UNITED STATES

  SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

[x]           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

[  ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-34709

GLOBAL GEOPHYSICAL SERVICES, INC.

(Name of registrant as specified in its charter)

DELAWARE	05-0574281
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
13927 South Gessner Road Missouri City, Texas	77489
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (713) 972-9200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    [x]                   No   [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes    [x]                  No   [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “accelerated filer”, “large accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (check one):

Large accelerated filer [  ] Accelerated filer [x] Non-accelerated filer [  ] Smaller reporting company[  ]

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes    [  ]                  No   [x]

At August 12, 2013, there were 38,090,479 shares of common stock, par value $0.01 per share, outstanding.

GLOBAL GEOPHYSICAL SERVICES, INC.

Table of Contents

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements	1
Consolidated Balance Sheets as of  June 30, 2013 (Unaudited) and  December 31, 2012	1
Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2013 and 2012 (Unaudited)	3
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012 (Unaudited)	4
Consolidated Statements of Stockholders’ Equity (Unaudited)	5
Notes to Consolidated Financial Statements	6
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.  Quantitative and Qualitative Disclosure About Market Risk	32
Item 4.  Controls and Procedures	32
PART II.  OTHER INFORMATION
Item 1.  Legal Proceedings	33
Item 1A.  Risk Factors	33
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.  Defaults Upon Senior Securities	33
Item 4.  Mine Safety Disclosures	33
Item 5.  Other Information	33
Item 6.  Exhibits	34
Signatures	35

GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 30, 2013		December 31, 2012
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	10,681	$	23,359
Restricted cash investments		1,440		1,830
Accounts receivable, net		43,153		51,766
Inventory		5,025		11,864
Income and other taxes receivable		815		1,472
Prepaid expenses and other current assets		28,644		21,480
TOTAL CURRENT ASSETS		89,758		111,771
MULTI-CLIENT LIBRARY, net		291,005		309,067
PROPERTY AND EQUIPMENT, net		91,502		100,172
GOODWILL		12,381		12,381
INTANGIBLE ASSETS, net		11,745		13,083
OTHER ASSETS		6,061		6,401
TOTAL ASSETS	$	502,452	$	552,875

See accompanying notes to consolidated financial statements.

1

GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In thousands, except par value and share amounts)

	June 30, 2013			December 31, 2012
	(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	37,609		$	42,597
Current portion of long-term debt		92,431			22,970
Current portion of capital lease obligations		4,410			5,639
Income and other taxes payable		2,491			3,563
Deferred revenue		13,111			22,498
Other payables		1,666			3,059
TOTAL CURRENT LIABILITIES		151,718			100,326
DEFERRED INCOME TAXES, net		17,396			27,073
LONG-TERM DEBT, net of current portion and unamortized discount		244,191			311,250
CAPITAL LEASE OBLIGATIONS, net of current portion		3,494			4,176
NON-CONTROLLING INTERESTS		758			997
OTHER LIABILITIES		958			1,505
TOTAL LIABILITIES		418,515			445,327
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value, 100.0 million shares authorized, 48.2 million shares and 47.6 million shares issued and 38.1 million shares and 37.6 million shares outstanding at June 30, 2013 and December 31, 2012, respectively		482			476
Additional paid-in capital		257,128			253,415
Accumulated deficit		(77,143	)		(49,815	)
		180,467			204,076
Less: treasury stock, at cost, 10.1 million shares and 10.0 million shares at June 30, 2013 and December 31, 2012, respectively		96,530			96,528
TOTAL STOCKHOLDERS’ EQUITY		83,937			107,548
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	502,452		$	552,875

See accompanying notes to consolidated financial statements.

2

GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	Three Month Period Ended June 30,						Six Month Period Ended June 30,
	2013			2012			2013			2012
	(unaudited)						(unaudited)
REVENUES	$	63,352		$	97,372		$	146,761		$	193,483
OPERATING EXPENSES		55,298			71,975			127,668			132,668
GROSS PROFIT		8,054			25,397			19,093			60,815
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES		20,609			12,086			36,649			27,626
INCOME (LOSS) FROM OPERATIONS		(12,555	)		13,311			(17,556	)		33,189
OTHER INCOME (EXPENSE)
Interest expense, net		(8,430	)		(7,934	)		(16,799	)		(15,049	)
Foreign exchange gain (loss)		(133	)		(939	)		44			(1,049	)
Other expense, net		(185	)		(236	)		(228	)		(420	)
TOTAL OTHER EXPENSE		(8,748	)		(9,109	)		(16,983	)		(16,518	)
INCOME (LOSS) BEFORE INCOME TAXES		(21,303	)		4,202			(34,539	)		16,671
INCOME TAX EXPENSE (BENEFIT)		(5,402	)		1,706			(6,972	)		7,455
INCOME (LOSS) AFTER INCOME TAXES		(15,901	)		2,496			(27,567	)		9,216
NET LOSS, attributable to non-controlling interests		(115	)		(50	)		(239	)		(260	)
NET INCOME (LOSS), attributable to common shareholders	$	(15,786	)	$	2,546		$	(27,328	)	$	9,476
INCOME (LOSS) PER COMMON SHARE
Basic	$	(0.42	)	$	0.07		$	(0.72	)	$	0.26
Diluted	$	(0.42	)	$	0.07		$	(0.72	)	$	0.26
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		37,985			37,247			37,871			37,143
Diluted		37,985			37,247			37,871			37,143

See accompanying notes to consolidated financial statements.

3

GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Six Month Period Ended June 30,
	2013			2012
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss), attributable to common shareholders	$	(27,328	)	$	9,476
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation (net) and amortization expense		89,511			63,158
Non-cash revenue from Multi-client data exchange		-			(4,442	)
Deferred tax expense (benefit)		(9,677	)		3,344
Gain on sale of assets		(2,925	)		(9,881	)
Other		4,502			3,586
Effects of changes in operating assets and liabilities
Accounts receivable, net		8,613			10,020
Inventory		(1,731	)		-
Prepaid expenses and other current assets		(5,564	)		(2,234	)
Accounts payable and accrued expenses		(4,988	)		(14,458	)
Deferred revenue		(9,387	)		(1,105	)
Other		(865	)		2,352
NET CASH PROVIDED BY OPERATING ACTIVITIES		40,161			59,816
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(6,559	)		(18,949	)
Investment in Multi-client library		(51,355	)		(79,770	)
Investment in unconsolidated affiliate		(250	)		(500	)
Change in restricted cash investments		390			2,818
Purchase of intangibles		(1,637	)		(2,849	)
Proceeds from involuntary conversion of assets		2,100			-
Proceeds from sale of assets		4,599			14,107
NET CASH USED IN INVESTING ACTIVITIES		(52,712	)		(85,143	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from long-term debt		906			49,280
Net proceeds from (payments on) revolving credit facility		855			(16,940	)
Debt issuance costs		(250	)		(1,364	)
Proceeds from sale and leaseback transaction		1,940			-
Principal payments on capital lease obligations		(3,911	)		(3,665	)
Purchase of treasury stock		(2	)		(1	)
Issuances of stock		335			432
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(127	)		27,742
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(12,678	)		2,415
CASH AND CASH EQUIVALENTS, beginning of period		23,359			21,525
CASH AND CASH EQUIVALENTS, end of period	$	10,681		$	23,940

See accompanying notes to consolidated financial statements.

4

GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, unaudited)

	Common Stock		Additional Paid-in Capital		Treasury Stock			Accumulated Deficit			Total Stockholders' Equity
Balances at January 1, 2013	$	476	$	253,415	$	(96,528	)	$	(49,815	)	$	107,548
Issuance of common stock		6		327		-			-			333
Compensation expense associated with stock grants		-		3,386		-			-			3,386
Purchase of treasury stock		-		-		(2	)		-			(2	)
Net loss		-		-		-			(27,328	)		(27,328	)
Balances at June 30, 2013	$	482	$	257,128	$	(96,530	)	$	(77,143	)	$	83,937

See accompanying notes to consolidated financial statements.

5

GLOBAL GEOPHYSICAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of Global Geophysical Services, Inc. and its controlled subsidiaries (collectively, the “Company” unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company provides an integrated suite of seismic data solutions to the global oil and gas industry.

The consolidated financial statements of the Company as of and for the three and six months ended June 30, 2013 are unaudited and have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2012. In the opinion of management, the accompanying unaudited financial information includes all adjustments necessary for a fair presentation of the interim financial information. Operating results for the interim periods are not necessarily indicative of the results of any subsequent periods. Certain information in the footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) has been condensed or omitted for the interim periods presented under the United States Securities and Exchange Commission (“SEC”) rules and regulations. As such, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Certain amounts in the 2012 consolidated financial statements have been reclassified to conform to the classifications in the 2013 consolidated financial statements.

NOTE 2 - SELECTED BALANCE SHEET ACCOUNTS

Prepaid expenses and other current assets included the following (in thousands):

	June 30, 2013		December 31, 2012
	(unaudited)
Assets held for sale	$	4,268	$	4,878
Prepaid expenses		3,798		1,181
Mobilization costs, net		4,830		998
Note receivable, current portion		806		1,750
Insurance proceeds receivable		2,269		-
Current deferred tax asset		12,673		12,673
Total prepaid expenses and other current assets	$	28,644	$	21,480

Other current assets included certain property and equipment which was identified as held for sale. The Company classifies assets as held for sale and ceases the depreciation and amortization of the assets when there is a plan for disposal of the assets and those assets meet the held for sale criteria as defined in FASB ASC 360 “Plant, Property and Equipment”. These assets were recorded at the lower of their carrying value or their fair value based on current market conditions.

Accounts receivable, net included the following (in thousands):

	June 30, 2013			December 31, 2012
	(unaudited)
Accounts receivable, trade	$	22,226		$	38,511
Unbilled		25,067			16,321
Allowance for doubtful accounts		(4,140	)		(3,066	)
Accounts receivable, net	$	43,153		$	51,766

The Company occasionally experiences disagreements or disputes with customers relating to amounts charged by the Company. When management determines that amounts relating to such disputes are uncollectable, a charge to bad debt expense is recorded in the period such a determination is made. Bad debt expense, net of recovery for the three months ended June 30, 2013 and 2012 was $0.1 million and zero, respectively, and $1.1 million and $2.9 million for the six months ended June 30, 2013 and 2012, respectively.

6

Other assets included the following (in thousands):

	June 30, 2013		December 31, 2012
	(unaudited)
Debt issuance costs, net	$	5,224	$	5,689
Investment in unconsolidated affiliate		463		441
Other		374		271
Total other assets	$	6,061	$	6,401

NOTE 3 - INVENTORY

The Company identifies certain recording systems produced or held for sale as inventory. Inventory consists primarily of finished products. Inventory is stated at the lower of cost or net realizable value. Cost of inventory is determined by using the first-in, first-out method. The Company periodically reviews its inventory and makes provisions for damaged, missing or obsolete inventory.

NOTE 4 - MULTI-CLIENT LIBRARY

Multi-client library included the following (in thousands):

	June 30, 2013		December 31, 2012
	(unaudited)
Multi-client library, at cost	$	709,423	$	655,477
Less: accumulated Multi-client library amortization		418,418		346,410
Multi-client library, net	$	291,005	$	309,067

Multi-client library amortization expense for the three months ended June 30, 2013 and 2012 was $24.4 million and $25.8 million, respectively, and $72.0 million and $48.1 million for the six months ended June 30, 2013 and 2012, respectively.

The Company entered into a strategic License and Marketing Agreement dated as of March 28, 2013 (“the Agreement”) with SEI-GPI JV LLC, a limited liability company jointly owned by Seismic Exchange, Inc. and Geophysical Pursuit, Inc., hereinafter referred to as “SEI/GPI”. Under the terms of the Agreement, SEI/GPI, as licensee, will provide exclusive marketing services for a substantial portion of the Company’s North American onshore data library. The Agreement provided for a $25.0 million non-refundable license fee payable upon execution of the Agreement. For the three and six months ended June 30, 2013, the Company recorded late sale revenues of $1.0 million and $24.3 million, respectively, representing the portion of the license fee related to completed library assets. The remaining $0.7 million, representing the uncompleted portion of ongoing surveys, is recorded as deferred revenue and will be recognized in accordance with the Company’s proportionate performance revenue recognition policy. SEI/GPI receives, as compensation for marketing the data, a commission on all gross revenues resulting from the sub-licensing of the data subject to the Agreement. Revenues for sub-licenses issued by SEI/GPI as licensee pursuant to the Agreement are accounted for at gross, with the commission being recorded and classified as Selling, General and Administrative expense in the Company’s Consolidated Statements of Operations. For the three and six months ended June 30, 2013, the Company recorded $5.9 million of commission expense.

In connection with the Agreement, the Company evaluated certain Multi-client surveys for impairment. The impairment test compared the future cash flows from the surveys to their carrying value. If estimated future net cash flows exceeded the carrying value of the Multi-client asset, no impairment was required. If the carrying value exceeded estimated future net cash flows, the estimated future net cash flows were discounted to determine the survey’s estimated fair value. The variance between the discounted estimates of future net cash flows and the carrying value of respective Multi-client survey was recorded as impairment and the Multi-client survey’s carrying value was correspondingly reduced. For the three and six months ended June 30, 2013, the Company recorded an impairment charge of zero and $13.0 million, respectively, classified in the Consolidated Statements of Operations as Multi-client library amortization expense.

For the six months ended June 30, 2013, the Company recorded $13.8 million of amortization expense related to the $24.3 million of late sale revenues.

7

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment, net included the following (in thousands): 

	June 30, 2013		December 31, 2012
	(unaudited)
Machinery and equipment	$	302,195	$	308,039
Computers and software		19,658		19,661
Buildings		13,601		13,601
Boats		7,634		7,634
Land		2,157		2,157
Furniture and fixtures		103		103
		345,348		351,195
Less: accumulated depreciation		266,220		258,248
		79,128		92,947
Construction in process		12,374		7,225
Property and equipment, net	$	91,502	$	100,172

In May 2013, a fire destroyed a warehouse in Colombia that contained Company equipment with a net book value of approximately $4.4 million. The equipment destroyed in the fire was insured and the Company expects to recover, at a minimum, the net book value of the equipment lost in the fire. As of June 30, 2013, the Company received a partial settlement for the loss of $2.1 million and recorded a receivable of $2.3 million from its insurance carriers as a component of prepaid expenses and other current assets in the Consolidated Balance Sheet. Subsequent to June 30, 2013, the Company collected $0.9 million of the insurance receivable.

The following table provides an analysis of depreciation expense (in thousands):

	Three Month Period Ended June 30,				Six Month Period Ended June 30,
	2013		2012		2013		2012
	(unaudited)				(unaudited)
Gross depreciation expense	$	9,454	$	9,519	$	18,486	$	19,584
Less: capitalized depreciation for Multi-client library		895		3,117		2,591		6,076
Depreciation (net)	$	8,559	$	6,402	$	15,895	$	13,508

NOTE 6 - GOODWILL AND OTHER INTANGIBLES

Goodwill and other intangibles included the following (in thousands):

	June 30, 2013		December 31, 2012
	(unaudited)
Customer list	$	3,984	$	3,984
Trademark		1,759		1,759
Patents		3,913		3,913
Non-compete agreements		1,057		1,057
Intellectual property		9,154		8,883
		19,867		19,596
Less: accumulated amortization		8,122		6,513
Total intangible assets, net		11,745		13,083
Goodwill		12,381		12,381
Total goodwill and other intangibles, net	$	24,126	$	25,464

8

Intangible assets subject to amortization are amortized on a straight-line basis over their estimated useful lives, which are between two and fifteen years. Amortization expense for the three months ended June 30, 2013 and 2012 was $0.8 million and $0.8 million, respectively, and $1.6 million and $1.5 million for the six months ended June 30, 2013 and 2012, respectively. For the three months ended June 30, 2013 and 2012, the Company capitalized $0.2 million and $0.3 million, respectively, of development costs related to internal use software as a component of intellectual property. For the six months ended June 30, 2013 and 2012, the Company capitalized $0.3 million and $1.4 million, respectively, of development costs related to internal use software as a component of intellectual property.

NOTE 7 - INCOME TAXES

The Company provides for income taxes during interim periods based on an estimate of the effective tax rate for the year.  Discrete items and changes in the estimate of the annual effective tax rate are recorded in the period in which they occur.

The Company assesses the likelihood that deferred tax assets will be recovered from the existing deferred tax liabilities or future taxable income in each jurisdiction. To the extent the Company believes that recovery will not meet the more likely than not threshold, it establishes a valuation allowance. The Company has recorded valuation allowances in several non-US jurisdictions for its net deferred tax assets since management believes it is more likely than not that these assets will not be realized because the future taxable income necessary to utilize these losses cannot be established or projected or the Company no longer has activities in these jurisdictions.

The effective income tax rate for the three months ended June 30, 2013 and 2012 was 25.4% and 40.6%, respectively. The effective income tax rate for the six months ended June 30, 2013 and 2012 was 20.2% and 44.7%, respectively. The Company’s effective income tax rate in 2013 and 2012 differs from the federal statutory rate primarily due to state income taxes, non-deductible expenses, foreign tax credit limitations, tax rate differential from non-US activities, and valuation allowances related to non-US jurisdictions.

NOTE 8 - LONG-TERM DEBT

Long-term debt included the following (in thousands):

	June 30, 2013		December 31, 2012
	(unaudited)
Senior notes	$	250,000	$	250,000
Revolving credit facility		79,915		79,060
Promissory notes		10,781		11,204
Notes payable - insurance		2,135		806
		342,831		341,070
Less: unamortized discount		6,209		6,850
		336,622		334,220
Less:  current portion		92,431		22,970
Long-term debt, net of current portion and unamortized discount	$	244,191	$	311,250

9

Senior Notes: On April 27, 2010, the Company issued $200.0 million aggregate principal amount of its 10.5% senior notes due 2017 (the “Notes”) pursuant to exemptions from registration under the Securities Act of 1933. The Company’s net proceeds from the offering were approximately $188.1 million after deducting the initial purchasers’ discounts, offering expenses and original issue discount.

The Notes represent general unsecured, senior obligations of the Company and are unconditionally guaranteed as to principal, premium, if any, and interest by the Company’s domestic subsidiaries (the “Guarantors”) on a senior unsecured basis.

The Company used the proceeds from the offering and sale of the Notes to repay outstanding indebtedness and used the remaining proceeds for capital expenditures and for general corporate purposes.

The Notes were issued under an Indenture with The Bank of New York Mellon Trust Company, N.A., (the “Trustee”).

On March 28, 2012, the Company issued an additional $50.0 million aggregate principal amount of its 10.5% senior notes due 2017 pursuant to exemptions from registration under the Securities Act of 1933. The net proceeds to the Company from the issuance were approximately $47.0 million after deducting the initial purchasers’ discounts, offering expenses and original issue discount. On September 28, 2012, the Company issued $50.0 million in aggregate principal amount of its 10.5% senior notes due 2017 that were registered under the Securities Act of 1933 (the “New Notes”) in exchange for an identical amount of the unregistered notes issued on March 28, 2012.

The New Notes represent general unsecured, senior obligations of the Company. The New Notes are unconditionally guaranteed as to principal, premium, if any, and interest by the Guarantors on a senior unsecured basis.

The Company used the proceeds from the offering and sale of the New Notes to repay outstanding indebtedness under its existing Revolving Credit Facility.

The New Notes are covered under the terms of an Indenture dated March 28, 2012. The Notes and the New Notes are hereinafter collectively referred to as the “Senior Notes”. The following is a brief summary of the material terms and conditions of the Senior Notes’ Indentures.

Interest — The Senior Notes bear interest at a rate of 10.5% per annum and interest is paid semi-annually, in arrears, on May 1 and November 1 of each year.

Principal and Maturity — The Senior Notes were issued with a $250.0 million aggregate principal amount and will mature on May 1, 2017.

Optional Redemption by the Company — On or after May 1, 2014, the Company may redeem the Senior Notes at the following percentages of the original principal amount: (i) 105.250% from May 1, 2014 to April 30, 2015; (ii) 102.625% from May 1, 2015 to April 30, 2016; and (iii) 100% from May 1, 2016 and thereafter.

Repurchase Obligations by the Company — Upon a change of control of the Company (as defined in the Indentures), each holder of the Senior Notes may require the Company to purchase their Senior Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase.

Restrictive Covenants — The Indentures relating to the Senior Notes contain restrictive covenants that limit, among other things, certain restricted payments in respect of the Company’s equity interests and any subordinated debt, dividend restrictions affecting subsidiaries, incurrence of additional indebtedness and issuances of disqualified stock, certain asset sales and mergers with other entities, and certain liens (other than permitted liens).

Events of Default — The Indentures for the Senior Notes also contain events of default including, but not limited to, the following: (i) nonpayment; (ii) defaults in certain other indebtedness of the Company or the Guarantors; and (iii) the failure of the Company or the Guarantors to comply with their respective covenants in the event of a mandatory redemption, optional redemption, option to repurchase, or a merger, consolidation or sale of assets. Upon an event of default, the holders of the Senior Notes or the Trustee may declare the Senior Notes due and immediately payable. As of June 30, 2013, the Company was in compliance with all respective Indenture covenants.

10

Debt Issuance Costs: Costs related to the issuance of debt are capitalized and amortized as a component of interest expense using the effective interest method over the maturity period of the related debt. Accumulated amortization was $2.8 million and $2.0 million at June 30, 2013 and December 31, 2012, respectively.

Bank of America Revolving Credit Facility: On April 30, 2010, the Company entered into a revolving credit facility under the terms of a Credit Agreement (the “Revolving Credit Facility”) with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and each lender from time to time party thereto. The Revolving Credit Facility provided for borrowings of up to $50.0 million with a maturity date of April 30, 2013. On June 9, 2011, the Company amended the Revolving Credit Facility to provide for borrowings of up to $70.0 million under substantially similar terms. The loans under the Revolving Credit Facility bear interest at a rate equal to LIBOR plus the Applicable Rate or the Base Rate plus the Applicable Rate. The Base Rate is defined as the higher of (x) the prime rate or (y) the Federal Funds rate plus 0.50%. The Applicable Rate is defined as a percentage determined in accordance with a pricing grid based upon the Company’s leverage ratio, that will decline from LIBOR plus 4.00% or the prime rate plus 3.00% to a minimum rate equal to LIBOR plus 3.50% or the prime rate plus 2.50%. The Company may prepay borrowings under the Revolving Credit Facility at any time without penalty or premium, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of LIBOR borrowings. The Company also pays a commitment fee of 0.75% per annum on the actual daily unused portions of the Revolving Credit Facility.

The Company’s Revolving Credit Facility is secured by a first priority lien on substantially all of the Company’s assets, the assets of the Company’s non-foreign subsidiaries, the stock of the Company’s non-foreign subsidiaries and 66% of the stock of certain of the Company’s foreign subsidiaries. In addition, the Company’s non-foreign subsidiaries guarantee the Company’s obligations under the Revolving Credit Facility.

The terms of the Revolving Credit Facility limit the Company’s ability and the ability of certain of the Company’s subsidiaries to, among other things: incur or guarantee additional indebtedness; grant additional liens on the Company’s assets; make certain investments or certain acquisitions of substantially all or a portion of another entity’s business or assets; merge with another entity or dispose of the Company’s assets; pay dividends; enter into transactions with affiliates; engage in other lines of business and repurchase stock.

Additionally, the Revolving Credit Facility requires that the Company maintain certain ratios of total senior, secured debt to consolidated EBITDA (as defined therein), and of consolidated EBITDA to consolidated interest. The Revolving Credit Facility includes customary provisions with respect to events of default. Upon the occurrence and continuation of an event of default under the Revolving Credit Facility, the lenders have the right to, among other things, terminate their revolving loan commitments, accelerate the repayment of the loans outstanding and declare the same to be immediately due and payable. As of June 30, 2013, the Company was in compliance with all respective Revolving Credit Facility covenants.

On July 20, 2012, the Company further amended the Revolving Credit Facility (the “Third Amendment”), with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Credit Suisse AG, Cayman Islands Branch, as Syndication Agent and a Lender, Barclays Bank PLC, and Citibank, N.A (collectively, the “Lenders” and individually, a “Lender”). Under the Third Amendment, the maximum amount of permitted borrowings under the Revolving Credit Facility was increased to $85.0 million until the initial Maturity Date of April 30, 2013, at which point the maximum amount of permitted borrowings was reduced to $67.5 million and the Maturity Date of the Revolving Credit Facility was extended to April 30, 2014 (the “Extended Maturity Date”). Under the Third Amendment, the Company, as Borrower, has the right to request an increase in lending commitments by an additional $10.0 million subject to the requirements of the Revolving Credit Facility until the Extended Maturity Date.

On April 24, 2013, the Company entered into the fourth amendment (the “Fourth Amendment”) to the Company’s Revolving Credit Facility with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Barclays Bank PLC, and Citibank, N.A. The Company has requested and certain of the Lenders have agreed to assume a portion of certain expiring commitments and extend such Lenders’ respective Commitments and/or the expiration thereof on the terms and conditions set forth in the Amendment. Under the Fourth Amendment, the permitted borrowings under the Revolving Credit Facility was reduced to $80.0 million until the initial Maturity Date of September 30, 2013, at which point the maximum permitted borrowings under the Revolving Credit Facility is reduced to $67.5 million through the Maturity Date of the Revolving Credit Facility on April 30, 2014. As of June 30, 2013, borrowings outstanding under the Revolving Credit Facility aggregated $79.9 million. The Company currently intends to refinance the Revolving Credit Facility prior to its maturity. The Company may also fund the scheduled reduction in commitments under the Revolving Credit Facility through cash generated from operations.

11

Promissory Notes: From time to time, the Company issues short term promissory notes to various foreign financial institutions to finance equipment purchases and working capital needs for foreign operations.  The balance outstanding under these promissory notes as of June 30, 2013 and December 31, 2012 was $10.2 million and $10.4 million, respectively, at weighted average interest rates of 9.3% and 9.1%, respectively.

In January 2011, the Company issued a non-interest bearing promissory note related to the acquisition of STRM LLC. The balance outstanding under the promissory note as of June 30, 2013 and December 31, 2012 was $0.6 million and $0.8 million, respectively.

Notes Payable - Insurance: In exchange for insurance services provided, the Company from time to time issues negotiable promissory notes. The balance outstanding under these promissory notes as of June 30, 2013 and December 31, 2012 was $2.1 million and $0.8 million, respectively, at weighted average interest rates of 3.4% and 3.4%, respectively.

Letter of Credit Facility:  In February 2007, the Company entered into a $10.0 million revolving line of credit which was secured by restricted cash.  The terms of the letter of credit facility as currently written only allow for letters of credit to be drawn on the available credit; however, the cash balance in excess of the total outstanding letters of credit may be withdrawn by the Company at any time.  As of June 30, 2013 and December 31, 2012, the letters of credit outstanding were $1.4 million and $1.8 million, respectively.

NOTE 9 – CAPITAL LEASE

From time to time, the Company enters into leases and sale and leaseback transactions to acquire certain seismic equipment, computer equipment and vehicles that are accounted for as capital leases. The balance outstanding under these capital leases as of June 30, 2013 and December 31, 2012 was $7.9 million and $9.8 million, respectively, at weighted average interest rates of 5.7% and 5.3%, respectively.

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NOTE 10 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows ASU 2011-04 “Fair Value Measurement” as it relates to financial assets and financial liabilities, which defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements.  The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements.

This guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.   Hierarchical levels, as defined in this guidance and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities are as follows:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Inputs that are both significant to the fair value measurement and unobservable.

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the financial instruments that could have been realized as of June 30, 2013 or that will be realized in the future and do not include expenses that could be incurred in an actual sale or settlement.

In the normal course of operations, the Company is exposed to market risks arising from adverse changes in interest rates.  Market risk is defined for these purposes as the potential for change in the fair value of debt instruments resulting from an adverse movement in interest rates.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and current debt approximate their fair value due to the short maturity of those instruments, and therefore, have been excluded from the table below.  The fair value of the Notes is determined by multiplying the principal amount by their market price.  The following table sets forth the level 1 fair value of the Company’s financial assets and liabilities as of June 30, 2013 and December 31, 2012 (in thousands):

	June 30, 2013				December 31, 2012
	(unaudited)
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
$200.0 million senior notes	$	196,194	$	174,000	$	195,801	$	178,000
$50.0 million senior notes	$	47,597	$	43,500	$	47,349	$	44,500

The Company is not a party to any hedge arrangements, commodity swap agreements or other derivative financial instruments.

The Company utilizes foreign subsidiaries and branches to conduct operations outside of the United States. These operations expose the Company to market risks from changes in foreign exchange rates.

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NOTE 11 - STOCK-BASED COMPENSATION

The Company follows ASC 718 “Compensation – Stock Compensation” for share-based payments which requires all stock-based payments, including stock options, to be recognized as an operating expense over the vesting period, based on their grant date fair values.

In July 2006, the Company’s board of directors and stockholders adopted the Global Geophysical Services, Inc. 2006 Incentive Compensation Plan (the “2006 Incentive Plan”).  The 2006 Incentive Plan provides for a variety of incentive awards, including nonstatutory stock options, incentive stock options within the meaning of Section 422 of the Internal Revenue Code, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based awards, and other stock-based awards.  A total of 9,203,058 shares of common stock are reserved for issuance under the 2006 Incentive Plan.  

Stock Options:  The Company estimates the fair value of each stock option on the date of grant using the Black-Scholes-Merton valuation model.  The volatility is based on expected volatility over the expected life of eighty-four months.  As the Company has not historically declared dividends, the dividend yield used in the calculation is zero. Actual value realized, if any, is dependent on the future performance of the Company’s common stock and overall stock market conditions.  There can be no assurance the value realized by an optionee will be at or near the value estimated by the Black-Scholes-Merton model.

The Company did not grant any stock options during the six months ended June 30, 2012. The following assumptions were used for the six month period ended June 30, 2013:

	Six Month Period Ended June 30, 2013
Risk-free interest rate		1.19	%
Expected lives (in years)		7
Expected dividend yield		0.00	%
Expected volatility		78.76	%

The computation of expected volatility during the six months ended June 30, 2013 was based on historical volatility. Historical volatility was calculated from historical data for the time approximately equal to the expected term of the option award starting from the grant date. The risk-free interest rate assumption is based upon the U.S. Treasury yield curve in effect at the time of grant for the period corresponding with the expected life of the option.

Option activity for the six months ended June 30, 2013 is summarized as follows:

	Number of Optioned Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Weighted Average Optioned Grant Date Fair Value
Balance as of December 31, 2012		1,893,200		$	22.87			$	5.30
Expired		-			-				-
Granted		1,000,000			3.51				3.51
Exercised		-			-				-
Forfeited		(272,200	)		22.80				5.81
Balance at June 30, 2013		2,621,000		$	15.49		5.06	$	4.56
Exercisable as of June 30, 2013		1,505,075		$	22.61		5.04	$	4.97

Through June 30, 2013, a total of 5,830,400 options have been granted and 3,209,400 have been forfeited.

Compensation expense associated with stock options for the three months ended June 30, 2013 and 2012 was $0.5 million and $0.3 million, respectively, and $0.8 million and $0.7 million for the six months ended June 30, 2013 and 2012, respectively, and was included in Selling, General and Administrative expenses in the Consolidated Statements of Operations. At June 30, 2013 and 2012, the Company had 1,115,925 and 412,250 of non-vested stock option awards, respectively. The total cost of non-vested stock option awards which the Company had not yet recognized at June 30, 2013 and 2012 was $3.0 million and $2.1 million, respectively.  Such amount at June 30, 2013 is expected to be recognized approximately over a period of four years.

14

Restricted Stock:  To encourage retention and performance, the Company granted certain employees and consultants restricted shares of common stock with a fair value per share determined by multiplying the stock price on the date of the award by the number of shares awarded. Restricted stock activity for the six months ended June 30, 2013 is summarized as follows:

	Number of Nonvested Restricted Share Awards			Weighted Average Grant Date Fair Value
Balance as of December 31, 2012		976,976		$	6.72
Granted		490,147			3.45
Vested		(165,255	)		11.20
Forfeited		(185,321	)		9.60
Balance at June 30, 2013		1,116,547		$	4.14

Compensation expense associated with restricted stock for the three months ended June 30, 2013 and 2012 was $0.9 million and $1.2 million, respectively, and $2.6 million and $2.3 million for the six months ended June 30, 2013 and 2012, respectively, and was included in Selling, General and Administrative expenses in the Consolidated Statements of Operations. The total cost of non-vested stock awards which the Company has not yet recognized at June 30, 2013 and 2012 was approximately $4.8 million and $7.4 million, respectively. This amount is expected to be recognized over the next three years.

Employee Stock Purchase Plan: The Company maintains an Employee Stock Purchase Plan (“ESPP”), under which employees can choose to have a portion of their earnings withheld, subject to certain restrictions, to purchase the Company's common stock. The purchase price of the stock is 85% of the lower of the stock price at the beginning or end of the plan period at three-month intervals. The expense related to the ESPP for the three and six months ended June 30, 2013 and 2012 was immaterial to the consolidated financial statements. 

NOTE 12 - EARNINGS (LOSS) PER SHARE

The Company follows ASC 260 “Earnings Per Share” for share-based payments which are considered as participating securities. All share-based payment awards that contained non-forfeitable rights to dividends, whether paid or unpaid, were designated as participating securities and included in the computation of earnings per share (“EPS”).

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	Three Month Period Ended June 30,					Six Month Period Ended June 30,
	2013			2012		2013			2012
	(unaudited)					(unaudited)
Net income (loss), attributable to common shareholders	$	(15,786	)	$	2,546	$	(27,328	)	$	9,476
Basic weighted average shares outstanding		37,985			37,247		37,871			37,143
Diluted
Shares issuable from the assumed conversion of stock options		-			-		-			-
Total		37,985			37,247		37,871			37,143
Basic income (loss) per share	$	(0.42	)	$	0.07	$	(0.72	)	$	0.26
Diluted income (loss) per share	$	(0.42	)	$	0.07	$	(0.72	)	$	0.26

As of June 30, 2013 and 2012, 2,621,000 and 2,116,400 out-of-the-money stock options have been excluded from diluted earnings per share because they are considered anti-dilutive.

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NOTE 13 - SUPPLEMENTAL CASH FLOW INFORMATION

The following provides supplemental cash flow information (in thousands):

	Six Month Period Ended June 30,
	2013		2012
	(unaudited)
Interest paid	$	15,567	$	13,475
Income taxes paid	$	2,689	$	3,249

The following provides supplemental disclosure of non-cash investing and financing activities (in thousands):

	Six Month Period Ended June 30,
	2013		2012
	(unaudited)
Property and equipment additions transferred from inventory	$	8,571	$	-
Property and equipment disposal recoverable through insurance proceeds	$	2,269	$	-
Property and equipment additions financed through capital leases	$	-	$	1,202
Non-cash Multi-client data swap asset recorded as deferred revenue	$	-	$	146
Original issue discount on notes payable	$	-	$	3,000
Non-cash property and equipment additions associated with swap of property and equipment	$	-	$	7,500
Non-cash property and equipment additions associated with data swap	$	-	$	1,751
Purchase price not paid at close of acquisition	$	-	$	2,993

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NOTE 14 – SEGMENT INFORMATION

In accordance with the way management views the business, the Company has two reportable segments: Proprietary Services and Multi-client Services.

The following table sets forth significant information concerning the Company’s reportable segments as of and for the three and six months ended June 30, 2013 and 2012 (in thousands):

	As of and for the Three Month Period Ended June 30, 2013 (Unaudited)
	Proprietary Services			Multi-Client Services		Corporate			Total
Revenues	$	26,774		$	36,578	$	-		$	63,352
Segment income (loss) before taxes	$	(9,760	)	$	5,223	$	(16,766	)	$	(21,303	)
Segment assets	$	30,778		$	311,153	$	160,521		$	502,452

	As of and for the Three Month Period Ended June 30, 2012 (Unaudited)
	Proprietary Services		Multi-Client Services		Corporate			Total
Revenues	$	58,578	$	38,794	$	-		$	97,372
Segment income (loss) before taxes	$	4,719	$	7,851	$	(8,368	)	$	4,202
Segment assets	$	54,078	$	299,731	$	184,560		$	538,369

	As of and for the Six Month Period Ended June 30, 2013 (Unaudited)
	Proprietary Services			Multi-Client Services		Corporate			Total
Revenues	$	54,210		$	92,551	$	-		$	146,761
Segment income (loss) before taxes	$	(15,188	)	$	5,065	$	(24,416	)	$	(34,539	)
Segment assets	$	30,778		$	311,153	$	160,521		$	502,452

	As of and for the Six Month Period Ended June 30, 2012 (Unaudited)
	Proprietary Services		Multi-Client Services		Corporate			Total
Revenues	$	123,413	$	70,070	$	-		$	193,483
Segment income (loss) before taxes	$	17,629	$	12,826	$	(13,784	)	$	16,671
Segment assets	$	54,078	$	299,731	$	184,560		$	538,369

NOTE 15 – RECENTLY ISSUED ACCOUNTING STANDARDS

During the six months ended June 30, 2013, there were no newly issued accounting standards that could have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. Please refer to the discussion of recently issued accounting standards included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

NOTE 16 – GUARANTEES OF REGISTERED SECURITIES

The Senior Notes are fully and unconditionally guaranteed, on a joint and several basis, by all subsidiaries of the Company organized in the United States. The non-guarantor subsidiaries are comprised of all subsidiaries organized outside of the United States.

Separate condensed consolidating financial statement information for the guarantor subsidiaries and non-guarantor subsidiaries as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012 is as follows (in thousands):

17

	As of June 30, 2013 (Unaudited)
	Guarantors		Non-guarantors			Eliminations			Consolidated
BALANCE SHEET
ASSETS
Current assets	$	137,377	$	15,697		$	(63,316	)	$	89,758
Multi-client library, net		289,663		1,342			-			291,005
Property and equipment, net		89,499		2,003			-			91,502
Investment in subsidiaries		1		-			(1	)		-
Intercompany accounts		15,191		(15,191	)		-			-
Other non-current assets		29,958		229			-			30,187
TOTAL ASSETS	$	561,689	$	4,080		$	(63,317	)	$	502,452
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	151,299	$	63,735		$	(63,316	)	$	151,718
Long-term debt and capital lease obligations, net of current portion and unamortized discount		247,685		-			-			247,685
Deferred income tax and other non-current liabilities		19,112		-			-			19,112
TOTAL LIABILITIES		418,096		63,735			(63,316	)		418,515
Stockholders' equity		143,593		(59,655	)		(1	)		83,937
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	561,689	$	4,080		$	(63,317	)	$	502,452

	As of December 31, 2012
	Guarantors		Non-guarantors			Eliminations			Consolidated
BALANCE SHEET
ASSETS
Current assets	$	150,864	$	21,761		$	(60,854	)	$	111,771
Multi-client library, net		309,031		36			-			309,067
Property and equipment, net		97,129		3,043			-			100,172
Investment in subsidiaries		1		-			(1	)		-
Intercompany accounts		20,589		(20,589	)		-			-
Other non-current assets		31,728		137			-			31,865
TOTAL ASSETS	$	609,342	$	4,388		$	(60,855	)	$	552,875
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	102,568	$	58,612		$	(60,854	)	$	100,326
Long-term debt and capital lease obligations, net of current portion and unamortized discount		315,426		-			-			315,426
Deferred income tax and other non-current liabilities		29,575		-			-			29,575
TOTAL LIABILITIES		447,569		58,612			(60,854	)		445,327
Stockholders' equity		161,773		(54,224	)		(1	)		107,548
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	609,342	$	4,388		$	(60,855	)	$	552,875

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	Three Month Period Ended June 30, 2013 (Unaudited)
	Guarantors			Non-guarantors			Eliminations			Consolidated
STATEMENTS OF OPERATIONS
Revenues	$	49,965		$	15,075		$	(1,688	)	$	63,352
Operating expenses		44,065			12,770			(1,537	)		55,298
Selling, general and administrative expenses		17,393			3,367			(151	)		20,609
Loss from operations		(11,493	)		(1,062	)		-			(12,555	)
Interest expense, net		(8,387	)		(43	)		-			(8,430	)
Other income (expense), net		44			(362	)		-			(318	)
Loss before income taxes		(19,836	)		(1,467	)		-			(21,303	)
Income tax expense (benefit)		(5,966	)		564			-			(5,402	)
Loss after income taxes		(13,870	)		(2,031	)		-			(15,901	)
Net loss, attributable to noncontrolling interests		(115	)		-			-			(115	)
Net loss, attributable to common shareholders	$	(13,755	)	$	(2,031	)	$	-		$	(15,786	)

	Three Month Period Ended June 30, 2012 (Unaudited)
	Guarantors			Non-guarantors			Eliminations			Consolidated
STATEMENTS OF OPERATIONS
Revenues	$	59,787		$	40,667		$	(3,082	)	$	97,372
Operating expenses		41,181			33,568			(2,774	)		71,975
Selling, general and administrative expenses		7,669			4,725			(308	)		12,086
Income from operations		10,937			2,374			-			13,311
Interest income (expense), net		(7,935	)		1			-			(7,934	)
Other income (expense), net		817			(1,992	)		-			(1,175	)
Income before income taxes		3,819			383			-			4,202
Income tax expense		995			711			-			1,706
Income (loss) after income taxes		2,824			(328	)		-			2,496
Net loss, attributable to noncontrolling interests		(50	)		-			-			(50	)
Net income (loss), attributable to common shareholders	$	2,874		$	(328	)	$	-		$	2,546

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	Six Month Period Ended June 30, 2013 (Unaudited)
	Guarantors			Non-guarantors			Eliminations			Consolidated
STATEMENTS OF OPERATIONS
Revenues	$	126,323		$	23,465		$	(3,027	)	$	146,761
Operating expenses		109,785			20,564			(2,681	)		127,668
Selling, general and administrative expenses		30,296			6,699			(346	)		36,649
Loss from operations		(13,758	)		(3,798	)		-			(17,556	)
Interest expense, net		(16,648	)		(151	)		-			(16,799	)
Other income (expense), net		72			(256	)		-			(184	)
Loss before income taxes		(30,334	)		(4,205	)		-			(34,539	)
Income tax expense (benefit)		(8,198	)		1,226			-			(6,972	)
Loss after income taxes		(22,136	)		(5,431	)		-			(27,567	)
Net loss, attributable to noncontrolling interests		(239	)		-			-			(239	)
Net loss, attributable to common shareholders	$	(21,897	)	$	(5,431	)	$	-		$	(27,328	)

	Six Month Period EndedJune 30, 2012 (Unaudited)
	Guarantors			Non-guarantors			Eliminations			Consolidated
STATEMENTS OF OPERATIONS
Revenues	$	120,790		$	78,792		$	(6,099	)	$	193,483
Operating expenses		67,807			70,270			(5,409	)		132,668
Selling, general and administrative expenses		14,917			13,399			(690	)		27,626
Income (loss) from operations		38,066			(4,877	)		-			33,189
Interest income (expense), net		(15,052	)		3			-			(15,049	)
Other income (expense), net		390			(1,859	)		-			(1,469	)
Income (loss) before income taxes		23,404			(6,733	)		-			16,671
Income tax expense		5,320			2,135			-			7,455
Income (loss) after income taxes		18,084			(8,868	)		-			9,216
Net loss, attributable to noncontrolling interests		(260	)		-			-			(260	)
Net income (loss), attributable to common shareholders	$	18,344		$	(8,868	)	$	-		$	9,476

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	Six Month Period Ended June 30, 2013 (Unaudited)
	Guarantors			Non-guarantors			Eliminations		Consolidated
STATEMENTS OF CASH FLOWS
Net cash provided by (used in) operating activities	$	42,338		$	(2,177	)	$	-	$	40,161
Net cash used in investing activities		(50,652	)		(2,060	)		-		(52,712	)
Net cash provided by (used in) financing activities		(706	)		579			-		(127	)
Net decrease in cash and cash equivalents	$	(9,020	)	$	(3,658	)	$	-	$	(12,678	)

	Six Month Period EndedJune 30, 2012 (Unaudited)
	Guarantors			Non-guarantors			Eliminations		Consolidated
STATEMENTS OF CASH FLOWS
Net cash provided by operating activities	$	59,328		$	488		$	-	$	59,816
Net cash used in investing activities		(85,057	)		(86	)		-		(85,143	)
Net cash provided by (used in) financing activities		28,983			(1,241	)		-		27,742
Net increase (decrease) in cash and cash equivalents	$	3,254		$	(839	)	$	-	$	2,415

NOTE 17 - SUBSEQUENT EVENTS

The Company evaluates events and transactions that occur after the balance sheet date but before the consolidated financial statements are issued. The Company evaluated such events and transactions through the date the consolidated financial statements were filed electronically with the Securities and Exchange Commission.

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in combination with our Interim Financial Statements and related notes contained in this Quarterly Report on Form 10-Q and our Financial Statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2012 (Commission file number: 001-34709).

Forward Looking Statements

Statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q that relate to forecasts, estimates or other expectations regarding future events regarding technological advancements and our financial position, business strategy and plans and objectives of our management for future operations, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of such terms or other comparable terminology.

Forward-looking statements include, but are not limited to, statements about business outlook for the year, backlog and bid activity, business strategy, and related financial performance and statements with respect to future events.  Such forward-looking statements are based on certain assumptions made by the Company based on management’s experience and perception of historical trends, industry conditions, market position, future operations, profitability, liquidity, backlog, capital resources and other information currently available to management and believed to be appropriate. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, the volatility of oil and natural gas prices, disruptions in the global economy, dependence upon energy industry spending, delays, reductions or cancellations of service contracts, high fixed costs of operations, weather interruptions, inability to obtain land access rights of way, industry competition, limited number of customers, credit risk related to our customers, asset impairments, the availability of capital resources, and operational disruptions. A discussion of these factors, including risks and uncertainties, is set forth under “Risk Factors” in our Annual Report on Form 10-K filed with the SEC. These forward-looking statements reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategies and liquidity. Although the Company believes that the expectationsand assumptions reflected in such statements are reasonable, the Company can give no assurance that such expectations or assumptions willprove to be correct.  All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements. The forward-looking statements speak only as of the date made and, other than as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Our backlog estimates represent those seismic data acquisition projects for which a client has executed a contract and has scheduled a start date for the project and unrecognized pre-committed funding from our Multi-client Services segment. Backlog estimates are based on a number of assumptions including those related to foreign exchange rates, and proportionate performance of contracts and our valuation of assets, such as seismic data to be received by us as payment under certain agreements. The realization of our backlog estimates is further affected by our performance under term rate contracts, as the early or late completion of a project under term rate contracts will generally result in decreased or increased, as the case may be, revenues derived from these projects. We and our clients may also modify contracts for services by mutual consent. Because of potential changes in the scope or schedule of our clients' projects, we cannot predict with certainty when or if our backlog will be realized. Even where a project proceeds as scheduled, it is possible that the client may default and fail to pay amounts owed to us. In addition, the contracts in our backlog are generally subject to cancellation by the client. Material delays, payment defaults or cancellations could reduce the amount of backlog currently reported, and consequently, could inhibit the conversion of that backlog into revenues.

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Overview

We provide an integrated suite of seismic data solutions to the global oil and gas industry, including our high resolution RG-3D Reservoir GradeSM (“RG3D”) seismic solutions. Our seismic data solutions consist primarily of seismic data acquisition, microseismic monitoring, data processing and interpretation services. Through these services, we deliver data that enables the creation of high resolution images of the earth’s subsurface and reveals complex structural and stratigraphic details. These images are used primarily by oil and gas companies to identify geologic structures favorable to the accumulation of hydrocarbons, to reduce risk associated with oil and gas exploration, to optimize well completion techniques and to monitor changes in hydrocarbon reservoirs. We integrate seismic survey design, data acquisition, processing and interpretation to deliver enhanced services to our clients. In addition, we own and market a seismic data library and license this data to clients on a non-exclusive basis.

We provide seismic data acquisition on a worldwide basis for land, transition zone and shallow marine areas, including challenging environments such as marshes, forests, jungles, arctic climates, mountains and deserts worldwide. Our seismic solutions are used by many of the world’s largest and most technically advanced oil and gas exploration and production companies, including national oil companies (“NOCs”), major integrated oil companies (“IOCs”), and large independent oil and gas companies. Our management team has significant operational experience in most of the major U.S. shale and tight reservoir plays, including the Haynesville, Barnett, Bakken, Fayetteville, Eagle Ford and Woodford, where we believe our high resolution RG3D seismic solutions are particularly well-suited.   We believe our experience positions us well to serve our customers as they expand their involvement in shale and tight reservoir plays outside the U.S.

We generate revenues primarily by providing Proprietary Services and Multi-client Services to our clients. Our Proprietary Services generate revenues by conducting geophysical surveys for our clients on a contractual basis where our clients generally obtain all rights to the seismic data acquired. We also generate revenues by providing microseismic monitoring, data processing and interpretation services. Our Multi-client Services generate revenues by selling licenses, on a non-exclusive basis, to seismic and other data we own as a part of our seismic data library.

Results of Operations

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012 (unaudited)

The following tables set forth consolidated revenues by service and area for the periods indicated (amounts in millions):

	Three Month Period Ended June 30,
	(unaudited)
	2013					2012
	Amount		%			Amount		%
Proprietary Services	$	26.8		42	%	$	58.6		60	%
Multi-client Services		36.6		58	%		38.8		40	%
Total	$	63.4		100	%	$	97.4		100	%

	Three Month Period Ended June 30,
	(unaudited)
	2013					2012
	Amount		%			Amount		%
United States	$	38.7		61	%	$	43.3		44	%
International		24.7		39	%		54.1		56	%
Total	$	63.4		100	%	$	97.4		100	%

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Revenues. We recorded revenues of $63.4 million for the three months ended June 30, 2013 compared to $97.4 million for the same period of 2012, a decrease of $34.0 million, or 35%.

We recorded revenues from Proprietary Services of $26.8 million for the three months ended June 30, 2013, compared to $58.6 million for the same period of 2012, a decrease of $31.8 million, or 54%. The decrease related to our international Proprietary operations was $33.6 million, primarily due to a decrease in crew activities in Colombia and Brazil.

Multi-client Services generated revenues of $36.6 million for the three months ended June 30, 2013 compared to $38.8 million for the same period of 2012, a decrease of $2.2 million, or 6%. The $36.6 million in Multi-client Services revenues included $22.5 million of late sale revenues and $14.1 million of pre-commitment revenues. This compared to $10.6 million of late sale revenues, $24.7 million of pre-commitment revenues, and $3.5 million in non-cash data swap transactions during the same period of 2012.

The following table sets forth consolidated Multi-client Services revenues for the periods indicated (amounts in millions):

	Three Month Period Ended June 30,
	2013		2012
	(unaudited)
Multi-client revenues
Pre-commitments	$	14.1	$	24.7
Late sales		22.5		10.6
Subtotal		36.6		35.3
Non-cash data swaps		-		3.5
Total revenues	$	36.6	$	38.8

Operating expenses. Operating expenses, excluding depreciation and amortization, decreased by $15.3 million, or 42%, to $21.5 million for the three months ended June 30, 2013 in comparison to the same period of 2012.  The decrease was primarily due to a reduction in active crews operating in international markets for the three months ended June 30, 2013.

Selling, General and Administrative Expenses. Selling, General and Administrative expenses, excluding depreciation and amortization, increased by $8.5 million, or 76%, to $19.7 million for the three months ended June 30, 2013 in comparison to the same period of 2012. The SG&A cost increase was primarily due to Multi-client sales commissions of $5.9 million for the three months ended June 30, 2013.

Depreciation and Amortization Expenses.  Total depreciation (net) and amortization expense increased by $0.8 million, or 2%, to $33.8 million for the three months ended June 30, 2013 in comparison to the same period of 2012. The Multi-client Services amortization expense for the three months ended June 30, 2013 was $24.4 million, representing an average amortization rate of 67% for the period. Gross depreciation expense for the three month period ended June 30, 2013 was $9.5 million, of which, $0.9 million was capitalized in connection with our Multi-client Services investments resulting in a net depreciation expense of $8.6 million. During the three months ended June 30, 2013, approximately $1.4 million of library amortization expense was attributable to backstop amortization.

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The following table summarizes depreciation and amortization for the periods indicated (amounts in millions):

	Three Month Period Ended June 30,
	2013			2012
	(unaudited)
Gross depreciation expense	$	9.5		$	9.5
Less: capitalized depreciation for Multi-client library		0.9			3.1
Depreciation (net)		8.6			6.4
Multi-client amortization expense:
Revenue based amortization		23.0			23.7
Backstop amortization		1.4			2.1
Impairment		-			-
		24.4			25.8
Amortization expense of intangible assets		0.8			0.8
Depreciation (net) and amortization expense	$	33.8		$	33.0
Average Multi-client amortization rate for the period		67	%		66	%

Interest Expense, Net. Interest expense, net, increased by $0.5 million, or 6%, to $8.4 million for the three months ended June 30, 2013, compared to $7.9 million for the same period of 2012. The increase in interest expense related to an increase in borrowings outstanding under the Revolving Credit Facility.

Other Income (Expense), Net. Other income (expense), net and foreign exchange gain (loss) was a loss of $0.3 million for the three months ended June 30, 2013, compared to a loss of $1.2 million for the same period of 2012. The primary difference related to decreased foreign exchange losses.

Income Tax Expense (Benefit). Our income tax benefit for the three months ended June 30, 2013 was $5.4 million compared to income tax expense of $1.7 million for the same period of 2012. The effective income tax rate for the three months ended June 30, 2013 and 2012 was approximately 25% and 41%, respectively. The Company’s effective income tax rate in 2013 and 2012 differs from the federal statutory rate primarily due to state income taxes, non-deductible expenses, foreign tax credit limitations, tax rate differential from non-US activities, and valuation allowances in non-US jurisdictions.

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Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012 (unaudited)

The following tables set forth consolidated revenues by service and area for the periods indicated (amounts in millions):

	Six Month Period Ended June 30,
	(unaudited)
	2013					2012
	Amount		%			Amount		%
Proprietary Services	$	54.2		37	%	$	123.4		64	%
Multi-client Services		92.6		63	%		70.1		36	%
Total	$	146.8		100	%	$	193.5		100	%

	Six Month Period Ended June 30,
	(unaudited)
	2013					2012
	Amount		%			Amount		%
United States	$	105.9		72	%	$	93.1		48	%
International		40.9		28	%		100.4		52	%
Total	$	146.8		100	%	$	193.5		100	%

Revenues. We recorded revenues of $146.8 million for the six months ended June 30, 2013 compared to $193.5 million for the same period of 2012, a decrease of $46.7 million, or 24%.

We recorded revenues from Proprietary Services of $54.2 million for the six months ended June 30, 2013, compared to $123.4 million for the same period of 2012, a decrease of $69.2 million, or 56%. The decrease related to our international Proprietary operations was $63.7 million, primarily due to a decrease in crew activities in Colombia and Brazil.

Multi-client Services generated revenues of $92.6 million for the six months ended June 30, 2013 compared to $70.1 million for the same period of 2012, an increase of $22.5 million, or 32%.  The increase was primarily attributable to higher late sale revenues, including $24.3 million of the one-time non-refundable license fee related to our Multi-client data marketing and distribution relationship. The $92.6 million in Multi-client Services revenues included $50.2 million of late sale revenues and $42.4 million of pre-commitment revenues. This compared to $25.3 million of late sale revenues, $40.3 million of pre-commitment revenues, and $4.5 million in non-cash data swap transactions during the same period of 2012.

The following table sets forth consolidated Multi-client Services revenues for the periods indicated (amounts in millions):

	Six Month Period Ended June 30,
	2013		2012
	(unaudited)
Multi-client revenues
Pre-commitments	$	42.4	$	40.3
Late sales		50.2		25.3
Subtotal		92.6		65.6
Non-cash data swaps		-		4.5
Total revenues	$	92.6	$	70.1

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Operating expenses. Operating expenses, excluding depreciation and amortization, decreased by $27.8 million, or 43%, to $37.4 million for the six months ended June 30, 2013 in comparison to the same period of 2012.  The decrease was primarily due to a reduction in active crews operating in international markets for the six months ended June 30, 2013.

Selling, General and Administrative Expenses. Selling, General and Administrative expenses, excluding depreciation and amortization, increased by $9.0 million, or 35%, to $34.8 million for the six months ended June 30, 2013 in comparison to the same period of 2012. The SG&A cost increase was primarily due to increased employee severance related charges, bad debt expense and Multi-client sales commissions for the six months ended June 30, 2013.

Depreciation and Amortization Expenses.  Total depreciation (net) and amortization expense increased by $26.4 million, or 42%, to $89.5 million for the six months ended June 30, 2013 in comparison to the same period of 2012. The Multi-client Services amortization expense for the six months ended June 30, 2013 was $72.0 million, of which $13.0 million was attributable to impairment related charges for certain library assets, resulting in an increase in our average amortization rate to 78% for the period. Gross depreciation expense for the six month period ended June 30, 2013 was $18.5 million, of which, $2.6 million was capitalized in connection with our Multi-client Services investments resulting in a net depreciation expense of $15.9 million. During the six months ended June 30, 2013, approximately $2.7 million of library amortization expense was attributable to backstop amortization.

The following table summarizes depreciation and amortization for the periods indicated (amounts in millions):

	Six Month Period Ended June 30,
	2013			2012
	(unaudited)
Gross depreciation expense	$	18.5		$	19.6
Less: capitalized depreciation for Multi-client library		2.6			6.1
Depreciation (net)		15.9			13.5
Multi-client amortization expense:
Revenue based amortization		56.3			43.6
Backstop amortization		2.7			4.5
Impairment		13.0			-
		72.0			48.1
Amortization expense of intangible assets		1.6			1.5
Depreciation (net) and amortization expense	$	89.5		$	63.1
Average Multi-client amortization rate for the period		78	%		69	%

Interest Expense, Net. Interest expense, net, increased by $1.8 million, or 12%, to $16.8 million for the six months ended June 30, 2013, compared to $15.0 million for the same period of 2012. The increase in interest expense related to an increase in borrowings outstanding under the Revolving Credit Facility and the New Notes issued in March 2012.

Other Income (Expense), Net. Other income (expense), net and foreign exchange gain (loss) was a loss of $0.2 million for the six months ended June 30, 2013, compared to a loss of $1.5 million for the same period of 2012. The primary difference related to foreign exchange gain.

Income Tax Expense (Benefit). Our income tax benefit for the six months ended June 30, 2013 was $7.0 million compared to income tax expense of $7.5 million for the same period of 2012. The effective income tax rate for the six months ended June 30, 2013 and 2012 was approximately 20% and 45%, respectively. The Company’s effective income tax rate in 2013 and 2012 differs from the federal statutory rate primarily due to state income taxes, non-deductible expenses, foreign tax credit limitations, tax rate differential from non-US activities, and valuation allowances in non-US jurisdictions.

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EBITDA. We define EBITDA as net income before interest, taxes, depreciation and amortization, and non-controlling interests. EBITDA is not a measure of financial performance derived in accordance with GAAP and should not be considered in isolation or as an alternative to net income as an indication of operating performance. The table below presents a reconciliation of EBITDA to net income (loss) (in thousands):

	Three Month Period Ended June 30,						Six Month Period Ended June 30,
	2013			2012			2013			2012
Net income (loss), attributable to common shareholders	$	(15,786	)	$	2,546		$	(27,328	)	$	9,476
Net loss, attributable to non-controlling interests		(115	)		(50	)		(239	)		(260	)
Income tax expense		(5,402	)		1,706			(6,972	)		7,455
Interest expense, net		8,430			7,934			16,799			15,049
EBIT (1)	$	(12,873	)	$	12,136		$	(17,740	)	$	31,720
Add: Revenue based Multi-client amortization		23,013			23,690			56,303			43,587
Add: Non-revenue based Multi-client amortization (2)		1,441			2,081			15,705			4,540
Add: Depreciation (net) and other amortization (3)		9,366			7,168			17,503			15,031
EBITDA (1)	$	20,947		$	45,075		$	71,771		$	94,878
Less: Revenue based Multi-client amortization		(23,013	)		(23,690	)		(56,303	)		(43,587	)
Less: Non-revenue based Multi-client amortization (2)		(1,441	)		(2,081	)		(15,705	)		(4,540	)
Adjusted EBITDA (1)	$	(3,507	)	$	19,304		$	(237	)	$	46,751
Add: Revenue based Multi-client amortization		23,013			23,690			56,303			43,587
Add: Non-revenue based Multi-client amortization (2)		1,441			2,081			15,705			4,540
Add: Stock based compensation		1,400			1,536			3,386			2,977
Less: Non-cash multi-client revenue		-			(3,510	)		-			(4,442	)
Less: Cash investment in multi-client library		(23,367	)		(37,429	)		(51,355	)		(79,770	)
Cash EBITDA (1)	$	(1,020	)	$	5,672		$	23,802		$	13,643

(1)      EBIT, EBITDA, Adjusted EBITDA and Cash EBITDA (as defined in the calculations above) are non-GAAP measures.

(2)      Includes library impairment charges and backstop amortization.

(3)      Includes amortization of intangibles.

Our management believes EBITDA is useful to an investor in evaluating our operating performance because this measure is widely used by investors in the energy industry to measure a company’s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon, among other factors, accounting methods, book value of assets, capital structure and the method by which assets were acquired. We believe EBITDA helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure and asset base from our operating structure. EBITDA is also used as a supplemental financial measure by our management in presentations to our board of directors, as a basis for strategic planning and forecasting, and as a component for setting incentive compensation.

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Liquidity and Capital Resources

Our primary internal sources of liquidity are cash generated by the Proprietary Services and Multi-client Services we provide to our clients, and proceeds from the sale of assets. Our primary external sources of liquidity are borrowings under our Revolving Credit Facility, debt and equity offerings and equipment financings such as capital leases. Our primary uses of capital include the acquisition of seismic data recording equipment, seismic vehicles and vessels, other equipment needed to outfit new crews and to enhance the capabilities of and maintain existing crews’ energy sources, and investments in Multi-client Services data for our seismic data library. We also use capital to fund the working capital required to add new crews and operate existing crews and to make debt service payments on our outstanding indebtedness.

Our internal sources of liquidity, including our cash position, depend to a large extent on the level of demand for our services. Historically, we have periodically supplemented our internal sources of liquidity with external sources, including borrowings under our Revolving Credit Facility, as the need arises. With our current level of indebtedness and share price, our access to debt and equity capital markets may be limited and we may be increasingly reliant on our internal sources of liquidity. For this reason, we are focused on remaining fully pre-funded on investments in our Multi-client library and increasing the weighting of Proprietary Services revenues as a percentage of total revenues. In addition, we have extended until September 30, 2013 the reduction of commitments under our Revolving Credit Facility to $67.5 million. As of June 30, 2013, borrowings outstanding under our Revolving Credit Facility aggregated $79.9 million. We currently intend to refinance the Revolving Credit Facility prior to its maturity. We may also fund the scheduled reduction in our commitments under the Revolving Credit Facility through cash generated from operations. While we are focused on improving our liquidity, events beyond our control may affect our results of operations and financial condition, which could reduce or delay capital expenditures, including amounts we may spend on our Multi-client library.

As of June 30, 2013, we had available cash and undrawn borrowing capacity under our Revolving Credit Facility as follows (in millions):

	June 30, 2013
	(unaudited)
Available cash	$	10.7
Undrawn borrowing capacity under Revolving Credit Facility (1)		0.1
Total available liquidity	$	10.8

(1) Borrowings under the Revolving Credit Facility are subject to certain limitations under provisions of the Senior Notes Indenture.

The following table summarizes the net cash provided by (used in) operating, investing and financing activities for the six months ended June 30, 2013 and 2012 (in millions):

	Six Month Period Ended June 30,
	2013			2012
	(unaudited)
Adjustments to reconcile net income (loss) to net cash	$	54.1		$	65.2
Effects of changes in operating assets and liabilities		(13.9	)		(5.4	)
Operating activities		40.2			59.8
Investing activities		(52.7	)		(85.1	)
Financing activities		(0.1	)		27.7
Net increase (decrease) in cash and cash equivalents	$	(12.6	)	$	2.4

Operating Activities.  Net cash provided by operating activities was $40.2 million for the six months ended June 30, 2013 compared to $59.8 million for the same period of 2012, a decrease of $19.6 million. The decrease in operational cash flow was primarily driven by the decrease in operating income during the period.

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Investing Activities.  Net cash used in investing activities was $52.7 million for the six months ended June 30, 2013, compared to $85.1 million for the same period of 2012, a decrease of $32.4 million. The decrease was primarily the result of decreased investment in our Multi-client library and capital expenditures, partially offset by decreased sales of assets. The following table sets forth our cumulative investment in our Multi-client library for the periods indicated (in millions): 

	Six Month Period Ended June 30,
	2013		2012
	(unaudited)
Multi-client investment (period)
Cash	$	51.4	$	79.8
Capitalized depreciation (1)		2.6		6.1
Non-cash data swaps (2)		-		2.8
Total	$	54.0	$	88.7
Investment (cumulative)
Cash	$	624.5	$	488.0
Capitalized depreciation (1)		58.0		50.1
Non-cash data swaps (2)		26.9		26.0
Total		709.4		564.1
Cumulative amortization		418.4		291.3
Multi-client net book value	$	291.0	$	272.8

(1) Represents capitalized cost of the equipment, owned or leased, and utilized in connection with Multi-client Services.

(2) Includes non-cash data swap investment recorded as deferred revenue.

Financing Activities. Net cash used by financing activities was $0.1 million for the six months ended June 30, 2013, compared to net cash provided by financing activities of $27.7 million for the same period of 2012, an increased cash outflow of $27.8 million. The increased cash outflow was primarily the result of increased principal payments on our Revolving Credit Facility, capital leases and promissory notes.

Capital Resources.  On April 30, 2010, we entered into the Revolving Credit Facility with Bank of America, N.A., as administrative agent, and the lenders party to the Revolving Credit Facility.  Our Revolving Credit Facility initially provided for borrowings of up to $50.0 million. Under the Third Amendment, borrowings up to $85.0 million were permitted under our Revolving Credit Facility until April 30, 2013, at which point the maximum permitted borrowings were reduced to $67.5 million and the final maturity date was extended to April 30, 2014. The loans under our Revolving Credit Facility bear interest at a rate equal to LIBOR plus the Applicable Rate or the Base Rate plus the Applicable Rate. The Base Rate is defined as the higher of (x) the prime rate or (y) the Federal Funds rate plus 0.50%. The Applicable Rate is defined as a percentage determined in accordance with a pricing grid based upon our leverage ratio, that will decline from LIBOR plus 4.00% or the prime rate plus 3.00% to a minimum rate equal to LIBOR plus 3.50% or the prime rate plus 2.50%. We may prepay borrowings under our Revolving Credit Facility at any time without penalty or premium, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of LIBOR borrowings. We are also obligated to pay a commitment fee of 0.75% per annum on the actual daily unused portions of the Revolving Credit Facility. Under the Revolving Credit Facility, the Company, as Borrower, has the ability until the Extended Maturity Date, April 30, 2014, to request an increase in lending commitments by an additional $10.0 million subject to the requirements of the Credit Agreement. On April 24, 2013, the Company entered into the Fourth Amendment to the Company’s Revolving Credit Facility with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Barclays Bank PLC, and Citibank, N.A. The Company has requested and certain of the Lenders have agreed to assume a portion of certain expiring commitments and extend such Lenders’ respective Commitments and/or the expiration thereof on the terms and conditions set forth in the Amendment. Under the Fourth Amendment, the permitted borrowings under the Revolving Credit Facility was reduced to $80.0 million until the initial Maturity Date of September 30, 2013, at which point the maximum permitted borrowings under the Revolving Credit Facility is reduced to $67.5 million through the Maturity Date of the Revolving Credit Facility on April 30, 2014.

Capital Expenditures. Capital expenditures for the six months ended June 30, 2013 were $68.0 million, consisting of cash investments in property and equipment of $6.6 million and investments in our Multi-client library of $51.4 million.

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Contractual Obligations

The following table summarizes the payments due in specific periods related to our contractual obligations as of June 30, 2013 (in thousands):

	Total		Within 1 Year		1-3 Years		3-5 Years		After 5 Years
Debt obligations (1)	$	342,831	$	92,431	$	400	$	250,000	$	-
Capital lease obligations		7,904		4,410		3,459		35		-
Operating lease obligations		3,687		1,940		1,438		309		-
	$	354,422	$	98,781	$	5,297	$	250,344	$	-

(1) Includes unamortized discount.

Off Balance Sheet Arrangements

We do not currently have any off balance sheet arrangements.

Backlog

The Company’s backlog at June 30, 2013 was approximately $201 million ($174 million in Proprietary Services; $27 million in Multi-client Services) compared to $174 million at June 30, 2012. Backlog at March 31, 2013 was approximately $180 million ($136 million in Proprietary Services; $44 million in Multi-client Services).

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The primary sources of market risk are the volatility of oil and gas prices and the concentration of our clients in the oil and gas industry. The volatility of oil and gas prices may have a positive or negative effect on demand and pricing for our services. The concentration of substantially all of our clients in the oil and gas industry may have a positive or negative effect on our exposure to credit risk since all of our clients are similarly affected by changes in industry and economic conditions. We regularly maintain deposits in our bank accounts in excess of the $250,000 guaranteed by the Federal Deposit Insurance Corporation. We are subject to market risk exposure related to changes in interest rates on our outstanding floating rate debt. Borrowings under our Revolving Credit Facility bear floating-rate interest, at our option, based on LIBOR or the prime rate. We do not enter into interest rate hedges or other derivatives for speculative purposes.

Financial instruments, which potentially subject us to concentration of credit risk, consist primarily of unsecured trade receivables. In the normal course of business, we provide credit terms to our clients. Accordingly, we perform ongoing credit evaluations of our clients and maintain allowances for possible losses.

We conduct business in various foreign countries. We are subject to foreign exchange risks because our contracts may, from time-to-time, be denominated in currencies other than the U.S. dollar while a significant portion of our operating expenses and income taxes accrue in other currencies. Movements in the exchange rates between the U.S. dollar and other currencies may adversely affect our financial results. Historically, we have not attempted to hedge foreign exchange risk. For the six months ended June 30, 2013, approximately 3% of our revenues were recorded in foreign currencies, and we recorded net foreign exchange gain of $0.1 million. We attempt to match our foreign currency revenues and expenses in order to balance our net position of receivables and payables in foreign currency. Nevertheless, during the past three years, foreign-denominated receivables have exceeded foreign-denominated payables primarily as a result of contract terms required by our national oil company clients. Our management believes that this will continue to be the case in the future.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of the Company disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of June 30, 2013.  Based on that evaluation, the Company’s principal executive and principal financial officer have concluded that these controls and procedures were effective as of June 30, 2013.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

Neither the Company nor any of its subsidiaries is a party to any pending legal proceedings other than litigation arising in the ordinary course of the Company’s business, and the Company believes that such litigation is unlikely to materially impact the Company.  Moreover, the Company is not aware of any such legal proceedings that are contemplated by governmental authorities with respect to the Company, any of its subsidiaries, or any of their respective properties.

Item 1A.  Risk Factors

Our business has many risks. Factors that could materially adversely affect our business, financial position, results of operations, liquidity or the trading price of our shares are described in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012. As of the date of this report, these risk factors have not changed materially. This information should be considered carefully, together with other information in this report and other reports and materials we file with the SEC.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable. 

Item 5.  Other Information

None

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Item 6.  Exhibits (items indicated by an (*) are filed herewith)

Exhibit No.	Description
10.1	Amendment No. 4 to Credit Agreement, dated as of April 24, 2013, entered into by Global Geophysical Services, Inc., as Borrower, the lenders from time to time party thereto, as Lenders, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on April 25, 2013).
10.2	Amendment No. 4 to First Preferred Fleet Mortgage, dated as of April 24, 2013 and effective as of April 24, 2013, by and between Global Geophysical Services, Inc., as Shipowner, and Bank of America, N.A., a national banking association, as administrative agent, as Mortgagee (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed by the Company on April 25, 2013).
10.3*	Form of Incentive Stock Option Agreement.
10.4*	First Amendment, effective as of May 24, 2013, to Global Geophysical Services, Inc. Amended and Restated 2006 Incentive Compensation Plan, effective as of February 5, 2010.
10.5*	Form of 2013 Performance Unit Award Agreement – Executive Officers.
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GLOBAL GEOPHYSICAL SERVICES, INC.
Date:  August 13, 2013	/s/ Richard C. White
	Richard C. White
	President and Chief Executive Officer
	(Principal Executive Officer)
Date:  August 13, 2013	/s/ P. Mathew Verghese
	P. Mathew Verghese
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)

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