Dawson(DWSN) - 2023 Q2 - Quarterly Report

Financial Performance - Operating revenues for Q2 2023 increased 324.3% to $20,219,000 compared to $4,765,000 in Q2 2022[84] - Operating expenses for Q2 2023 increased 193.4% to $19,906,000 compared to $6,785,000 in Q2 2022[86] - EBITDA for Q2 2023 was $(2,521,000), an improvement from $(4,575,000) in Q2 2022[93] - Total operating costs for Q2 2023 were $24,996,000, representing a 98.0% increase from Q2 2022[89] Expenses Management - General and administrative expenses were 14.7% of revenues in Q2 2023, down from 59.3% in Q2 2022[87] - General and administrative expenses decreased 25.5% to $6,476,000 during the first six months of 2023 compared to $8,696,000 in the same period of 2022[87] Cash Flow and Investments - Net cash provided by operating activities increased to $5,751,000 for the six months ended June 30, 2023, compared to $1,734,000 for the same period in 2022, primarily due to a $3,035,000 employee retention credit[95] - Net cash used in investing activities was $2,990,000 for the six months ended June 30, 2023, an increase of $3,090,000 from a net cash provided of $100,000 in the same period of 2022, driven by capital expenditures rising to $2,021,000[96] - Net cash used in financing activities was $3,454,000 for the six months ended June 30, 2023, compared to $3,174,000 provided in the same period of 2022, with significant cash distributions of $3,055,000 related to a transaction[97] Capital Expenditures - The Board of Directors approved a capital budget of $5,000,000 for 2023, with $2,216,000 spent on capital expenditures in the first half of 2023, primarily for rolling stock and maintenance[98] Credit and Financing - As of June 30, 2023, the company had approximately $5,000,000 available for withdrawal under its Revolving Credit Facility, with no amounts borrowed to date[101] - The company has a short-term convertible note payable of approximately $9,880,000, which can be converted into 5,811,765 shares of common stock at a conversion price of $1.70[104] - The company has finance leases totaling $1,014,000 as of June 30, 2023, with interest rates ranging from 4.85% to 7.66%[107] Market Conditions - The number of active drilling rigs in the lower 48 states dropped from 800 to 675 as of July 15, 2023, with private drillers accounting for 70% of the decline[80] - The company is exposed to market risks, including fluctuations in commodity prices and interest rate changes, which may impact its financial performance[111] Future Outlook - The company anticipates significant increases in carbon capture related seismic activity in 2024[82] - Increased utilization of crews is expected to continue into Q1 2024, with full utilization anticipated in Q4 2023[79] - The order book remains improved with several large projects in West Texas and Eastern New Mexico[81] Financial Position - Cash, restricted cash, and short-term investments totaled $23,352,000 as of June 30, 2023[115] - The company maintains a historical allowance for doubtful accounts of $250,000 as of June 30, 2023, reflecting ongoing credit evaluations of clients in the oil and natural gas industry[112]