Dawson(US:DWSN)2025-04-02 21:00Company Operations - Dawson Geophysical Company operates 130 vibrator energy source units and approximately 326,000 recording channels as of December 31, 2024[25]. - The company has invested in cableless recording systems, which have led to increased crew efficiencies and higher channel counts on projects[23]. - The majority of projects are conducted under turnkey agreements, which provide more profit potential but involve higher operational risks[35]. - The company utilizes advanced 3-D seismic survey techniques to produce high-resolution images of subsurface conditions, enhancing operational efficiencies for clients[19]. - The company has provided seismic acquisition services for carbon capture and sequestration projects, expanding its service offerings beyond traditional oil and gas[13]. - The company operated two crews in the U.S. and resumed seasonal operations in Canada, maintaining high crew utilization in the fourth quarter[118]. - The company began testing new single node channels in Q4 2024, which improved efficiency and margins, with ongoing evaluations based on field operations[119]. - The majority of revenues were derived from turnkey contracts, which are expected to remain prevalent in operations across the Midwest, Western, and Southwestern U.S.[121]. - The company has a strong backlog of projects extending through the end of Q2 2025, indicating positive future demand for services[118]. Financial Performance - The company incurred net losses of $4.1 million for the year ended December 31, 2024, and $12.1 million for the year ended December 31, 2023[53]. - Total revenues for the year ended December 31, 2024, were $74.2 million, a decrease from $96.8 million in 2023, including a $14.7 million drop in reimbursable revenues[129]. - U.S. acquisition revenues for the year ended December 31, 2024, were $40.7 million, down from $49.0 million in 2023, primarily due to decreased demand for services[127]. - Canadian acquisition revenues increased slightly to $12.7 million in 2024 from $12.4 million in 2023, attributed to higher demand and utilization of single node channels[128]. - General and administrative expenses decreased by 25% to $9.5 million for the year ended December 31, 2024, compared to $12.6 million for the same period in 2023[133]. - Total operating costs for the year ended December 31, 2024, were $78.7 million, representing a 28% decrease from the corresponding period in 2023[136]. - Net cash used in operating activities was $1.9 million for the year ended December 31, 2024, compared to net cash provided of $814,000 for the same period in 2023[145]. - Net cash used in investing activities was $0.7 million for the year ended December 31, 2024, which includes cash capital expenditures of $1.9 million[146]. - Net cash used in financing activities was $11.6 million for the year ended December 31, 2024, including dividend payments of approximately $9.9 million[147]. - As of December 31, 2024, the company had $1.4 million in cash and a positive working capital balance of $4.6 million[149]. - Adjusted EBITDA for the year ended December 31, 2024, was $1.961 million, compared to an Adjusted EBITDA of $(2.016) million for the same period in 2023[140]. Client Concentration and Risks - The company generated approximately 43% of its revenues from two clients during the twelve months ended December 31, 2024[28]. - Approximately 43% of the company's revenues for the twelve months ended December 31, 2024, were derived from its two largest clients[47]. - The company has a concentration of clients, which increases exposure to credit risks; a default by a significant client could materially affect operating results[52]. - The company is significantly affected by the volatility of oil and natural gas prices, which influence client expenditures on exploration and production activities[43]. - The company’s business is significantly influenced by fluctuations in oil and natural gas prices, impacting exploration and development activities[117]. - The company is monitoring geopolitical events, such as the military conflict between Russia and Ukraine, which may impact oil and gas prices and demand for its services[40]. Operational Challenges - The company faces high fixed costs, primarily due to depreciation and maintenance expenses, which could lead to continuing or increasing operating losses during periods of low demand[55]. - The company operates in a highly competitive market, which may lead to downward pricing pressure and loss of market share[61]. - The company is subject to delays related to obtaining land access rights, which could adversely affect its operations[64]. - The company relies on a limited number of key suppliers for seismic services and equipment, which could affect productivity if supply is disrupted[67]. - Legislative measures addressing greenhouse gas emissions could negatively impact the exploration and production of oil and gas, affecting demand for the company's services[85]. - The company faces risks related to cybersecurity threats that could disrupt operations and lead to loss of sensitive information[81]. - The company is subject to significant government regulation, which may adversely affect operations and lead to increased compliance costs[82]. - The company may be held liable for the actions of subcontractors, which could result in additional risks and liabilities[78]. Capital Expenditures and Investments - The Board of Directors approved a capital expenditure budget of $6 million for 2025, reflecting a strategic increase from the initial $2.5 million budget for 2024[26]. - The company operates in a capital-intensive industry, requiring significant investment to maintain and expand seismic data acquisition capabilities[65]. - Working capital requirements remain high due to infrastructure expansion in response to client demand for improved data quality[65]. Stock and Market Activity - The company's common stock experienced price volatility, with high and low sales prices for the twelve months ended December 31, 2024, at $2.22 and $1.27, respectively[72]. - As of December 31, 2024, Wilks and its affiliates owned approximately 80% of the company's common stock, limiting public market activity and increasing price volatility[73]. - The company is subject to foreign currency exchange rate risk, which could impact results of operations and cash flows[71]. Financial Management and Compliance - The company adopted ASU 2023-07 for the fiscal year ended December 31, 2024, which aims to improve disclosures about reportable segments and their expenses[174]. - The company does not expect the adoption of ASU 2023-09 to have a material impact on its financial statements and disclosures, effective January 1, 2025[175]. - The company has not experienced any changes in its internal control over financial reporting that materially affected its effectiveness as of December 31, 2024[187]. - The company evaluates lease agreements to determine their classification as operating or finance leases, with most operating leases being non-cancelable[169]. - The company recognizes revenue based on the performance of services under cancelable service contracts, with revenue recognized as services are performed[163]. - The company has not entered into any hedge arrangements or derivative financial instruments, exposing it to market risks from fluctuations in commodity prices and interest rates[177]. - The Company filed several amendments to the Agreement and Plan of Merger with Wilks Brothers, LLC and WB Acquisitions Inc. between October 2021 and January 2022, indicating ongoing strategic consolidation efforts[203]. - An Asset Purchase Agreement was executed on March 24, 2023, involving the acquisition of Breckenridge Geophysical, LLC, reflecting the Company's market expansion strategy[203]. - The Company has made multiple loan modification agreements with Dominion Bank from September 2019 to March 2023, indicating ongoing financial management and restructuring efforts[206][207]. - The Company has implemented several employment agreements and separation agreements in December 2023, suggesting a focus on talent management and organizational restructuring[207]. - The Company has incorporated various certifications as per the Sarbanes-Oxley Act of 2002, ensuring compliance and governance standards are maintained[207].