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Geokinetics Reports Fourth Quarter and Year-End 2009 Financial Results


News provided by

Geokinetics Inc.

Mar 15, 2010, 04:50 ET

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HOUSTON, March 15 /PRNewswire-FirstCall/ -- Geokinetics Inc. (NYSE Amex: GOK) today announced its financial results for the three months and twelve months ended December 31, 2009.  

Highlights for the three months ended December 31, 2009:

  • Fourth quarter revenues increased 3.9% from the same period in 2008 to $122.4 million.
  • Excluding $1.3 million of one-time, non-recurring costs associated with the acquisition of the onshore seismic acquisition and multi-client data library business of Petroleum Geo-Services ASA ("PGS Onshore"), EBITDA (a non-GAAP financial measurement, defined below) increased by 6.1% from the same period in 2008 to $16.7 million.
  • Reported a loss applicable to common stockholders of ($22.8) million, or ($1.98) per share.  Excluding costs associated with the PGS Onshore acquisition of $13.3 million ($6.9 million non-cash), or $1.15 per share after tax, adjusted loss was ($0.83) per share.

Highlights for the twelve months ended December 31, 2009:

  • The Company reported a 7.7% increase in total annual revenues to $511.0 million as compared to 2008.  
  • Excluding $1.3 million of costs associated with the PGS Onshore acquisition, EBITDA increased 35.8% from 2008 to $88.3 million.
  • Reported a loss applicable to common stockholders of ($22.4) million, or ($2.06) per share.  Excluding costs associated with the PGS Onshore acquisition of $13.3 million ($6.9 million non-cash), or $1.22 per share after tax, Geokinetics incurred a loss of ($0.84) per share.  
  • Backlog was approximately $190.2 million as of December 31, 2009, of which $160.2 million is international projects and $30.0 million is North American projects.  This compares to $259.0 million at the end of the third quarter and $548.0 million as of December 31, 2008.  On a pro-forma basis for PGS Onshore, total backlog was $378.2 million, of which $289.2 million is international projects and $89.0 million is North American (excluding Mexico) projects.  

Richard F. Miles, President and Chief Executive Officer, stated, "We experienced significant revenue growth in our international data acquisition business during 2009.  These positive results were partially offset by a significant decline in activity levels in North America, both in data acquisition and processing, where demand weakened during the second half of the year.  

"Our fourth quarter results were adversely affected by startup delays in our international markets, along with continued deterioration in the North American seismic market that included continued pricing pressure.  Several international projects, which were expected to be awarded and started during the second half of 2009, continue to be postponed by our customers due to 2010 budget uncertainties and volatility in commodity prices.  

"As a result, our backlog declined to $190.2 million as of December 31, 2009, which impacted and will continue to affect our operations in the near term.  Despite the disappointing second half, our 2009 EBITDA reached a record high.  Our recent acquisition of PGS Onshore positions Geokinetics as the clear leader in the onshore seismic data acquisition business, creating the second largest provider of onshore seismic data acquisition services in the world in terms of crew count and the largest based in the Western Hemisphere.  This transformative transaction expands our services and customer base, accelerates our entrance into the North America multi-client business, gives us a more flexible capital structure with significant liquidity and enhances our overall position within the seismic contractor industry.  

"We continue to see numerous opportunities for our services, both in international markets and in North America, with many of these in areas where Geokinetics is particularly strong such as the shallow water Ocean Bottom Cable (OBC) market. There is also large demand for multi-client work in several of the shale plays in the U.S.  Many of these are large projects that could provide us with substantial backlog and long-term visibility.  

"Since the beginning of 2010 bid activity has been increasing, and we remain optimistic that as customer confidence returns, we will see significant awards in the coming months, most likely in the second half of the year.  However, in the current uncertain environment our customers are taking longer than in previous cycles to award projects.  We do have a significant number of bids still outstanding, especially in the high-value OBC market.  Based on the recent increase in bids submitted and the delayed timing of several international projects, we expect our 2010 financial results to be stronger in the second half of the year than in the first."

Fourth Quarter 2009 Results

Total revenues in the fourth quarter of 2009 rose 3.9% to $122.4 million from $117.8 million in the fourth quarter of 2008.  The increase in revenues was primarily attributable to increased international revenues resulting from a higher contribution from shallow water OBC and transition zone projects.  While the wide fluctuations in global oil and natural gas prices have tempered exploration spending during the past year, the international job mix has been shifting to shallow water marine and transition zone acquisition, which are areas of strength for the Company.  

North American acquisition operations were underpinned by the Company's multi-client project in Pennsylvania targeting the Marcellus shale, and fourth quarter 2009 revenue included $6.7 million from this project.  This revenue contribution is the result of the second delivery of data on this project, and the final delivery on this phase is expected in the first quarter of 2010.

Direct operating costs increased slightly by 0.3% to $92.2 million in the fourth quarter of 2009, primarily reflecting modestly higher seismic data acquisition operating expenses.  Total expenses rose 6.0% to $122.2 million from $115.3 million, reflecting a 46.0% increase in G&A expenses.  The G&A expenses totaled $14.7 million during the quarter, which included $1.3 million of one-time costs associated with the PGS Onshore acquisition and other expenses related to the implementation of new information systems.  

EBITDA for the fourth quarter of 2009, including the $1.3 million of costs associated with the PGS Onshore acquisition, decreased 2.5% to $15.4 million from $15.8 million in the fourth quarter of 2008.  EBITDA as a percentage of revenues was 12.6% and 13.4% for the fourth quarters of 2009 and 2008, respectively.

The Company reported a loss applicable to common stockholders of ($22.8) million, or ($1.98) per share, in the fourth quarter of 2009 compared to a loss of ($6.3) million, or ($0.60) per share, for the same quarter in 2008.  Included in fourth quarter 2009 results are $13.3 million of one-time, non-recurring costs associated with the PGS Onshore acquisition.  Despite the reported loss before taxes, the Company incurred a tax expense of $5.0 million, primarily related to the Company's international operations.

    
    
    Selected Fourth Quarter Segment Data
    (All data in millions, except gross margin percentages)
    
    
    Three Months Ended December 31, 2009:
                               Data Acquisition
    
                           North                         Data
                          America     International   Processing  Consolidated
                          --------    -------------   ----------  ------------
    Revenues               $17.7          $101.8         $2.9        $122.4
    Direct Operating
     Costs                  13.0            77.0          2.2         $92.2
    Gross Margin %            27%             24%          24%           25%
    
    Three Months Ended December 31, 2008:
                                Data Acquisition
    
                           North                         Data
                          America     International   Processing  Consolidated
                          --------    -------------   ----------  ------------
    Revenues               $36.0           $79.0         $2.8        $117.8
    Direct Operating
     Costs                 $29.2           $60.6         $2.1         $91.9
    Gross Margin %            19%             23%          25%           22%
    

2009 Annual Results

Annual revenues for the year 2009 increased 7.7% to $511.0 million from $474.6 million in 2008.  This increase is primarily attributable to a 46% growth in revenues in the international seismic data acquisition segment, offsetting significant declines in activity levels in North America both in data acquisition and processing.  Overall seismic data acquisition revenue rose 8.1% to a total of $500.3 million as compared to $462.6 million for 2008, primarily attributable to investment in additional international crew capacity and continued strong demand for the Company's services in niche markets such as OBC and transition zone.  Seismic data processing revenue fell 11% to $10.7 million from 2008 due to decreased demand and increased price competition.

Direct operating costs were approximately the same as a year ago at $370.2 million.  Total expenses rose 4.9% to $480.9 million, primarily because of higher generation and administrative ("G&A") expenses that rose 36.7% to $53.8 million.  The higher G&A expenses included one-time costs associated with the PGS Onshore acquisition and other expenses related to the implementation of new information systems necessary for managing the Company's growing business.  In addition, the 2009 expenses included severance costs of $1.6 million.  

EBITDA (as defined below) for the year 2009, including the $1.3 million of costs associated with the PGS Onshore acquisition, increased 33.8% to $87.0 million from $65.0 million in 2008.  EBITDA as a percentage of revenues was 17.0% and 13.6% for the years 2009 and 2008, respectively.

The Company reported a loss applicable to common stockholders of ($22.4) million, or ($2.06) per share, in the year 2009 compared to a loss of ($5.3) million, or ($0.51) per share, in 2008.  Included in 2009 results are $13.3 million of one-time, non-recurring costs associated with the PGS Onshore acquisition.  Despite the reported net loss, the Company incurred a tax expense of $23.3 million, or a 127.5% effective tax rate, primarily related to its foreign operations.  

    
    
    Selected 2009 Segment Data
    (All data in millions, except gross margin percentages)
    
    
    Twelve Months Ended December 31, 2009:
                                  Data Acquisition
                           North                         Data
                          America     International   Processing  Consolidated
                          --------    -------------   ----------  ------------
    Revenues               $83.1          $417.2         $10.7       $511.0
    Direct Operating
     Costs                 $66.0          $295.6          $8.6       $370.2
    Gross Margin %            21%             29%           20%          28%
    
    
    Twelve Months Ended December 31, 2008:
                                  Data Acquisition
                           North                         Data
                          America     International   Processing  Consolidated
                          -------     -------------   ----------  ------------
    Revenues              $177.5          $285.1         $12.0       $474.6
    Direct Operating
     Costs                $138.2          $223.1          $8.9       $370.2
    Gross Margin %            22%             22%           26%          22%
    

Financings and Amended Credit Facility

As part of the PGS Onshore acquisition financing, the Company entered into a new $50.0 million senior secured revolving credit facility on February 12, 2010 that matures on February 12, 2013.  Furthermore, the Company raised $300 million in Senior Secured Notes to fund the PGS Onshore acquisition and to repay outstanding borrowings under its existing senior credit facility, other existing borrowings, capital leases and other obligations, which totaled approximately $67 million as of December 31, 2009 and were repaid on February 12, 2010.  

Restricted Cash

As part of the Senior Secured Notes offering, the Company was required to deposit $303.8 million into escrow, which was included in restricted cash on the Company's consolidated financial statements as of December 31, 2009.  These amounts were released from escrow when the PGS Onshore acquisition was completed in mid February, and the Company used a portion of the amounts released from escrow to pay the cash portion of the purchase price of the PGS Onshore acquisition and to repay debt as mentioned above.

Capital Expenditures

Capital expenditures for 2010 are currently estimated at approximately $65.3 million, an increase from $38.8 million of capital expenditures in 2009.  Investments will primarily be targeted toward expansion of the Company's shallow water capabilities, expansion of international operations upon the receipt of contract awards and maintenance capital.  In addition, 2010 multi-client data library investments are anticipated to be approximately $47.0 million and will be primarily focused on the expansion of the Company's existing multi-client data library interests in the Marcellus Shale in Pennsylvania.  These amounts do not include any capital expenditures or multi-client investments related to PGS Onshore's business, which will be approved at a later date.  

Changes in Common Stock

The Company is providing this update to assist shareholders in understanding recent changes to the Company's common stock outstanding as well as changes resulting from the closing of the PGS acquisition.  The following is a summary of significant transactions that involved the issuance of the Company's common stock.  All amounts are approximate.

    
    
    Common stock issued prior to recent significant             
     transactions                                               10.8 million
    Common stock issued through public offering on December
     18, 2009                                                    4.0 million
    Common stock issued in connection with restructuring of
     preferred stock on December 18, 2009                        0.8 million
    Common stock issued through exercise of over-allotment
     option on January 14, 2010                                  0.2 million
    Common stock issued to PGS in connection with purchase of
     PGS Onshore on February 12, 2010                            2.1 million
                                                                 -----------
    Common stock issued after recent significant transactions   17.9 million

PGS Onshore Acquisition

The following table provides information on the Company's and PGS Onshore's historical operations and the Company's operations on a pro forma basis assuming the consummation of the PGS Onshore acquisition as of December 31, 2009.

    
    
                                        Historical             Pro Forma
                            Geokinetics       PGS Onshore     Geokinetics
    Recording Channels
     (in thousands)            122,000           84,000         206,000
    Crew capacity                   25               13              38
    Multi-client
     library (sq. miles)           392            5,500           5,892
    Employees                    4,400            3,719           8,119
    

Fourth Quarter Operations Review and First Quarter 2010 Operational Outlook

The Company is providing this update to assist shareholders in understanding the operations of the Company in the fourth quarter of 2009 and the operational expectations for the first quarter of 2010.  All commentary below excludes the activity of PGS Onshore as it was not owned by Geokinetics during the fourth quarter of 2009 and a large portion of the first quarter of 2010.

International

Latin America – Operated three to four crews during the fourth quarter, with an average of three and a half crews operating in Bolivia and Brazil.  The Company expects to operate one to three crews during the first quarter, with an average of two crews operating in Bolivia and Brazil.  The Company's project in Peru that was expected to start late in the fourth quarter has experienced some delays and is now expected to start in the second quarter of 2010.  

EAME – Operated two to three crews during the fourth quarter, with an average of two crews operating in Angola and Egypt.  The Company expects to operate one to two crews in the first quarter, with an average of two crews operating in Angola and Egypt.  In mid-January 2010, the Company's OBC crew in Angola completed a large project that it had been operating since the fourth quarter of 2008 and is currently mobilizing for its next project that it expects to start late in the first quarter and run for approximately two months.  

Australasia / Far East – Operated one to two crews during the fourth quarter, with an average of one and a half crews operating in Bangladesh and Malaysia.  The Company expects to operate two to three crews for the majority of the first quarter, with an average of one and a half crews operating in Bangladesh and Malaysia.  

North America

United States - Operated four crews during the fourth quarter.  The Company expects to operate four crews during the first quarter.  The Company completed the acquisition of the first phase of its multi-client data library program in Pennsylvania during the fourth quarter and has commenced the second phase in the first quarter.  The Company has also signed up two more extensions to this program which will require a second crew starting in the second quarter.  The data acquired on these data library projects are jointly owned by the Company and its customer and has been accounted for as an investment with all costs deferred and amortized against Geokinetics' share of data license revenues.  

Canada - Operated one crew in Canada for approximately half of the fourth quarter and started a second crew late in the quarter.  The Company expects to operate two crews for the entire first quarter during the winter season.    

Backlog

Geokinetics' backlog as of December 31, 2009 (excluding PGS Onshore) was approximately $190.2 million, down 65% from $548 million at December 31, 2008 and down 27% from $259.0 million at September 30, 2009.  Approximately $160.2 million, or 84% of current backlog, is related to international business (excluding Canada), with the remaining $30.0 million, or 16%, in North America ($21 million of which is attributable to the United States).  Of the Company's international backlog, approximately $120 million, or 75%, is with national oil companies (NOCs) or partnerships including NOCs.  Approximately $17 million of the international backlog, or 11%, is in shallow water transition zones and OBC environments.  On a pro-forma basis with PGS Onshore, total backlog was $378.2 million, of which $89.0 million is North American (excluding Mexico) projects and $289.2 million is international projects.

Conference Call and Webcast Information

Geokinetics has scheduled a conference call for Tuesday, March 16, 2010, at 11:00 a.m. Eastern Time.  To participate in the conference call, dial (480) 629-9772 for international callers, and (877) 941-6010 for domestic callers a few minutes before the call begins and ask for the Geokinetics conference call.  A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until March 30, 2010.  To access the replay, dial (800) 406-7325 for domestic callers or (303) 590-3030 for international callers, in both cases using pass code 4244512#.

The webcast may be accessed online through Geokinetics' website at www.geokinetics.com in the Investor Relations section.  A webcast archive will also be available at www.geokinetics.com shortly after the call and will be accessible for approximately 90 days.  For more information regarding the conference call, please contact Donna Washburn at DRG&E at 713-529-6600 or email [email protected].  

Geokinetics Inc., based in Houston, Texas, is a leading international provider of seismic data acquisition and high-end seismic data processing services to the oil and gas industry.  Geokinetics operates in some of the most challenging locations in the world from mountainous jungles, swamps and surf transition zones and ocean bottom environments. More information about Geokinetics is available at www.geokinetics.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").  All statements, other than statements of historical facts, included in this earnings release that address activities, events or developments that Geokinetics expects, believes or anticipates will or may occur in the future are forward-looking statements.  These statements include but are not limited to statements about the business outlook for the year, backlog and bid activity, business strategy, related financial performance and statements with respect to future events.  These statements are based on certain assumptions made by Geokinetics based on management's experience and perception of historical trends, industry conditions, market position, future operations, profitability, liquidity, backlog, capital resources and other factors believed to be appropriate.  Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Geokinetics, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to financial performance and results, job delays or cancellations, reductions in oil and gas prices, the continued disruption in worldwide financial markets, impact from severe weather conditions and other important factors that could cause actual results to differ materially from those projected, or backlog not to be completed, as described in the Company's reports filed with the Securities and Exchange Commission. Backlog consists of written orders and estimates of Geokinetics' services which it believes to be firm, however, in many instances, the contracts are cancelable by customers so Geokinetics may never realize some or all of its backlog which may lead to lower than expected financial performance.

Although Geokinetics believes that the expectations reflected in such statements are reasonable, it can give no assurance that such expectations will be correct.  All of Geokinetics' forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements.  Any forward-looking statement speaks only as of the date on which such statement is made and Geokinetics undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact: Scott A. McCurdy

Vice President and CFO

Geokinetics Inc.

(713) 850-7600

    
    
                     GEOKINETICS INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share amounts)
    
                              Three Months Ended  Twelve Months Ended
                                  December 31,        December 31,
                              ------------------  -------------------
                                2009      2008       2009      2008
                                ----      ----       ----      ----
    
    Revenue:
       Seismic data
        acquisition           $119,487  $114,938   $500,283  $462,576
       Data processing           2,871     2,820     10,683    12,022
                                 -----     -----     ------    ------
    Total revenue              122,358   117,758    510,966   474,598
                               -------   -------    -------   -------
    
    Expenses:
        Seismic data
         acquisition            90,018    89,878    361,525   361,377
        Data processing          2,221     2,047      8,641     8,861
        Depreciation and
         amortization           15,243    13,275     56,921    48,990
        General and
         administrative         14,678    10,055     53,791    39,341
                                ------    ------     ------    ------
    Total expenses             122,160   115,255    480,878   458,569
                               -------   -------    -------   -------
        Loss on disposal of
         property and
         equipment              (1,615)     (366)    (3,759)   (1,255)
        Gain on insurance
         claim                       -         -          -     1,125
                                   ---       ---        ---     -----
    Income (loss) from
     operations                 (1,417)    2,137     26,329    15,899
                                ------     -----     ------    ------
    Other income
     (expenses):
        Interest income             44       305        242       815
        Interest expense        (1,689)   (1,982)    (6,213)   (6,991)
        Bridge loan
         commitment fees        (2,910)        -     (2,910)        -
        Foreign exchange gain
         (loss)                   (619)      352        680       835
        Other, net                 (78)                 113      (304)
                                   ---       ---        ---      ----
    Total other income
     (expenses), net            (5,252)   (1,325)    (8,088)   (5,645)
                                ------    ------     ------    ------
    Income (loss) before
     income taxes               (6,669)      812     18,241    10,254
                                ------       ---     ------    ------
    Provision for income
     taxes                       4,972     5,122     23,252     9,268
                                 -----     -----     ------     -----
    Net income (loss)          (11,641)   (4,310)    (5,011)      986
    Inducements paid to
     preferred
     stockholders:               9,059         -      9,059
    Dividend and
     accretion costs             2,146     1,982      8,345     6,325
                                 -----     -----      -----     -----
    Loss applicable to
     common stockholders      $(22,846)  $(6,292)  $(22,415)  $(5,339)
                              ========   =======   ========   =======
    For Basic and Diluted
     Shares:
       Loss per common share    $(1.98)   $(0.60)    $(2.06)   $(0.51)
       Weighted average
        common shares
        outstanding             11,547    10,470     10,875    10,390
    
    
    
    
    
                   GEOKINETICS INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                              (In thousands)
    
                                                  December 31,
                                                  ------------
                                             2009             2008
                                             ----             ----
                ASSETS
    Current assets:
      Cash and cash equivalents             $10,176          $13,341
      Restricted cash                       121,837            9,921
      Accounts receivable, net              143,944           91,753
      Inventories                             1,664            1,412
      Deferred costs                         14,364           25,372
      Prepaid expenses and other
       current assets                         8,824            9,002
                                              -----            -----
            Total current assets            300,809          150,801
    Property and equipment, net             187,833          205,285
    Restricted cash to be used for
     PGS Onshore acquisition                183,920                -
    Goodwill                                 73,414           73,414
    Multi-client data library, net            6,602              801
    Deferred financing costs, net            10,819            1,038
    Other assets, net                         8,293            8,377
                                              -----            -----
            Total assets                   $771,690         $439,716
                                           ========         ========
         LIABILITIES, MEZZANINE AND
            STOCKHOLDERS' EQUITY
    
    Current liabilities:
      Short-term debt and current
       portion of long-term debt
       and capital lease
       obligations                          $68,256          $33,096
      Accounts payable                       55,390           49,056
      Accrued liabilities                    61,814           29,968
      Deferred revenue                       14,081           29,995
      Income taxes payable                   15,335            1,601
                                             ------            -----
    Total current liabilities               214,876          143,716
    Long-term debt and capital
     lease obligations, net of
     current portion                        296,601           57,850
    Deferred income taxes                     6,486           13,608
    Mandatorily redeemable
     preferred stock                         32,104                -
                                             ------              ---
            Total liabilities               550,067          215,174
                                            -------          -------
    Commitments and contingencies
    Mezzanine equity:
      Preferred stock, Series B
       Senior Convertible: $10.00
       par value; 2,500,000 shares
       authorized, 290,197 shares
       issued and outstanding as of
       December 31, 2009 and
       391,629 shares issued and
       outstanding as of December
       31, 2008                              71,245           94,862
                                             ------           ------
            Total mezzanine equity           71,245           94,862
                                             ------           ------
    Stockholders' equity:
      Common stock, $.01 par value;
       100,000,000 shares
       authorized, 15,578,528
       shares issued and 15,296,839
       shares outstanding as of
       December 31, 2009 and
       10,580,601 shares issued and
       10,470,233 shares
       outstanding as of December
       31, 2008                                 156              106
      Additional paid-in capital            223,927          188,940
      Accumulated deficit                   (73,725)         (59,386)
      Accumulated other
       comprehensive Income                      20               20
                                                ---              ---
            Total stockholders' equity      150,378          129,680
                                            -------          -------
    Total liabilities, mezzanine
     and stockholders' equity              $771,690         $439,716
                                           ========         ========
    
    
    
    
    
                          GEOKINETICS INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (In thousands)
    
                          Three Months Ended           Twelve Months Ended
                             December 31,                  December 31,
                          ------------------           -------------------
                           2009        2008            2009           2008
                           ----        ----            ----           ----
    OPERATING
     ACTIVITIES
    Net Income (loss)    $(11,642)   $(4,310)        $(5,011)         $986
    Adjustments to
     reconcile net
     loss to net
     cash provided
     by operating
     activities
      Depreciation
       and amortization    15,246     13,275          56,921        48,990
      Bad debt
       expense                225        875           1,110         3,541
      Amortization
       of deferred
       financing
       costs                  211        100             560           336
      Stock-based
       compensation           563        489           2,174         1,934
      Loss (Gain) on
       sale of fixed
       assets and
       insurance
       claims               1,667        366           3,759           130
      Deferred
       income taxes        (7,122)    (2,918)         (7,122)       (2,918)
    Changes in
     operating
     assets and
     liabilities:
      Restricted
       cash, net of
       financing
       portion                 60     (7,004)          7,967        (8,563)
      Accounts
       receivable         (26,538)    (4,314)        (53,301)      (27,476)
      Prepaid
       expenses,
       deferred
       financing
       costs and
       other assets        12,474        176          10,200       (23,988)
      Accounts
       payable             19,213     (3,620)          6,334        29,677
      Accrued
       liabilities,
       deferred
       revenue and
       other
       liabilities        (10,541)    14,808          29,668        14,948
                          -------     ------          ------        ------
      Net cash
       provided by
       operating
       activities          (6,184)     7,923          53,259        37,597
                           ------      -----          ------        ------
    INVESTING
     ACTIVITIES
    Proceeds from
     disposal of
     property and
     equipment and
     insurance
     proceeds                 435      1,566           1,320         3,047
    Purchases of
     property and
     equipment            $(9,299)   $(1,977)        (35,816)      (40,289)
    Investments in
     multi-client
     data library          (3,226)         -         (10,716)            -
    Oil and gas
     interests
     obtained in
     conjunction
     with seismic
     surveys                    -          -               -        (6,101)
    Change in
     restricted
     cash held for
     purpose of
     PGS Onshore         (303,803)         -        (303,803)            -
                         --------        ---        --------           ---
      Net cash used
       in investing
       activities       $(315,893)     $(411)      $(349,015)     $(43,343)
                        ---------      -----       ---------      --------
    FINANCING
     ACTIVITIES
    Proceeds from
     issuance of
     debt                  88,419     53,086         207,259       224,162
    Proceeds from
     issuance of
     Senior Secured
     Notes, net of
     discount             294,279          -         294,279             -
    Cash inducement on
     preferred stock
     conversion            (2,121)         -          (2,121)            -
    Proceeds from
     exercised
     stock options              -          -               -           593
    Proceeds from
     common stock
     issuance, net         34,130          -          33,985             -
    Proceeds from
     preferred
     stock
     issuance                   -         (4)              -        29,137
    Payments on
     capital lease
     obligations
     and vendor
     financing              4,362     (9,997)        (25,889)      (29,192)
    Payments on
     debt                 (96,026)   (51,345)       (204,737)     (220,423)
    Payments of
     debt issuance
     costs                (10,185)      (315)        (10,185)         (315)
                          -------       ----         -------          ----
      Net cash
       provided by
       financing
       activities         312,858     (8,575)        292,591         3,962
                          -------     ------         -------         -----
    Effects of
     exchange rate
     changes on
     cash and cash
     equivalents                -          -               -             -
                              ---        ---             ---           ---
    Net increase
     (decrease) in
     cash                 $(9,219)   $(1,063)         (3,165)       (1,784)
    Cash at
     beginning of
     year                  19,395     14,404          13,341        15,125
                           ------     ------          ------        ------
    Cash at end of
     year                 $10,176    $13,341         $10,176       $13,341
                          =======    =======         =======       =======

GAAP Reconciliation

The Company defines EBITDA as Net Income before Taxes, Interest, Other Income (Expense) (including foreign exchange gains/losses, gains/losses on sale of equipment and insurance proceeds, warrant expense and other income/expense), and Depreciation and Amortization.  EBITDA is not a measure of financial performance derived in accordance with Generally Accepted Accounting Principles (GAAP) and should not be considered in isolation or as an alternative to net income as an indication of operating performance.  See below for reconciliation from Income Applicable to Common Stockholders to EBITDA amounts referred to above:

    
    
    
                                                For the Year Ended
                                                   December 31
                                                  (in thousands)
                                             2009               2008
                                             ----               ----
    
    Net Loss Applicable to Common
     Stockholders                         $(22,415)           $(5,339)
    Preferred Stock Dividends and
     Inducements Paid to
     Restructure Preferred Stock            17,404              6,325
                                            ------              -----
    Net Income (Loss)                       (5,011)               986
    Income Tax Expense                      23,252              9,268
    Interest Expense, net
     (including Bridge Loan
     Commitment Fees)                        8,881              6,176
    Other Expense (Income) (as
     defined above)                          2,966               (401)
    Depreciation and Amortization           56,921             48,990
                                            ------             ------
    EBITDA                                 $87,009            $65,019
                                           =======            =======
    
    
    
                                                   For the Three
                                                    Months Ended
                                                    December 31
                                                   (in thousands)
                                                   --------------
                                              2009               2008
                                              ----               ----
    Net Loss Applicable to Common
     Stockholders                          $(22,846)           $(6,292)
    Preferred Stock Dividends and
     Inducements Paid to
     Restructure Preferred Stock             11,205              1,982
                                             ------              -----
    Net Income (Loss)                       (11,641)            (4,310)
    Income Tax Expense                        4,972              5,122
    Interest Expense, net
     (including Bridge Loan
     Commitment Fees)                         4,555              1,677
    Other Expense (Income) (as
     defined above)                           2,312                 14
    Depreciation and Amortization            15,243             13,275
                                             ------             ------
    EBITDA                                  $15,441            $15,778
                                            =======            =======
    
    

SOURCE Geokinetics Inc.

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