What: Shares of Geospace Technologies (NASDAQ:GEOS) couldn't slow down its long-term slide and declined 22.6% in July. Over the past 18 months, Geopsace's stock has declined more than 80% as it was one of the first companies to signal the decline of oil.

GEOS Chart

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So what: Geospace Technologies' equipment is used almost exclusively for seismic evaluation, the go-to technique for discovering new oil and gas reservoirs. It's a well-run business with little debt and very few capital obligations to keep the company going. The problem for Geospace is that it couldn't be in a worse part of the oil and gas industry right now.

Seismic evaluation is part of the early-stage exploration efforts that oil and gas producers need to do to find new reserves and replace existing production. When times get tough like they are today, though, exploration budgets are some of the first things to get slashed to save cash. As we have seen over the past several months, oil and gas producers have been slashing budgets as much as possible to either wrap up spending on large development projects already under construction or to just maintain current production levels. Without companies willing to spend on exploratory work, there simply isn't any demand for Geospace's seismic equipment.

All you need to do is look at Geospace's revenue over the past two quarters -- Q4 2014 and Q1 2015 -- which were down 71% compared to the same two quarters a year prior. 

Now what: As long as companies continue to cut budgets and try to preserve as much cash as possible, chances are that Geospace's outlook isn't going to look too rosy. It will take a sustained recovery in crude oil prices before these wounded producers get the confidence to go out and look for new oil. Until then, the prospects for Geospace aren't going to look much better than they do today. 

Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com or on Twitter @TylerCroweFool.

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