TWST: Seismic is, I think, in most people's minds identified with exploration. However, it's an ongoing tool, a data collection and a process and review that goes on in production and reservoir monitoring. Could you give us little more insight into how robust those second areas of work for seismic are and what part of the value chain they play for the oil and gas companies?
Mr. Peebler: If you look at seismic imaging, you are absolutely correct. In the early days, it really started in almost pure exploration. And then the beachhead for 3-D was actually closer to development. And that's where they already had a sense of the large structures or the basins, but they wanted to go in and have a finer look at the subsurface to better drain a reservoir, and so they started doing 3-D shoots. As the volume of 3-D started increasing, and the costs started coming down, then they started saying, well, maybe we ought to also use 3-D in exploration. So the beachhead was in development, and then it started moving out to exploration. What's happened, though, in the last few years is now it's moved in the other direction. In addition to moving from development to exploration, it's also now starting to move from development into production. And that takes us into a whole new checkbook, if you want to think of it like that. The way oil companies organize is that they have sort of an exploration development budget ' where is the field (which is exploration play); let's start developing the field, and you delineate the features of the field through development wells and start strategically placing wells to better drain the reservoir; and then you get into actually massive production of the reservoir, and how is the fluid flow flowing through the reservoir compared to what we thought. That's where what's called time lapsed or 4-D seismic has come in, the fourth dimension being time. And actually this is merely taking a snapshot. It can be every six months, it can be every three months, it could be every other year depending on the nature of the reservoir. And then a reservoir engineer can see how the fluid flow is actually moving through the reservoir compared to its predictions. And because the earth really isn't very homogeneous, and in fact it is typically a lot more complex than our models can anticipate, it's fairly usual that the reservoir won't behave as originally modeled. So if you can use seismic to give you more information, then you can go back and readjust your models to reality, and that can change the engineering technologies ' whether you drill more wells or you change the completion technologies, but how you effectively get more out of the reservoir. That's really important. If you look at the history of our industry, the majority of structures in the world were found in the 1950s and 1960s, the superstructures, and since then we've had a few blips. We discovered deepwater in Gulf of Mexico, but the aggregate reservoirs, the majority of them, really were found in the 1950s, 1960s and early 1970s. And so now most of the play is to go back into existing structures and find substructures. But even a bigger play, to a certain extent, is how do we drain more from the existing reservoirs that we have and how do we drain them more efficiently. Even today with today's technology, it's not unusual for us to only get a third to half of the oil and gas out of reservoirs. So you could argue that there is more exploration-like production to be found in existing reservoirs through better production technologies and techniques than actually pure exploration. Also, if you look at the large companies, what we call the IOCs, which would be your Exxon Mobils, your BPs, those companies are having a more and more difficult time to find access to new exploration opportunities. Most of the future exploration opportunities lie in places like Russia and Libya and the Middle East, and those are very competitive with the NOCs (national oil companies), and they are competitive with each other. So you have to ask, where can they grow, and one way they can grow is grow with their current existing reservoirs just by draining them a lot more efficiently. So we think over time, that side of the business, late development production will become a bigger part of the seismic pie and it really is new dollars. If you look at the oil companies' exploration development, it tends to be in one budget and then production tends to be in another budget. And that budget has already been passed for seismic. The challenge is to get a reservoir engineer to appreciate the value of geophysics and see how he integrates that information into his standard reservoir models and techniques he has been using for years. So it is not a easy market, it's a slow market, it is a slow diffusion market, but we think year over year, we will see a slow to steady increase in that side.