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.

These factors tend to partially insulate seismic providers from price-driven industry volatility. Accordingly, the softer commodity prices, higher field costs and reduced capital budgets and drilling rates experienced in Canada in 2007 did not translate into reduced seismic data usage. In short, Pulse outperformed the wider oilfield service sector, continuing to grow despite weaker natural gas prices in 2006 and 2007. The nature of the seismic data business dynamic bodes well for Pulse's business going forward.