Welcome to the Geospace Technologies' third quarter 2013 earnings conference call. Hosting the call today from Geospace is Mr. Gary Owens, Chairman, President and Chief Executive Officer. He is joined by Tom McEntire, the company's Vice President and Chief Financial Officer; and Mr. Rick Wheeler, the company's Executive Vice President and Chief Operating Officer. (Operator Instructions) It is now my pleasure to turn the floor over to Gary Owens. Sir, you may begin.

Good morning, and welcome to the Geospace Technologies' third quarter call for fiscal year 2013. We appreciate your participation in the call today. I am Gary Owens, the company's Chairman, President and CEO. Also with me are Mr. Tom McEntire, the company's Vice President and Chief Financial Officer; and Mr. Rick Wheeler, the company's Executive Vice President and Chief Operating Officer. I will begin the prepared portion of the conference call, followed by a review of our financial performance from Tom. Rick will then discuss the immediate outlook for our business, and I'll add some remarks before we conclude. Before I begin discussing the quarter and the year, allow me to say that if you wish to listen to a replay of today's call, it will be available by going to the Investor Relations section of our website at www.geospace.com. I should point out that the information we will discuss this morning is time sensitive and therefore may not be accurate on the day one listens to the replay. I warn you that many of the statements we will make today will constitute forward-looking statements within the meaning of the Private Securities Litigation Act of 1995, including statements about the market for our products, revenue recognition, rental fleet expansion and capital expenditures. These statements are made with management's current expectations and knowledge. The statements are based on risks that are known and unknown are influenced by uncertainties and other factors that we are unable to predict or control. Some or all of these may create undesirable results or cause our performance to differ materially from any results or performances we may express or imply. These risk and uncertainties include the risk factors you can find in our filings with the SEC, including the filings on Form 10-K and our quarterly…

Thank you, Gary, and good morning everyone. I will start by discussing an overview of our consolidated results of operations for the third quarter of fiscal year 2013, and then I will drill deeper into our revenues for each of our core product segments. Finally, I will close with some information concerning our balance sheet and cash flows. While we will update our estimates of revenue recognition cash flows for fiscal year 2013, we will not provide any earnings guidance during this call. For the third quarter ended June 30, 2013, we reported revenues of $78.1 million, an increase of 42% over revenues of $55.2 million for the third quarter of last year. Our net income for the third quarter of fiscal year 2013 was $17 million or $1.31 per diluted share, an increase of 58% from last year's net income of $10.7 million or $0.83 per diluted share. We report our revenue segments in four different product categories. I will discuss each of these product categories for the third quarter of fiscal year 2013 and their comparison to the third quarter of fiscal year 2012. Revenues from our traditional seismic products for the third quarter of fiscal year 2013 were $10.8 million, a decrease of 37% compared to revenues of $17.2 million last year. The decrease in revenue has primarily resulted from lower demand for our geophones, marine and connector products. We believe this decline in revenue was due to a general softness in worldwide seismic activities and a significant pullback in North America Shell exploration activities. Revenues from our wireless seismic products for the third quarter of fiscal year 2013 were $15.9 million, a decrease of 45% compared to revenues of $28.9 million last year. The decrease in demand for our wireless products is due to a slowdown…

Thanks, Tom. As we stated, third quarter revenues from our wireless systems were down year-over-year and essentially flat relative to last quarter. This is evidence of the overall slowdown of activity seen in the seismic market worldwide and especially in North America. The effects of this reduction in activity on our wireless systems as well as our traditional seismic products are expected to be continue into the fourth quarter. Most new quoting opportunities are negotiating for date some time in the next fiscal year, and a few outstanding quotes have seen an initial delivery dates delayed as well. However, as in prior years, we may receive substantial unforeseen orders on short notice, so we have no expectation as such in order. As has been typical, the demand reflected in current inquiries continues to be a mix of rentals and outright purchases for use in both the net domestic and an ever increasing larger portion of international locations. Our OBX seabed nodal system continues to make headway carving out its niche in the industry. We're very excited to say that as a direct result of the new interest we mentioned in our last conference call, a rental is now underway for an active seismic survey utilizing 1,200 stations of our shallow water OBX system. Meanwhile, negotiations continue moving forward with various potential customers looking at our deepwater OBX. Although, the earliest delivery date available for the first customer permitting to a large station system would be in calendar year 2014. The rest of our seismic product segment dominated our third quarter revenues driven almost entirely by our work towards completion of the Statoil order. As resources were freed up from final activities of the Shell project and new machinery came online to increase our manufacturing capacity, we were able to outperform…

Thanks Rick. After 43 years in the industry, including the last 16 years with the company, and at the age of 66, I am announcing my retirement effective December 31, 2013. I will remain on the company's board as a Chairman. There comes a time, when one knows it's time to retire, and for me this is the time. It is an emotional decision with pros and cons involved. I'll take a lifetime memories with me and a deep appreciation of a myriad of people that became part of the journey. I owe all of them a sincere thanks. Mr. Rick Wheeler, the company's Executive Vice President and Chief Operation Officer, will take my place. Rick brings almost 30 years of engineering and operational experience to this position. I had known Rick all those years, and now he brings a vast amount of industry knowledge and great leadership skills to the company. Our company is fortunate to have an individual such as Rick. I look confidently towards the company's future with Rick at the helm. I will now turn the call back to the moderator for questions.

(Operator Instructions) And our first question will come from Veny Aleksandrov with FIG Partners.

My first question is on the inventory. So there is a little bit of slowdown and it's going to get going in Q4, but you have $50 million invested in inventory. So which segment of the business is this inventory for? Is it primarily OBX, is it the combination of OBX plus GSX or there is some inventory for the Statoil contract?

Well, the inventory is a split between the wireless products for both land and OBX, but the OBX is our focus at this point. The inventories that we have for the land system are not really outlandish with respect to what we have typically sold in the past. So it actually poses quite a nicety for us to have this on this shelf, so that we can focus our production activities on the OBX, because there are some competitive resources on those two products that don't compete with the Statoil products, but do compete with each other. So with the wireless land components on the shelf, we can't continue to concentrate on the OBX, which are harder to manufacture and something we need to beef up.

So if you get an order, how quick you can turnaround and deliver it, and I know it depends on the size of the order. But if you get an order, is it going to be delivered within the quarter that you develop?

Not for the OBX. The shallow water system perhaps, but the larger deepwater systems are not going to be delivered until 2014.

And my next question, the flexibility of manufacturing. You did great this quarter, manufacturing for the Statoil, because of delinquency in traditional. And with this new machines coming, are you guys going to be more flexible and be able to shift more things around?

I think so. I think these new machines are going to give us some capacities that are very strained right now. In one sense, the fact that some elements are slow, allowed Statoil to accelerate a little bit, but the fact is, we want to be able to catch those markets when they recover and come back. So we do have extra capacities of these machines and we will continue to have flexibility upon.

And our next question comes from Ryan Fitzgibbon with Global Hunter Securities.

This first question kind of expanded out on what Veny was getting on there. The timing of OBX sounds to be, if I heard you correctly, Rick, is calendar year 2014?

Right.

Is that really due to a customer timing of orders or is that due to not having enough industry inventory to ship the potential product.

It's actually kind of a combination. These marine systems have a lot of extra infrastructure with respect to the vessels and that sort of thing that have be to put together and that's not a simple matter that happens in a few weeks. That takes months to accomplish. So as these customers that would be purchasing the OBX began mobilizing to get into that business, they are going to have a lot to do with respect to getting their boats and other components put in place, and so the timing is an issue, but also the capacity that we have to manufacture, that that product does take sometime to do.

And could you give us an update as to how many OBX quotes you have outstanding. And do you think that you're quotes cross the finish line on something this size?

Well several quotes are out there. I can't really get into the details of all them and they are, of course, what I consider significant size, they would be quite an additional component of our product line. So in general, I think, we're encouraged by what we see there and that's why we're preparing as we are.

And then if I could switch over to the Statoil project, do you have a sense, maybe this one is for Tom, as to how much third-party vendor cost and kind of the stretch you have in your supply chain, maybe impacted margins for that project in the quarter?

Yes, there is a couple things impacting margin for the quarter. One of it is, as Rick alluded to was the strained capacity that we have. We're having outsource, which is creating some variances in our cost. It cost us to more procure certain products outside the company rather make them inside. In addition, one of the things that's puling us is that the third quarter and fourth quarter in our fiscal year are relatively slow quarters from a rental standpoint. And so we've got low rental revenues and a high amount, fixed amount of depreciation each quarter. So those two things are the biggest things impacting margins.

And you would expect that to persist in the September quarter?

Yes.

And then finally, can you give us an update as to how your recent discussions with Statoil have gone for potential follow-on project?

Well, they are ongoing, but we don't have any signed contracts. So I guess, that's what everybody wants to see, but we can't show you that.

And the next question comes from Joe Maxa with Dougherty & Company. Joe Maxa - Dougherty & Company: The Statoil project you expect to finish up by middle of fiscal year 2014. I know you don't have any signed contracts with them, but are you anticipating or are you talking with others and are you typically feeling what could be a manufacturing void when this contract runs out?

Well, we think we are talking to not only Statoil, but others as well. We have a history of being successful at these reservoir monitoring projects and I think we've been in it for a long time and I think that is our strength. So we anticipate more business in this area. Statoil, and Shell and BPs are not going to be only the players in this as they start reaping these benefits as we go forward. On top of that, the OBX is another product line that hasn't even hit the way we expected to and that's going to also have a big impact on our revenues. Joe Maxa - Dougherty & Company: The 1,200 unit rental agreement, is that shallow water?

It is shallow water. Joe Maxa - Dougherty & Company: And how long do you anticipate a rental like that may last and are you anticipating that the customer ultimately buys it?

We're certainly hoping for that. The rental and the clients are committed to this project, and so that's our expectation is that things are going to continue to with the OBX in a positive fashion. Joe Maxa - Dougherty & Company: So this wasn't just one project there that rented it for it and given it back?

No, I don't think so it all. Joe Maxa - Dougherty & Company: And just on the overall comments about slowing seismic activity. Can you give us a little more color on what you're seeing into that perhaps, why some of these larger products have been pushed out?

I think you can go back and read the press releases of our customers for the last current quarter and see what kind of color they gave on the analyst and what they are saying on that call as far as we're seeing. So when they talk about cruise stacks or slows or backlog goes down, we feel that. Joe Maxa - Dougherty & Company: So it's more related to your wireless seismic, and obviously some of your traditional pieces?

Yes, sure. That's why it has the most impact on.

And our next question comes from Travis Bartlett with Simmons & Company.

Just looking at the expected Statoil revenue recognition for Q4, $25 million to $30 million, what's leading that to be lower quarter-over-quarter, just thinking about how that impacts Q4 results? Simmons & Company: Just looking at the expected Statoil revenue recognition for Q4, $25 million to $30 million, what's leading that to be lower quarter-over-quarter, just thinking about how that impacts Q4 results?

In the third quarter we had a significant amount of Statoil product that we were outsourcing to third parties. And a lot of those third parties completed the outsourcing and we now completed those components of the Statoil order, and there's going to be some of that going forward that not as much as we had in the third quarter.

And then, shifting gears towards the OBX. Obviously, OBX is expected to be a significant contributor to just the earning stream, once it gets going. How impactful do you think some of these bigger awards can be from a topline standpoint thinking about next year? Simmons & Company: And then, shifting gears towards the OBX. Obviously, OBX is expected to be a significant contributor to just the earning stream, once it gets going. How impactful do you think some of these bigger awards can be from a topline standpoint thinking about next year?

Well, they could be large. We think Statoil is large. These could similarly be large. I mean Statoil is huge from our perspective, but these will have significant impact, if they continue going down the road they are.

And then just in terms of OBX for a rental fleet right now. Can you just talk about how many stations you have capitalized at this point? I mean basically how many of the OBX systems are currently available in the rental fleets? And then how should we think about that going forward? Simmons & Company: And then just in terms of OBX for a rental fleet right now. Can you just talk about how many stations you have capitalized at this point? I mean basically how many of the OBX systems are currently available in the rental fleets? And then how should we think about that going forward?

I think we've got about 1,300 to 1,400 capitalized at this point. The majority of those are the shallow water. As stated 1,200 of them are out and actually we've got several smaller systems that are out too. A lot of this is the clients are interested in what they can do, the contractors are interested in how they will use them and the benefits it provides. So the rental will continue to provide opportunities for our customers to get their hands on these and they actually see where the benefits are and that will help drive sales.

And fair to say you're ratably adding towards the rental fleet apart from some of the bigger rental agreements? Simmons & Company: And fair to say you're ratably adding towards the rental fleet apart from some of the bigger rental agreements?

Yes.

And our next question comes from Bert Boksen with Eagle Asset Management.

You guys are betting a lot on this OBX. You're building the inventory. You're buying land. You're building are using out, could you may be go through where you have so much confidence that this system is going to be as successful as currently you think it is?

Part of the confidence has been number of contractors that are talking to us, and that specialize in that part of the marketplace. And I think it's pretty apparent to those guys that having a system that's not dependent on interconnected channels will be a lot more productive than having a cable system. But it's a big step, change, and it's a very conservative industry. And one big mistake can be a very serious blow to a company such as the seismic contractor. So they move with caution. So we've talked about this parts over the last year and people renting this go try it and test it and see what the data quality is and see what operational efficiencies can be. And the feedback from all of those has been very encouraging for us. So a lot of these guys, because the ticket on these things are so large, having to find money and not just for the system, but for the vessel and the equipment that goes on the vessel to handle this type of equipment. The international footprint, that the interest from these are coming from the North Sea and Indonesia and Gulf of Mexico, Brazil and lakes like Lake Erie and Lake in Peru that we've been in. It's just a lot of oil company, a lot of contractor interest and our people soliciting money with quotes from us that details what the system would look like and what it would cost has given us that confidence. We talked to these people several times a week. So it's not an isolating quote that goes out that we never hear back from again. So I think the progress these guys are making with their customers and with their financial community is getting to a place where we need to put the inventory in place and this is such an important part of our future growth, we have to that take this seriously. And I can tell you we've spend a lot of engineering and sales and management time reviewing all of this, before jumped off this cliff. We have a higher level of confidence that this is what we need to do to prepare for what we think has a high probability of happening.

What do you see is the advantages of the OBX compared with alternative or traditional ways of doing things and what might be the disadvantage?

The high productivity that can occur on these crews are due to the dependence on electronics, reliability versus cable reliability. And on land, we have seen that with the wireless system, where operational issues have been reduced when they didn't have interconnected cables. And on land when you have a bad cable you can hop in a truck or a four-wheeler and get to the part to the cable that's bad, but when your cable is under a thousand feet of water and there is quite away from the vessel that compounds that. So the advantage as we see in the water is similar to just what we see on land, but with a larger financial impact. Cables wear out. They get torn up. And they have to replace those often. That goes away, when you have a node system instead of a cable system. And the ability to put it in the water and pick it up is easier without the cables and the bulk that comes with the cable helps the vessel size and the work area on the vessel. The negative part of it is, that this is not a normal way we do, we take seismic data at the moment, so there is always hesitance when you're changing how our customer their business. They can't see the data in real time. They have to download that data after they pull the nodal. So this blind, so to speak, shooting causes people to pause. But just like on land, which is also a blind shooting, the trade off for that blind shooting is significantly higher productivity, which translates into much lower cost for the oil company and more predictability from the seismic contractor standpoint.

If you have this 1,200 rental OBX system you have out, could you approximately tell us what these channels might sell for, so we can get a sense for how big these sales could be in the future?

We have shallow water, we have the deepwater and we have some variations in how are we on our clock. And so they range somewhere in the $7,500 a station, which are four channeled stations to over $11,000 per station. So you have a smorgasbord from which to buy for and that kind of complicates the manufacturing on what you need to have on the shelf, because some of this is plastic and some of this is titanium machined parts, but the guts are the same. So if some of these quotes we have for 3,000, 4,000, 5,000 stations, we have several of those out. So take that number multiplied by the revenue and as Rick was saying, some of these quotes have chances of being very significant for us. And since they are difficult to manufacture from how fast you can build one standpoint it affects inventory as both Tom and Rick mentioned. But having a chance to sell that not being able to deliver that is a very large opportunity cost or so if success is preparation leading opportunity, we are getting prepared.

And our next question comes from Georg Venturatos with Johnson Rice.

I wanted to touch on the PRM side. Obviously, you are pulling forward some of that revenue recognition from the Statoil deal, I just want to get a sense of deal that you're doing that, are you more confident today than you were three months ago that you might secure an additional contract in '14 based on the discussions? And then also does this pull forward help you in terms of negotiations with those customers to say, hey, we're further along in this Statoil order to date, any clarity there would be helpful.

I think pulling forward does stimulate additional interest, because some of the discussions we have been having that has been an expressed concern, so with respect to our ability to manufacture this quicker than we had originally anticipated. I think it does have an impact on how things will progress going forward and how our potential customers use that capability.

And then based on some of the additional capacity expansion efforts you're doing, do you have a sense of where that, kind of, max capacity you could have maybe on a dollar basis, on the PRM side, quarterly could be compared to what you did this quarter, you know, north of $40 million?

Not really. I mean, capacity is one of those things that you have to steer it down when problems arise. For the most part, we're targeting what we see as our future needs, and we're not trying to go beyond that at this point in time. Although, we do want to have our plans incorporate what future elements of expansion might be necessary in that regard, but we're not making any inroads in trying to do that.

And then just last question from me. On the wireless side, in terms of the quotes you have outstanding, could you give us a little more detail maybe on the percentage of rental over sales in terms of the mix there? And then also, I know, you mentioned some more international interest, and you maybe give us some quantification in terms of the percentage that's coming from international markets?

A significant amount is coming from international and that is growing as time goes on. South America is very active and some things are going on there. Indonesia has got some activities as well. But Canada is still North America, but that's certainly increasing as well. The OBX is certainly international in its concept in terms of where it will be used.

And then in terms of rental versus sales mix?

It's half and half or it's a relatively balanced mix. But the rentals, I think even there, there are expectations if they want to buy them.

And we'll go next to Joel Luton with Westlake Securities.

Just got a couple of questions. With the GSX, I know you all have previously said that you're still kind of in the early stages of that product in terms of the potential there. Could you just give a little bit more color on that? And then hearing from some of your customers on their quarterly call that they seem to be saying that things appear to be picking up, and does that translate into a better '14 for you all? And then just one question for, Gary, is the reason you're retiring, so don't have to do these quarterly calls anymore?

Just got a couple of questions. With the GSX, I know you all have previously said that you're still kind of in the early stages of that product in terms of the potential there. Could you just give a little bit more color on that? And then hearing from some of your customers on their quarterly call that they seem to be saying that things appear to be picking up, and does that translate into a better '14 for you all? And then just one question for, Gary, is the reason you're retiring, so don't have to do these quarterly calls anymore?

That was the number one consideration in my decision.

We're hearing the same thing. And I think in those press releases that you read in a conference call of the customers, you're reflecting what they're saying. I think our Latin American office is going to dividends for us in 2014, and some of the interest we're seeing is coming out of there. But I think the North American and the Canadian part of that appears from what we're being told to have a brighter 2014, and they are experiencing at the moment. So I think that's our expectation is that we'll see an uptick in that part of client from North and South America especially, although we do have some other things going forward overseas.

And do you think with the GSX you can generate some of the large revenues that you have in the past with that product?

And do you think with the GSX you can generate some of the large revenues that you have in the past with that product?

Yes, but I hate to use this word, it will be lumpy.

And we'll go next to Craig Hoagland with Anderson Hoagland.

Most of my questions have been answered. The one remaining is, if you had a significant OBX order for 2014, would you likely put a press release out and before the revenue was actually realized?

Yes. We would do that, when we get the order.

And we'll go next to George Prince with RBC.

I have a couple of questions. Do you think you could give us on the wireless concept the (time) for that? I know it's a harder question, but what is the addressable market and where do you think that penetration is so far compared to that and what is the comparative threat in that marketplace for you?

Well, I'm not sure what's you're asking or I didn't understand with terminology, but I can tell you that there is competition in this front. So Shell has always been our largest competitor in the seismic instrumentation market. There are some others out there. We're simply trying to make a product that is cost-effective and can beat the competition.

What I meant was, can you give us some kind of dollar figure of how much potential business there is for this kind of product?

I mean there is $4 million or $5 million channels on land in use today and maybe 60% or so percent of that's an addressable. That's not tied of that competition or competitive relationship. So the fact we got tenth of that replaced, means that there are still large number of targeted crews with channels that we're going after. So you can translate that into hundreds and millions of dollars over some period of time. So it's just a matter of speed. But I think we have said in the past that these products have 10-year life, it has decade long life. So that you should expect that this will take that long to fully penetrate. So it will have fits and starts as disrupters that buy the equipment, our equipment go into their respected markets and cause people to have to take a serious look of how they're going to deal with the disruptions this product can give. So you'll see it start quickly ebb and then have another spurt and ebb and it'd be lumpy.

And we'll go next to Anthony Raab with Perimeter Capital.

My question is how big do you think the market is for OBX?

Say that again, I'm sorry.

I said how big do you think the market is for OBX?

Well, the OBX is a new product with respect to operationally some things can be done with it that have never been done before. It opens up a market that in some ways, elements of it did not exist. But it's still a niche market. There is still going to be marine streamers out there. There is no way that the OBX is going to replace every marine stream operations just because of the cost effectiveness and what can be done with towing steamers. But the OBX itself solves problems where you would put an ocean-bottom system in its own unique ways and opens new opportunities where they would never consider put in an ocean-bottom cable system, but they would put one of these. So it's a little hard to tell exactly how big that market could be at this point in time, although it is going to be a niche component.

And then the next question is with regards to the investment that the customer has to engage in, in order to operate with this product, can you give us a sense of the magnitude and maybe how that compares with the competing product in the market?

You mean, as far as their vessels go.

Yes, please.

I don't think the vessels are as much as like towing streamers vessels, because these vessels have a different construction for them and all of that. But quiet honestly, I'm not entirely sure, how much these vessels costs. I haven't really evaluated that aspect of the thing. But I imagine that it's very similar to the outfitting vessels for the ocean bottom cables. I mean they have to have effective rooms for their instrumentation. They will have to have the same thing for the OBX, although many crews are evaluating whether they want satellite operations with the OBX since they could bring the data somewhere else to process it instead of about taking it and processing it directly on the boat.

In terms of, if you wish to retrofit a boat for this, I mean do you think the number is in the $10 million to $20 million, or $20 million to $50 million, or $50 million to $100 million?

That I couldn't tell you, I know that they need some racks for this. We have a design that uses containers to optimize the rigging out of boats. So that you can plop these containers on to the boats in a very efficient fashion, so we've watch on our side to try to streamline that rigging out process, but I really couldn't tell you that what they see on their side.

And we certainly haven't heard any numbers to the extent that you just mentioned. We would expect it to be much less then that.

And we will go last to Hamed Khorsand with BWS Financial.

Just wanted to talk with you about the wireless seismic products, so it seems like, it's slowed down a bit here. And you guys have been more talking about the OBX line. Is it because you came out with GSX? Is the product upgrades one of the reasons, why you've seen it slowed down, the land, I mean, you really haven't penetrated much of the market yet?

No. I think, if you'll talk to the other contractors, I don't think their slow downs have anything to do with our GSX. I think this is just an industry pause that you see from time-to-time. And you'll see it pick backup, so that's how it goes here.

And then, I guess just really running out, everyone else's concerns on manufacturing. If you are expediting the manufacturing process, just using cash for expansion purposes, can you just layout the strategy here, because I'm trying to understand why strain your cash balance without having a game plan beyond calendar 2014?

In lots of our areas of manufacturing right now, we have three shifts working. And it's very difficult to get people who want to work at night or in the graveyard shift. And it's harder to find people who will be supervisors or support people for that time of day, and therefore, we make most of our mistakes. We have our slowest production per person because of lack of support and help. So for us to be able to fully utilize our factory, we need to bring those hours on to the daylight shift where we have support on the manufacturing. And we do not have the space to be able to accomplish that. And therefore, we're having to outsource to people significant amounts, lot more than we wanted to do, because we can't. We don't have enough people at night, in graveyard shift. We pay those people more money to entice them, to work in those areas. So when you have lack of productivity, higher cost, more scrap and mistakes that are made on the night shift, you have to be able to bring those on to the hour. So besides the Statoil contract and similar kinds of contracts we need machine shop, cable shop, sensor shop, expansion for our other product lines. The OBX has an impact on the machine shop and our sensor shop a lot. And to bring to be able to build an OBX, you have to be able to build the sensors that go in them and you have to be able to machine titanium parts that are slow, to be made big titanium parts. So part of the reason here is not to expand this and get ready for probably make at the moment, but it is also to expand, to accommodate products that we foresee coming into our product line in the future. And if we can hardly make what we make now, it's going to be very hard to bring new products into the manufacturing area where we are taxed. So this expansion of land and machinery there we'll add more people is to be able to be a more efficient, more productive manufacturer of our existing products and to give us the flexibility when we get these large (PRM) type of systems.

We'll go to Travis Bartlett with Simmons & Company. Travis Bartlett - Simmons & Company: I just had a one quick follow-up. I'm not sure, if I missed this already, but how many OBX stations do you guys currently have completed in inventory? And then just in terms of your manufacturing capacity for those, where do we stand today in terms of the weekly capacity for OBX?

We are not giving out our inventory numbers, but we have increased our inventory significantly since the beginning of the year. And a good portion of that relates to the OBX. So we did mentioned earlier that we've capitalized about 1,400 units, we've got 1,200 net on rent right now, but we won't be giving out inventory quantities now or in the future.

Travis, part of it is we don't count inventory like you implied in the question. We talked about a lot of options that go on OBX from shallow and deep and so on. So we make these up into components that can be shoved in kind or the other. We really don't finish as you think about the word finish, those products where we count them. And there is a lot of subassemblies involved. They had different hydrophones, they have different bodies, its just that we don't think along those lines. So it's hard to get those kind of things out and it wouldn't make sense to you if we did. Travis Bartlett - Simmons & Company: But is there any commentary or discomfort you may have, in terms of the manufacturing capacity for those, just the way that you guys think about the channels or stations?

Well, a lot of the machinery that we have put in place is, in fact, expanding that capacity. It's one of the reasons that we got it. Certainly with Statoil underway and concerning the machines shop, the majority of it, there was no capacity for OBX. So we had an opportunity to get some machines that actually were optimized to work on the OBX housings as well as the Statoil. And when you deal with machines you're always making the machine, working around the machine to accomplish what you need to do. And when you have an opportunity to make an more optimal decision on a particular machines whose strengths are for certain mill work or other labor work and that sort of thing, we have that chance to do that and we do.

And I'd like to turn the conference back over to Mr. Owens for any closing remarks.

Well, thank you everybody for your questions, they were interesting and for the comments, and appreciated all of that. We'll look forward to talking to you in December after the earnings release for the year, talk to you then.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.