314606--3/15/2010--GEOKINETICS

related topics

{regulation, change, law}

{debt, indebtedness, cash}

{gas, price, oil}

{condition, economic, financial}

{customer, product, revenue}

{cost, regulation, environmental}

{operation, international, foreign}

{control, financial, internal}

{operation, natural, condition}

{loss, insurance, financial}

{system, service, information}

{product, market, service}

{personnel, key, retain}

{interest, director, officer}

{tax, income, asset}

We are subject to certain risks related to acquisitions, including the PGS Onshore acquisition, and these risks may materially adversely affect our revenues, expenses, operating results and financial condition. PGS Onshore may have liabilities which are not known to us. Our business largely depends on the exploration and development activity in the oil and natural gas industry. Economic conditions could negatively affect our business. We operate under hazardous conditions that subject us and our employees to risk of damage to property or personal injury and limitations on its insurance coverage may expose us to potentially significant liability costs. Historically, we have been dependent on a few customers operating in a single industry; the loss of one or more customers could adversely affect our financial condition and results of operations. We have invested, and expect to continue to invest, significant amounts of money in acquiring and processing seismic data for multi-client surveys and for our seismic data library without knowing precisely how much of this seismic data we will be able to sell or when and at what price we will be able to sell such data. The seismic data acquisition services industry is capital intensive and sources of cash to finance our capital expenditures may not always be available. If financing is not available, our results of operations will be negatively affected. Our high level of fixed costs can leave us vulnerable to downturns in revenues, which can result in losses. We face intense competition in our business that could result in downward pricing pressure and the loss of market share. We rely on a limited number of key suppliers for specific seismic services and equipment. Revenue derived from our projects may not be sufficient to cover our costs of completing those projects. As a result, our results of operations may be adversely affected. Our clients could delay, reduce or cancel their commitments or service contracts with us on short notice, which may lead to lower than expected demand and revenues. Our agreements with our clients may not adequately protect us from unforeseen events or address all issues that could arise with our clients. The occurrence of unforeseen events, or disputes with clients not adequately addressed in the contracts could result in increased liability, costs and expenses associated with any given project. We may be held liable for the actions of our subcontractors. Our results of operations can be significantly affected by currency fluctuations. Our operations outside of the United States are subject to additional political, economic, and other uncertainties that could adversely affect our business, financial condition or results of operations, and our exposure to such risks will increase as we expand our international operations. As a company subject to compliance with the Foreign Corrupt Practices Act (the "FCPA"), our business may suffer because our efforts to comply with U.S. laws could restrict our ability to do business in foreign markets relative to our competitors who are not subject to U.S. law. Any determination that we or our foreign agents or joint venture partners have violated the FCPA, may adversely affect our business and operations. We are subject to compliance with stringent environmental laws and regulations that may expose us to significant costs and liabilities. Current or future distressed financial conditions of customers could have an adverse impact on us in the event these customers are unable to pay us for the services we provide. Our seismic data acquisition services revenues are subject to seasonal conditions and customers' budgeting cycles. We may be unable to retain and attract management and skilled and technically knowledgeable employees. Our operating results from seismic data acquisition services can be significantly impacted from quarter to quarter due to a change in the timing of a few large jobs occurring at any one time. Our results of operations could be adversely affected by asset impairments. The cyclical nature of, or a prolonged downturn in, our industry, could affect the carrying value of our goodwill or other long-lived assets and negatively impact our earnings. Our substantial debt could adversely affect our financial health and prevent us from fulfilling our obligations. Our debt agreements contain restrictive covenants that may limit our ability to respond to changes in market conditions or pursue business opportunities. If we are unable to comply with the restrictions and covenants in our debt agreements, there could be a default under the terms of such agreements, which could result in an acceleration of repayment. To service our indebtedness, we require a significant amount of cash, and our ability to generate cash will depend on many factors beyond our control. There are inherent limitations in all control systems and failure of our controls and procedures to detect error or fraud could seriously harm our business and results of operations. We have identified material weaknesses in our internal controls, which could affect our ability to ensure timely and reliable financial reports and the ability of our auditors to attest to the effectiveness of our internal controls. Climate Change Legislation or Regulations could result in increased operating costs and reduced demand for the oil and gas our clients intend to produce. Significant physical effects of climatic change have the potential to damage our facilities, disrupt our production activities and cause us to incur significant costs in preparing for or responding to those effects. Federal legislation and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.

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314606--3/15/2010--GEOKINETICS_INC