Microcap Geokinetics CEO on Seismic Services (GOKN)

Apr.11.06 | About: Geokinetics, Inc. (GEOKQ)

Geokinetics is a microcap energy exploration technology company, with a market cap of about $90 million. Excerpt from The Wall Street Transcript's 4/10/06 interview with Geokinetics Inc. CEO David Johnson:

Geokinetics is a technology-oriented seismic service company. We service oil and gas companies that are looking for prospects to drill. Our two main lines of business are 3-D seismic data acquisition and 3-D seismic processing. Specifically, what we do is help oil company personnel form images of the earth -- three dimensional images of the earth, much like a CAT scan, except it--s like a CAT scan on steroids. So it is a large picture of the subsurface of the earth that enables an exploration company to find drill sites, quantify the risks and discover more reserves.

We are a public company. We have approximately 650 employees right now. We are the number two provider of onshore seismic in the North American market. Because of our North American focus, we are participating in the growth in activity that has been generated by the historically high natural gas prices. Demand for our services began to move strongly upward in mid-2005 and continues to grow.

This is a technology game. The seismic business provides images of the rock layers in the earth. Just as you can imagine how medical imaging technology has changed over the past 10 or 15 years, so has the imaging technology used by oil companies changed. Right now, three-dimensional imaging technology is key. We have built a strong reputation by offering some of the most modern equipment on the market.

Success requires a combination of careful work in the field and also the application of high tech digital signal processing algorithms, which converts the raw data into crisp, focused 3-D images. The growing application of these technologies, beginning in the early 1990s, was a major contributor to the overall improvement in the exploration drilling success rate, improving in the US from about 25% success to about 50% today. This improvement has generated billions of dollars of value for the exploration industry.