In 28 of the past 50 trading days, Geospace Technologies(NASDAQ:GEOS) stock moved by 5% or more. Does the volatility spell opportunity for investors? For me, that depends on how Geospace answers three questions when it reports fiscal first-quarter 2015 (calendar fourth quarter 2014) earnings on February 4th.

GEOS Chart

Source: YCharts.

No. 1: Has the company scaled back its costs?
Geospace manufactures and sells seismic mapping equipment used in oil fields. Manufacturing businesses like Geospace typically incur costs regardless of how much production capacity they use. Falling demand thus invokes a double-whammy of falling revenue and worsening margins.

Geospace, though, has shown an impressive ability to reduce its cost structure in previous downturns. Profits even remained positive through the 2008 financial crisis. It's been years, though, since Geospace last had to button down the hatches and brace for a storm. Whether Geospace can once again finagle its way to a low cost structure in this downturn will dictate how well it emerges on the other side.

No. 2: Which customers have jumped ship?
Geospace's management team can count on its collective fingers the number of potential customers. Fewer than 20 seismic contractors are eligible customers, and the company's other customers are the large integrated oil companies.

As a group, these customers are cutting back spending in response to lower oil prices. But "as a group" doesn't matter to Geospace. What matters is whether any of its customers have cut back, and by how much.

Last year, Statoil (NYSE:EQNR) accounted for 26% of the company's revenue. We know Statoil has been scaling back capital outlays, but we won't know the extent of its cutbacks until the company announces its own earnings on Feb. 6. Even a minor cutback from Statoil could have an outsized effect on Geospace, which would struggle to replace the lost revenue. 

If Statoil severely cutting back production is the worst case, the ideal is that many of Geospace's customers reduce outlays but none drop planned purchases altogether. Both extremes are unlikely. The closer Geospace is to the latter, the more interested I will be in the stock.

No. 3: How is the rental business going?
Geospace has historically had a simple business model:

1. Design seismic equipment

2. Sell seismic equipment

3. Repeat

Competitor Mitcham Industries (NASDAQ:MIND) has built a business renting rather than selling seismic equipment. While Geospace is known for designing the most technologically innovative seismic products, the up-front cost to customers can be a tough sell next to renting comparable products.

In response, Geospace has begun offering rentals. Its goal is not to change business models or compete directly with the likes of Mitcham. Instead, the company hopes offering a cheap way to test out equipment will enable customers to discover the benefits of Geospace's superior products, ultimately leading to sales. This seems like an idea worth trying, but it is as yet unproven. I'm looking to management to shed light on its experience to date with the experiment.