Mitcham Industries Q2 2009 Earnings Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Terese Fabian - Sidoti & Company - Analyst : Good morning. I have a question on the mix of equipment in your capital spending the last two quarters. Can you address that?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay. If you break it down in terms of proportions does anything stand out?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay, thank you.

Question: Pierre Conner - Capital One Southcoast - Analyst : Good morning, gentlemen.

Question: Pierre Conner - Capital One Southcoast - Analyst : I apologize if you already gave the number. Can you quantify for us the amount of the leasing deferral with the impact of the permitting complications?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay.

Question: Pierre Conner - Capital One Southcoast - Analyst : Right.

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. No, that's helpful. I appreciate it, Billy. My second question is related to the VSP. You have the second one in this 100-level tool -- and it's sort of a two part follow up, which is is the leasing potential on that 100-level tool -- I mean, is the bottom-line impact on that thing twice as much as the 50-level tool, or you price it that way, and then do you have plans -- how many more VSP tools can you add or what -- sort of rate do you see them being added? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Pierre Conner - Capital One Southcoast - Analyst : Duration.

Question: Pierre Conner - Capital One Southcoast - Analyst : Yes. Got it, got it. And then what's your forward purchasing plan on additional VSPs?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay, great. Thanks, gentlemen.

Question: Luisa Hermann - Dahlman Rose - Analyst : Hi, good morning.

Question: Luisa Hermann - Dahlman Rose - Analyst : With respect to depreciation, do you expect it to continue at current levels? And then secondly, do you see an immediate need to add additional channels on the leasing side?

Question: Luisa Hermann - Dahlman Rose - Analyst : Right.

Question: Luisa Hermann - Dahlman Rose - Analyst : Okay, great. Thank you very much.

Question: Tyson Bauer - Wealth Monitors, Inc. - Analyst : Good morning, gentlemen. Couple of quick questions. Obviously you're very confident regarding the last part of this fiscal year. Longer term, I guess the way your stock price is acting and the movement in the oil and gas markets, what environment would have to exist where you would see decreased demand, because it doesn't seem like, at least intuitively, people are going to be looking for oil and gas for a long time as much as they can get, yet your share price seems to exhibit a situation that you may be hitting peak earnings either this year or next year and that you don't have that sustainability and growth. How would you address that concern? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Tyson Bauer - Wealth Monitors, Inc. - Analyst : Okay. I'm guessing with the 85,000 channels that you currently have in hand and given the time of the year that you're pretty well set as far as deployment or utilizing those channels. How would you characterize that as the 95% plays, 90%, in those kind of terms? And then secondly, what kind of geographic split are you looking at? Obviously you said almost 80% of your business is international. Get a little more specific on geographic regions that you're isolating.

Question: Tyson Bauer - Wealth Monitors, Inc. - Analyst : All right. Thanks a lot, gentlemen.

Question: Tamara Manukean - Greenwood Investments - Analyst : Hi, Billy, Rob.

Question: Tamara Manukean - Greenwood Investments - Analyst : I have a few questions. One is a follow up. In terms of your capital expenditures and given your stock price today is $12, do you evaluate share buyback as an alternative, or at what point would you consider that as an option for the capital allocation?

Question: Tamara Manukean - Greenwood Investments - Analyst : Okay, very good. And in terms of your business in Russia, I was wondering how is it doing right now and whether it's getting affected at all in terms of Russian relation -- I mean, US relationship with Russia is not so good right now and whether you foresee any sanctions and how that would affect you? Is there any talk about that at all?

Question: Tamara Manukean - Greenwood Investments - Analyst : Okay, very good. Thank you.

Question: Greg Hillman - First Wilshire Securities Management - Analyst : Yes, yes, yes.

Question: Greg Hillman - First Wilshire Securities Management - Analyst : So sorry about that. Yes, I was walking the dogs. Yes, I had a question about the useful life of your equipment versus the depreciation that you use. Could you talk about that a little bit and could you just talk about over the last 12 months, the amount of equipment you've had to retire due to the fact that it's just too old or it doesn't work any more, and also whether you foresee any obsolescence due to the fact it just is technologically obsolescent. Can you talk about some of the issues, please?

Question: Greg Hillman - First Wilshire Securities Management - Analyst : So, am I correct in assuming you said the useful life of your equipment is ten to 12 years? Did you say that, is that correct, or is it longer than that?

Question: Terese Fabian - Sidoti & Company - Analyst : So actually the li -- could the life be like 15 or 20 years?

Question: Greg Hillman - First Wilshire Securities Management - Analyst : Okay. Okay, thanks very much.

Question: Terese Fabian - Sidoti & Company - Analyst : Yes, I have a question. What are you seeing in terms of channel density in surveying? I saw CGV reported a pretty huge number of 40,000 channel count survey for Qatar. Is this common or -- what are the average ranges of numbers?

Question: Terese Fabian - Sidoti & Company - Analyst : And in terms of the Russian market are you seeing the same increased channel count there?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay. If I could just ask on the Royal Australian Navy contract, is that something that comes up, is it a repeatable contract bid, and what is the timing on that in terms of revenue and margins?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay. Thank you.

Question: Pierre Conner - Capital One Southcoast - Analyst : Thank you. You did address the Royal Australian Navy question for me, but the other one I had was a follow up on the geographic issue is can you give us a bracket on your North America or maybe just US onshore exposure; i.e., what is your exposure to net gas on -- and it would probably on the equipment leasing side assuming that equipment's also very (inaudible) but at the moment what would be a bracket on that?

Question: Pierre Conner - Capital One Southcoast - Analyst : Of that 20% US-based, would you say that's all onshore?

Question: Pierre Conner - Capital One Southcoast - Analyst : The streamers are international right now?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. All right, that's helpful. Thanks, gentlemen.

Question: Tamara Manukean - Greenwood Investments - Analyst : I might have missed this. What was the gross margin on other equipment sales and lease pool equipment sales?

Question: Tamara Manukean - Greenwood Investments - Analyst : Sure, no problem. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Tamara Manukean - Greenwood Investments - Analyst : 35%. And my other question is about growth rate in equipment leasing line of business, it seems like based on the first half of this year versus the first half of last year it's decelerating, is there anything that suggests that second half of the year growth rate would accelerate?

Question: Tamara Manukean - Greenwood Investments - Analyst : And in terms of CapEx in the first half of the year, when is this equipment going to be deployed? Is it the second half or toward the end of the year or beginning of the next year?

Question: Tamara Manukean - Greenwood Investments - Analyst : Okay, very good. Thank you very much.

Question: Terese Fabian - Sidoti & Company - Analyst : Hi, I do have a follow up on the VSP system. Can you talk a little bit about how that is used in the production phase? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Terese Fabian - Sidoti & Company - Analyst : How would you evaluate the size of the market for this tool? Do you know what percentage of companies -- ENP companies are using it now or anything approximate?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay, thank you.