Experts are questioning whether earthquakes happen more frequently due to increased oil and gas activities. Regardless of the claim, drillers aren’t taking any chances — and seismic data companies are cashing in as a result…
According to the European-Mediterranean Seismological Centre (EMSC) in France, a record 36,726 earthquakes were reported in 2013 — over 100 earthquakes per day!
The daily amount has nearly quadrupled since 2005 when just 10,010 earthquakes were detected.
Rest assured, this doesn’t mean that the Apocalypse is upon us.
Rather, vast improvements in seismic technology have been better able to detect smaller tremors (e.g. with magnitude of less than 2.5 on the Richter scale).
More earthquake detection stations are also being set up around the world, whereby increasing the level of earthquake reporting and accuracy.
But no matter how weak or strong an earthquake could be, the importance of seismic services is paramount to an ever-growing human population.
From risk mitigation to community planning, it’s becoming more crucial that governments and businesses step up their investments and resources into such studies. And many are doing just that.
Not only can the data collected help protect countless lives when disaster hits…billions of dollars in infrastructure costs can be saved as well.
And nowhere is this more apparent than in oil country.
As I had revealed a few months back, Democrats in Washington have requested hearings from their Republican counterparts in the House Energy and Commerce Committee to discuss possible seismic activities linked to hydraulic fracturing.
The request stemmed from a USGS study in October 2013 that suggested the highly probable correlation between the injection of wastewater and the uptick in tremors surrounding oil and gas projects in Oklahoma.
To date, there’s been no response from Republicans in the Committee.
However, despite the lack of progress in DC, some state regulators are taking matters into their own hands.
Most recently, the Ohio Department of Natural Resources (ODNR) announced that it would require companies seeking horizontal drilling permits within 3 miles of known fault lines or where previous quakes have occurred to install a network of seismic monitors.
Mark Bruce, a spokesman for ODNR explained that, “seismic testing will be done in real-time. If we see anything above [magnitude] 1.0, we’ll require them to stop.”
“We can then look at the data. If the seismic monitors show that it is down at the bedrock (below the fracturing), then it has nothing to do with the well and they can continue,” Bruce adds. “But if the disturbance is originating closer to the level of the well bore, operations will be suspended.”
ODNR is currently reviewing some 400 permits that were previously issued but haven’t been drilled to determine their locations in relation to areas with known seismic activity.
If any of the permits are found to require the installation of seismic networks before fracking can commence, then this geo-science company is likely going to get some lucrative phone calls.
Top Earthquake Stock To Buy Today:
Midland TX-based Dawson Geophysical Company (NASDAQ:DWSN) is a leading provider of onshore seismic data acquisition servicers in the lower 48 states and in Canada.
The Company provides seismic data for a wide range of clients, primarily in the oil and gas business. It has approximately 14 data collection teams fanned across the country and one team in Canada to set up their seismic systems.
Though it’s a relatively small firm with a market cap just shy of $230 million, it’s been in business for over sixty years.
For its fiscal year 2013, Dawson generated revenues of $305.3 million and net income of $10.5 million. Earnings per share were $1.31.
Its Q1 fiscal 2014 ended December 31st saw the distribution of its first-ever quarterly dividend, which was $0.08 per share.
At roughly $28, Dawson’s stock is well off its high-water mark of $85 back in 2007, but is up significantly from its 2009 low of $10 and has never fallen below $20 since.
Dawson also shows a solid balance sheet with approximately $66 million of working capital and $20 million in debt, of which some $11 million will be paid back in 2014.
One of the reasons why I see opportunity in Dawson now is because the Company, like many other midstreams, just went through a blistering cold winter season…which negatively impacted the utilization rate of their crews.
With spring’s arrival, Dawson is expected to be back to full utilization and is in the process of securing a number of microseismic projects in both the US and Canada.
If more states decide to follow the lead of Ohio, Dawson could be in for one busy and profitable year.