Dawson Geophysical Company
Q1 2014 Earnings Call Transcript

Published: 4 Feb 2014

[Operator:]

Good morning and welcome to the Dawson Geophysical’s First Quarter 2014 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Dawson Geophysical Company cautions that statements made today in this conference call, which are forward-looking and which provide other than historical information involve risks and uncertainties that may materially affect the company’s actual results of operations. These risks include, but are not limited to the volatility of oil and natural gas prices, dependence upon energy industry spending, disruptions in the global economy, industry competition, delays, reductions or cancellations of service contracts, high fixed costs of operations, external factors affecting our crew such as weather interruptions, and inability to obtain land access rights of way, whether we enter into turnkey or term contracts, crew productivity, limited number of customers, credit risk related to our customers, the availability of capital resources and operational disruptions. A discussion of these and other factors, including risks and uncertainties is set forth in the company’s 10-K for the fiscal year ended September 30, 2013. Dawson Geophysical Company disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future events, or otherwise. During this conference call, we will make references to EBITDA, which is a non-GAAP financial measure. A reconciliation of the non-GAAP measures to the applicable GAAP measure can be found in our current earnings release, a copy of which is located on our website www.dawson3d.com. Please note this event is being recorded. And I would now like to turn the conference over to Steve Jumper, President and CEO. Please go ahead sir.

[Stephen C. Jumper:]

Thank you, Emily. Good morning and welcome to Dawson Geophysical Company’s first fiscal quarter 2014 earnings and operations conference call. As Emily said, my name is Steve Jumper, Chairman, President, and CEO of the company. Joining me on the call are Christina Hagan, Executive Vice President and Chief Financial Officer. We’re going to go through this with some brief comments, and then open the call up for questions. As in the past, the call is scheduled for 30 minutes and we will not provide guidance as we’ve not done in the past. Our December 31, 2013 quarter had its challenges. As previously disclosed in our 2013 year-end press release, utilization rates for the first half of the quarter were negatively impacted due to carry over issues in Q4 of fiscal 2013. And in fact, we’re at or below 50%. Severe weather conditions negatively impacted utilization rates in the back half of the quarter in both United States and Canada. Activity levels in the Canadian seismic market were softer than anticipated, and our Canadian crew experienced operational difficulties. Costs related to the return of full utilization in the United States were higher than anticipated as were costs in the Canadian start up . As a result, we reported revenues of approximately $68 million for the first fiscal quarter of 2014 as compared to approximately $76.6 million for the same quarter of fiscal 2013. Net income attributable to common stock for the quarter decreased to a loss of approximately $2.9 million from a net income attributable to common stock of approximately $2.9 million last year during the first quarter. EBITDA for the first quarter of fiscal 2014 was approximately $4.8 million compared to approximately $14.3 million in the same quarter of fiscal 2013. Despite these challenges, we’re pleased to report that we achieved full deployment of 12 data acquisition crews in mid-November, and crew utilization rates are now improved. Yesterday, our Board of Directors approved the commencement of the payment of $0.08 quarterly cash dividend to shareholders subject to capital availability and determination of cash dividends continue to be in the best interest of the company. The Board has set the first of such quarterly dividends to be payable on February 24, 2014, to shareholders of record at the close of business on February 14, 2014. Our order book has strengthened to a level of relatively equivalent to commitments carried over the past twelve months despite the slowdown in bid activity reported in our fiscal 2013 year-end earnings release. Interest level for microseismic projects in the U.S. continued to increase. As previously disclosed, we took delivery of 9,000 stations of GSX three-channel units complete with three-component geophones. We anticipate operating a large channel count multi-component crew in the United States for a significant portion of 2014. We plan to maintain our previously disclosed $35,000,000 capital budget for fiscal 2014 with the unspent balance dedicated primarily to maintenance capital requirements, including replacement of light vehicles and batteries for recording equipment; and our balance sheet strength remains strong with approximately $66,000,000 of working capital and approximately $20,000,000 of debt, of which approximately $11,000,000 will be paid over the next twelve months. As mentioned previously, revenues for the first quarter of fiscal 2014, historically our most difficult quarter, with shorter daylight hours and the holiday season, decreased compared to the prior year ago period primarily as a result of previously disclosed reduction and utilization rates during the first half of the quarter. In addition, factors that negatively impacted utilization rates during the second half of the quarter included severe cold and inclement weather conditions that lowered crew productivity during such period. Utilization rates for the first half of the quarter, as I said, were at or below 50%. To put this in perspective, the negative impact for cold weather conditions in our primary areas of operation combined with the operational difficulties in our Canadian operations and additional costs related to returning to full utilization in U.S. took us back to Q4 2013 EBITDA levels and utilization rates not experienced since the first quarter of 2011. Currently, all 12 large [debt] (ph) acquisition crews redeployed during the mid November time period are operating at full utilization. Our outlook for the U.S. market for fiscal 2014 remains positive as we anticipate steady demand. Our order book strengthened to a level consistent with commitments carried out during the past 12 months despite the slowdown of bid activity during the summer of 2013, and reflects commitment sufficient to maintain full utilization of all 12 crews through mid calendar ’14. As mentioned in the press release, we’re currently operating one crew in Canada for the 2013/2014 winter season with two large channel count multi-component projects under contract. The past two winter seasons in the Canadian seismic market have been softer than we anticipated and due to weather issues and operational difficulties we believe that the Canadian market will continue to have a negative impact on our second quarter of fiscal 2014. That said, we remain optimistic on the opportunities in Canada and believe in the Canadian market’s long term growth prospects. Turning to microseismic, we’re continuing to see growth prospects in the business. We anticipate securing contracts to complete several microseismic projects utilizing primarily a small crew which is in addition to our 12 larger crews during the remainder of fiscal 2014 and are continuing to pursue additional opportunities. Capital expenditures for the first fiscal quarter of 2014 were approximately $24,000,000. As previously noted, we took delivery of 9,000 stations of GSX three-channel units complete with three-component geophones. Despite the large first quarter CapEx spend , we anticipate that we will maintain our previously disclosed $35,000,000 capital budget for ’14 with the unspent balance dedicated primarily to capital maintenance requirements including the replacement of light vehicles and batteries for record equipment. As previously mentioned our balance sheet remains strong with $66,000,000 of working capital and approximately $20,000,000 of debt, of which approximately $11,000,000 will be paid over the next twelve months, and we continue to maintain a fully available $20,000,000 revolving line of credit. Before closing, I would be remiss if I didn’t talk about the recent commencement of our quarterly dividend policy. We implemented the policy to reward our valued shareholders as well as increased shareholder value. We believe that cash flow from operations has more been sufficient to return capital to shareholders while maintaining the level of capital investment necessary to grow our business over the long term. We will evaluate supplemental dividend payments depending on market conditions, financial performance, and capital needs in an effort to increase return for shareholders. And with that Emily, we’re finished with my comments and we’re ready for questions.

[Operator:]

Thank you, we will now begin the question and answer session. (Operator Instructions) And our first question comes from Veny Aleksandrov of FIG Partners, please go ahead.

[Veny Aleksandrov:]

Good morning.

[Stephen C. Jumper:]

Good morning, Veny.

[Veny Aleksandrov:]

My first question is just from the crew count, so you have 12 crews plus 1 microseismic, and out of these 12 crews, one is in Canada currently, correct?

[Stephen C. Jumper:]

That, now Veny we’ve 12 large shale count crews operating in the U.S. We have the one small crew that is equipped with the Wireless Seismic equipment about 2,500 channels that will be deployed from time to time on microseismic projects or small 2D and 3D projects, and then we have the crew operating in Canada.

[Veny Aleksandrov:]

Okay. So it’s 12 plus one, plus one, and one is the small microseismic, that was my question, I just wasn’t sure from the press release, okay. And then my second question is on the operating expenses and the margins in the quarter, so there were the mobilization of the crew. There was Canada that weighted in, and then did we also have significantly higher third-party charges or third party charges were at a reasonable level?

[Stephen C. Jumper:]

Yeah, I think Veny the third-party charges were probably in-line with our historical averages, so they were down in the normal range. Our expense level was higher than anticipated for us from an operating expense standpoint, primarily due to, as we said, the returning back to full deployment, getting equipment ready, getting people back on the payroll, getting those crews mobilized out. There are some specific project costs that are related to getting a project up and running. Those were a little bit higher than we anticipated. Actually, we have done a pretty good job as you now talked over the last couple of quarters of getting our overall operating expenses down over time. We think we will continue to see opportunities to do that, and so that’s primarily what happened in the Q1 timeframe.

[Veny Aleksandrov:]

So this is behind us, the mobilization costs were down, we were finally working on projects and this is behind us in Q1?

[Stephen C. Jumper:]

I think so. With respect to our Canadian operation, those projects have taken, the initial project has taken longer than anticipated primarily due to heavy snowfall, and which produced some operational difficulties, and so there is going to be some Q1 carry over expense related to getting that project finished just by virtue that it took longer than we anticipated it to take, and so that project expense relative to revenues is moving against this a little bit, but in the U.S., I think we have got most of that behind us, yes.

[Veny Aleksandrov:]

Thank you and one last clarification, on the order book, you are saying that you have commitments equal to the commitments in last 12 months, (inaudible) , I did not…?

[Stephen C. Jumper:]

Yeah, that basically, we have been able to get our order book back up to levels where it was a year ago, so we had taken a little bit of dip, and backlog is difficult to quantify in terms of units or time or dollars. They all kind of work together to kind of project where you are going to be at a certain point in time, and as we have always said, our backlog is really not backlog and that it can be modified, delayed, altered and scaled up on very short order, but nonetheless our order book has recovered back to levels that we experienced in the early part of 2013, and so the commentary there is that the backlog situation is back up to where we see given where we are today, full utilization of 12 crews through the middle of calendar 2014, and we anticipate demand levels and commitments to stay at a level where we will keep all 12 running for the balance of fiscal 2014.

[Veny Aleksandrov:]

Thank you. I really appreciate it. Thanks.

[Stephen C. Jumper:]

Thanks Veny.

[Operator:]

Our next question is from Collin Gerry of Raymond James, please go ahead.

[Collin Gerry:]

Good morning.

[Stephen C. Jumper:]

Hey, Collin.

[Collin Gerry:]

I want to kind of follow up on that line of questioning, so just what's the customer behavior kind of like right now? Certainly, oil prices are holding in there and activity looks to be pretty strong, but I am just trying to take – you guys initiated a dividend, it sounds like the order book is firming up? I mean is this a level of outlook from your customers that we should be somewhat bullish on as we go through the rest of the year?

[Stephen C. Jumper:]

You know Collin, I don’t know if bullish is the right word. We have characterized the activity level in the U.S. for the past few quarters, and that I guess for the most part of 2013 has been steady for our company. We have been able to maintain, what I’d call replacement level activity or bidding in another words as we have eaten up backlog. We have been able to get it replaced, and so we haven’t really seen the order book or the backlog expand in the last 12 to 15 months, but I would call it steady and we have got some nice projects in-house and we have got some projects that certainly are in longer term than we have had in the past, but our client base which includes both E&P companies as well as providers to multi-client data libraries are asking questions about projects later in the year and having conversations, and there is steady level of data activity, but there are conversations about things that they would like to get done in the back half of the year. And so, I would say the conversation is steady. I think we are in a position where I don’t know if the right word is robust or bullish or not, but we feel pretty good about the balance of 2014 given where we are today.

[Collin Gerry:]

And in regards to your clients that are building libraries, are there any guys out there that are saying, hey look at that gas price is kind of moving up here. This is the time maybe we go out and start acquiring some natural gas inventory and some of the old basins that we used to be more activate in or is that, or are we not there yet?

[Stephen C. Jumper:]

We have one crew working in Pennsylvania in the Marcellus shale area. I don’t anticipate having any more than one working in the near future. We really haven’t seen a big uptake in natural gas activity. I think we will keep that curve up in Pennsylvania probably for the good, the better part of fiscal 2014 but the majority of what we are doing is still oil related in primarily in the Permian and up through some stuff and then some activity in the Bakken.

[Collin Gerry:]

Okay. That makes sense. And then just last one for me. It sounds like the weather bug did pretty hard in this past quarter. We are still seeing some pretty interesting weather in this current quarter and I am just kind of worried, it seems like basing your commentary that the weather issues were more of December quarter than you haven’t been as hurt by in this quarter, is that a geographical thing or am I interpreting that exactly?

[Stephen C. Jumper:]

Collin, the weather commentary is always hard to quantify how bad it hurts you or it’s going to hurt you. I think what happened to us in the late November, early December timeframe was we particularly in West Texas we had two fairly severe ice storms and we had snowfall back in the North East and we had a higher than the normal snowfall in Canada and I think the overall just long-term cold particularly in West Texas really impacted how we got started up and got back to full utilization. It just slowed things down, it’s just, we just had a really difficult time getting on track from our utilization issue that we had carried over from Q4 ’13 and so we are going back out to full deployment and the middle of November ’13, things just can't get on track it’s just slows things down, getting things on the ground, getting up and running. We had the holiday season in there which always affects us we had some particularly up in the midcontinent eastern edge of the Rockies’ areas hedges bitter coal but just really kind of slowed things down. Now in this quarter as we speak right now we had snow in West Texas on Sunday, it’s had little bit of rain , so we have some weather impact here, we’ve certainly had some weather impact in Pennsylvania, we have little bit of weather impact in the Rockies’ and North Dakota but, it’s occurring in times where we’re on projects, we are up and running and so it’s not as focused I guess so far in January of ’14 as it was maybe in November, December timeframe.

[Collin Gerry:]

Okay that makes sense. I will turn it back, thanks.

[Stephen C. Jumper:]

Okay, thank you.

[Operator:]

Our next question is from Rudy Hokanson of Barrington Research. Please go ahead.

[Rudy A. Hokanson:]

Thank you. I was just wondering you mentioned in your press release Steve that a multi-client job in West Texas and I was just wondering if you could talk about your strategy or your portfolio in terms of doing multi-client work right now and what that might entail?

[Stephen C. Jumper:]

Rudy, I believe the press release refers to multi-component.

[Rudy A. Hokanson:]

Multi-component? Okay, I’m sorry. I misread that. Then let me ask just a question little bit more about the microseismic. Is you are having discussions with clients. Can you maybe give us an idea, are they talking about specific projects right now or just that they are looking at using microseismic as part of their ongoing work with the projects that they are working on now? I guess my question is with microseismic, how far along are you with this in discussions? How real are they going to be termed or how soon?

[Stephen C. Jumper:]

Well the I don’t think – we will be the only company that expresses this for you, but the microseismic particularly surface recorded microseismic business line has been slower to move than we have all of us had originally anticipated. We did a couple of projects that were really more Q2, Q3 of 2013 related. We were pretty quiet in terms of activity levels in the Q1 in the December quarter. Our conversations usually revolve with specific ENP companies that will have several well package that they are looking at. Their most of the work is being done in the microseismic world. It continues to be bore-hole type work. And so the industry both from the provider side and the user side it continues to evaluate how we can integrate surface seismic into either the bore-hole works that being done or in loop bore-hole work when you are not in area where bore-holes are available. So our conversations occur with the ENP companies. They occur with some of the groups that provide bore-hole work. They occur with some of the folks that do some of the analytical side and there are a couple of instances where we have conversations and proposals on the table to perform some multi-world packages. It's kind of interesting and that probably one of the things we deal with is some of the microseismic works is actually done in sometimes in more in the production and engineering side on an ENP company than the geology and the geophysics side and so there is an entry, there is a barrier there to enter, get through, don’t have anything concrete at this point I think the discussions are real, I think the science and the technology is in its infancy, I think it’s areas where we know it would work well in certain basins just by virtue of how the rocks respond and I think in other basins we are still trying to figure as an industry

[Rudy A. Hokanson:]

Okay. Thank you that’s what I’ve got.

[Stephen C. Jumper:]

Thanks Rudy.

[Operator:]

Our next question is from Georg Venturatos of Johnson Rice, please go ahead.

[Georg P. Venturatos:]

Hey, good morning Steve.

[Stephen C. Jumper:]

Hey Georg.

[Georg P. Venturatos:]

Hey, wanted to touch on the backlog or order book commentary, like you said you are back to kid of where you were in early ’13, curious about from a mix standpoint, how do you feel with regard to the mix of having some of the smaller projects as well as larger projects that kind of help you fill out that utilization?

[Stephen C. Jumper:]

We are in a somewhat of a unique position right now and that with the weather issues and the inability to get down some of the projects in Q4 or early part of Q1 that were, we are working hard to fulfill the short-term commitments that we have. The short-term it looks very good in terms of mix, Georg I don’t think there were quite where we would like to be in terms of project size mix, I think we’d like to see if a few more of the mid-range projects come available but looking at our schedule and what we have in line and we feel pretty good about certainly further middle of calendar ’14 with what we have in place currently. But, we continue as I think the entire industry does to look for though, and I don’t say aggressively but pursue projects of all sizes and I think that’s a good question, it certainly not where we would like it to be at this point.

[Georg P. Venturatos:]

Okay, understood. I guess from the follow on that just from the operators’ perspective, what do you think has changed in terms of dynamic of the industry in terms of some of those mid size projects kind of lacking at the moment, what’s their thought and why are they just looking more towards larger projects unless so in that midsize range?

[Stephen C. Jumper:]

Well, I just think in general these weather where we’re working for ENP companies or providers of multi-client data libraries, I think the larger, in particular have no quite large acreage positions they are trying to focus on and get a long term drilling program and I think that’s where most of the activity is occurring. Certainly, in the western U.S. I think the projects, just the land ownership position, the accessibility, all those kinds of things just lend themselves to bigger projects in addition to the fact that from an overall cost basis, your cost per square mile is much less than it would be let’s say back in the eastern part of U.S. where you have got all these other supplemental services that can escalate the cost of a 3D. So, dollar standpoint, there is little more funding for larger projects. I think the smaller project probably comes from smaller operators, getting their activity level up. It's probably being driven as a general row more towards many more conventional kind of stuff than large stuff block horizontal type drilling programs. That would be my guess at this point, George.

[Georg P. Venturatos:]

Okay. That makes sense. And last one from me just on quickly on Canada side. It sounds like it was, it's obviously a drag in the quarter. Is it going to be more of a drag in 2Q or less so, it sounds like maybe?

[Stephen C. Jumper:]

Well, we have got one more project that will start on later in this month. And so, I think it's probably about an equivalent drag to what it was in the first quarter.

[Georg P. Venturatos:]

Okay, perfect. That’s it from me. Thanks a lot.

[Stephen C. Jumper:]

I bet, see you, okay. All right.

[Operator:]

Your next question is from Doug Dyer of Heartland Advisors. Please go ahead.

[Doug Dyer:]

Hi! Good morning. If you could, can we get some more commentary on the utilization? I believe in the press release it says the retirements, you were down to 50% utilization. Was that just for the month of December or was it longer than that little more color there would be helpful please?

[Stephen C. Jumper:]

Okay Doug, we had commented in our Q4 press release year end 2013 which was probably somewhere around the first week of November that we had had severe utilization impact in Q4, the September quarter primarily related to a concentration of activity in areas with very high level of agricultural activity which is a problem that quite honestly we have had two years in a row. In 2012 that was split over the back half of 2013 or the Q3 in the first half of Q4 and 2013 that carry over we were somewhere around the 50% utilization rate in terms of deployed. In Q4, the September quarter, and that carried over to about mid November. And so right around the mid November timeframe, we began to increase our crew cap back up to about a week or ten day period there in mid November. And so the 50% utilization rate comment applied more towards the first half of the December quarter. The back half of the December quarter in conjunction with the ramp up probably got hit with severe weather impact that slowed, I guess the best way to describe it is slowed that return to full utilization down quite a bit. So our 50% comment was primarily related to the first half of the December quarter.

[Doug Dyer:]

Okay. Another way I was thinking utilization if you have got 12 deployed, is that considered 100% utilization or if you have 12 deployed but they can only work a few hours a day or maybe three weeks out of the month, how do you think of that? Or how should we think of that?

[Stephen C. Jumper:]

Yeah that’s a really good question. In the first half of the quarter, I would say that I would characterize our utilization as more maybe 50% deployed and so of the – we probably had 6-7 actually in the field in the first half of the quarter, what those actual utilization rates were for those 6-7 that were deployed it would be difficult for me to quantify here, but I would say that those 6-7-8 from time to time they were deployed in the first half of the quarter were fairly efficient and very productive. And in mid November, we began to deploy up to maybe like I said over week to ten day period. We got back to full deployment of 12 and once it was full , those 12 were fully deployed, their individual utilization rates varied to the quarter due to weather issue, start-up issue, those types of things. And so, Doug, I really don’t have any answer for you in terms of what the actual utilization rates were for those fully deployed 12 in the back half other than to say that they were negatively impacted by these other factors and did not achieve what we would consider to be full utilization and full utilization in the seismic world is not always easy to quantify because you are always going to have time where are laying out the project or you are picking up a project and you are moving and so whether full utilization is actually 80% or 85%, I don’t think we really have that answer but certainly the utilization of those 12 deployed crews was negatively impacted in the back half of the quarter.

[Doug Dyer:]

Okay. And are you still seeing some weather delays now is that to ease up?

[Stephen C. Jumper:]

No, I would say through January, we have battled weather we had some impacts in isolated parts of the country certainly we had heavy snowfall in North East and we continued to have excessive cold and snow up in the eastern part of the Rockies Niobrara, and Bakken areas. Certainly it's been impact of the Canadian operation. I know that you anticipate whether when you are in Canada but it was a worse than we – than our Canadian guys had anticipated or had experienced. I think one other impact we had is that as we were ramping back up this full deployment going back to 12 fully deployed crews, my sense is that we have a very high level of activity particularly in the Permian Basin area and that’s where we tended even though the weather impact is nationwide and it's been unseasonably cold weather or winter all over the country, I think those impacts in November and December in areas where we had high level of activity, very intense activity and in intense start-up area probably was more of an impact than my sense is on what we have experienced in January and even today. Like I said, we have experienced three days of weather here in the Permian Basin we think it's going to clear up for the next day or two, but I think we had more of an isolated concentrated impact on the start-up side in Q1 than what we are seeing here in Q2.

[Doug Dyer:]

All right Steve, thank you very much.

[Stephen C. Jumper:]

Thanks Doug.

[Operator:]

Our next question is from Gary Lenhoff of Great Lakes Advisors, please go ahead.

[Gary Lenhoff:]

Thanks. Steve, this maybe a dump question but is utilization synonymous with being paid? In other words 50% utilization meaning that the crews 50% of the crews are being paid for use of 50% of the crews at that point in time?

[Stephen C. Jumper:]

That’s an interesting way to characterize that Gary. And it's not a stupid question because buried down below the utilization question, and in fact how utilization is actually would be technically calculated I think the answer maybe yes. And here is why it is – as a general rule in the Turnkey contract, you are paid, you are generating revenue when you are acquiring data. And so we have talked about this on the call before that cost of layout, and the cost of pick-up and move is factored into a revenue stream that occurs when you are actually operating energy sources. And so when we said our utilization rate is around 80%-85% that’s taking into fact that you could have one crew that’s picking up a project and then moving and laying out and so they may go several weeks or so without technically generating revenue and depending on where those situations fall, relative to quarter boundary can have an impact and I think that is what affected us in – that’s one of the factors that affected us in the Q1 timeframe, these weather impacts occur when you are trying to get deployed and get out and running. And so, if you are on a day rate agreement for example, you are paid every day the crews on the field, on the Turnkey you are paid as a acquired data and there is not preference honestly Gary which contract we work under. It kind of depends on where you are and what the circumstances are that dictates what type of contract you run into. Turnkey there is more upside, more downside risk, day rate, more consistent, there is less risk but less upside and so I think that’s a good question and I don’t know if the answer is just yes, but the answer is certainly kind of geared toward that line of thinking that you brought up there.

[Gary Lenhoff:]

Okay. Thanks. Second question. You alluded to this last quarter but one of the problems, one of the challenges you are facing is you have – your efficiency is improving which makes it more difficult to redeploy or to re – to move along. Can you kind of just give us an idea of where you – you have learned a lot about that in the last six months, I suspect you still have more to learn, where you are in that process and how you are thinking about how you can improve your efficiency or your logistics because you are more efficient?

[Stephen C. Jumper:]

My sense is Gary is that seismic industry is not only the only oil field service company, or sector that’s having to deal with improved efficiencies. I think that’s happening all across the oil field services I mean that’s just the nature of our bees just to do things faster, more cost effective and have a better product and without getting into too much detail and disclosing too much about how we think about that here we obviously have had two consecutive years where we have had an issue related to utilization impact from agricultural activity primarily in the Permian Basin. And so, part of that is how that moves forward into the fall time frame this year will kind of depend on where the high level of activity are and so that’s just Eagle Ford for example is going to be different than the Permian and so balance is something that we would like to work on. We are not always in control of balance and where our ENP and multi-client libraries friends are working but from our standpoint, we have talked over the last several years that the metric that we measure ourselves about may not be necessarily crew count that it may be more channel count and how we utilize those resources. And I think internally we are starting to take a look at maybe we don’t have the full efficiencies built in, maybe there is an efficiency on the expense side, maybe there is an efficiency on maximizing a lot of things rather than just getting as much done today as we possibly can regardless of the schedule down the road. And so I think we are looking at how we manage channels differently and how we manage resources and how we manage personnel on a companywide over the base of 12 type crews as opposed to just focusing on keeping those 12 crews moving from one project to the other it is little bit different for us and it is a new kind of thinking and it certainly something that we haven’t accomplished to full efficiency, I guess is the word overnight, but I think we are getting there, I think we are understanding little bit different to manage more but we can control and for what we can.

[Gary Lenhoff:]

Great, I think that’s helpful. Thank you.

[Stephen C. Jumper:]

Thanks Gary, I appreciate the commentary.

[Operator:]

(Operator Instructions) I’m showing no further questions, this does conclude our question-and-answer session. I would like to turn the conference back over to Mr. Jumper for any closing remarks.

[Stephen C. Jumper:]

Thank you, Emily. I would certainly want to thank everybody for participating in our call. I want to thank our employees for a very dedicated stretch here under difficult circumstances given weather and return to full utilization and their hard work and dedication is certainly well appreciated by our clients and our shareholders both and want to thank our clients for their continued trust in our services and certainly want to thank our valued shareholders for their trust and continued support and we’re excited to look at the rest of fiscal 2014. And we are excited to have the opportunity to begin a program where we are returning capital back to our shareholders and in a manner that will allow us to continue to grow our business and maintain our level of capital needs that we think we are going to need to remain competitive in our business line. We look forward to talking to you again in 90 days. Thank you very much.

[Operator:]

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.