The energy business is cyclical, and so companies like Dawson Geophysical (DWSN 0.70%) understand that they'll see good and bad times over the long run. What not everyone understood was the sheer magnitude of the decline in energy that occurred during the mid-2010s, and many companies are still reeling from the impact of lower prices on the ability to engage in exploration and production activity in a cost-effective manner.

Coming into Thursday's fourth-quarter financial report, investors fully anticipated further losses, but they nevertheless wanted to see some signs of building momentum toward a full recovery. Dawson made some more incremental progress, but there's still a long road ahead for the seismic services provider. Let's take a closer look at Dawson Geophysical and what its latest results say about its prospects.

A mobile seismic equipment vehicle on an open prairie under a blue sky, with caption The New Dawson, United, Stronger, Better.

Image source: Dawson Geophysical.

Dawson builds energy

Dawson Geophysical's fourth-quarter results weren't perfect, but they still showed what the company has achieved under tough conditions. Revenue climbed 30% to $39.1 million, which was far better than the 18% growth that most investors were looking to see. The company still lost money, but net losses of $4.54 million translated to $0.21 per share, which was less than the consensus forecast among those following the stock for a loss of $0.28 per share.

From an operational standpoint, Dawson had already anticipated that it would suffer a temporary drop in crew utilization because of issues related to clients not being ready to move forward with proposed projects. Even so, the company managed to run nine crews across its geographical footprint, starting the quarter with seven in the U.S. and two in Canada and finishing it with six U.S. crews and three Canadian crews. Seasonal factors came into play as well, with shorter days and the impact of the holiday season making it harder to get business done.

Costs at Dawson climbed but not as much as its revenue. Operating expenses were higher by 15%, helping to narrow losses from operations, and Dawson contained rising overhead costs to just a 9% increase.

CEO Stephen Jumper was pleased with recent results. "We are encouraged by our third and fourth quarter results," Jumper said, "as we finished the year with positive full year EBITDA." He highlighted the importance of improving operational efficiency through internal restructuring and reducing the levels of in-house services that Dawson provides.

Can Dawson Geophysical keep picking up speed?

Oil and natural gas exploration and production companies seem to be getting more comfortable with price conditions in the market, and many players in the area have made asset purchases that point toward near-term development efforts. In particular, Jumper said that companies are looking to reduce their drilling costs, and having more reliable seismic data is seen as offering an ability to maximize production at the lowest possible cost. That should help provide some support for Dawson's business, although exactly how and when improving conditions will find their way into the seismic company's numbers remains to be seen.

Dawson does believe it should have solid activity levels in 2018. Current projections include seven U.S. crews through the third quarter of 2018, with the anticipated completion of two microseismic projects in the U.S. during the first half of the year. In Canada, Dawson anticipated operating four crews through the end of the winter season, which corresponds to the company's first quarter.

Shareholders were reasonably happy with the company's recovery, and the stock rose 2% at the open Thursday morning following the announcement. It'll take more time for Dawson to get up to full speed, but if conditions in the energy industry keep improving, then the seismic specialist seems to be in a good place to take advantage of future business when it comes.