COMPANY ACHIEVES RECORD REVENUES AND INCREASES BACKLOG HOUSTON, May
7 /PRNewswire-FirstCall/ -- Geokinetics Inc. (AMEX:GOK) announced
today financial results of operations for the first three months of
2008. Highlights include: -- Increased revenue by 8% from 2007 to
$120.2 million for the three months ending March 31, 2008. --
EBITDA decreased by 1% from 2007 to $18.4 million for the three
months ending March 31, 2008. -- Net income to common stockholders
of $2.6 million, or $0.24 per fully-diluted common share for the
three months ending March 31, 2008, as compared to $5.1 million, or
$0.75 per fully-diluted common share in the same quarter last year.
-- Mobilized operations in Bangladesh, Bolivia and Tanzania and
assembled new transition zone crew for initial work in Australia
and New Zealand. -- Invested $25.7 million in the first quarter of
2008, primarily to increase channel count internationally, as part
of the Company's 2008 $64.5 million capital budget. -- Increased
backlog to $417 million at March 31, 2008, from $411 million at
December 31, 2007 and $283 million at March 31, 2007. Three Months
Results In the first quarter ended March 31, 2008, revenue
increased 8% to $120.2 million compared to $111.0 million for the
first quarter of 2007. Revenue consisted of $61.7 million for North
American data acquisition, $55.6 million for International data
acquisition and $2.9 million from data processing. Increased
revenues were driven primarily by a stronger Canadian winter season
in 2008 and the impact of the Company's 2007 capital investment
program increasing revenue generating capacity in 2008. EBITDA (as
defined below) decreased slightly to $18.4 million for the first
quarter of 2008, compared to $18.6 million in the first quarter of
2007. EBITDA improved in Data Processing and North America, both in
Canada and the U.S., however, the contribution internationally was
reduced due to the first quarter of 2007 including a very large
international project that accelerated a significant amount of
revenue into the quarter; excluding the effect of this project,
activity levels were up internationally during the first quarter of
2008. The Company had net income to common stockholders of $2.6
million, or $0.24 per diluted common share, in the first quarter of
2008, compared to net income of $5.1 million, or $0.75 per diluted
common share, for the same quarter in 2007. The reduced net income
was primarily due to higher depreciation expense as a result of the
Company's capital investment program and the impact of a $1.5
million gain from an insurance claim which occurred in the first
quarter of 2007. These were partially offset by lower interest
expense in the 2008 quarter due to lower debt levels and lower
interest rates during the quarter. Selected Balance Sheet Data Cash
and cash equivalents and restricted cash totaled $23.8 million at
March 31, 2008, of which $1.4 million was restricted cash. Total
debt was $92.0 million with $20.2 million of that amount being
current. Total debt to capitalization was 31.9% as compared to
29.4% at December 31, 2007. The increase was primarily a result of
additional borrowings to fund the Company's capital investment
program. Backlog Increases The Company's backlog at the end of the
first quarter reached a new quarterly high of $417 million, up from
$411 million at December 31, 2007, and $283 million at the end of
the first quarter of 2007. Approximately $235 million of current
backlog is related to international business (excluding Canada),
with the remaining $182 million in North America ($176 million of
this amount is attributed to the United States). Current backlog
does not include a $59 million project in Argentina which was
previously included in backlog starting in July 2007. This project
has been excluded from current backlog because of continuing delays
and uncertainty regarding the timing of commencement and eventual
completion of the project, however, this project was included in
backlog at December 31, 2007. Operations Overview During the first
quarter of 2008, crew activity and utilization increased over the
fourth quarter of 2007. In Canada, the Company operated five crews
most of the quarter in Alberta and the Northwest Territories. In
the United States, a total of eight crews worked actively in
Central Texas, North Dakota and the Texas/Louisiana Gulf Coast
region. In Latin America, the Company operated four to six crews
during the quarter, primarily in Brazil and Colombia, and mobilized
a crew into Bolivia. In the Eastern Hemisphere, marketing efforts
initiated in 2007 delivered positive results. The Company operated
its transition zone crew in Egypt most of the quarter and the
Company's ocean bottom cable ("OBC") crew in Australia worked
approximately two months of the quarter. In addition, the Company
mobilized crews in Bangladesh and Tanzania which have now commenced
operations. Finally, the Company began mobilizing for operations in
Mozambique and set up a new transition zone crew that will
initially work in Australia and New Zealand. In the first quarter
of 2008, Geokinetics continued to invest in revenue-generating
equipment and capacity. A total of $25.7 million was invested
primarily in international operations. The Company added channels
for Latin America and the Eastern Hemisphere during the quarter.
Investment in these recording channels provides Geokinetics'
clients with enhanced sub-surface resolution and further enables
the Company to compete on larger contracts. In addition, the
Company added additional Sercel SeaRay equipment for its Australian
OBC crew and outfitted a new transition zone crew for the
Australasia region. As of March 31, 2008, Geokinetics had
approximately 94,700 stations of single-component and 7,450
stations of multi-component recording equipment, equating to a
total channel count of 118,300. This compares to 108,000 channels
at December 31, 2007 and 94,000 channels at March 31, 2007 using
this methodology. Second Quarter 2008 Activity Outlook Geokinetics
is providing this update to assist shareholders in understanding
the operational expectations for the second quarter of 2008. As is
typical with the conclusion of the Canadian winter season, the
Company reduced operations in Canada and expects to operate only
one crew for part of the second quarter while the ground thaws and
incur repair and maintenance costs, as compared to operating five
crews during most of the first quarter. Geokinetics expects to
continue operating eight crews in the United States as it did in
the first quarter of 2008, and while the Company has experienced
some weather delays early in the second quarter which affected two
crews, the Company expects to have strong utilization for the
remainder of the quarter. Geokinetics expects activity levels in
Colombia to remain strong, but down slightly from first quarter.
The ramp-up of a crew in Bolivia that commenced operations late in
the first quarter, combined with consistent activity levels in
Brazil, is expected to keep crews working for the majority of the
second quarter. In the Eastern Hemisphere, Geokinetics expects its
OBC crew in Australia to be down for at least half of the quarter
before ramping-up operations later in the quarter. The Company's
new transition zone crew in Australia commenced operations
mid-quarter and is expected to work the remainder of the quarter.
In Egypt, the Company's crew is expected to work the majority of
the quarter, with the exception of time needed for a move between
projects. In Bangladesh, one crew is expected to work a majority of
the second quarter versus being idle for most of the first quarter.
In addition, new crews are expected to commence operations in
Tanzania and Mozambique during the quarter, but are not expected to
contribute significantly to the second quarter. Finally, the
Company is currently in the early stages of mobilizing two crews
for operations in Angola which are expected to commence during the
third and fourth quarters. Management Comment Richard Miles,
President and Chief Executive Officer, said: "Continued investment
in recording channel capacity, combined with 2007 international
marketing efforts, contributed to strong results in the first
quarter of 2008. Typically, our first quarter revenues and profits
increase from the fourth quarter as Canada completes its winter
season, and this year has been no exception. The second quarter is
historically our lowest quarter due to the Canadian thaw and other
seasonality in our business. We expect the severity of any decrease
to be largely dependent on how well we are able to perform with our
new country startups and the restart of our upgraded OBC crew in
Australia during the quarter. Our backlog remains strong and I am
excited about our revenue visibility into next year. The increase
in our order book is a testament to the increasing demand for our
innovative solutions, which help our customers maximize the returns
from their complex E&P projects. In addition, an increasing
part of our order book and opportunities are coming from the
shallow water environments around the world, which is very
encouraging given our expertise in those areas." Miles continued,
"Robust customer demand is driving our capital investment decisions
for adding increased revenue generating capacity. In the first
quarter we spent $25.7 million on new equipment to increase our
recording capacity in Latin America, the Eastern Hemisphere and to
start up a new transition zone crew. We continue to focus on
improving our worldwide operations for improved efficiency and
service to our customers, profitability and shareholder value."
Below are condensed consolidated Statements of Results of
Operations. More detailed information is available in the Company's
Form 10-Q for the quarter ended March 31, 2008 which will be filed
by May 12, 2008. For the Quarter Ended March 31, 2008 2007 (In
thousands) Revenue $120,154 $110,964 Expenses: Operating expenses
92,415 83,129 General and administrative 9,302 9,220 Depreciation
and amortization 10,991 7,532 Total expenses 112,708 99,881 Other
gain (loss), net (81) 1,542 Income from operations 7,365 12,625
Other income (expense): Interest expense, net (1,321) (3,887) Other
(661) 253 (1,982) (3,634) Income before income taxes 5,383 8,991
Provision for income taxes 1,520 2,687 Net income 3,863 6,304
Preferred stock dividend and accretion costs 1,276 1,178 Income
applicable to common stockholders $2,587 $5,126 Income per common
share - basic $0.25 $0.89 Income per common share - diluted $0.24
$0.75 Weighted average common shares outstanding - basic 10,316
5,758 Weighted average common shares outstanding - diluted 10,594
8,377 The Company defines EBITDA as Earnings before Interest,
Taxes, Other Income (Expense) (including returns to preferred
stockholders, foreign exchange gains/losses, gains/losses on sale
of equipment and insurance proceeds, warrant expense and other
income/expense), and Depreciation and Amortization. EBITDA is not a
measure of financial performance derived in accordance with
Generally Accepted Accounting Principles ("GAAP") and should not be
considered in isolation or as an alternative to net income as an
indication of operating performance. See below for reconciliation
from Net Income to Common Stockholders to EBITDA amounts referred
to above: For the Quarter Ended March 31, 2008 2007 (In thousands)
Net Income to Common Stockholders $2,587 $5,126 Preferred Stock
Dividends and Accretion Costs 1,276 1,178 Net Income 3,863 6,304
Provision for income taxes 1,520 2,687 Interest Expense, net 1,321
3,887 Other Expense (Income) (as defined above) 742 (1,795)
Depreciation and Amortization 10,991 7,532 EBITDA $18,437 $18,615
Conference Call and Webcast Information Geokinetics has scheduled a
conference call and webcast on Thursday, May 8, 2008, beginning at
11:00 a.m. Eastern Daylight Time and 10:00 a.m. Central Daylight
Time to discuss its first quarter 2008 financial and operational
results. The webcast may be accessed online through Geokinetics'
website at http://www.geokinetics.com/ in the Investor Relations
section. A limited number of telephone lines will also be available
to participants ten minutes prior to the start of the webcast by
dialing (877) 407-8035 for domestic or (201) 689-8035 for
international. A replay of the webcast will be available online at
http://www.geokinetics.com/ in the Investor Relations section and
at http://www.investorcalendar.com/. A telephone audio replay will
also be available through May 22, 2008, by dialing (877) 660-6853
for domestic or (201) 612-7415 for international, account #286 and
conference ID#281917. If you have any questions regarding this
procedure, please contact Diane Anderson at (713) 850-7600. About
Geokinetics Inc. Geokinetics Inc., based in Houston, Texas, is a
leading global provider of seismic acquisition and high-end seismic
data processing services to the oil and gas industry. Geokinetics
has strong operating presence in North America and is focused on
key markets internationally. Geokinetics operates in some of the
most challenging locations in the world from the Arctic to
mountainous jungles to the transition zone environments. More
information about Geokinetics is available at
http://www.geokinetics.com/. 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 (the "Exchange Act").
All statements, other than statements of historical facts, included
in this earnings release that address activities, events or
developments that Geokinetics expects, believes or anticipates will
or may occur in the future are forward- looking statements. These
statements include but are not limited to statements about the
business outlook for the year, backlog and bid activity, business
strategy, related financial performance and statements with respect
to future benefits. These statements are based on certain
assumptions made by Geokinetics based on management's experience
and perception of historical trends, industry conditions, market
position, future operations, profitability, liquidity, backlog,
capital resources and other factors believed to be appropriate.
Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of Geokinetics,
which may cause actual results to differ materially from those
implied or expressed by the forward-looking statements. These
include risks relating to financial performance and results, job
delays or cancellations, impact from severe weather conditions and
other important factors that could cause actual results to differ
materially from those projected, or backlog not to be completed, as
described in the Company's reports filed with the Securities and
Exchange Commission. Backlog consists of written orders and
estimates of Geokinetics' services which it believes to be firm,
however, in many instances, the contracts are cancelable by
customers so Geokinetics may never realize some or all of its
backlog, which may lead to lower than expected financial
performance. Although Geokinetics believes that the expectations
reflected in such statements are reasonable, it can give no
assurance that such expectations will be correct. All of
Geokinetics' forward-looking statements, whether written or oral,
are expressly qualified by these cautionary statements and any
other cautionary statements that may accompany such forward-looking
statements. Any forward-looking statement speaks only as of the
date on which such statement is made and Geokinetics undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise.
DATASOURCE: Geokinetics Inc. CONTACT: Scott A. McCurdy, Vice
President and CFO of Geokinetics Inc., +1-713-850-7600, Fax,
+1-713-850-7330 Web site: http://www.geokinetics.com/
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