Global Geophysical Reports Record Revenues and Operating Margins for the Fourth Quarter

HOUSTON, Feb. 2, 2012 (GLOBE NEWSWIRE) -- Global Geophysical Services, Inc. (NYSE:GGS) announced today that fourth quarter operating income was $15.3 million on revenues of $113.1 million. Normalized for tax rate adjustments, diluted earnings for the fourth quarter were $0.14 per share, or $0.04 per share without adjustments. Improved results from the Proprietary Services segment along with data library late sale contributions from the Multi-client Services segment were the primary drivers of the company's performance during the quarter.

Global's revenues were $385.4 million for the full year 2011, compared with $254.7 million for 2010, an increase of 51%. Operating Income for 2011 was $44.9 million, compared to an operating loss of $11.0 million for 2010.

Highlights and Notable Accomplishments

• Proprietary Services revenues for the fourth quarter were $62.3 million and generated gross margin of $9.0 million, or 14.4%. Sequentially, Proprietary Services gross margins increased by $2.2 million, or 3.7%, on revenues of $60.1 million during the third quarter of 2011. Margins for the fourth quarter reflected the contribution of data acquisition programs that were contracted during the period.
• Multi-client late sale revenues were $14.2 million during the fourth quarter and were $48.3 million for the full year 2011. Late sale revenues for the full year 2010 were $16.4 million.
• During the fourth quarter, Multi-client revenues exceeded Multi-client cash investment by $16.9 million. Beginning with the third quarter of 2011, Multi-client revenues have exceeded Multi-client cash investment by $25.1 million. Net book value of the Multi-client library as of December 31, 2011 was $232 million.
• Backlog at December 30, 2011 was approximately $201 million, of which $78 million is for Proprietary Services and $123 million is for Multi-client Services. Approximately 85% of the backlog is expected to be recognized as revenues prior to June 30, 2012.
• Global increased its recording instrumentation capacity to 180,000 channels as of December 31, 2011. Approximately 20% of the company's channel count is its proprietary land nodal AUTOSEIS^®(1) HDR units.
• HDR channels have now been successfully deployed on multiple US 3D seismic programs, as well as for frac monitoring applications, and have been tested in areas throughout North and South America including jungle and arctic environments. During the first quarter of 2012, the company is deploying the Autoseis HDR technology into Brazil, Colombia, and Alaska and is expanding channel counts in the US Lower 48. During 2012, Global expects to increase its Autoseis channel count by an additional 100,000 channels.

Richard Degner, President and CEO, commented:

"The company's fourth quarter produced several milestones for the company. Revenues and operating income reached record levels on the strength of the Proprietary Services and Multi-client Services contributions.

Global's Multi-client data library programs increased to approximately 7 million acres, of which 4.3 million acres were acquired as of year end. Also, the Multi-client business reached the inflection point at which revenues exceeded cash investment. Going forward, we expect pre-funding levels for new programs to be at or above cost along with sustained late sale contributions from the company's expanding base of library assets. Multi-client cash investment for 2012 is expected to be consistent with prior years between $170 - $180 million.

AUTOSEIS^® continues to drive both increased efficiency and increased quality of our data acquisition programs. Having successfully applied the technology on several North American programs, the use of HDR is expanding domestically and internationally, with exceptional application on logistically and environmentally challenging programs. Starting in Q2 2012, 26,000 HDR's will be deployed on a West Texas Multi-client Shale project where Global will record over 4.5 million traces per square mile, an order of magnitude higher than most shale 3D projects currently underway. Acquiring data at this density has not been previously commercially feasible with conventional cabled systems.

Autoseis HDR is the primary recording platform for Global's microseismic frac monitoring services. Deployment with patent pending array design have enabled the recording of higher fidelity data. During 2012, we will leverage the continuous recording capability of the HDR to provide passive monitoring capabilities, complementing active source seismic programs.

Global's planned increase in HDR channel count during 2012 will be accompanied by a planned reduction of cabled channel counts.  We expect to divest approximately 40,000 channels of cabled systems. Net PP&E investment (adjusted for asset divestments) for 2012 is expected to be in the range of $30 - $40 million and primarily allocated to the investment in HDR capacity growth. 

The company continues to broaden its data processing, analysis and interpretation services offerings. In 2011 we completed the integration of STRM LLC, now routinely offering their Tomographic Fracture Imaging^TM as part of our microseismic monitoring services, and providing detailed descriptions of the pre-existing natural fracture networks which are effectively the permeability fairways in shale plays. In the fourth quarter, we provided this service on an international basis for the first time. Our recently completed acquisition of Sensor Geophysical adds substantial capabilities in the area of 3C and 4C processing. Combined with our expanding consulting offerings in the area of unconventional resource analysis, Global is able to provide a fully integrated geosciences platform to our customers."

Fourth Quarter Results

The following table sets forth our consolidated revenues for the three months ended December 31, 2011 and for the corresponding period of 2010.

We recorded revenues of $113.1 million for the three months ended December 31, 2011 compared to $93.5 million for the same period of 2010, an increase of $19.6 million, or 21%.

We recorded revenues from Proprietary Services of $62.3 million for the three months ended December 31, 2011 compared to $40.4 million for the same period of 2010, an increase of $21.9 million or 54%. Latin America represented $35.5 million of that revenue.

Multi-client Services generated revenues of $50.8 million for the three months ended December 31, 2011 compared to $53.1 million for the same period of 2010, a decrease of $2.3 million, or 4%.  The $50.8 million in Multi-client Services revenues included $14.2 million of late sale revenues, $35.5 million of pre-commitment revenues, and $1.1 million of data swap revenues.  This compared to $10.7 million of late sale revenues, $38.7 million of pre-commitment revenues, and $3.7 million of data swap revenues during the same period of 2010.  Table 3 provides selected data regarding our Multi-client Services Library activities.

Operating margin for the quarter ending December 31, 2011 was 13.5%, compared to 10.8% in the same period of 2010. 

Included within operating expenses is Multi-client Services amortization of $31.3 million, representing a 62%  effective amortization rate. Gross depreciation expense for the quarter was $9.7 million, of which $3.5 million was capitalized in connection with our Multi-client Services library investments resulting in net depreciation expense of $6.2 million. Table 2 provides a reconciliation of Net Income to EBITDA (a non-GAAP measure).

Fiscal 2011 Results

The following table sets forth our consolidated revenues for the year ended December 31, 2011 and for the corresponding period in 2010.

We recorded revenues of $385.4 million for the year ended December 31, 2011 compared to $254.7 million for the same period of 2010, an increase of $130.7 million, or 51%.

We recorded revenues from Proprietary Services of $208.0 million for the year ended December 31, 2011 compared to $119.8 million for the same period of 2010, an increase of $88.2 million, or 74%. Latin America represented $143.9 million of that revenue, an increase of $67.2 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 $177.4 million for the year ended December 31, 2011 compared to $134.9 million for the same period in 2010, an increase of $42.5 million, or 32%.  The $177.4 million in Multi-client Services revenues included $48.3 million of late sale revenues, $126.0 million of pre-commitment revenues, and $3.1 million of data swap revenues.  This compared to $16.4 million of late sale revenues, $109.1 million of pre-commitment revenues, and $9.4 million of data swap revenues for the same period of 2010.  Table 3 provides selected data regarding our Multi-client Services Library activities.

Operating margins for the year ended December 31, 2011 was 11.7%, compared to an operating loss for the same period of 2010. 

Included within operating expenses is Multi-client Services amortization of $112.7 million, representing a 64% effective amortization rate. Gross depreciation expense for the year ended December 31, 2011 was $44.9 million, of which $16.9 million was capitalized in connection with our Multi-client Services library investments resulting in net depreciation expense of $28.0 million. 

Conference Call and Webcast Information

Global Geophysical has scheduled a conference call for Thursday, February 2, 2012, at 11:00 a.m. Eastern Time (10:00 a.m. Central / 9:00 a.m. Mountain /8:00 a.m. Pacific). 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:

Conference Topic: Global Geophysical Services Q4 Earnings Call

Date of Call: 2/2/2012

Time of Call 11:00 a.m. Eastern Time

Participant Operator Assisted Toll-Free Dial-In Number: (877) 312-5527

Participant Operator Assisted International Dial-In Number: (253) 237-1145

The webcast from the call will be available for on-demand replay on our investor relations website at: http://ir.globalgeophysical.com/results.cfm

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.

AUTOSEIS^® is a registered trademark of GGS, and hereinafter all references to the term AUTOSEIS or Autoseis shall refer to AUTOSEIS^®.

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 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.