Global Geophysical Services Announces 2nd Quarter Earnings

HOUSTON, Aug. 5, 2010 (GLOBE NEWSWIRE) -- Global Geophysical Services, Inc. (NYSE:GGS) today announced financial results for its second quarter ended June 30, 2010.

Second Quarter Highlights

• The company reported total revenues of $40.1 million compared to $57.7 million for the same period in 2009, a decrease of 30.5%.
• EBITDA (defined below) for the second quarter of 2010 was $17.7 million compared to $15.5 million in the same period of 2009.
• Backlog as of June 30, 2010 was approximately $179 million. Backlog as of March 31, 2010 was approximately $145 million.
• Net loss for the second quarter of 2010 was ($12.1) million compared to a net loss of ($4.5) million in the same period of 2009.
• Loss per share for the second quarter of 2010 was ($0.41) based on 29.5 million shares outstanding compared with ($0.55) for the same period 2009. A reconciliation of the share count is included towards the end of this release.
• Included in the loss for the second quarter is a $6.0 million expense for the extinguishment of debt in connection with the previously announced refinancing of the Company's credit facilities. Also included is $3.0 million of bad debt provision based upon our economic assessment of a disputed receivable.
• Our liquidity at June 30, 2010 was $144 million, including $50 million in undrawn revolver.

Richard Degner, President and CEO, commented:

"Our second quarter 2010 results were impacted by lower demand for seismic services, combined with delays in data acquisition for both proprietary programs as well as multi-client programs attributable to adverse weather conditions and permit issues. Likewise, the quarter's results included a non-cash charge resulting from our previously announced refinancing transactions. In addition, we also opted to provision for potential delays in the resolution of one of our disputed receivables.

The company made progress on a number of its key objectives including:

• Sequentially increasing backlog quarter over quarter;
• Increasing crew and program activities in North and South America, including land and TZ programs for an Independent Oil Company ("IOC") client in Colombia as well as a new program for an IOC client in Argentina;
• Expanding our multi-client library commitments within key basins including the Eagle Ford and Haynesville shale plays;
• Launching Global's offering of Microseismic services to broaden our technology service portfolio within the shale plays;
• Doubling our data processing computing capacity which is expected to come on-line in the second half of 2010.

We continue to see increases in bid activity across all regions. Although we expect the timing to vary by region, the overall supply-demand balance and corresponding pricing environment should continue to show improvement."

Second Quarter Results

The following table sets forth our consolidated revenues for the three months ending June 30, 2010 and for the corresponding period in 2009.

The revenue decrease in the second quarter of 2010 compared to the same quarter of 2009 was primarily the result of lower demand for seismic services, combined with program delays caused by adverse weather conditions, permit and access considerations, crew scheduling and program start-up cycles.

The Company's proprietary seismic acquisition revenue totaled $16.4 million as compared to $53.2 million for the same period of 2009, a decrease of $36.8 million or 69%.  The decrease in U.S. seismic acquisition revenue of $20.4 million is primarily the result of a shift from proprietary to multi-client demand in the North American unconventional resource plays. International proprietary seismic acquisition revenues for the same period in 2010 declined $16.4 million, or 55%, compared to the same period in 2009. The revenues from our Europe, Africa and Middle East operations decreased by $7.9 million, primarily due to crew reductions in 2010, while the revenues from our Latin America and Asia Pacific operations decreased by $0.9 million and $7.6 million, respectively.

Multi-client revenues increased to $23.7 million for the period ending June 30, 2010 from $4.5 million, an increase of $19.2 million or 427%. The $23.7 million in multi-client revenues included $23.2 million of pre-commitment revenue and $0.5 million of late sale revenue. The increase was mainly the result of additional projects in the Eagle Ford, Haynesville, and Bakken shale plays.

Operating expenses decreased by $13.7 million to $39.2 million for the quarter ended June 30, 2010, a decrease of 26% compared to the same period in 2009. Depreciation and amortization expense increased to $28.5 million as compared to $18.9 million for the same period in 2009. In the three months ended June 30, 2009, the Company capitalized $3.8 million of expenses associated with crew mobilization as compared to the second quarter of 2010 where the company recognized expenses of $0.8 million, a swing of $4.6 million.

Included in depreciation and amortization expense for the three month period ending June 30, 2010 is amortization of multi-client library assets of $14.3 million as compared to $3.2 million for the same period of 2009.

The following table summarizes data for our multi-client services:

The total pre-commitments that had not been recognized as revenue as of June 30, 2010 were $130 million compared to $99 million at March 31, 2010.

Six Months Ending June 30, 2010 Results

The following table sets forth our consolidated revenues for the six months ended June 30, 2010 and for the corresponding period in 2009.

The revenue decrease for the six months ended June 30, 2010 compared to the same period of 2009 was primarily the result of lower demand for seismic services, combined with program delays caused by adverse weather conditions, permit and access considerations, crew scheduling and program start-up cycles.

The Company's proprietary seismic acquisition revenue totaled $61.1 million for the six months ended June 30, 2010 as compared to $115.3 million for the same period of 2009, a decrease of $54.2 million or 47%.  The decrease in U.S. seismic acquisition revenue of $33.7 million is primarily a result of a shift from proprietary to multi-client demand in the North American unconventional resource plays. International proprietary seismic acquisition revenues for the six months ended June 30, 2010 declined $20.5 million, or 27%, compared to the same period in 2009. The revenues from our Europe, Africa and Middle East operations decreased by $17.1 million, primarily due to crew reductions in 2010, while the revenues from our Latin America and Asia Pacific operations increased by $1.7 million and decreased by $5.1 million, respectively.

Multi-client revenues increased to $39.7 million for the six months ended June 30, 2010 from $9.2 million, an increase of $30.5 million or 332%. The $39.7 million in multi-client revenues included $34.9 million of pre-commitment revenue and $4.8 million of late sale revenue. The increase was mainly the result of additional projects in Eagle Ford, Haynesville, and Bakken shale plays.

Operating expenses decreased by $9.0 million to $98.1 million for the six months ended June 30, 2010, a decrease of 8% compared to the same period in 2009. Depreciation and amortization expense increased to $52.3 million as compared to $37.2 million for the same period in 2009. In the six months ended June 30, 2009, the Company capitalized $13.3 million of expenses associated with crew mobilization as compared to the same period of 2010 where the company recognized expenses of $8.4 million, a swing of $21.7 million.

Included in depreciation and amortization expense for the six months ended June 30, 2010 is amortization of multi-client library assets of $23.0 million as compared to $6.8 million for the same period of 2009.

EBITDA Reconciliation

The Company defines EBITDA as Net Income before Interest, Taxes, Depreciation, and Amortization. The table below presents a reconciliation of EBITDA to Net Income:

Non-GAAP Financial Measure

This press release contains information about the Company's EBITDA, a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission. The Company believes EBITDA is useful to an investor in evaluating our operating performance because this measure is widely used by investors in the energy industry to measure a company's operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon, among other factors, accounting methods, book value of assets, capital structure and the method by which assets were acquired. The company further believes EBITDA helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure and asset base from the company's operating structure. EBITDA is also used as a supplemental financial measure by the Company's management in presentations to our board of directors, as a basis for strategic planning and forecasting, and as a component for setting incentive compensation.

EBITDA has limitations as an analytical tool and should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income and operating income and these measures may vary among other companies. Limitations to using EBITDA as an analytical tool include:

• EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or capital commitments;
• EBITDA does not reflect changes in, or cash requirements necessary to service interest or principal payments on, our debt;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
• other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

Reconciliation of Shares Used in EPS Calculations

Conference Call and Webcast Information

Global Geophysical has scheduled a conference call for Thursday, August 5, 2010, at 9:00 a.m. Eastern Time.   Investors and analysts are invited to participate in the call by phone or via the internet webcast at: http://ir.globalgeophysical.com/

Conference Call Information:

Replay Telephone Numbers:

About Global Geophysical Services, Inc.

Global Geophysical Services (NYSE:GGS) is a leading worldwide provider of "reservoir grade" (RG3D^®) seismic data acquisition services, data processing, interpretation services and multi-client seismic data library products to an international client base. Headquartered in Houston, Texas, GGS was built from the ground up by a team of the most experienced leaders in the seismic industry. Global Geophysical Services combines innovative design techniques and environmental responsibility with advanced application of modern and emerging technologies to facilitate the success of its clients. To learn more about Global Geophysical, visit www.GlobalGeophysical.com.

The Global Geophysical Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7300

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this earnings release that address activities, events or developments that Global Geophysical expects, believes or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements include but are not limited to statements about business outlook for the year, backlog and bid activity, business strategy, and related financial performance and statements with respect to future events. Such forward-looking statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, industry conditions, market position, future operations, profitability, liquidity, backlog, capital resources and other information currently available to management and believed to be appropriate.

Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to the volatility of oil and natural gas prices, disruptions in the global economy, dependence upon energy industry spending, delays, reductions or cancellations of service contracts, high fixed costs of operations, weather interruptions, inability to obtain land access rights of way, industry competition, limited number of customers, credit risk related to our customers, asset impairments, the availability of capital resources, and operational disruptions. A discussion of these factors, including risks and uncertainties, is set forth under "Risk Factors" in our Registration Statement on Form S-1/A filed with the Securities and Exchange Commission. These forward-looking statements reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategies and liquidity. Although the Company believes that the expectations reflected in such statements are reasonable, the Company can give no assurance that such expectations will be correct. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements. We assume no obligation to update any such forward-looking statements.

Backlog estimates are based on a number of assumptions and estimates including assumptions related to foreign exchange rates, proportionate performance of contracts and our valuation of assets, such as seismic data, to be received by us as payment under certain agreements. The realization of our backlog estimates are further affected by our performance under term rate contracts, as the early or late completion of a project under term rate contracts will generally result in decreased or increased, as the case may be, revenues derived from these projects. Contracts for services are occasionally modified by mutual consent and may be cancelable by the client under certain circumstances. Consequently, backlog as of any particular date may not be indicative of actual operating results for any future period. More information can be found set forth under "Risk Factors" in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission.