Pulse benefits from the seismic data sub-sector's favourable position within the oil and natural gas service industry's price and activity dynamics. The industry's use of seismic data is the key determinant of Pulse's revenue, so it's important to understand where seismic fits into the industry's capital spending programs and the commodity price dynamics.
Seismic interpretation remains key to oil and natural gas producers' longer-term growth and success, regardless of short-term energy commodity prices. Spending on seismic data represents a small proportion of the producing sector's very large capital budgets. And so, while capital budgets and rates of oil and natural gas well drilling fluctuate greatly along with commodity price movements, spending on seismic data is often among the last capital spending items to be cut. Seismic spending therefore tends not to move in lockstep with commodity prices and drilling rates. In addition, during softer commodity price phases, producing companies may shift capital resources from expensive proprietary seismic surveys to the more cost-effective acquisition of licensed data.
Pulse's strength is reflected in its financial health, experienced management and the bench strength of its team. The Company’s solid working capital, reasonable debt and significant credit capacity to take advantage of potential market opportunities. Pulse's management understands industry cycles and how to manage the business in the downturn and the recovery phases. Pulse's staff is equally strong and committed to building market share through superior seismic products and services.
Growth is a basis of capital appreciation in the public markets. Pulse is a growth company with a strong and highly scalable business model. Pulse is committed to growing its seismic data library sales by continually augmenting its data library and through vigorous sales and marketing. Pulse owns the second-largest readily available set of seismic data covering the Western Canada Sedimentary Basin. Pulse has grown its 3D seismic data library to over 28,264 net square kilometres and its 2D seismic data library to approximately 340,000 net kilometres.
This growth in capacity and top-line revenue is not particularly capital-intensive, and does not require adding to Pulse's current base of approximately 25 employees. This helps to maximize growth in Pulse's funds from operations and cash EBITDA. These key metrics are showing quarterly growth.
Pulse creates value in a number of ways. Seismic data retains its value and Pulse has a superb library of high-quality, strategically located, highly available and competitively priced data. These strengths ensure that Pulse's seismic library data can generate repeated sales at high cash operating margins for years to come. This will help us to generate sustainable cash EBITDA and dividends into the future. This, in turn, will support our value in the capital markets.
We believe Pulse's cash-generating business model, its record of growth and its streams of cash EBITDA and dividends make the Company's stock a value investment. In our view, this discrepancy creates room for Pulse's share price to increase.