Image source: Dawson Geophysical.

The plunge in oil prices has crushed companies across the sector, and seismic-services specialist Dawson Geophysical (NASDAQ:DWSN) has suffered huge losses as its customers cut back on their capital expenditures. Coming into its fourth-quarter financial report, Dawson investors didn't see much likelihood of success from the company, although they hoped that it would at least be able to narrow its losses. Dawson's results showed some progress on that front, but the company will still need a full-fledged oil rebound in order to generate lasting gains for the stock. Let's take a closer look at how Dawson Geophysical did and what's ahead for its future.

Dawson Geophysical is still struggling
Dawson Geophysical's fourth-quarter results reflect the ongoing struggles in the oil patch. Pro forma revenue was down 28% to $55.1 million, giving effect to the merger with TGC Industries. Dawson lost $4.9 million on a pro forma basis, but the resulting loss of $0.23 per share was a bit less than the loss of $0.25 per share that investors had expected from the company.

A closer look at Dawson's numbers showed just how tough the entire 2015 year was for the company. Total losses came in at $26.3 million, or $1.27 per share. Revenue sank by more than a third to $234.7 million on a pro forma basis, and reported EBITDA dropped by nearly three-quarters.

The main problem that Dawson faces continues to be the weakness in oil prices. The fourth quarter featured a closing price per barrel of around $38, and the company noted that the low price had led many near-term projects to get delayed. With project funding sources drying up in certain areas and with delays in obtaining required approvals for others, economic uncertainty is taking its toll on the company's ability to do business.

Dawson ran around eight to 10 crews in the U.S. during the quarter, which was less than the solid 10-crew performance in the previous quarter. Moreover, activity in Canada remained limited, which is a result of the higher production costs for areas like the oil sands of Alberta.

CEO Stephen Jumper has tried to maintain a positive view on the situation. "Despite the current economic conditions," Jumper said, "we are confident that the combination [with TGC Industries] strategically positions Dawson Geophysical to emerge from the downturn as a robust company." Moreover, the CEO has maintained a healthy balance sheet to give Dawson as much flexibility as possible to navigate the tough environment.

Can Dawson Geophysical bounce back?
The main problem, though, is that Dawson Geophysical just can't get demand for its services. The company expects that it will only be able to run between four and six crews in the U.S. into the second quarter of 2016. Moreover, Dawson is reluctant to take a stab at estimating demand beyond the midpoint of the year, citing continued wild fluctuations in oil prices as making it impossible to make accurate guesses. Dawson has run two crews in Canada's seasonal market, but that will end later this month.

In response, Dawson has made further tough decisions. Head count is down 25% since the beginning of 2016, and even management has taken salary cuts of 5% to 25% along with suspending incentive plans. At the same time, though, Dawson is also working hard to develop new potential projects with its customers. Even if those projects get delayed, they should be ready to go when conditions in the industry improve.

Dawson Geophysical stock initially fell after the report, but it closed the day up about 6% in response to improving energy-market conditions. If oil can climb out of its downturn and start rising, then Dawson might finally be able to get its crews back to work and see a return to potential profitability ahead.

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