Good morning and thank you for standing by. Welcome to the Mitcham Industries Fiscal 2013 Second Quarter conference call. At this time, everyone is in a listen-only mode. Following the presentation, there will be a question and answer session. If you wish to ask a question, please press star, one on your telephone keypad. As a reminder, this conference is being recorded today, September 6, 2012 I would now like to turn the call over to Karen Roan at DRG&L. Karen, you may go ahead.

Thank you, Carrie. Good morning and welcome to the Mitcham Industries Fiscal 2013 Second Quarter conference call. We appreciate all of you joining us today. Your hosts are Bill Mitcham, President and Chief Executive Officer, and Rob Capps, Executive Vice President and Chief Financial Officer. Before I turn the call over to management, I have a few items to cover. If you would like to listen to a replay of today’s call, it will be available via webcast by going to the Investor Relations section of the Company’s website at mitchamindustries.com, or by a recorded instant replay until September 13. Information on how to access the replay was provided in yesterday’s earnings release. Information reported this call speaks only as of today, Thursday, September 6, 2012, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay. Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company’s actual future results or performance to materially differ from any future results or performance expressed or implied by those statements. These risks and uncertainties include the risk factors disclosed by the Company from time to time in its filings with the SEC, including in its annual report on Form 10-K for the year ended January 31, 2012. Furthermore, as we start this call please also refer to the statement regarding forward-looking statements incorporated in our press release issued yesterday, and please note that the contents of our conference call this morning are covered by these statements. Now I’d like to turn over the call to Mitcham’s President and CEO, Bill Mitcham.

Thanks Karen. Good morning everyone. We’d like to thank all of you for joining us today for our fiscal 2013 second quarter conference call. As usual, I will begin by making a few general comments about the quarter. Rob will then discuss our financial performance in depth before I conclude with a discussion of our market outlook. Then we’ll open the call for your questions. As we announced in our press release on August 9, we had a very favorable conclusion to a longstanding tax matter during the quarter that resulted in a $5.3 million tax benefit, and Rob will speak a lot more about that shortly. But during the quarter, we did continue to see some of the issues that had negatively impacted our first quarter leasing revenues. We always anticipate the normal seasonal decline in leasing revenues in our fiscal second quarter from the first quarter, but this year’s second quarter leasing revenues were lower than we had originally expected as they were adversely impacted by lower land activity in Latin America and in Europe. The lower activity in Latin America resulted from permitting difficulties as well as some lingering weather issues. In Europe, seismic activity was also slower due to fiscal and political issues, as well as environmental concerns which had caused delays in many energy projects in eastern Europe, particularly non-conventional natural gas projects. On the more positive side, marine leasing activity remained very strong in the quarter due to strength in the worldwide marine seismic market, and U.S. land leasing revenues were higher than a year ago. And Seamap had a solid quarter, delivering one GunLink 4000 system in the second quarter as well as sales of related equipment, replacement parts, engineering services and ongoing support and repair services. The delays and permitting issues that we experienced in our first and second quarters do not in our opinion indicate any change in the solid fundamentals that remain in place for our industry and our company. They are simply part of the seismic business. We have certainly seen the results from some of the seismic contractors impacted by these same factors in the first few months of this year. With that, I’ll turn the call over to Rob who will give you a detailed review of our financial results, and after this discussion we’ll return with some final remarks and questions. Rob?

Okay, thanks Bill and good morning everybody. I’ll begin as usual by discussing the top line of each of our two segments, which are equipment leasing and Seamap, then follow with a discussion of the profitability of each of the segments and conclude with a discussion of our consolidated results and our financial position. First let me review the equipment leasing segments, which includes not only our core leasing business but also non-Seamap equipment sales such as occasional sales of our lease pool equipment, new seismic equipment that we acquire from third parties, sales of heli-transport equipment, and sale of new hydrographic and oceanographic equipment from our Australian subsidiary, SAP. Our core leasing revenues in the second quarter were approximately $11 million compared to 12 million in the second quarter a year ago, down 11% primarily due to the declines in Latin America and Europe. As Bill said, activity in Latin America was again negatively impacted by lower levels of land activity due to weather and permit-related project delays, which as you may recall affected our first quarter results as well. In Europe, seismic activity has been held back by fiscal issues and environmental concerns. These declines were partially offset by strong marine leasing and higher revenues in U.S. land business as compared to last year’s second quarter. Our sales of lease pool equipment were 3.2 million in this quarter compared to 326,000 in the same quarter last year as we took advantage of some opportunities to dispose of some older equipment this year. Other equipment sales, which includes sales for SAP and heli-picker equipment were $1.7 million compared to 2.1 million in the same quarter a year ago. Now let me turn to our Seamap segment, which designs, manufactures and sells a variety of products and systems used in…

Thanks Rob. I think it’s fair to say that we’ve seen a brief pause in seismic activity in some regions around the world. The current environment of low natural gas prices in North America combined with economic and environmental concerns in Europe and the project delays in Latin America during the first half of this fiscal year have all contributed. Having said that, we still generated a very good first half of fiscal 2013 with revenues, earnings and EBITDA ahead of the record year we had in fiscal 2012. In fact, this is the best period of first half financial results in the history of our company; however – you knew a but was coming – due to the pause I just mentioned, we think it’s unlikely that we will repeat the incredible financial results this year that we saw in the back half of fiscal 2012. Activity in Latin American has started to pick up. We’ve shipped several jobs there. The Latin American market remains certainly one of our best growth opportunities and should continue to be an active area of exploration for the next several years. Despite occasional speed bumps or lumpiness like we’ve seen recently, we’re seeing opportunities to deploy additional products in that area, including wireless recording systems, downhole tools, and three-component digital sensors. Additionally, we are now seeing indications of strong upcoming winter seasons in Canada and Russia as several customers are making very early commitments for equipment in those areas. With the additions to our lease pool that we’ve made and plan to make going forward, we expect to have more equipment deployed in both Canada and Russia this winter, including additional three-component digital sensors. In other words, we currently expect the next winter seasons in Canada and Russia to be at least as…

Excellent, thank you so much. Ladies and gentlemen, we will now open the call for questions. [Operator instructions] Our first question comes from Vinny Alexandrov of FIG Partners.

Good morning Billy and Rob.

Hi Vinny. How are you?

I am good. So let me start with my questions. Seamap – we expect a strong second half. Is it only new systems, or it’s a combination of new systems plus some maintenance and repair work?

It’s a combination, Vinny.

It’s a combination. The repair is still going on?

Most definitely. We certainly have some deliveries of new systems schedule in the back half, primarily in the fourth quarter, but it will certainly be a combination of the two. All the after-market business continues on very strongly.

Right, right. That’s where I was going. And then my second question is on the three component – is it going to a specific project, or you’re seeing need for this equipment across the board in Canada?

It’s a variety of projects, not just one project.

It’s a variety of projects?

Yeah. It’s more than one customer. It’s a variety of customers and a variety of projects.

And this new equipment, you mentioned you were buying and deploying more. Where is your CAPEX going for the year?

We think total for the year will still be around the 35 to 40 million for the total year.

Okay, so you have not increased it for right now.

We have not.

Okay. And Billy talked about Canada, and you expect a very strong season there. It’s pretty early for contracts, and you are already talking about early indications. Is that right?

Yeah, it is early. We usually are having some discussions by now, but it’s definitely much earlier than normal and I think commitments are earlier that we’ve seen in the past.

So this is a very good indication that this is going to be a very strong year. The same thing for Russia?

That’s exactly right.

Okay, well thank you so much. I will re-queue and let somebody else ask questions, and I’ll talk to you . Thank you.

Excellent, thank you. Our next question comes from Ryan Fitzgibbons of Global Hunter Securities. Ryan, you may go ahead.

Hey, good morning guys. Question for you – it sounds like so Q3 of this year will be below last year. I’m trying to get a better sense as to why that is. Is Latin America just ramping up a bit slower? I’m thinking last year wasn’t all that big there, or is it just Canada, the winter season, your expectation is that Q3 is a little slower, then you ramp up in Q4?

Yeah, I think last year what we saw—we definitely expect to see the third quarter below last year’s third quarter, no doubt about that; and it’s a combination of Latin America being a bit slower, ramping up slower, because we did have pretty good business there this time last year, and also Europe. We certainly had business in Europe this time last year and that’s been much, much slower as we’ve talked about several times.

Okay. Can you talk about how the eastern Europe office has progressed – how many channels are now in that market, and if eastern Europe remains slow is there an opportunity to move those channels to the Middle East or North Africa?

Well there is, but there’s also an ability to move some of those channels into Russia for the winter, so we certainly can move those things around a bit. So we’re certainly looking at things like that, and that’s one way we’ll address the increased demand in Russia this winter.

Okay. Any idea how many channels you could actually have in Russia this winter?

Yeah, we’ll probably have 35,000 anyway in Russia.

Okay, okay. And then following on Vinny’s question – Canada – can you talk a bit about the early indications you have? Do you have firm contracts in place, and how big do you think that market is Q4 and Q1 of this year? I assume it tops what you guys did there last year, given the additional channels in country?

We certainly have more channels in country. I mean, we bought an additional 15,500 stations, DSU-3, that we didn’t have last year, and we’ll have that deployed we think this year. As far as firm contracts, I mean, they’re not necessarily signed contracts, and that typically doesn’t happen until kind of the last minute in our business. But as far as very strong indications, detailed negotiations, things of that nature, that’s where we are today.

Ryan, there’s a limited number of DSU-3s in the world, and we have most of them. And almost everything that we have is spoken for today in soft contracts, and we have close to 40, 45,000 DSUs. Most of those are anywhere from 60 to 90-day contracts for the winter. It’s no different than any other contract – you know, people won’t sign it and walk away from it, but we feel very good about the winter. Going back to the DSUs, we also had a very big DSU job that fell right in the middle—well, right in the middle, it fell in our entire, throughout the third quarter last year, and won’t have that contract this year.

Okay, understood. And then last one for me – CAPEX the back half of the year, to hit your guidance isn’t all that much. I think you’re going to generate a lot more cash than that. In the press release, you talk about potential opportunities to capitalize on market opportunities that arise. Are you alluding to M&A there, or is it additional opportunities maybe like in Q1 where you had a customer willing to sell you channels?

It’s a little bit of both. We certainly are always on the lookout for something from an M&A standpoint, but there’s certainly nothing pending; but that’s something we’re always going to keep some powder dry for.

Dry powder.

Understood. Okay, thanks guys.

Thank you. If there are any additional questions, please press star, one at this time. Our next question comes from Vinny Alexandrov of FIG Partners.

Thank you. Billy, you made a comment that U.S. land leasing activity in this past quarter was stronger than last year. Can you elaborate a little bit on that? I mean, we knew that the U.S. activity is improving, but that’s a really interesting comment. Do you think it’s going to continue like that, or was it just in the quarter?

Well Vinny, we saw a lot of our wireless equipment out this quarter that we didn’t have out last year, or as much out as last year. We had quite a bit of—again, of 408 out, 408 and 428 out—well, most of them 408 out that we didn’t have last year, so. Is it a trend? I don’t know. We’re certainly not necessarily surprised (inaudible), but we see more and more contractors that continue to add on channels – 15, 18, 20,000 channel jobs – and they certainly can’t—you know, they don’t have all of that in their inventory.

Thank you. Appreciate it.

Thank you again, and we do have another caller. Our next caller today is Bryan Dutt with Ironman. Bryan, you may go ahead.

Good morning gentlemen. In Latin America, is that predominantly Colombia? Is that all Colombia, and is that—you said it’s permitting. Is that something that you didn’t anticipate? Is it a shift in policy over there, or could you elaborate a little bit on that?

Well some of it is a shift in policy, and this year the oil companies have put more of the burden on the contractors, them being responsible for that permitting, and they’re having to go through all the different villages, and it’s a real pain when that burden is back on the contractor. And it’s not cheap – it’s very expensive, so that has certainly caused some concerns and some slowdowns over there. As far as us anticipating that, we’re not involved in the permitting side of it, so it’s not anything that we’ve had a problem with or the contractors have had a problem with before.

And if I’m not mistaken, you had a lot of rain in Colombia in the prior quarter. Was the weather bad again this quarter?

It wasn’t as bad, but it certainly kept a lot of people in, trying to get some of the prospects dry so you can get out on them. We just in the last 25, 30 days shipped, what, two or three jobs, so we’re moving equipment now. A couple of jobs have started, so yeah, it’s just taking some time to dry out.

And are you doing anything in Argentina?

We bid down in Argentina. We don’t have any equipment down there right now, I don’t think so. We have equipment in Colombia, Ecuador, Brazil, Peru, and I think we’ve got something in Bolivia or something on the way to Bolivia. So yeah.

And switching to Europe, again permitting issues – is this mostly anti-fracking type rhetoric going on?

Pretty much.

Yeah, that’s a lot of it, plus just some of the political instability in some of the areas such as Romania has been an issue.

Okay. And again, on an $18 million lease pool, you’ve got no contribution thus far this year. I think I heard you say or infer you’d see a little bit this year, but the bulk of it will be next year. You’ll see it in full force next year – is that correct?

Well, we’ll start to deploy most of that in the winter season, so we’ll get some impact from the fourth quarter but more an impact in the first quarter of next year – that’s true.

And I know you talked a lot about Canada. One thing I didn’t hear – maybe I missed it – but you’re not really blaming much on the rains like a lot of the other services companies – I mean, in this quarter beyond spring break-up.

No. In Canada, you mean?

In Canada, yes.

No, no. No.

Okay. All right, gentlemen. Thank you very much.

Thank you so much. Our next call comes from Tyson Bauer from KC Capital.

Good morning gentlemen. Rob, can you talk about thought we’ve seen an acceleration now for a number of quarters, four to be exact, on your lease pool equipment sales of some your older equipment that you’ve been able to find a market for at very healthy margins. I’m assuming that’s fully depreciated when you sell those. Is that expected to continue? Is this part of renewing or getting more advanced in a newer generation of lease pool average age?

Well I mean, not necessarily, Tyson. I think that’s the way it’s always been for us. I think if you go back in our history, and this is kind of going into—we’ll go for a while and not sell much, and we’ll go for a while and have a few quarters where we do sell some just as opportunities arise. Certainly the things we’ve been selling have tended to be older equipment, older technology such as 408. It’s all not necessarily fully depreciated but highly depreciated, safe to say, for the most part. So I mean, again, it’s difficult to predict. I mean, there’s a deal that could come in tomorrow that we could do, or it may not, so it’s really hard to predict which I know is difficult to model, but that’s just kind of the facts of the game.

Like the 408, are you anticipating trying to move away from that as you go forward to more of the three component and some of these other newer technologies? Is that an effort, or are you just taking advantage of opportunities that arise?

We’re taking advantage of opportunities as they arise. There is certainly big markets still for traditional 408, 428 cable systems –big, big markets.

And the remaining CAPEX budget for the last half of the year, is that more weighted toward the end or are we in preparation for gearing up for that winter season?

Well, I think most of it will be we want to have in place for the winter season, I think it’s fair to say.

All right. Thanks a lot, gentlemen.

Thank you. If there any additional questions, please press star, one at this time. Our next caller is Will Inshow with HFP Capital Markets.

Hi gentlemen. Just studied your forecast. I still think that congratulations are in order for a nice quarter. I just wanted to get your feeling on what the viability is of some of the new systems coming out, the high temperature downhole, fibre optic seismic. Are you getting any inquiries about that? I know it’s still somewhat in its infancy, but what kind of thoughts do you have on that?

Will, I think that’s all very early stage. A lot of it is still in the early days of production, and I don’t think there’s a whole lot of it, other than—you know, I don’t think in our business, the way we use the downhole, that a lot of that fibre optic is proven yet. Certainly some of the other contractors are using that – not in the seismic business. They’re using it more in the wire line business. There’s companies—there’s actually, I think, three companies that I know of that they are in the early stages of putting something together, but we’ll see. It takes a lot of time to prove that out. In the meantime, we’ll keep our downhole tools with what we know.

Sure, sure. Well, all my other questions were answered already, so I’ll let someone else go. Thanks a lot, guys.

Thank you very much. There are no further questions at this time, so I will turn it back to management.

Thank you, Carrie. I’d like to thank all of you once again for joining us on the call today and for your interest in Mitcham. We look forward to talking to you again after the conclusion of our third quarter. Thanks.

Thank you so much for joining the Mitcham Industries Fiscal 2013 Second Quarter conference call. If you wish to listen to a playback of this conference, please dial 1-866-949-7821. You may now disconnect.