Part One: Analysis of Company Performance during the period
Dawson Geophysical Company reported an increase in operating revenues for the year ended December 31, 2022, compared to the same period of 2021. The increase in revenues can be attributed to increased demand for the company's services. However, the company experienced low utilization rates during the second and third quarters of 2022 due to low demand for seismic services in North America, which negatively impacted the company's results of operations.
The fluctuations in domestic oil and natural gas exploration and development activities related to commodity prices have affected Dawson Geophysical's demand for services and results of operations. The company's revenues are predominantly affected by the level of client demand for services, prices, productivity, and utilization level of data acquisition crews. The company operates mainly in the mid-continent, western, and southwestern regions of the U.S. and Canada.
The company's efforts to negotiate more favorable contract terms in its supplemental service agreements, mitigate permit access delays, and improve overall crew productivity may contribute to revenue growth. The majority of the company's revenues were derived from turnkey contracts during the years ending December 31, 2022, and 2021. The company expects the majority of its contracts to be turnkey as it continues its operations in the mid-continent, western, and southwestern regions of the U.S. in which turnkey contracts are more common.
Part Two: Forward-looking Analysis
Dawson Geophysical Company expects demand for its services to remain sufficient to maintain one to two mid-sized crews well into the second half of 2023. While oil and natural gas markets are volatile and are likely to continue to be so in the future, opportunities exist for the company to enhance its market position by responding to its clients' continuing desire for higher resolution subsurface images.
The company's visibility into 2023 continues to improve, as does project timing related to land access agreements and project readiness. The company expects to operate four crews of increased capacity in Canada through the remainder of the Canadian season, which typically ends in late March or early April.
Client discussions continued to increase early in 2023, and the company believes demand for its services will remain sufficient to maintain one to two mid-sized crews well into the second half of 2023. The company responds to project-based channel requirements by routinely deploying a variable number of channels on a variable number of crews to maximize asset utilization and meet client needs.
In conclusion, Dawson Geophysical Company's performance during the period was impacted by fluctuations in domestic oil and natural gas exploration and development activities related to commodity prices, which affected demand for the company's services and results of operations. However, the company expects demand for its services to remain sufficient in the near future. The company's efforts to negotiate more favorable contract terms in its supplemental service agreements, mitigate permit access delays, and improve overall crew productivity may contribute to revenue growth. Opportunities exist for the company to enhance its market position by responding to its clients' continuing desire for higher resolution subsurface images.