Good day, everyone, and welcome to the Dawson Geophysical Second Quarter 2018 Results Conference Call. Statements made by management during this call with respect to forecast or estimates or other expectations regarding future events or which provide any information other than historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from future results or performance expressed or implied by those statements. These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including the company's annual report on Form 10-K filed with the SEC on March 9, 2018. Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated on the company's press release issued this morning, and please note that the contents of the company's conference call this morning is covered by those statements. During this conference call, management will make references to EBITDA, which is a non-GAAP financial measure. A reconciliation of non-GAAP measure to the applicable GAAP measure can be found in the company's current earnings release, a copy of which is located on the company's website, www.dawson3d.com. This call is scheduled for 30 minutes and the company will not provide any guidance. As a reminder, today's call is being recorded. And now it's my pleasure to turn the conference over to Stephen Jumper, Chairman, President and CEO of Dawson Geophysical. Please go ahead, sir.

Thank you, Laurie. Good morning and welcome to Dawson Geophysical Company's second quarter 2018 -- and operations update conference call. As -- said, my name is Steve Jumper, Chairman, President and CEO of the company. Joining me on the call is Jim Brata, Executive Vice President and Chief Financial Officer. Before I start the call, I'd like to remind you that if you would like to listen to a replay of today's call, it will be available via webcast by going to the Investor Relations section of the company's website at www.dawson3d.com. Information reported on this call speaks only of today, Thursday, August 2, 2018. And therefore, you are advised that time sensitive information may no longer be accurate as at the time of any replay listening. Turning to our preliminary results for six months ended June 30, 2018 results. Increased crew productivity and utilization continued to drive improved financial results as we generated a 14% increase in revenue and an over $7 million improvement in EBITDA for the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017; and a 16% increase in revenue and nearly $16 million improvement in EBITDA for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. For the quarter ended June 30, 2018 we reported revenues of $36.2 million, an increase of 14% compared to $31.6 million for the quarter ended June 30, 2017. For the second quarter of 2018, we reported a net loss of $5.7 million or a $0.25 loss per common share compared to a net loss of $14.9 million or a $0.66 loss per common share for the second quarter of 2017. We reported EBITDA of nearly $1.6 million for the quarter ended June 30, 2018 compared to negative EBITDA…

Thank you, Steve, and good morning. Revenues for the second quarter of 2018 were $36.2 million, an increase of 14.3% as compared to $31.6 million for the quarter ended June 30, 2017. As stated in our earnings release issued this morning, the company operated 4 to 7 crews in the U.S. and the equivalent of 1 crew in Canada for approximately half the quarter. The company is currently operating 5 crews in the U.S. and no crews in Canada. Based on currently available information, the company anticipates operating up to 5 [ph] crews in the U.S. during the third quarter and up to 5 crews on a combined basis in the U.S. and Canada during the fourth quarter of 2018. Cost of services in the second quarter of 2018 was $31.2 million, a decrease of 4.8% compared to $32.8 million in the same quarter of 2017. General and administrative expenses were $3.8 million in the second quarter of this year, a decrease of 14.5% [ph] compared to $4.5 million in the same quarter of 2017. Depreciation and amortization expense in the second quarter of 2018 was $7.4 million, a decrease of 25% compared to $9.9 million in the same quarter a year ago. Net loss for the second quarter of 2018 was $5.7 million or $0.25 loss per common share compared to a net loss of $14.9 million or $0.66 loss per common share in the same quarter of last year. We recorded an income tax benefit of $126,000 in the second quarter of 2018 and that compares to an income tax benefit of $394,000 in the same quarter a year ago. EBITDA in the second quarter of 2018 was $1.56 million compared to a negative EBITDA of $5.5 million in the same period a year ago. An EBITDA reconciliation…

Thank you, Jim. I have been made aware that we are experiencing apparently a little bit of audio trouble on the call here. We apologize for that and I believe it is being worked on as we speak. So, bear with us through the remainder of the call here. As stated in our earnings release issued this morning, while our second quarter and trailing 12-month financial results represent a strong improvement from comparable prior periods, bid activity and crew utilization slowed significantly during the second quarter of 2018. As we enter into the second month into the third quarter, we are experiencing a gradual improvement in bid activity, primarily outside of the Permian and Delaware basins. As we experienced during the second half of 2017, the majority of our projects continue to be driven by multi-client data library companies, a model we did not actively participate in, but we do act as a contractor for several of the largest providers. While our experienced highly-qualified personnel and robust inventories favorably position us with these projects, the competition remains strong between various multi-client providers and affects project timing as seismic projects are put together with multiple participants, a situation which is beyond our control. During the second quarter, Permian and Delaware activity declined slightly as we are nearing completion of several large projects in this highly concentrated area of activity. Project visibility remains constrained due to the uncertain sustainability of the recent rise in oil prices and overall activity, particularly in the Delaware Basin. The company's Board of Directors has approved a 2018 capital budget in the amount of $10 million. Capital expenditures for the quarter were $1.1 million and $5.6 million for the first half of 2018, primarily for replacement vehicles and maintenance level seismic data acquisition equipment. The company's balance sheet remained strong, as Jim said, with $44.3 million of cash and short-term investments and $60.8 million of working capital as of June 30, 2018. The company has notes payable and capital lease obligations totaling $6.7 million as of the second quarter as Jim stated earlier. It is our belief that seismic data acquisition activity will increase in producing basins outside of the Permian and Delaware basins, the primary areas of activity in the U.S., if commodity prices continue to improve and those basins become more economic; but that activity has yet to materialize in a meaningful way. We remain committed to maintaining a strong balance sheet and positioning ourselves as the leader of onshore seismic data acquisition services in North America. Management has a guarded outlook for the remainder of 2018, but we're encouraged by the recent increase in bid activity for 2019. In conclusion, we continue to be well-positioned to meet the needs of our shareholders and clients as we deliver the best in class high resolution subsurface images that enable our clients to reduce costs and improve their operating efficiency. And with that, Laurie, I believe we are ready to take some questions.

Thank you. [Operator Instructions] And we'll go to Marshall Adkins at Raymond James.

Hey, Steve. Actually a very good performance in what typically is your seasonally weak quarter. The crew count is a little lower than we thought, but your margins meaningfully better. Help me understand what was going on. Was it bigger crew size or just more efficiencies or you cut so much cost in apparently your phone bill that you're able to make more money?

You always got to throw one in there, don't you? Marshall, I think it's a combination of several of those factors. The crews that we're operating continue to channel count. It's not benign [ph] as we've talked about to be up in the 20 to [Indiscernible] channel range. That range; it improved efficiencies, it gives you more running room, the projects are bigger. Margins can be obviously affected by not just efficiency, but move times and those types of things. So, we've been on some bigger projects that certainly help. I do think our group has done a nice job of improving the crew productivities and efficiencies, doing a nicer job, understanding channel counts and improving the cost structure and the financial efficiencies. So, I think it's a combination of several of those things that you mentioned.

All right. So, you're obviously pretty caught up in the back half of the year with these I guess projects winding down, your guidance on crew counts are fairly low coming out of what is a low quarter. Should we expect an improvement in EBITDA like we normally get into the third quarter?

Marshall, it's -- we're kind of tinkering on guidance here and I'm not going to go there, but we are facing what looks to be like a somewhat challenging Q3. And so, it's too early in the quarter to really make any predictions about where that's going to go. There are some things in the pipeline that could -- activity level in the third and the fourth quarter are not contracted up yet, but we think we're getting close on a couple of things that could be very positive for us. We are getting pretty good indicators for 2019 on projects not just in the Permian and Delaware, but in SCOOP stack, there's some stuff down in Austin Chalk related areas that have some momentum too and there's some things in Wyoming, Colorado area [Indiscernible]. So, we're encouraged -- 2019 where our outlook for the back of the year is obviously guarded. We had some significant slowdown in bid activity in Q2 whether that is looking at the degradation [ph] issues that you've talked about from a strip perspective or whether it's takeaway capacity in the Permian, we are not sure. But here in the last couple of weeks, we've started to see more positive energy going into '19.

So you broke up a little bit there, but there are some shorter cycle things that may get over and above what you're currently thinking. I mean obviously your current thoughts are what you have in hand. We're looking at a pretty ugly back half, but here you say there are some short cycle stuff that maybe gets booked, maybe there's some upside there?

Yes, that is correct. And we've got some things that we have talked about in the last couple of quarters in our call that there were some projects out there and those appear to be getting closer and we're in a good position on [Indiscernible] as we've talked about where the market, some of things are beyond our control. So in the back half, there are some things that could obviously help us there and then we're optimistic for 2019.

And it sounds like also in Canada, I know we're looking at improving activity in the back half of the year, a meaningful improvement in Canada in the back half of the year. Sounds like your Canadian operations might have a bright spot as we go through the rest of 2018, is that fair?

Well, we hope so. We think the early indications, the Canadian market is -- really it starts in October, but it really doesn't ramp up until December. And so, a lot of things won't get contracted up until the next couple of weeks, maybe a month or so. But indications are that there will be a improved level of activity in the Canadian market in the winter season, which I would -- its October to April, but I would probably put most of that into Q1 of 2019.

Last one from me. There's been some movement on the competitive landscape, I guess [Indiscernible] got bought by another company. Just give us an update on what you're seeing on the competitive landscape and I guess just general pricing if you could?

The seismic market has been a tough market as we've about for quite some time now. And there was a Chapter 11 bankruptcy by one of our competitors. Those assets were purchased by another company, South American Exploration, a publicly traded company with a symbol SAEX. That transaction closed, I believe late July end. So the competitive landscape from that standpoint hasn't changed much for us. SAE has been around a while, we know who they are. But I think the -- it's still going to remain a competitive market here particularly in the back half of 2018. Seismic industry really hasn't had much pricing traction in a while. It's been a tough market. But I think the ability to improve efficiencies on the larger projects and -- that are out there today and things that we've been shooting allow us to really generate better returns than we have in the past with the smaller channel count crew. I think the market I think at some point with the channel count growth starts to become a little constrained in channel count. And so I think the capacity issue that we've always talked about in terms of crew count and those types of things really is going to circle back and continue to move capacity and as these projects get big, there hasn't been a whole lot of new equipment build for the three or four years. It just is going to look like this will become even more of a channel count model rather than a crew count model over time.

Right. Thank you.

Thanks, Marshall.

[Operator Instructions]. We'll go next to [Indiscernible].

Hi, Steve.

Hey, Bill. How are you?

I'm doing just fine. I wanted to ask you about this shift to more library business as opposed to years ago when that was not a meaningful part of your business. Maybe you could address the margins associated with that type of activity versus your historically traditional business?

Okay. We have had some book of business that has been multi-client related, but not to the level on a percentage basis that we've seen in the last couple of years. The multi-client projects, particularly in the unconventional, tend to be larger in scale than what, let's say, a standalone E&P project would be. With that scale of about comes increased channel count, comes through the operating efficiencies, most projects longer and so they're all turnkey related. So, there is certainly potential there just because of the scale and scope. If you go back several years in the past when we have worked with individual E&P projects, they tend to be smaller in nature. We've had situations where we've had more term type agreements, whether day rate and some dedicated crews to certain E&Ps over time going back several years back. And so it's a little different model, its not a model that we're unfamiliar with. We have worked for multi-client companies in the past. But I would say the biggest thing, Bill, is I just tend to be -- good news is they tend to be very large in scale and be turnkey, they tend to have some running room in them. The downside is that getting them put together can be more difficult at times and more time consuming just based on the fact that they are dealing with so many other potential underwriters and E&P groups behind them.

Thank you. That's great.

[Operator Instructions] And sir, it appears I have no additional questions at this time. I'll turn the call back over to you for any additional remarks.

Well, I appreciate it, Laurie. Thank you for -- I want to thank everybody for taking the time to listen in. We're extremely pleased with our 12 months, and our six-month and the recent results. We want to thank our employees for their continued dedication, their effort in maximizing efficiency and controlling cost. As we've said, we've got -- we've had a little bit of slowdown in activity here. We are looking at a lower crew count estimate in the back half of the year, but we're encouraged for our outlook for 2019 and somewhat encouraged by our upcoming winter season. Our balance sheet remains strong. We're in strong financial shape. Our client relations remain strong. Our personnel are well-respected in the industry. And so, we've got a lot of positives working for us and we'll continue to work hard for our shareholders and our clients. And we look forward to talking to you in another 90 days. Thank you very much.

And ladies and gentlemen, once again that does conclude today's conference. And again, I'd like to thank everyone for joining us today.