HOUSTON, Nov. 5 /PRNewswire-FirstCall/ -- Geokinetics Inc. (NYSE
Amex: GOK) today announced financial results for its third quarter
ended September 30, 2009. The Company reported total revenues of
$96.8 million and a net loss applicable to common stockholders of
($4.8) million, or ($0.45) per share. Third Quarter Financial
Highlights (All data in millions, except per share amounts) Q3
2009* Q3 2008 % Change ------- ------- -------- Revenues $96.8
$123.1 -21% Gross Margin, defined below, as a % of Revenue 31% 23%
EBITDA, a non-GAAP financial measurement defined below $16.4 $18.4
-11% EBITDA as a % of Revenue 17% 15% (Loss) Income Applicable to
Common Stockholders ($4.8) $0.2 (Loss) Earnings per Diluted Share
($0.45) $0.02 * Includes special charges of $0.5 million or $0.04
per share for severance costs Nine Month Financial Highlights (All
data in millions, except per share amounts) 9 Mos 2009* 9 Mos 2008
% Change ----------- ---------- -------- Revenues $388.6 $356.8 9%
Gross Margin, defined below, as a % of Revenue 28% 22% EBITDA, a
non-GAAP financial measurement defined below $71.6 $49.2 46% EBITDA
as a % of Revenue 18% 14% Income Available to Common Stockholders
$0.4 $1.0 Earnings per Diluted Share $0.04 $0.09 * Includes special
charges of $1.6 million or $0.15 per share for severance costs
Richard F. Miles, President and Chief Executive Officer, stated,
"Following a strong first half in which we generated record
results, primarily driven by enhanced international crew
performance and operating efficiencies, the weakness in demand in
several of our markets negatively impacted our third quarter
results. Additionally, as we indicated in our second quarter
earnings release, part of our backlog was pulled forward into the
first and second quarters due to the improved operating
efficiencies on several of our international crews, which resulted
in a temporary decline in activity levels in the third quarter.
"Our third quarter results were adversely affected by startup
delays internationally, along with further deterioration in the
North American seismic market. Some international projects, which
were expected to be awarded and started in the third quarter, were
postponed by our customers due to instability in the commodities
markets as well as permitting issues. In North America pricing has
been very competitive, and our four crews were underutilized during
the third quarter. Also, it is important to note that our quarterly
earnings pattern can be uneven due to the seasonality of activity
in some regions as well as fluctuations in international crew
sizes, location, utilization and the timing of crew moves. "In
spite of the disappointing third quarter, our year-to-date EBITDA
is greater than it was in all of 2008. While the outlook for 2010
is still taking shape, we see numerous opportunities for our
services, especially outside of North America, with many of these
in areas where Geokinetics is particularly strong such as the
shallow water OBC markets. We have participated in a considerable
amount of bidding activity and expect several of these to be
awarded in the near future. Many of these are large international
projects that should we be successful will provide us with
substantial backlog and long-term visibility. We are also pleased
with our success on a large multi-client project in North America
that contributed significantly to our EBITDA in the third quarter.
The crew acquiring the multi-client data is operating very
successfully and is ahead of schedule, and this project has already
more than doubled from the original scope and we are in discussions
to further expand it. "We believe we are extremely well positioned
and are confident of obtaining our share of the outstanding bids.
We are optimistic about building our backlog in the fourth quarter
and expect a sequential improvement in our results. We have the
capabilities and standing to capitalize on upcoming opportunities,
and we will continue to leverage our strengths and concentrate our
assets in areas where we are most effective." Third Quarter Results
Total revenues in the third quarter of 2009 decreased 21% from the
third quarter of 2008. The decline in revenues was primarily
attributable to further weakness in North America as evidenced by
third quarter 2009 international seismic acquisition revenues
declining by less than 2% from the third quarter of 2008. While
lower global prices for oil and natural gas have tempered
exploration spending during the past year, the international job
mix has been shifting to shallow water marine and transition zone
acquisition, areas where the Company operates very effectively.
North American acquisition operations were underpinned by the
Company's multi-client project in Pennsylvania targeting the
Marcellus shale, and third quarter 2009 revenue includes $3.9
million from this project. This revenue contribution includes the
first delivery of data on this project, and continual deliveries
are expected for at least the next two quarters. Direct operating
costs decreased 29% from the third quarter of 2008, outpacing the
decrease in revenues and producing gross margin, excluding
depreciation, amortization and general and administrative expenses,
for consolidated operations of 31% compared to 23% in the same
period of 2008. The improved gross margin was primarily due to
increased utilization of the Company's shallow water OBC crew which
led to a higher international gross margin. North America gross
margins worsened due to significantly reduced demand and activity
levels, and data processing gross margins declined due to pricing
pressure. EBITDA (as defined below) for the third quarter of 2009
decreased 11% to $16.4 million from $18.4 million in the third
quarter of 2008. EBITDA as a percentage of revenues was 17% and 15%
for the third quarters of 2009 and 2008, respectively. The Company
reported a loss applicable to common stockholders of ($4.8)
million, or ($0.45) per share, in the third quarter of 2009
compared to income of $0.2 million, or $0.02 per diluted share, for
the same quarter in 2008. Included in third quarter 2009 results
are special charges of $0.5 million, or $0.04 per share, for
severance costs. Despite the reported loss, the Company incurred
tax expense in foreign jurisdictions where it was profitable in the
third quarter and as a result incurred tax expense despite having a
loss before income taxes. Selected Third Quarter Segment Data (All
data in millions, except gross margin percentages) Three months
ended September 30, 2009: Data Acquisition North America
International Data Processing Consolidated -------------
------------- --------------- ------------ Revenues $11.4 $82.9
$2.5 $96.8 Direct Operating Costs $9.9 $55.3 $2.0 $67.2 Gross
Margin % 13% 33% 20% 31% Three months ended September 30, 2008:
Data Acquisition North America International Data Processing
Consolidated ------------- ------------- ---------------
------------ Revenues $35.7 $84.2 $3.2 $123.1 Direct Operating
Costs $28.1 $64.0 $2.2 $94.3 Gross Margin % 21% 24% 31% 23% Third
Quarter Operations Review and Fourth Quarter 2009 Operational
Outlook The Company is providing this update to assist shareholders
in understanding the operations of the Company in the third quarter
of 2009 and the operational expectations for the fourth quarter of
2009. International Latin America - Operated two to four crews
during the third quarter, with an average of two and a half crews
operating in Bolivia and Brazil. The Company expects to operate
four to five crews during the fourth quarter, with an average of
four crews operating in Bolivia, Brazil and Peru. EAME - Operated
two to three crews during the third quarter, with an average of two
crews operating in Angola, Cameroon and Egypt. The Company's OBC
crew in Angola operated at a reduced rate for approximately one
month of the third quarter as one of its major vessels was in dry
dock. The Company expects to operate two to three crews in the
fourth quarter, with an average of two crews operating in Angola
and Egypt. Australasia / Far East - Operated one crew during the
third quarter, with an average of a half crew operating in
Bangladesh. The Company expects to operate one to two crews during
the fourth quarter, with an average of one and a half crews
operating in Bangladesh and Malaysia. North America United States -
Operated two to four crews for an average of three and a half crews
during the third quarter. The Company expects to operate four crews
during the fourth quarter. The Company continues to work with a
15,000 channel crew on a multi-client data library project in the
Marcellus Shale in Pennsylvania. The data acquired on this data
library project is jointly owned by the Company and its customer
and has been accounted for as an investment with all costs deferred
and amortized against Geokinetics' share of data license revenues.
Canada - Operated no crews in Canada during the third quarter due
to seasonality. The Company expects to operate one crew for
approximately half of the fourth quarter as it prepares for the
upcoming winter season. Backlog Geokinetics' backlog as of
September 30, 2009 was approximately $259 million, down 49% from
$509 million at September 30, 2008 and down 19% from $318 million
at June 30, 2009. Approximately $229 million, or 88% of current
backlog, is related to international business (excluding Canada),
with the remaining $30 million, or 12%, in North America ($27
million of which is attributable to the United States). Of the
Company's international backlog, approximately $196 million, or
86%, is with NOCs or partnerships including NOCs. Approximately $60
million of the international backlog, or 26%, is in shallow water
transition zones and OBC environments. Current backlog is largely
composed of multiple long-term international contracts in their
middle stages, which have strong potential for additional follow-on
work; therefore additional awards are not expected until the
current contracts are closer to completion. Selected Nine Month
Segment Data (All data in millions, except gross margin
percentages) Nine months ended September 30, 2009: Data Acquisition
North America International Data Processing Consolidated
------------- ------------- --------------- ------------ Revenues
$65.4 $315.4 $7.8 $388.6 Direct Operating Costs $53.0 $218.5 $6.4
$277.9 Gross Margin % 19% 31% 18% 28% Nine months ended September
30, 2008: Data Acquisition North America International Data
Processing Consolidated ------------- ------------- ---------------
------------ Revenues $141.5 $206.1 $9.2 $356.8 Direct Operating
Costs $109.0 $162.5 $6.8 $278.3 Gross Margin % 23% 21% 26% 22%
Conference Call and Webcast Information Geokinetics has scheduled a
conference call for Friday, November 6, 2009, at 11:00 a.m. Eastern
Time. To participate in the conference call, dial (480) 629-9770
for international callers, and (800) 762-8779 for domestic callers
a few minutes before the call begins and ask for the Geokinetics
conference call. A replay of the call will be available
approximately two hours after the live broadcast ends and will be
accessible until November 20, 2009. To access the replay, dial
(800) 406-7325 for domestic callers or (303) 590-3030 for
international callers, in both cases using pass code 4175966#. The
webcast may be accessed online through Geokinetics' website at
http://www.geokinetics.com/ in the Investor Relations section. A
webcast archive will also be available at
http://www.geokinetics.com/ shortly after the call and will be
accessible for approximately 90 days. For more information
regarding the conference call, please contact Donna Washburn at
DRG&E at 713-529-6600 or email . Geokinetics Inc., based in
Houston, Texas, is a leading international provider of seismic data
acquisition and high-end seismic data processing services to the
oil and gas industry. Geokinetics operates in some of the most
challenging locations in the world from mountainous jungles, swamps
and surf transition zones and ocean bottom 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 events. 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,
reductions in oil and gas prices, the continued disruption in
worldwide financial markets, 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.
GEOKINETICS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30,
------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ----
Revenue: Seismic acquisition and related activities $94,338
$119,880 $380,796 $347,638 Data processing 2,511 3,227 7,812 9,202
----- ----- ----- ----- Total revenue 96,849 123,107 388,608
356,840 ------ ------- ------- ------- Expenses: Seismic
acquisition and related activities 65,203 92,086 271,507 271,499
Data processing 2,010 2,245 6,420 6,814 Depreciation and
amortization 16,315 12,937 41,678 35,715 General and administrative
13,205 10,399 39,113 29,286 ------ ------ ------ ------ Total
Expenses 96,733 117,667 358,718 343,314 ------ ------- -------
------- (Loss) gain on disposal of property and equipment (1,406)
25 (2,142) (461) Gain on insurance claims - - - 697 --- --- --- ---
Income from operations (1,290) 5,465 27,748 13,762 ------ -----
------ ------ Other income (expenses): Interest income 12 224 198
510 Interest expense (1,244) (1,946) (4,526) (5,009) Foreign
exchange gain (loss) 1,169 668 1,299 483 Other, net 96 - 192 (304)
-- --- --- ---- Total other expenses, net 33 (1,054) (2,837)
(4,320) -- ------ ------ ------ Income (loss) before income taxes
(1,257) 4,411 24,911 9,442 Provision for income taxes 1,482 2,433
18,280 4,146 ----- ----- ------ ----- Net income (loss) (2,739)
1,978 6,631 5,296 Returns to preferred stockholders: Dividend and
accretion costs 2,106 1,766 6,199 4,343 ----- ----- ----- -----
Income (loss) applicable to common stockholders $(4,845) $212 $432
$953 ======= ==== ==== ==== Income per common share Basic $(0.45)
$0.02 $0.04 $0.09 Diluted $(0.45) $0.02 $0.04 $0.09 Weighted
average common shares outstanding Basic 10,776 10,418 10,542 10,363
Diluted 10,776 10,518 10,542 10,463 GEOKINETICS INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except
share amounts) September 30, December 31, 2009 2008 ---- ----
(Unaudited) ASSETS Current assets: Cash and cash equivalents
$19,395 $13,341 Restricted cash 2,014 9,921 Accounts receivable,
net of allowance for doubtful accounts of $2,720 at September 30,
2009 and $3,944 at December 31, 2008 117,630 91,753 Deferred costs
19,814 25,372 Prepaid expenses and other current assets 14,921
10,414 ------ ------ Total current assets 173,774 150,801 -------
------- Property and equipment: Cost 295,365 269,836 Less:
Accumulated depreciation and amortization (100,432) (64,551)
-------- ------- 194,933 205,285 ------- ------- Goodwill 73,414
73,414 Other assets, net 17,408 10,216 ------ ------ Total assets
$459,529 $439,716 ======== ======== LIABILITIES, MEZZANINE AND
STOCKHOLDERS' EQUITY Current liabilities: Short-term debt and
current portion of long-term debt and capital lease obligations
$23,799 $33,096 Accounts payable 36,176 49,056 Accrued liabilities
59,644 29,968 Unearned revenue 29,396 29,995 Federal income taxes
payable 12,565 1,601 ------ ----- Total current liabilities 161,580
143,716 Long-term debt and capital lease obligations, net of
current portion 51,594 57,850 Deferred income tax and other
non-current liabilities 13,716 13,608 ------ ------ Total
liabilities 226,890 215,174 ------- ------- Commitments &
Contingencies Mezzanine equity: Preferred stock, Series B Senior
Convertible, $10.00 par value; 415,591 shares issued and
outstanding as of September 30, 2009 and 391,629 shares issued and
outstanding as of December 31, 2008 101,054 94,862 ------- ------
Stockholders' equity: Common stock, $.01 par value; 100,000,000
shares authorized, 10,811,189 shares issued and outstanding as of
September 30, 2009 and 10,580,601 shares issued and 10,470,233
shares outstanding as of December 31, 2008 106 106 Additional
paid-in capital 184,214 188,940 Accumulated deficit (52,755)
(59,386) Accumulated other comprehensive income 20 20 -- -- Total
stockholders' equity 131,585 129,680 ------- ------- Total
liabilities, mezzanine and stockholders' equity $459,529 $439,716
======== ======== GEOKINETICS INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months
Ended September 30, ------------- 2009 2008 ---- ---- OPERATING
ACTIVITIES Net income $6,631 $5,296 Adjustments to reconcile net
income to net cash provided by operating activities: Depreciation
and amortization 41,675 35,715 Deferred financing costs 349 236
Stock-based compensation 1,611 1,445 Gain (loss) on sale of assets
and insurance claims 2,092 (236) Changes in operating assets and
liabilities: Restricted cash 7,907 (1,559) Accounts receivable
(25,878) (20,496) Prepaid expenses and other assets (2,274)
(24,164) Accounts payable (12,879) 33,297 Accrued and other
liabilities 40,209 140 ------ --- Net cash provided by operating
activities 59,443 29,674 ------ ------ INVESTING ACTIVITIES
Investment in multi-client data library & oil and gas interests
(7,490) (6,101) Proceeds from disposal of property and equipment
and insurance claims 885 1,481 Purchases and acquisition of
property and equipment (26,517) (38,312) ------- ------- Net cash
used in investing activities (33,122) (42,932) ------- -------
FINANCING ACTIVITIES Proceeds from borrowings 118,840 171,076
Proceeds from exercised options - 593 Stock issuance costs (145)
(860) Proceeds from stock issuance - 30,001 Payments on capital
lease obligations and vendor financings (30,251) (19,195) Payments
on debt (108,711) (169,078) -------- -------- Net cash provided by
(used in) financing activities (20,267) 12,537 ------- ------ Net
increase in cash 6,054 (721) Cash at beginning of period 13,341
15,125 ------ ------ Cash at end of period $19,395 $14,404 =======
======= Supplemental disclosures related to cash flows: Interest
paid $4,671 $4,872 Taxes paid $5,838 $1,283 Purchase of equipment
under capital lease and vendor financing obligations $4,569 $31,282
GAAP Reconciliation The Company defines EBITDA as Net Income before
Taxes, Interest, Other Income (Expense) (including 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 Income
Applicable to Common Stockholders to EBITDA amounts referred to
above: For the Three Months Ended Sept. 30, ---------------------
2009 2008 ---- ---- (In thousands) (Loss) Income Applicable to
Common Stockholders $(4,845) $212 Preferred Stock Dividends and
Accretion Costs 2,106 1,766 ----- ----- Net (Loss) Income (2,739)
1,978 Provision for Income Taxes 1,482 2,433 Interest Expense, net
1,232 1,722 Other Expense (Income) (as defined above) 141 (693)
Depreciation and Amortization 16,315 12,937 ------ ------ EBITDA
$16,431 $18,377 ======= ======= For the Nine Months Ended Sept. 30,
--------------------- 2009 2008 ---- ---- (In thousands) (Loss)
Income Applicable to Common Stockholders $432 $953 Preferred Stock
Dividends and Accretion Costs 6,199 4,343 ----- ----- Net (Loss)
Income 6,631 5,296 Provision for Income Taxes 18,280 4,146 Interest
Expense, net 4,328 4,499 Other Expense (as defined above) 651 (415)
Depreciation and Amortization 41,678 35,715 ------ ------ EBITDA
$71,568 $49,241 ======= ======= Contact: Scott A. McCurdy Vice
President and CFO Geokinetics Inc. (713) 850-7600 DATASOURCE:
Geokinetics Inc. CONTACT: Scott A. McCurdy, Vice President and CFO
of Geokinetics Inc., +1-713-850-7600 Web Site:
http://www.geokinetics.com/
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