This is an idea that has little to commend it other than price. It is a "cigar butt" but not a bad one at that.
The company provides seismic exploration services to the oil and gas industry and accounts for about half of the supply in the onshore North America market. Revenues are transactional rather than recurring and visibility is low. Nevertheless, the company expects that it is able to put to work 8 to 10 crews in this oil price environment and over the next few quarters.
The adjusted EBITDA reconciliation for the quarter just reported is as follows
and the company has guided that will invest less than an annualized rate of $10 million in equipment over the next few quarters.
Beyond the immediate period the possibilities are framed by the following scenarios:
4 working crews per year represents long term oil and gas prices low enough that even"high grading" activity comes to a virtual standstill.
The high end scenario corresponds to the trailing 10 year average operating performance of the combined company -- that is, of the legacy Dawson and TGC Industries businesses adjusted for the synergies that, as seen from the Q3 results, one can reasonably expect.
In the low end scenario, one loses one's investment although the implied oil and gas price scenario is such that one can hedge it out buying puts on the securities of some other, more richly priced company.
In the high end scenario, the stock is likely to appreciate to the $15 to $17 range.
Diclosure: I own some shares in Dawson Geophysical