updated 4/28/2011 1:47:31 AM ET 2011-04-28T05:47:31

HOUSTON, April 28, 2011 (GLOBE NEWSWIRE) -- Global Geophysical Services, Inc. (NYSE:GGS) today announced financial results for its first quarter ended March 31, 2011.

First Quarter Highlights

  • The Company reported earnings per share of $0.08 for the first quarter of 2011 compared to a loss of ($0.88) per share for the corresponding period of 2010.
  • Operating Income for the first quarter of 2011 was $10.7 million compared to an operating loss of ($6.4) million in the first quarter of 2010.
  • Backlog as of March 31, 2011 increased to approximately $278 million compared to approximately $145 million as of March 31, 2010, an increase of $133 million. Backlog as of December 31, 2010 was approximately $265 million.
  • The Company reported total revenues of $76.8 million in the first quarter of 2011, which included $10.4 million of late sales from the licensing of Multi-client data.
  • Operating cash flow for the first quarter of 2011 was $50.7 million compared to $21.0 million in the corresponding quarter of 2010.

Richard Degner, President and CEO, commented:

"The company's first quarter results primarily reflect a meaningfully improved level of activity in the Western Hemisphere market. In addition, we have seen an uptick in activity across all geographic regions that should be reflected in the operating results of subsequent quarters.

Our sequential quarterly growth of backlog reflects program commitments in EAME and Latin America, as well as new commitments to our Multi-client programs in the US.

Our data library assets generated $37.8 million in revenues for the quarter, of which $10.4 million were for late sale licenses from a diverse group of seismic data assets within our portfolio.

Internationally, we are observing increased bidding and contracting levels within key Latin American markets, notably Colombia and Brazil. In addition, Global has commenced programs on behalf of clients in selected markets within the Eastern Hemisphere including Algeria, Northern Iraq and Poland.

In addition, we continue to expand our portfolio of seismic data capabilities and offerings. Specific activities include:

  • The launch of our Basin InSightTM Eagle Ford product which will provide an integrated geoscience and engineering earth model for over 6 million acres of the Eagle Ford shale in South Texas.
  • The launch of our data processing center in Rio de Janeiro, Brazil.
  • The completion of our first microseismic project.
  • The acquisition of STRM Technologies for advanced fracture imaging
  • The delivery and initial deployment of the AutoSeis HDR (High Definition Recorder), our proprietary small footprint, lightweight, autonomous nodal land seismic data recording technology.

Increased bidding and program activity levels are driving higher industry asset utilization. We believe the planned CAPEX increases among E&P companies, combined with demand for higher density seismic data will result in continued increases in pricing levels for services.

The company is also seeing opportunities to apply its broad experience and knowledge of unconventional resources within North America to shale opportunities in international markets. With our recent technology acquisitions and the launch of our microseismic monitoring business, we expect to leverage our integrated capabilities of proprietary recording instrumentation, RG3D data recording and patented azimuthal processing tools to delivery industry leading seismic data analytics on a global basis."

First Quarter Results

The following table sets forth our consolidated revenues for the three months ended March 31, 2011 and for the corresponding period in 2010.

    Three Months Ended
    March 31,
    2011 2010
(Amounts in millions)   Amount % Amount %
Proprietary services $39.0 51% $44.8 74%
Multi-client services 37.8 49% 15.9 26%
Total $76.8 100% $60.7 100%
           
    Three Months Ended
    March 31,
    2011 2010
    Amount % Amount %
United States $41.2 54% $19.4 32%
International 35.6 46% 41.3 68%
 Total $76.8 100% $60.7 100%

We recorded revenues of $76.8 million for the three months ended March 31, 2011 compared to $60.7 million for the same period ended in 2010, an increase of $16.1, or 27%.

We recorded revenues from Proprietary services of $39.0 million for the three months ended March 31, 2011. Latin America represented $31.3 million of that revenue, an increase of $13.0 million from the corresponding period in 2010. This growth was driven by additional program activity in Colombia and Brazil.  

Multi-client services generated revenues of $37.8 million for the three months ended March 31, 2011 compared to $15.9 million for the same period of 2010, an increase of $21.9 million, or 138%.  The $37.8 million in Multi-client revenues included $10.4 million of late sale license revenue and $26.4 million of pre-commitment revenue. This compared to $4.3 million in late sales revenue and $11.6 million of pre-commitment revenue during the same period of 2010.  Table 1 provides selected data regarding our Multi-client library activities.

Pre-commitment revenues for the quarter were driven primarily by programs in the Baaken and Niobrara shales. Late sale revenues were driven by licenses to data across library assets including the Eagle Ford, Haynesville, Niobrara, and Baaken data sets.

Operating margins for the quarter increased to 14%. Operating cash flow for the quarter was $50.7 million.

Included within operating expenses is Multi-client amortization of $25.5 million, representing a 68% effective amortization rate. Gross depreciation expense for the quarter was $12.6 million, of which $4.7 million was capitalized in connection with our Multi-client library investments resulting in net depreciation expense of $7.9 million. Table 2 provides a reconciliation Net Income to EBITDA (as non-GAAP measure).

Backlog

Backlog as of March 31, 2011 was approximately $278 million ($144 million Multi-client pre-commitments; $134 million proprietary data services) compared to $145 million as of March 31, 2010. Backlog as of December 31, 2010 was approximately $265 million.

Conference Call and Webcast Information

Global has scheduled a conference call for Thursday, April 28, 2011, at 12:00 p.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:

Title: Global Geophysical Services Q1 Earnings

Domestic Participants: Toll free 1 (877) 312-5527

International Participants: Toll +1 (253) 237-1145

Conference ID: 61754270

About Global Geophysical Services, Inc.

Global Geophysical Services provides an integrated suite of seismic data solutions to the global oil and gas industry including high resolution RG-3D Reservoir Grade® seismic data acquisition, microseismic monitoring, seismic data processing and interpretation services, and Multi-client data products. Global Geophysical combines experience, innovation, operational safety and environmental responsibility with leading edge technology 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

The statements in this press release that are not historical statements, including statements regarding future financial performance, are forward-looking statements within the meaning of the federal securities laws. 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. Global Geophysical Services Form 10-K for the year ended December 31, 2010, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect Global's business, results of operations, and financial condition. 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 Form 10-K filed with the Securities and Exchange Commission.

 
GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
  Three Month Period Ended
  March 31,
  2011 2010
  (unaudited)
     
REVENUES $ 76,835,094 $ 60,661,196
     
OPERATING EXPENSES 55,075,372 58,860,382
     
GROSS PROFIT 21,759,722 1,800,814
     
SELLING, GENERAL, AND    
ADMINISTRATIVE EXPENSES 11,011,818 8,249,284
     
INCOME (LOSS) FROM OPERATIONS 10,747,904 (6,448,470)
     
OTHER INCOME (EXPENSE)    
Interest expense, net (5,807,120) (4,584,118)
Unrealized gain on derivative instruments -- 331,163
Foreign exchange gain (loss) 817,546 (216,234)
Other income (expense) (103) 78,873
TOTAL OTHER EXPENSE (4,989,677) (4,390,316)
     
INCOME (LOSS) BEFORE INCOME TAXES 5,758,227 (10,838,786)
     
INCOME TAX EXPENSE (BENEFIT) 3,012,262 (3,601,268)
     
INCOME (LOSS) AFTER INCOME TAXES 2,745,965 (7,237,518)
     
NET LOSS, attributable to noncontrolling interests (43,517) --
     
NET INCOME (LOSS), attributable to common shareholders $ 2,789,482 $ (7,237,518)
     
INCOME (LOSS) PER COMMON SHARE    
Basic $ .08 $ (.88)
Diluted $ .08 $ (.88)
     
WEIGHTED AVERAGE SHARES OUTSTANDING    
Basic 36,406,830 8,243,748
Diluted 36,668,242 8,243,748
     
     
GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES    
CONSOLIDATED BALANCE SHEETS    
     
  March 31, December 31,
  2011 2010
  (unaudited)  
ASSETS    
     
CURRENT ASSETS    
Cash and cash equivalents $ 20,861,303 $ 28,237,302
Restricted cash investments 5,105,476 2,443,857
Accounts receivable, net 73,786,666 69,509,391
Income and other taxes receivable 6,954,864 6,954,864
Prepaid expenses and other current assets 4,048,013 4,842,496
TOTAL CURRENT ASSETS 110,756,322 111,987,910
     
MULTI-CLIENT LIBRARY, net 178,816,035 145,896,355
     
PROPERTY AND EQUIPMENT, net 122,562,192 126,963,953
     
GOODWILL AND OTHER INTANGIBLES, net 21,806,811 20,251,775
     
DEFERRED TAX ASSET 934,235 2,031,048
     
OTHER 5,668,856 6,135,459
     
TOTAL ASSETS $ 440,544,451 $ 413,266,500
     
     
GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES    
CONSOLIDATED BALANCE SHEETS (CONTINUED)    
     
  March 31, December 31,
  2011 2010
  (unaudited)  
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
CURRENT LIABILITIES    
Accounts payable and accrued expenses $ 50,251,945 $ 44,058,306
Current portion of long-term debt 947,000 3,344,261
Income and other taxes payable 4,233,794 5,601,356
Deferred revenue 62,317,633 47,496,895
TOTAL CURRENT LIABILITIES 117,750,372 100,500,818
     
LONG-TERM DEBT, net of current portion and unamortized discount 215,375,672 209,418,242
     
NONCONTROLLING INTERESTS 1,447,228 1,490,745
     
TOTAL LIABILITIES 334,573,272 311,409,805
     
     
COMMITMENTS AND CONTINGENCIES     
     
STOCKHOLDERS' EQUITY    
Common Stock, $.01 par value, authorized 100,000,000 and 0 shares, 45,941,215 and 45,586,215 issued and 36,432,934 and 36,142,985 outstanding at March 31, 2011 and December 31, 2010, respectively 459,412 455,862
Additional paid-in capital 240,571,037 239,248,935
Accumulated deficit (39,356,273) (42,145,755)
  201,674,176 197,559,042
Less: treasury stock, at cost, 9,508,281 and 9,443,230 shares at March 31, 2011 and December 31, 2010, respectively 95,702,997 95,702,347
TOTAL STOCKHOLDERS' EQUITY 105,971,179 101,856,695
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 440,544,451 $ 413,266,500
 
 
GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
     
  Three Month Period Ended
  March 31,
  2011 2010
  (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income (loss), attributable to common shareholders $ 2,789,482 $ (7,237,518)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization expense 38,577,203 23,765,728
Capitalized depreciation for Multi-client library (4,666,714) (5,471,817)
Amortization of debt issuance costs 313,289 244,328
Noncontrolling interest (43,517) --
Stock-based compensation 1,270,507 693,801
Non-cash charitable contribution 51,595 --
Non-cash revenue from Multi-client data exchange (973,298) --
Deferred tax (benefit) expense 1,096,813 (3,085,501)
Unrealized gain on derivative instrument -- (331,163)
Gain on disposal of property and equipment (65,385) (98,991)
Effects of changes in operating assets and liabilities:    
Accounts receivable, net (4,277,275) 11,140,144
Prepaid expenses and other current assets 794,483 8,382,671
Other assets 310,744 (772,449)
Accounts payable and accrued expenses 2,831,197 (2,051,570)
Deferred revenue 14,105,377 (2,714,419)
Income and other taxes receivable -- (1,077,712)
Income and other taxes payable (1,367,562) (429,798)
NET CASH PROVIDED BY OPERATING ACTIVITIES 50,746,939 20,955,734
     
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of property and equipment (5,559,370) (1,378,824)
Investment in Multi-client library (52,074,883) (25,329,533)
Change in restricted cash investments (2,661,619) (331,705)
Purchase of business (1,000,000) --
Proceeds from the sale of property and equipment 65,385 152,398
NET CASH USED IN INVESTING ACTIVITIES (61,230,487) (26,887,664)
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Principal payments on long-term debt (2,597,261) --
Net (payments) proceeds on revolving credit facility 5,000,000 (589,426)
Principal payments on capital lease obligations -- (984,303)
Purchase of treasury stock (650) (225)
Issuances of stock, net 705,460 1,023
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 3,107,549 (1,572,931)
     
NET DECREASE IN CASH AND CASH EQUIVALENTS (7,375,999) (7,504,861)
     
CASH AND CASH EQUIVALENTS, beginning of period 28,237,302 17,026,865
     
CASH AND CASH EQUIVALENTS, end of period $ 20,861,303 $ 9,522,004
 
 
GLOBAL GEOPHYSICAL SERVICES, INC.
Table 1: Selected MULTI-CLIENT ADDITIONAL DATA (UNAUDITED)
             
  2008 2009 2010        Q1-2010 Q1-2011
Multi-client revenues            
Pre-commitments 24,984,669 13,364,567 109,109,353   11,596,404 26,390,056
Late sales  --  2,250,000 16,376,478   4,310,060 10,431,238
Subtotal 24,984,669 15,614,567 125,485,831   15,906,464 36,821,294
Non-cash data swaps  --  8,880,000 9,381,991    --  973,298
Total revenue 24,984,669 24,494,567 134,867,822   15,906,464 37,794,592
             
             
Multi-client amortization 19,144,526 18,629,279 92,702,427   8,692,299 25,510,576
Average amortization rate (%) 77% 76% 69%   55% 68%
             
Multi-client investment (period)            
Cash (1) 25,169,740 34,352,781 170,755,194   25,329,533 52,771,593
Capitalized depreciation 3,037,442 3,729,362 20,369,366   5,471,817 4,666,714
Non-cash data swaps --  8,880,000 10,078,700   --  991,950
Total 28,207,182 46,962,143 201,203,260   30,801,350 58,430,257
             
Investment (cumulative)            
Cash 25,169,740 59,522,521 230,277,715   84,852,054 283,049,308
Capitalized depreciation 3,037,442 6,766,804 27,136,170   12,238,622 31,802,884
Non-cash data swaps  --  8,880,000 18,958,700   8,880,000 19,950,650
Total 28,207,182 75,169,325 276,372,585   105,970,676 334,802,842
             
Cumulative amortization 19,144,526 37,773,805 130,476,232   46,466,104 155,986,808
Multi-client net book value 9,062,657 37,395,521 145,896,355   59,504,572 178,816,035
             
             
Multi-client backlog at period end 11,250,000 77,900,000 137,430,000   105,960,000 144,370,000
 
(1) Includes $715,361 recorded as deferred revenue for the period ended 3/31/2011
             
 
GLOBAL GEOPHYSICAL SERVICES
Table 2: Reconciliation of Net Income to EBITDA, (a Non-GAAP Measure) UNAUDITED
 
  2008 2009 2010   Q1-2010 Q1-2011
EBITDA            
Net income (loss) (8,046,089) 445,359 (39,715,893)   (7,237,518) 2,789,482
Add: Depreciation (gross) (1) 53,950,952 60,583,280 58,894,205   14,828,255 12,556,277
Less: Capitalized depreciation  3,037,442 3,729,362 20,369,366   5,471,817 4,666,714
Add: Amortization of intangibles 0 877,099 594,644   146,183 444,965
Add: Multi-client amortization 19,144,526 18,629,279 92,702,427   8,692,299 25,510,576
Add: Interest income / expense net (2) 22,383,705 18,613,301 27,304,452   4,584,118 5,807,120
Add: Income tax expense (benefit)  6,027,246 292,697 599,945   (3,601,268) 3,012,262
EBITDA 90,422,898 95,711,653 120,010,414   11,940,252 45,453,968
             
(1) Includes gain or loss from sale of fixed assets      
(2) Includes refinance cost of debt in Q2-10      

Non-GAAP Financial Measure

EBITDA is 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.
CONTACT: Mathew Verghese
         Chief Financial Officer
         ir@globalgeophysical.com
         www.globalgeophysical.com
         Phone: 713-808-1750
         Fax: (713) 972-1008

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