in the same period a year ago. Depreciation and amortization expenses were $10.4 million for the nine months ended September 30th, 2021, a decrease of 25% compared to $13.4 million in the same period a year ago. Net loss for the nine months ended September 30th, 2021 was $22.1 million or $0.94 loss per common share compared to a net loss of $5.3 million or $0.23 loss per common share for the nine months ended September 30th, 2020. EBITDA for the nine months ended September 30th, 2021 was negative 12.2 million compared to positive EBITDA of 7.8 million in the same period of 2020. And EBITDA reconciliation was provided in our earnings release issued this morning. And now I'll highlight some balance sheet items. As of September 30th, 2021, our balance sheet includes debt, including obligations under financing leases, of approximately $256,000. Cash and short-term investments of $41.6 million. Our current ratio is 8.8 to 1. And working capital is approximately $39.4 million. And with that, I'll turn the call back to Steve for some comments on our operations and the recently announced tender offer for all shares of Dawson made by Wilkes Brothers LLC.