TGC Industries (TGE), a provider of 3-D seismic data and acquisition services to onshore oil and natural gas exploration and development companies in the U.S. and Canada, reported second quarter results this morning that fell short of estimates. Net income was $0.9 million, or 5 cents per share, a decline of 30% year-over-year. Revenues fell 14% to $18.6 million. Analysts expected earnings of 9 cents per share on revenues of $22.7 million. The company cited the idling of two of its eight seismic crews due to customer permitting delays for the shortfall.
Wayne Whitener, TGC Industries’ President and Chief Executive Officer, said, “We continue to experience a strong U.S. land seismic market and since the middle of April have seen increasing demand for our services. We have been awarded several new contracts of substantial size in the past few months and are pleased to report a record backlog of approximately $78 million, a 70 percent increase from the $46 million we reported at the end of our first quarter. In addition, by mid-July the two crews that we idled in the second quarter were back to work and fully operational.
“With our current backlog level, we expect to have our crews fully utilized for the remainder of the year and well into the first quarter of 2009. As a result of this substantial rise in backlog, we recently purchased an additional 4,000 recording channels, bringing our total channel count to approximately 47,000. In addition, we continue to see numerous opportunities for additional contracts, including many large contracts, indicating our improved competitive position within the industry.”
Shares of TGE closed Friday at $8.02 and have traded in a range of $6.60 – $11.86 during the past year. The long-term prospects for TGC and other land seismic companies look very promising. Recent discoveries of huge natural gas shale plays like the Haynesville have oil and gas companies furiously racing to drill new wells and find the next big score. And the political winds in Washington are supportive of increased domestic production and consumption of natural gas. Dawson (DWSN) is best of breed among other small-caps in the sector and is scheduled to report earnings this Thursday before the market opens.
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