Global Geophysical Services Announces 2nd Quarter Earnings

HOUSTON, July 28, 2011 (GLOBE NEWSWIRE) -- Global Geophysical Services, Inc. (NYSE:GGS) today announced financial results for its second quarter ended June 30, 2011.

Second Quarter Highlights

• The Company reported earnings per share of $0.02 for the second quarter of 2011 compared to a loss of ($0.41) per share for the corresponding period of 2010.
• Operating Income for the second quarter of 2011 was $8.1 million compared to an operating loss of ($10.9) million in the second quarter of 2010.
• Backlog as of June 30, 2011 was approximately $260 million compared to $179 million as of June 30, 2010, an increase of $81 million.
• The Company reported total revenues of $85.3 million in the second quarter of 2011, compared to $40.1 million for the corresponding period of 2010.

Richard Degner, President and CEO, commented:

"The company's second quarter results reflect program activity across all geographic regions. Revenues from international operations represented fifty percent of the company's activity for the quarter. International reveunes were primarily driven by Latin American activities and initial contributions from various programs in the Eastern Hemisphere. Licenses of Multi-client Services data library assets continue to be the primary driver of North American results, including revenues of $7.2 million from late sale licenses.

Operating margins continue to show improvement, and were approximately 12% on a year-to date basis. As previously noted, operating margins for the second quarter were impacted by reactivation costs for assets in the Eastern Hemisphere as well as costs for the re-deployment of assets across certain Latin American countries.

The overall pricing environment shows improvement, but still remains modest given meaningful increases in activity across all regions. Sector wide capacity continues to tighten.  Notably, North American data acquisition service capability is approaching near full utilization levels through early 2012.  GGS backlog remains at robust levels and stood at $260 million as of June 30, 2011.

In addition, Global continues to build out its integrated geophysical service capabilities. Notable milestones during the second quarter include:

• A diversified portfolio of data library assets in excess of 5200 square miles, up from approximately 2000 square miles as of June 30, 2010.
• Autoseis HDR (Global's proprietary land nodal recording technology) completing its first program as the primary recording platform.
• Establishing a backlog of multiple programs for Global's Microseismic service offering.
• Expanding the company's Basin Insight offering, integrating seismic data library with core and log based petrophysical information to create basin wide geomodels that describe shale sweet spots and reservoir detail.
• Expanding Global's supply chain with the capacity to source 50,000 channels annually of Autoseis HDR at a fraction of our historical spend.

We have also started to see increased transaction activity around the geographic areas of the company's Multi-client Services data assets. Along with the catalysts noted above, we expect to see improved operating performance in future periods."

Second Quarter Results

The following table sets forth our consolidated revenues for the three months ending June 30, 2011 and for the corresponding period in 2010.

We recorded revenues of $85.3 million for the three months ended June 30, 2011 compared to $40.1 million for the same period ended in 2010, an increase of $45.2 million, or 113%.

We recorded revenues from Proprietary Services of $46.4 million for the three months ended June 30, 2011 compared to $16.4 million for the same period in 2010, an increase of $30.0 million, or 183%. Latin America represented $36.5 million of that revenue, an increase of $27.9 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 $38.9 million for the three months ended June 30, 2011 compared to $23.7 million for the same period of 2010, an increase of $15.2 million, or 64%.  The $38.9 million in Multi-client Services revenues included $7.2 million of late sale revenues and $31.6 million of pre-commitment revenues.  This compared to $0.5 million in late sale revenues and $22.9 million of pre-commitment revenues during the same period of 2010.  Table 1 provides selected data regarding our Multi-client Services Library activities.

Operating margins for the quarter ending June 30, 2011 were approximately 10%, compared to an operating loss in the same period during 2010. Cash flow from operations for the quarter ended June 30, 2011 increased by $8.5 million over the first quarter ended March 31, 2011.

Included within operating expenses for the three months ended June 30, 2011 is Multi-client Services amortization of $26.3 million, representing a 68% effective amortization rate. Gross depreciation expense for the quarter was $11.4 million, of which $4.5 million was capitalized in connection with our Multi-client Services library investments resulting in net depreciation expense of $6.9 million. Table 2 provides a reconciliation of Net Income to EBITDA (as a non-GAAP measure).

Six Months Ending June 30, 2011 Results

The following table sets forth our consolidated revenues for the six months ended June 30, 2011 and for the corresponding period in 2010.

We recorded revenues of $162.1 million for the six months ended June 30, 2011 compared to $100.8 million for the same period ended in 2010, an increase of $61.3 million, or 61%.

We recorded revenues from Proprietary Services of $85.5 million for the six months ended June 30, 2011 compared to $61.1 million for the same period ended in 2010, an increase of $24.4 million, or 40%. Latin America represented $67.8 million of that revenue, an increase of $41.0 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 $76.6 million for the six months ended June 30, 2011 compared to $39.7 million for the same period of 2010, an increase of $36.9 million, or 93%.  The $76.6 million in Multi-client Services revenues included $17.6 million of late sale revenues and $58.0 million of pre-commitment revenues.  This compared to $4.8 million in late sale revenues and $34.5 million of pre-commitment revenues during the same period of 2010.  Table 1 provides selected data regarding our Multi-client Services Library activities.

Operating margins for the six months ended June 30, 2011 were approximately 12%, compared to an operating loss in the same period during 2010. Operating cash flow for the six months ended June 30, 2011 was $59.2 million.

Included within operating expenses for the six months ended June 30, 2011 is Multi-client Services amortization of $51.9 million, representing a 68% effective amortization rate. Gross depreciation expense for the quarter was $24.0 million, of which $9.2 million was capitalized in connection with our Multi-client Services library investments resulting in net depreciation expense of $14.8 million. 

Backlog

Backlog as of June 30, 2011 was approximately $260 million ($152 million Multi-client Services pre-commitments; $108 million proprietary data services) compared to $179 million as of June 30, 2010. Backlog as of March 31, 2011 was approximately $278 million.

Conference Call and Webcast Information

Global Geophysical has scheduled a conference call for Thursday, July 28, 2011, at 2:00 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 Q2 Earnings
Dial-in Numbers: 
Participant Toll-Free Dial-In Number: (877) 312-5527
Participant International Dial-In Number: (253) 237-1145

About Global Geophysical Services, Inc.

GGS provides an integrated suite of Geoscience solutions to the global oil and gas industry including high-resolution RG-3D Reservoir Grade® seismic data acquisition, Multi Client data library products, micro seismic monitoring, seismic data processing, data analysis, and interpretation services. GGS combines experience, innovation, operational safety, and environmental responsibility with leading edge geophysical technology to facilitate successful E&P execution.  GGS' combined product and service offerings provide the ability to Gain InSight™ in the exploration and production of hydrocarbons. GGS is headquartered in Houston, Texas. To learn more about GGS, 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, Inc. 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.

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.

Table 1: Selected Multi-client Services additional data (UNAUDITED)

GLOBAL GEOPHYSICAL SERVICES

Table 2: Reconciliation of Net Income to EBIT and EBITDA (Non-GAAP Measures)⁽¹⁾ UNAUDITED

CONTACT: Mathew Verghese

         Chief Financial Officer

         ir@globalgeophysical.com

         www.globalgeophysical.com

         Phone: 713-808-1750

         Fax: (713) 972-1008

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