UPDATE 3-Dawson Q3 profit beats Street view; shares soar

(Recasts; adds details, analysts' comments, updates share movement)

By Adveith Nair

BANGALORE, July 31 (Reuters) - Dawson Geophysical Co (DWSN.O), a provider of seismic data services to oil and gas companies, reported third-quarter earnings that beat market estimates, helped by increased demand for its services and lower finding and development costs.

Shares of the company rose as much as 19 percent to touch a high of $64.74.

Results reflect brisk domestic exploration activities by the company's clients, particularly those seeking natural gas reserves, Dawson said.

"Chesapeake Energy Corp (CHK.N), their biggest customer, is increasing capital spending in seismic. That bodes very well for them," Dahlman Rose analyst Neal Dingmann said from Houston.

Energy companies such as Chesapeake and XTO Energy Inc XTO.N have been snapping up mineral rights in shales, like Haynesville and Bakken, that are believed to hold massive reserves of natural gas.

Raymond James analyst Collin Gerry said the profitability over the intermediate to long term was repeatable.

"There's room for improvement. Over a six quarter time-frame, margins should be repeated, if not higher, which is very bullish for the stock," Gerry added.

STRONG RESULTS

The company reported net income of $9.7 million, or $1.26 a share, compared with $7.6 million, or 98 cents a share, a year ago. Analysts on average were expecting earnings of $1.14 a share, excluding special items, according to Reuters Estimates.

Revenue rose 23 percent to $84.6 million, helped by the addition of a new seismic data acquisition crew in September 2007, as well as increased channel count, and productivity on existing crews. Analysts had expected revenue of $82.3 million.

"Provided there are no problems with permits or the weather, they should do as good, if not better, in the next quarter," Dahlman Rose's Dingmann said

Shares of the Midland, Texas-based company, were trading up up about 18 percent at $63.97 in afternoon trade on Nasdaq. Before Thursday's change, the stock had lost about one-fourth of its value year-to-date. (Editing by Pratish Narayanan, Jarshad Kakkrakandy)