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Segment Information
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Segment Information Segment Information
The Company evaluates and reviews its results of operations based on two reporting segments: E&P Technology & Services and Operations Optimization. Refer to Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information about each business segment’s business, products and services.
The segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Operating Decision Maker in determining how to allocate resources and evaluate performance. The Company measures segment operating results based on income (loss) from operations.
The following table is a summary of segment information (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Net revenues:
E&P Technology & Services:
New Venture$4,686  $5,018  $6,127  $18,489  
Data Library6,867  17,794  46,998  27,742  
Total multi-client revenues11,553  22,812  53,125  46,231  
Imaging and Reservoir Services3,673  5,711  8,615  9,395  
Total15,226  28,523  61,740  55,626  
Operations Optimization:
Optimization Software & Services3,377  5,720  7,804  10,753  
Devices4,128  7,532  9,601  12,352  
Total7,505  13,252  17,405  23,105  
Total net revenues$22,731  $41,775  $79,145  $78,731  
Gross profit:
E&P Technology & Services$2,264  $12,357  $25,994  $17,797  
Operations Optimization2,320  7,226  6,934  11,698  
Total gross profit$4,584  $19,583  $32,928  $29,495  
Gross margin:
E&P Technology & Services15 %43 %42 %32 %
Operations Optimization31 %
(a)
55 %40 %
(a)
51 %
Total gross margin20 %47 %42 %37 %
Income (loss) from operations:
E&P Technology & Services$442  $5,237  $18,394  
(b)
$3,622  
Operations Optimization(474) 2,644  (3,733) 
(c)
2,814  
Support and other(5,440) (10,434) (13,807) (24,926) 
Income (loss) from operations(5,472) (2,553) 854  (18,490) 
Interest expense, net(3,414) (3,111) (6,635) (6,223) 
Other income (expense), net6,771  
(d)
96  7,200  
(d)
(696) 
Income (loss) before income taxes$(2,115) $(5,568) $1,419  $(25,409) 
(a)  Operations Optimization segment gross margin is negatively impacted by an out of period adjustment to cost of sales of $1.3 million for the three and six months ended June 30, 2020. Excluding this adjustment, gross margin would have been 48% and 47%, respectively, for the three and six months ended June 30, 2020. See “Out-of-Period Adjustments” below for further details.
(b)  Includes impairment of multi-client data library of $1.2 million partly offset by a positive out of period adjustment of $1.0 million for the six months ended June 30, 2020. See “Out-of-Period Adjustments” below for further details.
(c)  Includes impairment of goodwill of $4.2 million for the six months ended June 30, 2020.
(d)  Includes amortization of the government relief funding expected to be forgiven of $6.9 million for the three and six months ended June 30, 2020.
Intersegment sales are insignificant for all periods presented.
Out-of-Period Adjustments
During the second quarter of 2020, the Company identified two unrelated adjustments impacting prior periods. The net impact of these two out-of-period adjustments was an increase to loss from operations and net loss for the second quarter of 2020 of $0.3 million. The Company does not consider the adjustments, either individually or collectively, to be material to the prior periods nor to the second quarter of 2020.
The first adjustment involved the release of previously deferred inventory costs within the Operations Optimization segment. These inventory costs were associated with towed streamer equipment repairs for repair orders which had been completed in prior periods. The Company made an adjustment to reduce the deferred inventory costs and recorded an increase to cost of products of $1.3 million during the quarter. Excluding this adjustment, Gross Margin of the Operations Optimization segment would have been 48% and 47%, as adjusted, compared to 31% and 40%, as reported, respectively, for the three and six months ended June 30, 2020.
The second adjustment related to the release of a commission accrual within the E&P Technology & Services segment of $1.0 million. The Company noted that certain accrued commissions were no longer payable as the associated sales targets were
not met within a specified timeframe, which timeframe had lapsed in prior periods. The Company released the commission accrual and recorded a reduction in marketing and sales expense of $1.0 million during the quarter.