The 10,000 station Hawk system has recently returned to the US from Canada to continue work on 3D programs under an agreement with a multi-client geophysical company. The Hawk crew should begin work in mid-March with backlog for the remainder of 2013 and should continue to generate improved margins from those realized under current industry metrics. The slow increase in natural gas pricing continues to be reflected within the industry by increased activity levels focused on oil and liquids rich shale plays such as the Bakken, Utica (eastern Ohio) and Marcellus (western Pennsylvania and West Virginia). This has led to additional contract awards and an additional multi-component 3D recording crew in the second half of 2013. The Company is investigating long-term rental and purchase options to service this demand. Activity in the Denver-Julesburg ("DJ") Basin has been slower than projected but is also expected to increase in the second half of 2013. Pricing of services continues to be the driving factor in this competitive market with requirements for higher channel counts, wireless recording systems and third party multi-client programs driving the demand for services.
South America Operations
Tesla Colombia was formed in February 2013 to provide seismic acquisition services to companies in Colombia. An experienced management team has spent the better part of a year researching the South American market. In recent years, there has been increased foreign investment in Colombian natural resources, growing exploration activity and a strong demand for experienced and reliable seismic acquisition companies with modern equipment and experience in comparable terrains and environments. Meetings have been held and relationships have been built with both oil and gas and mining companies operating in Colombia. Many of these companies are Canadian-based or international operators that Tesla has done work for in other regions of the world. Management has also focused on developing relationships with local companies that can provide support to Tesla's operations in Colombia and provide access to potential clients. While no projects have been awarded at this time, the management team continues to pursue a number of opportunities that have been identified during Tesla's presence in the country. Tesla continues to investigate other opportunities in South America, specifically in Trinidad, Ecuador and Suriname.
Tesla International's UK and European crew has seen a sustained demand for acquisition services in both the hydrocarbon and minerals sectors. Indicators suggest that this demand will be maintained. Additional applications of seismic data in the areas of gas storage and CO2 sequestration have been active indicating a possible opportunity for growth in previously non-perspective areas of Europe. This crew should be fully utilized for a good portion of 2013 after securing commitments for a number of projects throughout the year. Management is pursuing opportunities to fill remaining gaps in the current 2013 work schedule.
Tesla International is currently completing a land and marine project in Tanzania. This project operated during most of the first quarter of 2013 before mobilizing for a land and marine project in the DRC. This project is a continuation of work performed in late 2011 and early 2012. The land portion of this program is expected to begin in late March with the larger marine portion to follow in the second quarter of 2013. There remains significant interest in the lake zones of the Rift Valley with Tesla International well placed to exploit the transition zone ("TZ") acquisition opportunities in the area. As such the TZ crew is expected to remain busy during a significant portion of 2013.
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