Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Mitcham Industries Third Quarter Earnings Call. [Operator Instructions] This conference is being recorded today, Wednesday, December 11, 2013. I would now like to turn the conference over to Mr. Jack Lascar. Please go ahead, sir.

Thank you, Damien. Good morning, everyone, and welcome to the Mitcham Industries Fiscal 2013 (sic) [2014] Third 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 over the call 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 or via a recorded instant replay until December 25. Information on how to access the replay was provided in yesterday's earnings release. Information reported on this call speaks only as of today, Wednesday, December 11, 2013, 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, 2013. 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. With that, I would like to turn the call over to Mitcham's President and CEO, Bill Mitcham.

Thanks, Jack, and good morning, everyone. I would like to thank you again for joining us today for our fiscal 2014 third quarter conference call. I'll 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 anticipated, we saw sequential improvement in our third quarter core leasing revenues over the second quarter of this year, mostly due to continuing improvement in Europe and increasing activity in the downhole business. However, leasing activity in the quarter remained relatively weak overall and below the third quarter of last year. As we discussed in our second quarter call, this was expected. Rental activity in the U.S. land market continued to be very weak. When we're still seeing capital budgets in the U.S. being allocated to developmental drilling rather than seismic exploration, which was reflected in lower U.S. land results both sequentially and year-over-year. Now there are some glimmers of hope in this area for the next year, however, but I'll talk about that in a little bit. So Latin America continued to be affected by the project delays that we've mentioned in our previous calls. However, we now see definite signs of activity and the region is picking up. Some of the delayed projects have finally started. We've shipped some equipment. New jobs are being scheduled. And we're bidding on some additional opportunities. As we've mentioned on our last call, we have quite a bit of equipment there already and we are adding new wireless equipment to address specific customer demands in that region. The pickup in European seismic activity we saw during the second fiscal quarter continued into the third quarter, and we're seeing…

Okay. Thanks, Bill, and good morning, everybody. I'll begin by discussing the top line of each of our 2 segments, which are Equipment Leasing and Seamap; and then follow with a discussion of the profitability of each of the segments; then conclude with a discussion of our consolidated results and the financial position. First, let me review our Equipment Leasing segment, which includes not only core leasing business, but also non-Seamap equipment sales, such as occasional sales of our lease pool equipment, new seismic equipment we acquire from third parties, sales of heli-transport equipment and sales of new hydrographic and oceanographic equipment from our Australian subsidiary, SAP. Our core leasing revenues in the third quarter were approximately $8 million compared to $11 million in the third quarter a year ago. Now that's down 29%, primarily due to continued low levels of activity coming from Latin America and U.S. land markets, as well as the marine leasing business. But these declines were partially offset by higher land leasing revenues in Europe and Pacific Rim, as well as higher revenues from the downhole business. As Bill said, the Latin American market is showing signs of improvement, which should have a positive impact on our fourth quarter results. The marine leasing business in the U.S. land market is going through challenging market conditions, although we expect the problems affecting the marine leasing business to improve relatively soon. We certainly expect sequential improvement in Canada and Russia over the next few quarters as we move into the winter seasons there. The new wireless opportunities in Canada, as Bill mentioned, should make a significant contribution. However, it's uncertain at this time if this will completely offset the relative weakness we see in Canada compared to last year. Moving on to lease pool equipment sales, revenues…

Thanks, Rob. And based on a sequential revenue improvement we saw in our core leasing business in the third quarter, the progress in the Latin America and the anticipated seasonal activity in Canada and Russia, we expect a healthy sequential increase in our leasing revenues for the fourth quarter over the third quarter. While the U.S. market remains soft, we do have a specific project underway in the U.S. that will have a very positive impact on our results in the region for the fourth quarter. And although it's still early days, a number of our customers have told us they expect an increase in activity in the U.S. during calendar 2014. The international market holds considerably more promise for us in the near future. Europe is showing marked improvement over last year, although we anticipate a pullback in Europe's Q4 revenues due to normal seasonal patterns. For the coming year, we expect our European business to benefit from some projects that should begin in the spring. North Africa and the Middle East also may yield some incremental opportunities. In the Pacific Rim, the Australian land market continues to perform well. We have some projects there, as well as in Indonesia that are scheduled to begin in the fourth quarter. With Latin America, activity finally showing signs of improvement coupled with a large backlog and greater amount of wireless equipment headed there, we expect increased revenues in this region in Q4 as well as next year. As we've said in the past, Latin America represents one of our best growth markets, and once work restarts and projects are underway, the region should once again become a strong revenue contributor. We expect a healthy upcoming winter season in Russia. But as we mentioned earlier, Canada remains uncertain, with generally weaker activity…

[Operator Instructions] Our first question is from the line of Ryan Fitzgibbon with Global Hunter Securities.

I'll start off with a first question on the wireless purchase. I believe that's right around 49,000 channels. Can you help us with really 2 things; one, where is that equipment being dedicated; and then two, is it currently working as of today?

Well, as we said, we've got a big group of equipment or a large channel count going to South America and channel count going to Canada. So is it working today? It's on the way to working... It's not -- it's contracted, but we are not -- we haven't invoiced ... [Multiple Speakers ]

So it's not shooting yet.

Okay. So we should think of kind of the revenue impact from the investment helping you maybe a little bit later on in fiscal Q4 and then the real impact is early next year?

Yes, we'll see part of that stuff in Q4. And certainly, the Canada stuff will get some Q4 impact. And then Q1, the stuff going to South America, may or may not get any Q4 impact, just depends when it gets out in the field.

And then where does the total channel count stand today for Mitcham? And then for those channels, how many are wireless?

Is that a trick question?

Well, don't hold me to this, but let see. It must be -- we must be on 260,000 or so right now, something like that.

260,000...

Yes, something like that.

6,7, 8, 9.

Wireless is 15-plus -- 5 plus 30..., so 55,000 -- 55,000, 60,000.

Second question from me is on Latin America. It's obviously been a challenging market over the last couple of years due to the permit issues and whatnot. Can you help us a little bit with maybe quantify and size the impact of the new jobs that have started and how you see that market actually progressing, maybe over the next 6 to 12 months?

We're stumbling here. So I mean, we're talking about large channel count jobs, meaning 5,000 to 10,000 channel jobs that either have started or are starting. And we see lots of jobs of that magnitude going into next year. But -- I will caution you, but it's still -- those issues are lessening. They're not gone away, though. So there still are jobs that are impacted by all these "permitting issues" that we are seeing some of them resolve themselves in some regions in Latin America, or in Colombia even. We're seeing that the problems not as great as they have been.

One of the things that we've seen, Ryan, is that when we first arrived a few years ago, most of the jobs that we were involved in were 2,000, 3,000, 4,000 channels. They were all cable systems. Now you look at wireless and we've got a 10,000-channel job starting. Oh, that's not true. Well, we got 15,000 channels. So that total job now is -- is around 30,000 channels. Some other jobs we're seeing are 8,000 to 10,000. So they're taking advantage of the wireless, and the norm of 2,000 to 4,000 now seems to be more in the 8,000 to 10,000 because of the wireless. Well, it's certainly easier to get around with the wireless equipment, and so I think we're seeing some bigger opportunities for us, larger channel count opportunities.

That makes sense. But, I guess, to that point, Bill, have any of those jobs actually begun so far in fiscal Q4, or are those just what you see on the horizon for next year?

We have jobs actually we're building today.

Our next question is from the line of Veny Aleksandrov with FIG Partners

My first question is, I'm trying to figure out Canada and Russia together. So Russia is going to be stronger, but Canada is going to be weaker. But then there is wireless equipment, so this is a positive. When we think about year-over-year -- and I know that it's too early and you still have to probably sign some contracts for Canada. But what's your take? Is it going to be flat to Russia plus Canada year-over-year, or a little bit worse or a little bit better?

Well, that's a tough one, Veny. I think, it could be flat year-over-year. It could be up a bit year-over-year. I mean, when you say there is weakness in Canada and there is, as you sit here today, certainly Canada is looking, absent from the new opportunities from the new wireless, is looking much weaker than last year. But there are still a variety of projects that are still out there that haven't been either led [ph] or decided yet. So there certainly is a possibility that we see a lot of uptake here in the last 30, 60 days, even as we get into January, February and see some work get out from the fourth quarter. So it's really, really difficult to tell right now. I think generally, we think it's flat to -- if it's up, it's up normally, I think.

Okay. My next question. You talked a lot about wireless and wireless going to Latin America and to Canada and that it should have meaningful impact. Are the economics different on a wireless contracts that they are on the wireline?

No, not really. I don't think so. No, from our standpoint, not materially different.

Okay. It's the number of channels that you guys always [ph] think as very positive figure.

Right. As Bill said, with wireless, you're seeing -- at least in Latin America, at least, you're seeing the channel count expand pretty dramatically because of the ability to do things with wireless where it didn't make as with cables there. So that certainly has an impact. But I think the overall economics aren't materially different.

Okay. And then my last question on the Seamap side. The sales slipped to the right, but you still had a very good quarter with aftermarket and maintenance and things like that. Was there anything big that you can point to, or [indiscernible] trend?

No, it's just kind of -- the general stuff, again, is there is nothing really large or significant in the quarter, just kind of the normal recurring stuff. Now is that a run rate going forward for the baseline stuff with our system sales? It is hard to say that, because there are still ups and downs for white collar sales and umbilical terminations and things like that. But clearly, we're seeing the baseline of business creep up as the installed base continues to expand.

Yes. There wasn't a big vessel and something stock plant and you had [indiscernible]..

No. No, it was not. No.

[Operator Instructions] Our next question is from the line of Gregg Hillman with First Wilshire Securities Management.

Bill, can you talk about just, I guess, at what price of oil does it affect your company or your business? And I was just wondering if just the improvements in technology bringing on additional supplies of natural gas and oil, in particular, horizontal drilling in that big ship from shale that supposed to cap remote natural gas deposits and compress them right there on the spot. But what's your take on that? And just the price of oil, whether with all the new supply in the United States where the price of oil could head toward $60 a barrel sometimes in the next 5 or 6 years?

Greg, that's a great question for my crystal ball. And I'm not sure that even it has the answer. Frankly, I don't know where that number is. I mean, we've seen that number -- over the past few years, we've seen it go from $140 to $35 and back into the $90s, and I think it's in around a $100. I don't know at what point people -- people being the oil companies say, "That's not it. They're always going to be in the oil and gas business." So does it -- when you look out there at the cancellations today, the cancellations in Canada, you wonder what the hell are they doing. Oil is $100 a barrel. Gas is whatever gas is and they're still canceling projects. You only have a short window every year in Canada, why would you not take advantage of it? I don't know the answer to that.

But in terms of this, what price do you think it affects you or the acryling [ph] activity? What's your sense of what price of oil?

Gregg, this is Rob. And that's really tough for us to know, because it's really what affects of oil companies; what's their hanging point; where they stop their exploration or reduce expiration. That's what really matters. So it's really their perception for things - more than the absolute process a point for profit of oil at any point in time. Oil prices are different in different parts of the world, and I think you're certainly seeing lower pricing in the U.S. right now because of supply issues. But, I think, the worldwide price of oil and gas for sure is very different. And again, when you work 80% plus outside the U.S., so I think that's probably more important point for us, what are the [indiscernible] measures and the national oil companies saying? And again, we have not seen them change their work plans. Do we have specific projects that were later canceled? Sure. But I don't think it changes overall the long-term picture.

Our next question is from the line of Joel Luton with Westlake Securities.

Could you give a little bit more color on what you think is going on in the U.S. markets and any sense of timing when that may start to improve?

No. Joe, I mean -- any other questions? I mean, what we've said in the past and what we -- I mean, when we kind of talk to the people that we know in the oil companies and -- I mean, it looks to us certainly like a lot of that money that they've had, a lot of funds going into seismic has been diverted into completions, more completions. I think when you look at the cost of a 10- or 12-stage frac, that's not cheap and somewhere -- and that money has to come from somewhere. And it cost X number of dollars to drill every well but, it cost a heck of a lot more to -- for a 6 or an 8 or a 10-stage frac than it does just to complete the -- a single completion. So I think we see some of that money being diverted. When does it come back come? I don't know. We certainly over the past few -- I'd say the past few sales meetings, the last month, 1.5 months, we've had a number of inquiries coming out of the U.S. But everything, again, is for first and second quarter of next year, not a whole lot for -- I say the first and second quarter. You talk about first quarter inquiries then you're probably talking about second quarter awards. So -- I mean, although for us it's certainly a pickup in our quoting, it hasn't turned into any jobs yet.

Okay. And one more question. This year, including equipment purchases, you've got a CapEx of $45 million. What -- any expectations for going into '15?

Yes. I mean, at this point, yes, I mean, we don't have any large purchases scheduled for next year. So we expect it to come off that a bit as we sit here today. But it's very early days on that right now to -- [indiscernible we're going to evaluate it as we go forward the next few weeks.

[Operator Instructions] I show there are no further questions at this time. I'd like to turn the conference back to management for any closing remarks.

Well, again, we'd like to thank you for joining us on this call and for your interest in Mitcham. We look forward to talking to you next year, I guess -- in 2014. And with that, we wish everybody a Merry Christmas, Happy New Year. And see you, talk to you soon. Thank you.

Ladies and gentlemen, this concludes the Mitcham Industries Third Quarter Earnings Call. Thank you for your participation. You may now disconnect.