Dawson(US:DWSN)2024-04-01 20:46Company Operations - As of December 31, 2023, Dawson Geophysical Company operates 130 vibrator energy source units and approximately 327,000 recording channels, including 117,000 single-channel GSR/GSX boxes and 186,000 channels of GSR Multi-channel boxes[25]. - The company has employed 281 full-time employees as of December 31, 2023, with 45 in management, sales, and administrative roles[36]. - The company has provided seismic acquisition services for carbon capture and sequestration projects, indicating diversification in service offerings[13]. - The majority of projects are operated under turnkey agreements, which provide more profit potential but involve higher risks due to potential crew downtime[34]. - The company has adopted a maintenance capital expenditures program since 2014, reflecting a strategic approach to managing its equipment base in line with service demand[26]. Financial Performance - The company incurred net losses of $12.1 million for the year ended December 31, 2023, compared to $18.6 million for the year ended December 31, 2022[58]. - Total Revenues for 2023 reached $96.8 million, a 87.5% increase from $51.6 million in 2022, including a $29.8 million rise in reimbursable revenues[138]. - Total Operating Costs for 2023 were $110.2 million, representing a 49% increase from the previous year[144]. - General and Administrative Expenses decreased by 26% to $11.4 million in 2023 from $15.5 million in 2022, due to cost management efforts[141]. - Net cash provided by operating activities was $814,000 in 2023, a significant improvement from a net cash used of $3.3 million in 2022[152]. - The company incurred a net loss of $12.1 million in 2023, an improvement from a net loss of $18.6 million in 2022[156]. - As of December 31, 2023, the company had $15.8 million in cash and a positive working capital balance of $15 million[156]. Client Concentration and Market Risks - The company generated approximately 73% of its revenues from four clients during the twelve months ended December 31, 2023, indicating a high client concentration risk[28]. - Approximately 73% of the company's revenues during the twelve months ended December 31, 2023, were derived from its four largest clients[51]. - The company faces high fixed costs, which include depreciation and maintenance expenses, potentially leading to continuing or increasing operating losses[60]. - The demand for the company's services is highly dependent on the capital expenditures of oil and natural gas companies, which are influenced by commodity prices[45]. - The oil and natural gas industry is historically cyclical, significantly affecting the company's revenue based on oil and natural gas price volatility[44]. Competitive Environment - The seismic data acquisition industry is competitive, with primary competitors including SAExploration Holdings, Inc., Echo Seismic Ltd., and Paragon Geophysical Services, Inc.[21]. - The company operates in a competitive environment, which may lead to downward pricing pressure and loss of market share[67]. - The company is in a capital-intensive industry and must continue to invest in seismic data acquisition capabilities to remain competitive, facing potential limitations in obtaining necessary financing[72]. Regulatory and Operational Risks - Current macroeconomic conditions, including inflation and geopolitical conflicts, are expected to impact oil and gas commodity prices and demand for the company's services[39]. - Delays in obtaining land access rights and permits can adversely affect the company's ability to complete projects and impact results of operations[69]. - The company may incur additional costs due to new environmental regulations related to greenhouse gas emissions, which could adversely affect demand for its services[97]. - The company operates under hazardous conditions, which could lead to injuries, equipment losses, and interruptions in business operations[88]. Stock Performance and Shareholder Information - The company's common stock experienced price volatility, with high and low sales prices for the twelve months ended December 31, 2023, at $2.65 and $1.28, respectively[79]. - Daily trading volumes for the common stock were low, with instances of trading as low as 0 shares during 2023, and over 80% of the stock is owned by Wilks and its affiliates, limiting public market activity[80]. - The common stock traded below $5.00 per share throughout 2023, which may classify it as a low-priced stock, potentially decreasing liquidity and increasing transaction costs[81]. - As of March 26, 2024, the market price for the company's common stock was $1.39 per share, with 66 common shareholders of record[121]. Capital Expenditures and Financing - The Board of Directors approved a maintenance capital expenditure budget of $5 million for 2023, of which $3.7 million was utilized, and an initial budget of $5 million for 2024[26]. - The company expects to finance its 2024 capital expenditures through cash flow from operations, borrowings, and funds available under its Revolving Credit Facility[164]. - The company has not borrowed any amounts under its Revolving Credit Facility, which has approximately $5.0 million available for withdrawal[160]. Management and Governance - A new Chief Executive Officer was appointed in December 2023, who now reviews financial information on a geographic basis for U.S. and Canada operations[134]. - The company evaluated its internal control over financial reporting as effective as of December 31, 2023[193]. - The company will file its definitive proxy statement within 120 days after the year-end, incorporating required information from earlier filings[201].