DAWSON GEOPHYSICAL CO
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 13, 2024
DWSN$1.64+3.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001558370-24-012071
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001558370-24-015542
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 51 previous paragraphs and 50 current paragraphs.
30 unchanged; 18 reworded; 2 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
We began the quarter with one crew operating in the United States, and had two small channel crews operating later in the quarter. We currently have one crew operating and a second large channel crew scheduled to deploy in mid-November, which will utilize the majority of our channels in the United States. Our seasonal operations in Canada resumed in October, and we expect increased revenues and profitability from Canada through the first quarter of 2025.
Current report
We are currently testing new single node channels in the field, and we expect to invest in increasing our channel count through the purchase of new equipment in the near future. We believe that investing in new single node channels will improve our revenue and margins due to improved crew efficiency with the lighter weight equipment.
Removed paragraphs (3)
Previous report
We started the quarter with two crews in the United States and dropped to one crew in late May. Our Canadian operations were seasonally halted in April, but we expect them to resume operating in the fourth quarter later this year. We reacted quickly to the softness in our calendar and reduced headcount to one crew to conserve cash during this time. We have improved our backlog and expect to have two crews deployed later in the third quarter this year. We expect to have our current equipment fully deployed through the end of the second quarter of 2025.
Previous report
We expect revenue in the third quarter to be comparable to the second quarter and to significantly increase in the fourth quarter due to additional jobs scheduled in the U.S. and resumption of our Canadian operations. Bid activity in the U.S. has continued to improve.
Previous report
the period. Acquisition expenses for the first six months of 2024 decreased 37% to $5.0 million from $7.9 million for the same period of 2023. The decrease was primarily due to decreased crew utilization.
Reworded paragraphs (18)
Previous wording
Statements other than statements of historical fact included in this Form 10-Q that relate to forecasts, estimates or other expectations regarding future events, including without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” regarding technological advancements and our financial position, business strategy, and plans and objectives of our management for future operations, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors. These factors include, but are not limited to, our status as a controlled public company, which exempts us from certain corporate governance requirements; the limited market for our common stock, which could result in the delisting of the common stock from Nasdaq; the impact of general economic, industry, market or political conditions; dependence upon energy industry spending; changes in exploration and production spending by our customers and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of our customers, particularly during extended periods of low prices for crude oil and natural gas; the volatility of oil and natural gas prices; changes in economic conditions; surplus in the supply of oil and the ability of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; the potential for contract delays; reductions or cancellations of service contracts; limited number of customers; credit risk related to our customers; reduced utilization; high fixed costs of operations and high capital requirements; operational challenges relating to the effects of the COVID-19 pandemic and certain efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees and remote work arrangements; industry competition; external factors affecting the Company’s crews such as weather interruptions and inability to obtain land access rights of way; whether the Company enters into turnkey or day…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Statements other than statements of historical fact included in this Form 10-Q that relate to forecasts, estimates or other expectations regarding future events, including without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” regarding technological advancements and our financial position, business strategy, and plans and objectives of our management for future operations, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors. These factors include, but are not limited to, our status as a controlled public company, which exempts us from certain corporate governance requirements; the limited market for our common stock, which could result in the delisting of the common stock from Nasdaq; the impact of general economic, industry, market or political conditions; dependence upon energy industry spending; changes in exploration and production spending by our customers and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of our customers, particularly during extended periods of low prices for crude oil and natural gas; the volatility of oil and natural gas prices; changes in economic conditions; surplus in the supply of oil and the ability of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, to agree on and comply with supply limitations; the potential for contract delays; reductions or cancellations of service contracts; limited number of customers; credit risk related to our customers; reduced utilization; high fixed costs of operations and high capital requirements; operational challenges relating to the effects of the COVID-19 pandemic and certain efforts to mitigate the spread
Previous wording
activities, and whether or not a future transaction or other action occurs that causes the Company to be delisted from Nasdaq and no longer be required to make filings with the SEC. The cautionary statements made in this Form 10-Q should be read as applying to all related forward-looking statements wherever they appear in this Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this paragraph. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company’s Annual Report on Form 10-K that was filed with the SEC on April 1, 2024 and any subsequent Quarterly Reports on Form 10-Q filed with the SEC. The Company disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Current wording
of the virus, including logistical challenges, protecting the health and well-being of our employees and remote work arrangements; industry competition; external factors affecting the Company’s crews such as weather interruptions and inability to obtain land access rights of way; whether the Company enters into turnkey or day rate contracts; crew productivity; the availability of capital resources; disruptions in the global economy, including unrest in the Middle East, export controls and financial and economic sanctions imposed on certain industry sectors and parties as a result of the developments in Ukraine and related activities, and whether or not a future transaction or other action occurs that causes the Company to be delisted from Nasdaq and no longer be required to make filings with the Securities and Exchange Commission (the “SEC”). The cautionary statements made in this Form 10-Q should be read as applying to all related forward-looking statements wherever they appear in this Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this paragraph. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company’s Annual Report on Form 10-K that was filed with the SEC on April 1, 2024 and any subsequent Quarterly Reports on Form 10-Q filed with the SEC. The Company disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Previous wording
U.S. Fee Revenues. Acquisition revenues for the second quarter of 2024 decreased 22.8% to $8.3 million compared to $10.8 million for the same period of 2023. The decrease was primarily due to a decrease in crew utilization. Acquisition revenues for the first six months of 2024 increased 15.5% to $26.6 million compared to $23.0 million for the same period of 2023. The increase was primarily due to an increase in crew utilization.
Current wording
U.S. Fee Revenues. Acquisition revenues for the third quarter of 2024 decreased 52% to $4.7 million compared to $9.7 million for the same period of 2023. The decrease was primarily due to a decrease in crew utilization. Acquisition revenues for the first nine months of 2024 decreased 4.6% to $31.3 million compared to $32.8 million for the same period of 2023. The decrease was primarily due to a decrease in crew utilization.
Previous wording
*Canadian Fee Revenues.*Acquisition revenues for the second quarter of 2024 decreased 95% to $5,000 compared to $101,000 for the same period of 2023. Acquisition revenues for the first six months of 2024 decreased 16.4% to 8.5 million compared to $10.1 million for the same period of 2023. The decreases in both periods were primarily due to a seasonal decrease in crew utilization.
Current wording
*Canadian Fee Revenues.*Acquisition revenues of $11,000 for the third quarter of 2024 equaled the acquisition revenues for the same period of 2023. Acquisition revenues for the first nine months of 2024 decreased 16% to 8.5 million compared to $10.1 million for the same period of 2023. The decreases in both periods were primarily due to a seasonal decrease in crew utilization.
Previous wording
*Total Revenues.*Revenues for the second quarter of 2024 were $12.5 million compared to $20.2 million for the same period of 2023. Total revenues included a decrease of $5.2 million in reimbursable revenues. Revenues for the first six months of 2024 were $44.1 million compared to $49.6 million for the same period of 2023. Total revenues included a decrease of $7.4 million in reimbursable revenues.
Current wording
*Total Revenues.*Revenues for the third quarter of 2024 were $14.4 million compared to $23.0 million for the same period of 2023. Total revenues included a decrease of $3.5 million in reimbursable revenues. Revenues for the first nine months of 2024 were $58.5 million compared to $72.6 million for the same period of 2023. Total revenues included a decrease of $10.9 million in reimbursable revenues.
Previous wording
*U.S. Fee Operating Expenses.*Acquisition expenses for the second quarter of 2024 decreased 18.6% to $7.9 million compared to $9.6 million for the same period of 2023. The decrease was primarily due to an overall decrease in crew production and utilization during the period. Acquisition expenses for the first six months of 2024 increased 9% to $21.0 million from $19.3 million for the same period of 2023. The increase was primarily due to an increase in crew utilization.
Current wording
*U.S. Fee Operating Expenses.*Acquisition expenses for the third quarter of 2024 decreased 43% to $5.7 million compared to $10.1 million for the same period of 2023. The decrease was primarily due to an overall decrease in crew production and utilization during the period. Acquisition expenses for the first nine months of 2024 decreased 9% to $26.8 million from $29.4 million for the same period of 2023. The increase was primarily due to an decrease in crew utilization.
Previous wording
*Canadian Fee Operating Expenses.*Acquisition expenses for the second quarter of 2024 decreased 29% to $0.7 million compared to $0.9 million for the same period of 2023. The decrease was primarily due to an overall decrease in crew production and utilization during
Current wording
*Canadian Fee Operating Expenses.*Acquisition expenses for the third quarter of 2024 decreased 5% to $0.8 million compared to $0.9 million for the same period of 2023. The decrease was primarily due to an overall decrease in crew production and utilization during the period. Acquisition expenses for the first nine months of 2024 decreased 34% to $5.8 million from $8.8 million for the same period of 2023. The decrease was primarily due to decreased crew utilization.
Previous wording
General and Administrative Expenses. During the second quarter of 2024, general and administrative expenses decreased 27.1% to $2.2 million compared to $3.0 million for the same period of 2023. During the first six months of 2024 general and administrative expenses decreased 37% to $4.1 million compared to $6.5 million for the same period of 2023. The decrease was primarily due to our focus on cost reduction initiatives, a decrease in retained legal counsel and a reduction in salary expenses.
Current wording
General and Administrative Expenses. During the third quarter of 2024 and 2023, general and administrative expenses remained equal totaling $2.5 million for both periods. During the first nine months of 2024 general and administrative expenses decreased 26% to $6.6 million compared to $9.0 million for the same period of 2023. The decrease was primarily due to our focus on cost reduction initiatives, a decrease in retained legal counsel and a reduction in salary expenses.
Previous wording
Depreciation and Amortization Expense. Depreciation and amortization expenses for the second quarter and first six months of 2024 totaled $1.4 million and $3.0 million, respectively, compared to $2.1 million and $4.8 million for the same periods of 2023. Depreciation expenses decreased in 2024 compared to 2023 as a result of multiple years of reduced capital expenditures.
Current wording
Depreciation and Amortization Expense. Depreciation and amortization expenses for the third quarter and first nine months of 2024 totaled $1.4 million and $4.4 million, respectively, compared to $2.0 million and $6.8 million for the same periods of 2023. Depreciation expenses decreased in 2024 compared to 2023 as a result of multiple years of reduced capital expenditures.
Previous wording
Total Operating Costs. Total operating costs for the second quarter of 2024 were $16.3 million, representing a 34.6% decrease from the same period of 2023. The operating costs for the first six months of 2024 were $42.2 million, representing a 23.3% decrease from the same period of 2023. The decrease in operating costs for the second quarter and first six months of 2024 compared to 2023 was primarily due to the factors described above.
Current wording
Total Operating Costs. Total operating costs for the third quarter of 2024 were $20.2 million, representing a 30% decrease from the same period of 2023. The operating costs for the first nine months of 2024 were $62.4 million, representing a 25% decrease from the same period of 2023. The decrease in operating costs for the third quarter and first nine months of 2024 compared to 2023 was primarily due to the factors described above.
Previous wording
Income Taxes. Income tax benefit for the second quarter of 2024 was $131,000 and income tax expense for the first six months of 2024 was $71,000, respectively, compared to income tax benefits of $82,000 and $99,000 for the same periods of 2023. These amounts represent effective tax rates of 3.6% and 3.0% for the second quarter and first six months of 2024, respectively, compared to 1.8% and 2.0% for the same periods of 2023. The Company’s nominal effective tax rate for the periods above was due to the presence of net operating loss carryovers and adjustments to the valuation allowance on deferred tax assets.
Current wording
Income Taxes. Income tax benefit for the third quarter of 2024 was $35,000 and income tax expense for the first nine months of 2024 was $36,000, respectively, compared to income tax expense of $3,000 and income tax benefit of $96,000 for the same periods of 2023. These amounts represent effective tax rates of 0.6 and -1.1% for the third quarter and first nine months of 2024, respectively, compared to -0.1% and 0.9% for the same periods of 2023. The Company’s nominal effective tax rate for the periods above was due to the presence of net operating loss carryovers and adjustments to the valuation allowance on deferred tax assets.
Previous wording
Cash Flows. Net cash provided by operating activities was $7.8 million for the six months ended June 30, 2024, compared to net cash provided by operating activities of $5.8 million for the same period of 2023. This increase was primarily due to net income in 2024 compared to net loss in 2023 along with various changes in the balances of our operating assets and liabilities.
Current wording
Cash Flows. Net cash provided by operating activities was $3.6 million for the nine months ended September 30, 2024, compared to $2.5 million for the same period of 2023. This increase was primarily due to various changes in the balances of our operating assets and liabilities.
Previous wording
Net cash used in investing activities was $1.3 million and $3.0 million for the six months ended June 30, 2024, and 2023, respectively. The decrease in cash used in investing activities between periods of $1.7 million was primarily due to a decrease in cash capital expenditures to $1.5 million for the first six months of 2024 compared to capital expenditures of $2.0 million for the same period of 2023. Additionally, in connection with the Breckenridge asset acquisition in 2023 we acquired $1.0 million of short-term investments.
Current wording
Net cash used in investing activities was $0.9 million and $3.5 million for the nine months ended September 30, 2024, and 2023, respectively. The decrease in cash used in investing activities between periods of $2.5 million was primarily due to a decrease in cash capital expenditures to $1.6 million for the first nine months of 2024 compared to capital expenditures of $2.6 million for the same period of 2023. Additionally, in connection with the Breckenridge asset acquisition in 2023 we acquired $1.0 million of short-term investments.
Previous wording
Net cash used in financing activities was $11.1 million for the six months ended June 30, 2024, and was primarily comprised of dividends paid of $9.9 million, principal payments of $0.8 million and $0.3 million under our notes payable and finance leases, respectively. Net cash used in financing activities was $3.5 million for the six months ended June 30, 2023, and was primarily comprised of principal payments of $0.3 million and $68,000 under our notes payable and finance leases, respectively. Additionally, in connection with the Breckenridge asset acquisition we had cash distributions of $3.1 million.
Current wording
Net cash used in financing activities was $11.4 million for the nine months ended September 30, 2024, and was primarily comprised of dividends paid of $9.9 million, principal payments of $0.9 million and $0.5 million under our notes payable and finance leases, respectively. Net cash used in financing activities was $3.7 million for the nine months ended September 30, 2023, and was primarily comprised of principal payments of $0.5 million and $0.2 million under our notes payable and finance leases, respectively. Additionally, in connection with the Breckenridge asset acquisition we had cash distributions of $3.1 million.
Previous wording
Capital Expenditures. The Board of Directors approved an initial 2024 capital budget in the amount of $2.5 million for capital expenditures, which was limited to necessary maintenance capital requirements and incremental recording channel replacement or increase. For the six months ended June 30, 2024, we have spent $1.8 million on capital expenditures, primarily for rolling stock and maintenance capital requirements. Historically, we have funded most of our capital expenditures through cash flow from operations, cash reserves, equipment term loans and finance leases.
Current wording
Capital Expenditures. The Board of Directors approved an initial 2024 capital budget in the amount of $2.5 million for capital expenditures, which was limited to necessary maintenance capital requirements and incremental recording channel replacement or increase. As of September 30, 2024, the Board of Directors increased this budget to $6.0 million to invest in additional single node channels. For the nine months ended September 30, 2024, we spent $2.5 million on capital expenditures, primarily for rolling stock and maintenance capital requirements. Historically, we have funded most of our capital expenditures through cash flow from operations, cash reserves, equipment term loans and finance leases.
Previous wording
Dominion Letters of Credit. As of June 30, 2024, Dominion Bank has issued one letter of credit in the amount of $265,000 to support our workers compensation insurance. The letter of credit is secured by a certificate of deposit with Dominion Bank.
Current wording
Dominion Letters of Credit. As of September 30, 2024, we have no outstanding letters of credit. Our previously issued letter of credit in the amount of $265,000 was not renewed on August 9, 2024.
Previous wording
As of June 30, 2024, we have one short-term note payable to a finance company for various insurance premiums totaling $133,000. As of December 31, 2023, we had one short-term note payable to a finance company for various insurance premiums totaling $910,000.
Current wording
As of September 30, 2024, we have no outstanding short-term notes payable. As of December 31, 2023, we had one outstanding short-term note payable to a finance company for various insurance premiums totaling $910,000.
Previous wording
In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases. Our Condensed Consolidated Balance Sheet as of June 30, 2024 and December 31, 2023, include finance leases of $2.0 million and $1.8 million, respectively.
Current wording
In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases. Our Condensed Consolidated Balance Sheet as of September 30, 2024 and December 31, 2023, include finance leases of $2.2 million and $1.8 million, respectively.