Note 3 - Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(3) Revenue from Contracts with Customers

The Company derives revenue from the (i) sale or license of multi-client and proprietary data, imaging and reservoir services within its E&P Technologies & Services segment; (ii) sale, license and repair of seismic data acquisition systems and other equipment; and (iii) sale or license of seismic command and control software systems and software solutions for operations management within its Operations Optimization segment. All E&P Technology & Services’ revenues and the services component of Optimization Software & Services’ revenues under Operations Optimization segment are classified as service revenues. All other revenues are classified as product revenues.    

The Company uses a five-step model to determine proper revenue recognition from customer contracts. Revenue is recognized when (i) a contract is approved by all parties; (ii) the goods or services promised in the contract are identified; (iii) the consideration the Company expects to receive in exchange for the goods or services promised is determined; (iv) the consideration is allocated to the goods and services in the contract; and (v) control of the promised goods or services is transferred to the customer. The Company is not required to disclose information about remaining contractual future performance obligations with an original term of one year or less. The Company does not have any contractual future performance obligations with an original term of over one year.

Revenue by Geographic Area

The following table is a summary of net revenues by geographic area (in thousands):

	Three Months Ended March 31,
	2021		2020
Europe	$	4,366	$	7,472
Latin America		3,503		20,062
Asia Pacific		2,201		7,763
Africa		1,772		12,240
North America		1,208		3,888
Middle East		727		954
Other		259		4,035
Total	$	14,036	$	56,414

Product revenues are allocated to geographic locations on the basis of the ultimate destination of the equipment, if known. If the ultimate destination of such equipment is not known, product revenues are allocated to the geographic location of initial shipment. Service revenues, which primarily relate to our E&P Technology & Services segment, are allocated based upon the billing location of the customer and the geographic location of the data.

See Footnote 2“Segment Information” for total net revenue by segment for the three months ended March 31, 2021 and 2020.

Unbilled Receivables

Unbilled receivables balances relate to revenues recognized on multi-client surveys, imaging and reservoir services and devices equipment repairs on a proportionate basis, and on licensing of multi-client data for which invoices have not yet been presented to the customer. The following table is a summary of unbilled receivables (in thousands):

	March 31,		December 31,
	2021		2020
New Venture	$	1,212	$	9,158
Imaging and Reservoir Services		1,287		680
Devices		1,586		1,424
Total	$	4,085	$	11,262

The changes in unbilled receivables are as follows (in thousands):

Unbilled receivables at December 31, 2020	$	11,262
Recognition of unbilled receivables (a)		13,612
Revenues billed to customers (a)		(20,789	)
Unbilled receivables at March 31, 2021	$	4,085

^(a) Includes all gross revenue recognition and related billing activity of the Company. As a matter of process, all net revenue recognized is initially reflected as an unbilled receivable and subsequently billed to customers, as applicable, including net revenue for all of software and a portion of devices within the Operations Optimization segment, although they are billed at the time of recognition.

Deferred Revenue

Billing practices are governed by the terms of each contract based upon achievement of milestones or pre-agreed schedules. Billing does not necessarily correlate with revenue recognized on a proportionate basis as work is performed and control is transferred to the customer. Deferred revenue represents cash received in excess of revenue not yet recognized as of the reporting period but that will be recognized in future periods. The following table is a summary of deferred revenues (in thousands):

	March 31,		December 31,
	2021		2020
New Venture	$	2,158	$	2,169
Imaging and Reservoir Services		672		665
Devices		622		48
Optimization Software & Services		1,002		766
Total	$	4,454	$	3,648

The changes in deferred revenues were as follows (in thousands):

Deferred revenue at December 31, 2020	$	3,648
Cash collected in excess of revenue recognized		1,230
Recognition of deferred revenue		(424	)
Deferred revenue at March 31, 2021	$	4,454

The Company expects to recognize a majority of deferred revenue within the next twelve months.

Credit Risks

For each of the three months ended March 31, 2021 and 2020, the Company had two customers with sales that each exceeded 10% of the Company’s consolidated net revenues. Revenues related to each of these customers are included within the E&P Technology & Services segment.

At  March 31, 2021, the Company had one customer with balances that accounted for 12% of the Company’s total combined accounts receivable and unbilled receivable balances. At March 31, 2020, the Company had one customer with a balance that accounted for 51% of the Company’s total combined accounts receivable and unbilled receivable balances.

The Company routinely evaluates the financial stability and creditworthiness of its customers. The Company has a corporate credit policy that is intended to minimize the risk of financial loss due to a customer’s inability to pay. Credit coverage decisions for customers are based on references, payment histories, financial and other data. The Company utilizes a third party trade credit insurance policy. The Company has historically not extended long-term credit to its customers.

Concentration of Foreign Sales Risk

The majority of the Company’s foreign sales are denominated in U.S. dollars. For the three months ended March 31, 2021 and 2020, international sales comprised 91% and 97%, respectively, of total net revenues. To the extent that world events or economic conditions negatively affect the Company’s future sales to customers in many regions of the world, as well as the collectability of the Company’s existing receivables, the Company’s future results of operations, liquidity and financial condition would be adversely affected.