SEC Filing | Dawson Geophysical

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1997

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DAWSON GEOPHYSICAL COMPANY
(Exact name of registrant as specified in its charter)

TEXAS 1382 75-0970548
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
corporation or organization) Classification Code Number) Identification No.)
L. DECKER DAWSON
PRESIDENT
DAWSON GEOPHYSICAL COMPANY
208 SOUTH MARIENFELD 208 SOUTH MARIENFELD
MIDLAND, TEXAS 79701 MIDLAND, TEXAS 79701
(915) 682-7356 (915) 682-7356
(Address, including zip code, and telephone (Name, address, including zip code, and
number, including area code, of registrant's telephone number, including area code, of
principal executive offices) agent for service)

COPIES TO:
JACK D. LADD C. NEEL LEMON III
STUBBEMAN, MCRAE, SEALY, THOMPSON & KNIGHT, P.C.
LAUGHLIN & BROWDER, INC. 1700 PACIFIC AVE.
550 W. TEXAS AVE., SUITE 800 SUITE 3300
MIDLAND, TEXAS 79701 DALLAS, TEXAS 75201

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following
box. [ ]
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CALCULATION OF REGISTRATION FEE

=================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------

Common Stock, $.33 1/3 par
value per share............ 1,725,000 shares $22.625 $39,028,125 $11,826.70
=================================================================================================================

(1) Includes up to 225,000 shares of Common Stock which may be purchased by
Underwriters to cover over-allotments, if any. See "Underwriting."
(2) Calculated pursuant to Rule 457(c) under the Securities Act of 1933, as
amended, based on the average of the high and low prices (reported on the
Nasdaq National Market) of the Common Stock on October 20, 1997.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 21, 1997

1,500,000 SHARES

(DAWSON LOGO)

COMMON STOCK
------------------------
Of the 1,500,000 shares of Common Stock offered hereby, 1,000,000 shares
are being issued and sold by Dawson Geophysical Company and 500,000 shares are
being sold by the Selling Shareholder. The Company will not receive any proceeds
from the sale of Common Stock by the Selling Shareholder. The Common Stock is
traded on the Nasdaq National Market under the symbol "DWSN." On October 20,
1997, the closing price of the Common Stock on the Nasdaq National Market was
$22.44 per share.

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SEE "RISK FACTORS" ON PAGES 6 THROUGH 8 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

==========================================================================================================================
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2) SELLING SHAREHOLDER
- --------------------------------------------------------------------------------------------------------------------------

Per Share.................. $ $ $ $
- --------------------------------------------------------------------------------------------------------------------------
Total(3)................... $ $ $ $
==========================================================================================================================

(1) The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting estimated expenses of $ payable by the Company.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 225,000 additional shares of Common Stock on the same terms and
conditions as the securities offered hereby solely to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."

------------------------

The shares of Common Stock are offered by the several Underwriters named
herein subject to prior sale, when, as and if delivered to and accepted by the
Underwriters, and subject to certain other conditions including the right of the
Underwriters to withdraw, cancel, modify or reject any order in whole or in
part. It is expected that delivery of the Common Stock will be made on or about
, 1997 at the offices of Raymond James & Associates, Inc., St.
Petersburg, Florida.

RAYMOND JAMES & ASSOCIATES, INC.

PRINCIPAL FINANCIAL SECURITIES, INC.

The date of this Prospectus is , 1997.
3

I/O System Two RSR Vibrator energy source units
The Company's I/O System Two RSR central control Vibrator energy source units operating in north
unit and transmitting tower. Texas.
- --------------------------------------------------------------------------------------------------------
Technician collecting data Geophysicist performing quality control
Technician collecting data from a remote seismic Company geophysicist performing quality control of
recorder. data volume from a 3-D seismic survey.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING TRANSACTIONS OR IMPOSING
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and the financial statements and related notes appearing
elsewhere in this Prospectus. As used herein, the "Company" means Dawson
Geophysical Company, the "Selling Shareholder" means L. Decker Dawson, President
of the Company, and "Common Stock" means the Company's Common Stock, $.33 1/3
par value per share, unless the context otherwise requires. Unless otherwise
indicated, all financial information and share data in this Prospectus assume no
exercise of the Underwriters' over-allotment option. Investors should carefully
consider the information set forth under "Risk Factors."

THE COMPANY

Founded in 1952, Dawson Geophysical Company acquires and processes
three-dimensional ("3-D") seismic data used in the exploration, development and
field management of oil and natural gas reserves. The Company's operations
consist of six 3-D seismic data acquisition crews and a seismic data processing
center located in Midland, Texas. As a result of an increase in industry-wide
demand for 3-D seismic surveys and the Company's competitive position, the
Company has experienced increasing demand for its 3-D seismic services. The
Company acquires and processes seismic data for its clients, ranging from major
oil and gas companies to independent oil and gas operators, who retain exclusive
rights to the information obtained.

The Company's land-based data acquisition crews operate primarily in the
southwestern United States, but have responded to demand from south Texas to
North Dakota. As a result of the addition of a sixth crew equipped with the
versatile I/O System Two(R)* Remote Seismic Recorder ("RSR"), the Company has
expanded its capabilities to accommodate more difficult and remote terrains such
as east Texas and the Rocky Mountains.

The Company operates five I/O System Two recording systems, one with RSR
capability, and one MDS-18X(R)* recording system. The Company's six seismic
crews are equipped with an aggregate capacity of 14,200 recording channels and
45 vibrator energy source units, which are configured to meet the demands of
specific survey designs. Each crew consists of approximately 40 technicians, 25
associated vehicles with off-road capabilities, 31,000 geophones, a recording
system, energy sources, electronic cables and a variety of other equipment.

3-D seismic surveys provide an immense volume of concentrated subsurface
information to the oil and gas industry. Detailed subsurface resolution from 3-D
seismic data enhances the exploration for new reserves and enables oil and gas
companies to better delineate existing fields and to augment reservoir
management techniques. Benefits of incorporating 3-D seismic technology into
exploration and development programs include reducing drilling risk, decreasing
oil and gas finding costs, lowering field development expenditures and
recovering a greater portion of reserves in place.

The Company believes that it maintains a competitive advantage in the
industry by (i) acquiring equipment to expand capacity in response to client
demand, (ii) updating its equipment to take advantage of advances in geophysical
technology, (iii) maintaining skilled and experienced personnel for its data
acquisition and processing operations, (iv) focusing its operations on the
domestic onshore seismic industry, and (v) providing integrated in-house
operations necessary to complete all phases of 3-D seismic data acquisition and
processing, including project design, permitting and surveying.

Since fiscal 1990, the Company has spent approximately $57 million to
acquire new 3-D telemetry recording systems and associated equipment, including
approximately $26 million since fiscal 1995. Consistent with the Company's
strategy of maintaining technologically advanced equipment and the financial
flexibility to expand its 3-D capacity, the Company intends to use, of the net
proceeds it receives from this offering, (i) approximately $10 million to reduce
bank debt of the Company, (ii) approximately $8 million to

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* I/O System Two(R) is a registered trademark of Input/Output, Inc. and
MDS-18X(R) is a registered trademark of I/O Exploration Products.
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acquire new equipment and to upgrade existing equipment for the six 3-D seismic
crews now operated by the Company, and (iii) the balance to increase working
capital of the Company and for general corporate purposes. The Company intends
to continue its program of acquiring new seismic equipment and upgrading its
existing equipment.

The headquarters of the Company, a Texas corporation, are located at 208
South Marienfeld, Midland, Texas 79701, and its telephone number is (915)
682-7356.

THE OFFERING

Common Stock offered by the
Company............................. 1,000,000 shares(1)

Common Stock offered by the Selling
Shareholder......................... 500,000 shares

Common Stock to be outstanding after
this offering....................... 5,200,000 shares(1)

Use of proceeds..................... Approximately $10 million to reduce
bank debt, approximately $8 million to
acquire new equipment and to upgrade
existing equipment for the Company's
six 3-D seismic crews, and the balance
to be added to working capital and for
general corporate purposes. See "Use of
Proceeds."

Nasdaq National Market symbol....... "DWSN"
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(1) Excludes 89,000 shares of Common Stock issuable upon exercise of outstanding
employee stock options. See "Management -- Compensation Plans."
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SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following summary financial information for the five fiscal years ended
September 30, 1996 was derived from the audited financial statements of the
Company. The historical information presented as of June 30, 1997 and for the
nine months ended June 30, 1996 and 1997 was derived from the unaudited
financial statements of the Company which, in the opinion of the Company's
management, contain all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation thereof. The following information
should be read in conjunction with "Selected Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
Company's financial statements and notes thereto and the other financial data
included elsewhere in this Prospectus.

NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
----------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------

STATEMENT OF OPERATIONS DATA:
Operating revenues............ $11,827 $17,016 $23,027 $28,188 $33,518 $24,485 $34,304
Operating costs:
Operating expenses......... 9,393 12,497 15,478 20,067 23,763 17,613 22,840
General and
administrative........... 694 842 887 975 1,299 1,031 1,052
Depreciation............... 1,441 1,830 3,016 4,150 5,818 4,104 5,456
------- ------- ------- ------- ------- ------- -------
11,528 15,169 19,381 25,192 30,880 22,748 29,348
------- ------- ------- ------- ------- ------- -------
Income from operations........ 299 1,847 3,646 2,996 2,638 1,737 4,956
Other income (expense)........ 807 950 (129) 444 122 171 37
Income before extraordinary
item....................... $ 918 $ 1,862 $ 2,266 $ 2,174 $ 1,888 $ 1,221 $ 3,248
Net income(1)................. $ 1,097 $ 2,739 $ 2,266 $ 2,174 $ 1,888 $ 1,221 $ 3,248
PER SHARE DATA:
Income per share before
extraordinary item......... $ .31 $ .62 $ .74 $ .54 $ .45 $ .29 $ .78
Net income per share.......... $ .37 $ .91 $ .74 $ .54 $ .45 $ .29 $ .78
Weighted average equivalent
common shares
outstanding................ 2,973 3,008 3,045 3,990 4,183 4,181 4,191

JUNE 30, 1997
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HISTORICAL AS ADJUSTED(2)
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BALANCE SHEET DATA (AT PERIOD END):
Working capital........................................... $11,890 $
Net property, plant and equipment......................... 29,675
Total assets.............................................. 44,747
Long-term debt, less current maturities(3)................ 4,214
Stockholders' equity...................................... 36,220

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(1) See the Company's financial statements and notes thereto included elsewhere
herein for information concerning the Company's use of net operating loss
carryforwards in certain periods.

(2) As adjusted to reflect the sale by the Company in this offering of 1,000,000
shares of Common Stock and the application of the estimated net proceeds it
receives therefrom as described under "Use of Proceeds."

(3) As of October 20, 1997, the Company's long-term debt, less current
maturities of $1,690,000, was $7,752,000.
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RISK FACTORS

Prospective investors should carefully consider the following factors, as
well as the other information contained in this Prospectus, in evaluating the
Company and its business before purchasing the Common Stock offered hereby.

INDUSTRY CONDITIONS

Demand for the Company's services depends upon the level of spending by oil
and gas companies for exploration, production, development and field management
activities, which activities depend in part on oil and gas prices. Beginning in
1982, a sharp decline in oil and gas prices led to a worldwide reduction in oil
and gas activities. This decline resulted in a significant reduction in the
overall demand for seismic services. Since reaching a high in 1981, the number
of land-based seismic crews operating worldwide and the number of companies
providing seismic services declined dramatically. Although demand for 3-D
seismic data acquisition services has continually increased over the past seven
years, no assurance can be given that current levels of oil and gas activities
will be maintained or that demand for the Company's services will reflect the
level of such activities. Decreases in oil and gas activities could adversely
affect the demand for the Company's services and the Company's results of
operations. In addition, a decrease in oil and gas expenditures in the United
States could result from such factors as unfavorable tax and other legislation
or uncertainty concerning national energy policy. Any significant decline in oil
and gas prices such as that which occurred in the 1980's could cause the Company
to alter its capital spending plans.

WEATHER

The Company's seismic data acquisition operations could be adversely
affected by inclement weather conditions. Delays associated with weather
conditions could negatively affect the Company's results of operations.

PERMITS

The Company's seismic data acquisition operations could be adversely
affected by the inability of the Company to obtain right of way usage from land
or mineral owners. Delays associated with permitting could negatively affect the
Company's results of operations.

OPERATING RISKS

The Company's activities are subject to general risks inherent in
land-based seismic data acquisition activities. To date, the Company has not
suffered any material losses of equipment, but there can be no assurance that it
will not experience such losses in the future. Because of the high fixed costs
associated with the Company's 3-D equipment, any significant downtime or low
productivity caused by reduced demand, weather interruptions, equipment
failures, permit delays or other causes could adversely affect its results of
operations. See "Business -- Operating Hazards and Insurance" for a description
of such risks and the insurance therefor carried by the Company.

LIQUIDITY AND WORKING CAPITAL REQUIREMENTS

The Company's sources of working capital are limited. The Company has
funded its working capital requirements with cash generated from operations,
cash reserves and borrowings from commercial banks. The Company's working
capital requirements increased significantly during the last seven years,
primarily due to the development of its 3-D land seismic data acquisition
infrastructure. If the Company were to expand its operations at a rate exceeding
operating cash flow, or if the current demand for and pricing of geophysical
services were to decrease substantially, additional financing could be required.
There is no assurance that additional financing could or would occur. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

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RELIANCE ON KEY SUPPLIER

The Company's primary supplier for seismic data acquisition systems is
Input/Output, Inc. Although the Company believes it will be able to obtain data
acquisition systems and/or replacement parts from Input/Output, Inc. or another
source for such systems or parts in the future, should it be unable to do so,
the Company's anticipated revenues could be reduced and the amount of cash
needed for capital expenditures could be increased. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources -- Capital Expenditures" and "Business -- Equipment
Acquisition."

LITIGATION

The Company is a defendant in two lawsuits relating to a July 1995 accident
involving a van owned by the Company in which four Company employees died. The
Company believes that it has meritorious defenses to the claims asserted against
it in such suits. Further, while the plaintiffs seek damages in excess of the
Company's liability insurance policies, the Company believes that its liability
insurance should provide adequate coverage of the damages, if any, which may be
assessed against the Company in such litigation. Due to the uncertainties
inherent in litigation, no assurance can be given as to the ultimate outcome of
such suits or the adequacy or availability of the Company's liability insurance
to cover any such damages. A judgment awarding plaintiffs an amount
significantly exceeding the Company's available insurance coverage could have a
material adverse effect on the Company's financial condition, results of
operations and liquidity. See "Business -- Legal Proceedings."

DEPENDENCE ON KEY PERSONNEL

The Company's success may be dependent upon, among other things, the
services of certain key personnel. The loss of services of any one or more of
the executive officers of the Company could have a material adverse effect on or
result in a disruption of normal business operations. See "Management."

COMPETITION

The acquisition and processing of 3-D geophysical data for the oil and gas
industry is a highly competitive business in the United States. The Company's
competitors include companies with financial resources that are significantly
greater than those of the Company as well as companies of comparable and smaller
size.

TECHNICAL OBSOLESCENCE

Seismic data acquisition and data processing technology have progressed
rapidly over the past several years, and the Company expects this progression to
continue. The Company's strategy is to regularly upgrade its data acquisition
and processing equipment to maintain its competitive position. However, due to
the rapid advances in technology and the related costs associated with such
technological advances, no assurance can be given that the Company will be able
to fulfill its strategy, thus possibly affecting the Company's ability to
compete.

GOVERNMENTAL REGULATIONS

The Company's operations are subject to a variety of federal, state and
local laws and regulations, including laws and regulations relating to the
protection of the environment and archeological sites. The Company is required
to expend financial and managerial resources to comply with such laws and
related permit requirements in its operations, and anticipates that it will
continue to be required to do so in the future. Although such expenditures
historically have not been material to the Company, the fact that such laws or
regulations change frequently make it impossible for the Company to predict the
cost or impact of such laws and regulations on its future operations. The
adoption of laws and regulations that have the effect of reducing or curtailing
exploration and production activities by energy companies could also adversely
affect the Company's operations by reducing the demand for its services.

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SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock in the open market
after this offering could adversely affect the trading price of the Common
Stock. Immediately after this offering, the Selling Shareholder will hold
507,272 shares, representing approximately 9.76% of the outstanding shares of
Common Stock. A decision by the Selling Shareholder to sell shares of Common
Stock could adversely affect the trading price of the Common Stock. Upon the
consummation of this offering, the Company will have 5,200,000 shares of Common
Stock outstanding (excluding 89,000 shares of Common Stock issuable upon
exercise of outstanding employee stock options). Of such outstanding shares, the
Company estimates that approximately 4,410,000 shares will be freely tradeable
unless purchased by an "affiliate" of the Company, as that term is defined in
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act").
See "Description of Capital Stock -- Shares Eligible for Future Sale."

NO DIVIDENDS

The Company has never paid cash dividends on its Common Stock and has no
plans to do so in the foreseeable future. The Company intends to retain earnings
for use in its operations and to finance its business. See "Dividend Policy."

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact included in this
Prospectus, including without limitation statements under "Prospectus Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" regarding technological advancements, use
of proceeds and the Company's financial position, business strategy and plans
and objectives of management of the Company for future operations, are
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). When used in this Prospectus, words such as "anticipate,"
"believe," "estimate," "expect," "intend" and similar expressions, as they
relate to the Company or its management, identify forward-looking statements.
Such forward-looking statements are based on the beliefs of the Company's
management as well as assumptions made by and information currently available to
the Company's management. Actual results could differ materially from those
contemplated by the forward-looking statements as a result of certain factors,
including but not limited to dependence upon energy industry spending, weather
problems, inability to obtain land use permits, the volatility of oil and gas
prices, the availability of capital resources and the other factors set forth in
"Risk Factors." Such statements reflect the current views of the Company with
respect to future events and are subject to these and other risks, uncertainties
and assumptions relating to the operations, results of operations, growth
strategy and liquidity of the Company. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this paragraph. The Company
assumes no obligation to update any such forward-looking statements.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock offered
by it are estimated to be approximately $ after deducting
underwriting discounts and commissions and offering expenses payable by the
Company. Of the net proceeds it receives from this offering, the Company intends
to use (i) approximately $10 million to reduce bank debt, (ii) approximately $8
million to acquire new equipment and to upgrade existing equipment for the
Company's six 3-D seismic crews in early 1998, and (iii) the balance for working
capital and general corporate purposes. Pending its use of the net proceeds it
receives from this offering, the Company may invest such proceeds in short-term
investments.

The Company's bank debt has been used to finance operating cash
requirements and capital expenditures for equipment purchases. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Loan Agreement" for additional
information concerning the Company's bank debt.

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The Company will not receive any proceeds from the sale of the shares of
Common Stock offered by the Selling Shareholder. See "Principal and Selling
Shareholders."

PRICE RANGE OF COMMON STOCK

The Common Stock is quoted on the Nasdaq National Market under the symbol
"DWSN." The following table sets forth the high and low sales prices, as
reported on the Nasdaq National Market, for the periods indicated.

HIGH LOW
------ ------

FISCAL YEAR ENDED SEPTEMBER 30, 1996
First Quarter............................................. $12.25 $ 8.50
Second Quarter............................................ 9.75 7.75
Third Quarter............................................. 12.00 9.13
Fourth Quarter............................................ 11.25 8.31

FISCAL YEAR ENDED SEPTEMBER 30, 1997
First Quarter............................................. $11.25 $ 8.13
Second Quarter............................................ 13.75 10.38
Third Quarter............................................. 14.50 9.13
Fourth Quarter............................................ 25.75 13.50

FISCAL YEAR ENDED SEPTEMBER 30, 1998
First Quarter (through October 20, 1997).................. $27.38 $22.13

The last reported sale price for the Common Stock on October 20, 1997 on
the Nasdaq National Market was $22.44 per share. As of September 30, 1997, there
were approximately 296 record holders of the Common Stock.

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DIVIDEND POLICY

Since its initial public offering in 1981, the Company has not declared or
paid any dividends on its Common Stock. The Company presently intends to retain
earnings for use in its operations and to finance its business. Any change in
the Company's dividend policy is within the discretion of its Board of Directors
and will depend, among other things, on the Company's earnings, debt service and
capital requirements, restrictions in financing agreements, business conditions
and other factors that the Board of Directors deems relevant.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1997, and as adjusted to give effect to the sale of 1,000,000 shares of
Common Stock offered hereby by the Company and the application of the estimated
net proceeds to the Company therefrom. See "Use of Proceeds" and the Company's
financial statements and notes thereto included elsewhere herein.

JUNE 30, 1997
----------------------
AS
HISTORICAL ADJUSTED
---------- --------
(IN THOUSANDS, EXCEPT
SHARE DATA)

Long-term debt, less current maturities(1).................. $ 4,214 $
Stockholders' equity:
Preferred Stock, par value $1.00 per share:
5,000,000 shares authorized, none issued or
outstanding......................................... --
Common Stock, par value $.33 1/3 per share:
10,000,000 shares authorized, 4,199,250 shares issued
and outstanding;
5,199,250 shares issued and outstanding as
adjusted(2).......................................... 1,400
Additional paid-in capital................................ 17,171
Retained earnings......................................... 17,649
------- -------
Total stockholders' equity........................ 36,220
------- -------
Total capitalization......................... $40,434 $
======= =======

- ---------------

(1) See the Company's financial statements and notes thereto included elsewhere
herein for additional information relating to the Company's long-term debt.
As of October 20, 1997, the Company's long-term debt, less current
maturities of $1,690,000, was $7,752,000.

(2) Excludes 59,750 shares reserved for issuance upon exercise of employee stock
options at June 30, 1997. See "Management -- Compensation Plans."

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SELECTED FINANCIAL DATA

The following selected financial data as of and for the five fiscal years
ended September 30, 1996 were derived from the historical financial statements
of the Company, which have been audited by KPMG Peat Marwick LLP, independent
certified public accountants. The following selected financial data as of and
for the nine months ended June 30, 1996 and 1997 were derived from the unaudited
historical financial statements of the Company which, in the opinion of the
Company's management, contain all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation thereof. The selected
financial data presented herein is qualified in its entirety by, and should be
read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Company's financial statements and
notes thereto and the other financial information included elsewhere herein.

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

NINE MONTHS
YEARS ENDED SEPTEMBER 30, ENDED JUNE 30,
--------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------

STATEMENT OF OPERATIONS DATA:
Operating revenues....................... $11,827 $17,016 $23,027 $28,188 $33,518 $24,485 $34,304
Operating costs:
Operating expenses..................... 9,393 12,497 15,478 20,067 23,763 17,613 22,840
General and administrative............. 694 842 887 975 1,299 1,031 1,052
Depreciation........................... 1,441 1,830 3,016 4,150 5,818 4,104 5,456
------- ------- ------- ------- ------- ------- -------
11,528 15,169 19,381 25,192 30,880 22,748 29,348
------- ------- ------- ------- ------- ------- -------
Income from operations................... 299 1,847 3,646 2,996 2,638 1,737 4,956
Other income (expense):
Interest and dividend income........... 413 367 209 399 253 187 167
Interest expense....................... (140) (160) (376) (170) (144) (26) (341)
Gain on disposal of assets............. 20 67 68 76 11 9 196
Other.................................. 60 1 (30) 8 2 1 15
Proceeds from litigation settlement.... -- 669 -- 131 -- -- --
Realized gain (loss) on marketable
securities........................... -- 6 -- -- -- -- --
Unrealized gain on marketable
securities........................... 454 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Income before income tax expense and
extraordinary item..................... 1,106 2,797 3,517 3,440 2,760 1,908 4,993
Income tax expense:
Current................................ 9 58 1,212 970 599 373 1,222
Deferred............................... 179 877 39 296 273 314 523
------- ------- ------- ------- ------- ------- -------
188 935 1,251 1,266 872 687 1,745
------- ------- ------- ------- ------- ------- -------
Income before extraordinary item......... 918 1,862 2,266 2,174 1,888 1,221 3,248
Tax benefit from utilization of loss
carryforward......................... 179 877 -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Net income(1)............................ $ 1,097 $ 2,739 $ 2,266 $ 2,174 $ 1,888 $ 1,221 $ 3,248
======= ======= ======= ======= ======= ======= =======
Income per common share:
Income before extraordinary item....... $ .31 $ .62 $ .74 $ .54 $ .45 $ .29 $ .78
Extraordinary item..................... .06 .29 -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Net income............................. $ .37 $ .91 $ .74 $ .54 $ .45 $ .29 $ .78
======= ======= ======= ======= ======= ======= =======
Weighted average equivalent common shares
outstanding............................ 2,973 3,008 3,045 3,990 4,183 4,181 4,191
======= ======= ======= ======= ======= ======= =======
BALANCE SHEET DATA (AT PERIOD END):
Working capital.......................... $ 4,803 $ 3,646 $ 2,789 $ 9,641 $ 5,343 $ 7,795 $11,890
Net property, plant and equipment........ 7,825 11,836 14,936 21,550 32,926 27,914 29,675
Total assets............................. 16,540 21,908 24,942 32,342 41,909 39,902 44,747
Long-term debt, less current
maturities(2).......................... 1,833 3,500 2,250 -- 4,857 2,926 4,214
Stockholders' equity..................... 12,628 15,482 17,686 30,856 32,804 32,134 36,220

- ---------------

(1) See the Company's financial statements and notes thereto included elsewhere
herein for information concerning the Company's use of net operating loss
carryforwards in certain periods.

(2) As of October 20, 1997, the Company's long-term debt, less current
maturities of $1,690,000, was $7,752,000.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Company's
financial statements and notes thereto included elsewhere in this Prospectus. In
addition, in reviewing the Company's financial statements it should be noted
that quarterly fluctuations in the Company's results of operations can occur due
to weather, land use permitting and other factors. See "Risk Factors."

NINE MONTHS ENDED JUNE 30, 1997 VERSUS NINE MONTHS ENDED JUNE 30, 1996

The Company's operating revenues increased 40.1% from $24,485,000 for the
first nine months of fiscal 1996 to $34,304,000 for the same period of fiscal
1997. The increase in revenues is primarily due to increased capacity and
improved efficiency resulting from fiscal 1996 capital expenditures. The fiscal
1996 capital expenditures consisted of the addition of a fifth crew in the third
quarter combined with additional channel capacity of the existing crews and
additional vibrator energy source units.

Operating expenses for the nine months ended June 30, 1997 totaled
$22,840,000, an increase of $5,227,000, or 29.7%, over the same period of fiscal
1996. Operating expenses increased primarily as a result of increased personnel
and other expenses associated with the equipment acquisitions and technological
upgrades made primarily during the third quarter of fiscal 1996.

General and administrative expenses for the nine months ended June 30, 1997
totaled $1,052,000, an increase of $21,000 from the same period of fiscal 1996.
The increase for fiscal year 1997 is primarily due to timing adjustments of
certain expenses. General and administrative expenses totaled 3.1% of operating
revenues for the nine months ended June 30, 1997 versus 4.2% of operating
revenues for the same period of fiscal 1996.

Depreciation for the nine months ended June 30, 1997 totaled $5,456,000, an
increase of $1,352,000, or 32.9% from the same period of fiscal 1996.
Depreciation continues to increase as a result of the capital expansion
discussed below in "Liquidity and Capital Resources."

Total operating costs for the first nine months of fiscal 1997 totaled
$29,348,000, an increase of 29.0% over the first nine months of fiscal 1996 due
to the factors described above. Income from operations increased to $4,956,000,
14.4% of revenues, from $1,737,000, 7.1% of revenues, in the comparable nine
month period of fiscal 1996. This increase is the direct result of the Company's
operating expenses being relatively fixed as compared to revenue trends. Because
of the high proportion of relatively fixed total operating costs (including
personnel costs for active crews and depreciation costs), income from operations
in fiscal 1997 reflects the benefit of efficient production with steady demand.

Interest is paid monthly at prime rates on the principal of the term notes
described below in "Loan Agreement."

Federal and state income tax expense is calculated at the rates of 35% and
36% in fiscal years 1997 and 1996, respectively.

FISCAL YEAR ENDED SEPTEMBER 30, 1996 VERSUS FISCAL YEAR ENDED SEPTEMBER 30, 1995

The Company's operating revenues increased 18.9% from $28,188,000 for
fiscal 1995 to $33,518,000 for fiscal 1996. In June 1996, the Company placed
into service its fifth telemetry recording system after combining two
1,000-channel crews in the quarter ended March 31, 1996. The Company further
increased production capacity during 1996 with the purchase of additional
equipment. Demand for larger surveys translates to an increased number of
channels and improved efficiency which has been gained with additional energy
source units to complement recording systems already in service.

Operating expenses increased 18.4% in 1996 as compared to 1995 as a result
of adding a new 3-D seismic crew as well as increased personnel and other
expenses associated with the equipment additions and technological upgrades.

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14

General and administrative costs have increased with additional support
services for the Company's expanding operations. As a percentage of operating
revenues, general and administrative costs increased to 3.9% from 3.5% in 1995.

Depreciation continues to increase dramatically due to the Company's
capital expansion. In 1996, the cost to field the new telemetry crew represents
approximately $10,000,000 of the total $15,597,000 in capital expenditures. The
increase from the total capital expenditures in 1995 of $10,961,000 is comprised
of the upgrades to data acquisition capacity of the existing crews and further
expansion of energy source units.

The decrease in income from operations for 1996 as compared to 1995 and for
1995 as compared to 1994 is attributable to the significant increase in
depreciation. In addition, the impact of the permit delays in the first quarter
and unfavorable weather during the first and fourth quarters of 1996 affected
revenue directly without a significant corresponding reduction in the relatively
fixed operating expenses.

The significant changes in the Company's other income and expenses are a
result of a final litigation settlement of $131,000 in 1995 resulting from the
suit filed against First Republic Bank in 1988 and the increase of interest
income in 1995 due to the investment of public offering proceeds until capital
expenditures were made.

The Company's effective tax rate for 1996 is 32.0% as compared to 36.8% for
1995. These rates reflect the effects of federal and state income taxes over the
periods reported. As of September 30, 1995, the Company had no tax loss
carryforwards to offset future tax expense.

FISCAL YEAR ENDED SEPTEMBER 30, 1995 VERSUS FISCAL YEAR ENDED SEPTEMBER 30, 1994

The Company's operating revenues increased 22.4% from $23,027,000 for
fiscal 1994 to $28,188,000 for fiscal 1995. This increase was attributable
primarily to the increased industry demand for 3-D data acquisition services,
additions of new equipment and technological upgrades to existing equipment.
Revenues did not increase during 1995 to the extent of the 1994 increase
primarily due to unfavorable weather during the third and fourth quarters of
1995.

Operating expenses for the year ended September 30, 1995 totaled
$20,067,000, an increase of $4,589,000 over fiscal 1994. Operating expenses
include increased personnel and other expenses associated with the equipment
additions and technological upgrades described above.

General and administrative expenses for the year ended September 30, 1995
totaled $975,000, an increase of $88,000 over fiscal 1994. General and
administrative expenses totaled 3.4% of operating revenue for the year ended
September 30, 1995 versus 3.8% for fiscal 1994. This decline as a percentage of
operating revenue was a result of economies of scale and improved operating
efficiency.

Depreciation for the fiscal year ended September 30, 1995 totaled
$4,150,000, an increase of $1,134,000 over fiscal 1994. Depreciation increased
as a result of the Company's capital expansion.

Operating costs for the year ended September 30, 1995 totaled $25,192,000,
an increase of $5,811,000 or 30% over fiscal 1994, due to the factors described
above. The $650,000 decrease in income from operations to $2,996,000 in 1995
from $3,646,000 in 1994 reflects the effects of increased depreciation resulting
from the new crew and its associated start-up expenses. In addition, the impact
of unfavorable weather during the third and fourth quarters of 1995 affected
revenue directly without a significant corresponding reduction in the relatively
fixed operating expenses.

The significant changes in the Company's other income and expenses were a
result of a litigation settlement of $131,000 in 1995 and decreased interest
expense as a result of the retirement of debt.

The Company's effective tax rate for 1995 was 36.8% as compared to 35.6%
for 1994. These rates reflect the effects of federal and state income taxes for
the periods reported. As of September 30, 1995, the Company had no tax loss
carryforwards to offset future current tax expense.

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15

OUTLOOK FOR FISCAL YEAR ENDED SEPTEMBER 30, 1997 VERSUS FISCAL YEAR ENDED
SEPTEMBER 30, 1996

The Company expects that fiscal 1997 revenues and income from operations
will be significantly increased over fiscal 1996. The Company anticipates that
operating costs will not have increased as rapidly as revenues due to the
relatively fixed nature of many of the Company's costs relative to the number of
active crews.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Despite net income of $3,248,000 for the nine months ended June 30, 1997
versus $1,221,000 for the same period of fiscal 1996, net cash provided by
operating activities of $6,325,000 for the nine months ended June 30, 1997 as
compared to $6,848,000 for the same period of fiscal 1996 reflects a slight
decrease primarily due to changes in working capital components. The increase in
accounts receivable in fiscal 1997 is the result of increased revenues.

Net cash used in investing activities decreased to $4,687,000 for the first
nine months of fiscal 1997 from $9,710,000 in the same period of fiscal 1996.
During the second quarter of fiscal 1997, the Company invested cash generated
from operations in U.S. Treasury instruments. As discussed below in "Capital
Expenditures," the Company is positioning for possible future expansion.

Net cash used in financing activities primarily reflects principal payments
on debt. During fiscal 1997, the Company made monthly principal payments of
$71,400 under a $6,000,000 term note, and in September 1997, the Company made a
$69,400 principal payment under a $5,000,000 term note. See "Loan Agreement"
below.

Capital Expenditures

Capital expenditures of $15,597,000 during fiscal year 1996 in addition to
capital expenditures during fiscal 1995 and 1994 have positioned the Company to
supply market demand with technologically advanced 3-D data acquisition
recording systems and leading edge data processing capabilities. Depreciation
has increased as a new crew has been placed into service each year for the past
several years.

Capital expenditures of $2,340,000 for the nine months ended June 30, 1997
include additions and replacements to the myriad of cables and geophones,
enhancements to the surveying operation, and additions in support of quality
control and operational safety efforts. In addition, the Company has budgeted
capital expenditures of approximately $2,000,000 for the fourth quarter of
fiscal 1997 to upgrade existing equipment.

The Company placed a sixth crew into service in August of 1997. The cost of
the new crew equipped with a 2,000 channel I/O System Two RSR was approximately
$6,000,000. See "Loan Agreement" below.

Loan Agreement

The Company is a party to a loan agreement, as amended (the "Loan
Agreement"), with Norwest Bank Texas, N.A. ("Norwest"). The Loan Agreement
consists of (1) a revolving line of credit of $6,000,000 which matures on April
15, 1999, (2) a term note in the aggregate principal amount of $6,000,000
bearing interest at Norwest's prime rate and which matures on March 15, 2003 and
(3) a term note in the aggregate principal amount of $5,000,000 bearing interest
at the prime rate as published in The Wall Street Journal and which matures on
April 15, 2003. The $5,000,000 term note, together with working capital, was
utilized to finance the purchase of equipment placed into service in August
1997. The term notes are secured by eligible accounts receivable and equipment
purchased from loan proceeds. At September 30, 1997, approximately $9.5 million
was outstanding under the term notes all of which was bearing interest at 8.5%
per annum.

Capital Resources

The Company believes that its capital resources, including the availability
of bank borrowings, and cash flow from operations are adequate to meet its
current operational needs and will allow the Company to

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16

continue its practice of acquiring new technologically advanced equipment and
upgrading its existing equipment. However, the Company's expansion plans,
including its capital budget for fiscal 1998, may be affected by its ability to
raise capital from additional sources, including but not limited to this
offering.

Litigation

RECENT ACCOUNTING PRONOUNCEMENTS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("FAS") No. 123, "Accounting for Stock-Based
Compensation." FAS 123 is required to be adopted by the Company in fiscal 1997.
FAS 123 provides for alternative methods of recording stock-based compensation
and requires additional disclosure regardless of which method is utilized to
record stock-based compensation. The Company accounts for employee stock-based
compensation using the intrinsic value method prescribed by Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB
25"). The Company plans to adopt only the disclosure provisions of FAS 123 at
September 30, 1997.

In February 1997, the Financial Accounting Standards Board issued FAS No.
128, "Earnings per Share." FAS No. 128 establishes standards for computing and
presenting earnings per share and is effective for periods ending after December
15, 1997. The impact of the adoption of FAS No. 128 on the Company's earnings
per share is expected to be immaterial.

In June 1997, the Financial Accounting Standards Board issued FAS No. 130,
"Reporting Comprehensive Income." FAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general purpose financial statements. FAS No. 130 is effective for interim
and annual periods beginning after December 15, 1997. The Company plans to adopt
FAS No. 130 for the period ended December 31, 1999.

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BUSINESS

GENERAL

Founded in 1952, Dawson Geophysical Company acquires and processes seismic
data used in the exploration, development and field management of oil and
natural gas reserves. Since fiscal 1990, the Company has spent approximately $57
million to acquire new 3-D telemetry recording systems and associated equipment,
including approximately $26 million since fiscal 1995. The Company's operations
consist of six 3-D seismic data acquisition crews and a seismic data processing
center. As a result of an increase in industry-wide demand for 3-D seismic
surveys and the Company's competitive position, the Company has experienced
increasing demand for its 3-D seismic services. During fiscal 1997,
substantially all of the Company's revenues were derived from 3-D seismic
operations.

The Company's land-based data acquisition crews operate primarily in the
southwestern United States, but have responded to demand from south Texas to
North Dakota. As a result of the addition of a sixth crew equipped with the
versatile I/O System Two RSR, the Company has expanded its capabilities to
accommodate more difficult and remote terrains such as east Texas and the Rocky
Mountains.

Data processing is performed by Company geophysicists at the Company's
computer center located in Midland, Texas. The Company acquires and processes
data for its clients, ranging from major oil and gas companies to independent
oil and gas operators, who retain exclusive rights to the information obtained.

The Company believes that it maintains a competitive advantage in the
industry by (i) acquiring equipment to expand capacity in response to client
demand, (ii) updating its equipment base to take advantage of advances in
geophysical technology, (iii) maintaining skilled and experienced personnel for
its data acquisition and processing operations, (iv) focusing its operations on
the domestic onshore seismic industry, and (v) providing integrated in-house
operations necessary to complete all phases of 3-D seismic data acquisition and
processing, including project design, permitting and surveying.

GEOPHYSICAL SERVICES

General. Technological advances in equipment and computers have allowed the
seismic industry to economically acquire and process immense volumes of seismic
data which produce more precise images of the earth's subsurface. The industry
refers to this process of data acquisition, processing and subsequent
interpretation of the processed data as the 3-D seismic method. Geophysicists
use computer workstations to interpret 3-D data volumes, identify subsurface
anomalies and generate a geologic model of subsurface features.

3-D seismic data are used in the exploration for new reserves and enable
oil and gas companies to better delineate existing fields and to augment their
reservoir management techniques. Benefits of incorporating 3-D seismic
technology into exploration and development programs include reducing drilling
risk, decreasing oil and gas finding costs and increasing the efficiencies of
reservoir location, delineation and management.

The Company is exploring the opportunities presented by the
four-dimensional seismic method, which adds the element of time to 3-D surveys.
By surveying the same site at successive times, geophysicists compare data
volumes and may be able to determine the progress of enhanced recovery programs
in existing petroleum reservoirs, and thereby aid in extracting remaining
reserves. Such projects could, over time, benefit reservoir management thereby
providing future opportunities for the Company.

The industry as a whole is investigating even more sophisticated
technologies. Researchers at the Colorado School of Mines, underwritten in part
by the Company, are exploring the use of three-component ("3-C") surveys
utilizing shear wave information in the effort to identify and exploit
recoverable oil and gas reserves. The Company's equipment currently includes
vibrators and geophones capable of generating and recording shear waves.

Data Acquisition. The seismic survey begins at the time a client requests
the Company to formulate a proposal to acquire seismic data on its behalf. The
Company's geophysicists then assist the client in designing

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the specifications of the proposed 3-D survey. If the client accepts the
Company's proposal, a Company permit agent then obtains access from the
landowner to the site where the survey is to be conducted.

Utilizing electronic surveying equipment, the Company's survey personnel
precisely locate the energy source and receiver positions from which the seismic
data are collected. The Company utilizes the satellite global positioning
system, known as GPS, to properly locate the seismic survey grid.

The Company operates six land based crews gathering 3-D seismic data. The
Company primarily uses vibrator energy sources, each of which weighs 50,000 to
62,000 pounds, but on occasion detonates dynamite charges placed in drill holes
below the earth's surface to generate seismic energy. The Company has 45
vibrator energy source units and a capacity of 14,200 recording channels, any of
which are configured to meet the demands of specific survey designs. Each crew
consists of approximately 40 technicians, 25 associated vehicles with off-road
capabilities, 31,000 geophones, a seismic recording system, energy sources,
electronic cables and a variety of other equipment. The Company operates five
I/O System Two recording systems, one with RSR capability, and one MDS-18X
recording system.

Since 1994 the Company has grown from four seismic data acquisition crews
with an aggregate recording capacity of 4,532 channels and 22 vibrator energy
source units. Demand for more recording channels continues to increase from
client companies as the industry strives for improved data quality. The
Company's current average of 2,367 channels per crew is well above the industry
average. The comparatively large number of recording channels gives the Company
a competitive edge with the versatility and productivity to improve data quality
at a lower cost per unit of data to the client.

Data Processing. The Company currently operates a computer center located
in Midland, Texas to process seismic data. Such processing primarily involves
the enhancement of the data by improving reflected signal resolution, removing
ambient noise and establishing proper spatial relationships of geological
features. The data are then arranged in such a manner that computer graphic
technology may be employed for examination and interpretation of the data by the
user.

The processing center operates 24 hours daily utilizing two parallel
high-speed computers. The Company continues to improve data processing
efficiency by further integrating workstation-based computer technology into the
mainframe operation at the computer center and remote sites such as the client's
office. The Company purchases, develops or leases, under non-exclusive licensing
arrangements, seismic data processing software.

The Company's computer center processes seismic data collected by its
crews, as well as by other geophysical contractors. In addition, the Company
reprocesses previously recorded seismic data using current technology to enhance
the data quality. The Company's processing contracts may be awarded jointly with
or independently from data acquisition services.

Integrated Services. The Company maintains integrated in-house operations
necessary to the development and completion of 3-D seismic surveys. Experienced
Company personnel conduct and supervise the 3-D seismic survey design,
permitting, surveying and data acquisition and processing functions for each
seismic program. In-house support operations include facilities for automotive
repair, automotive paint, electronics repair, electrical engineering and
software development, thereby enabling better quality control and improved
efficiency. The Company's clients generally undertake to provide their own
interpretation of the seismic data provided by the Company, although from time
to time the Company's geophysicists may assist its clients in this process.

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EQUIPMENT ACQUISITION

The Company believes it is essential to monitor and evaluate advances in
geophysical technology and to commit capital funds to purchase equipment it
deems most promising. Purchasing new assets and continually upgrading capital
assets involves a continuing commitment to capital spending. The Company's
capital expenditures for the three fiscal years ended September 30, 1996 and the
nine months ending June 30, 1997 were $6,161,000, $10,961,000, $15,597,000 and
$2,340,000 respectively. Projected capital expenditures for fiscal 1998 are at
least $8 million which will be used to purchase new equipment and upgrade
existing equipment for its six 3-D seismic crews by early 1998. See "Risk
Factors -- Liquidity and Working Capital Requirements" and "Use of Proceeds."

CLIENTS

The Company's services are marketed by supervisory and executive personnel
who contact clients to determine geophysical needs and respond to client
inquiries regarding the availability of crews or processing schedules. These
contacts are based principally upon professional relationships developed over a
number of years.

The Company's clients range from major oil companies to small independent
oil and gas operators. The services provided by the Company vary according to
the size and needs of the client. During the year ended September 30, 1996, the
three most significant clients for the Company's services accounted for
approximately 11.0%, 9.9% and 9.2% of the Company's revenues. For the nine
months ended June 30, 1997, the three most significant clients of the Company
accounted for approximately 7.9%, 7.4% and 7.4% of the Company's revenues. None
of such clients were included in the three largest clients during fiscal 1996.
Because of the limited number of data acquisition crews and the length of
contracts under which these crews have performed duties in the past, the Company
anticipates that a large portion of future revenues will continue to be
attributable to a few clients, who may change from period to period. The Company
presently believes that the loss of any one of its clients would not have a
material impact on its business.

CONTRACTS

For the past seven years, demand for the Company's services has
substantially exceeded its ability to meet such demand. Based on current market
conditions, current indications of interest and work in progress, the Company
believes that there will be a significant demand for its services well into the
Company's 1998 fiscal year.

The Company's seismic services are conducted under master contracts with
clients. Contracts are either "turnkey" contracts that provide for a fixed fee
to be paid to the Company for each unit of data acquired, or "term" contracts
that provide for a fixed hourly, daily, or monthly fee during the term of the
project. Turnkey contracts generally provide more profit potential for the
Company, but involve more risks because of the potential downtime for weather
and other types of delays. Substantially all of the Company's contracts with its
clients are turnkey. A supplemental agreement setting forth the terms of a
specific project, which may be cancelled by either party, is entered into for
every project.

The results of the Company's services belong to the contracting party. To
avoid conflicts of interest, the Company does not acquire any data for its own
account. All of the client's information is maintained in strictest confidence.
Company policy prohibits any officer, director or employee from participating in
oil and gas ventures.

COMPETITION AND MARKETS

The acquisition and processing of 3-D seismic data for the oil and gas
industry is a highly competitive business in the United States. Contracts for
such services generally are awarded on the basis of price quotations, crew
experience and availability of crews to perform in a timely manner, although
factors other than price, such as technological expertise and reputation, are
sometimes determinative. The Company's

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20

competitors include companies with financial resources that are significantly
greater than those of the Company as well as companies of comparable and smaller
size.

Historically, the demand for geophysical services has been directly related
to the level of spending by oil and gas companies for exploration, production,
development and field management activities, which activities depend in part on
the level of oil and gas prices. Because geophysical services are among the
first operations involved in the exploration for oil and gas, the level of such
services, in the past, has declined prior to a decline in oil and gas
exploration activities. In recent years, however, the improved subsurface
resolution obtainable from 3-D seismic data have enhanced the exploration for
new reserves and enabled oil and gas companies to utilize 3-D surveys to better
delineate existing fields and to augment their reservoir management techniques.
See "Risk Factors -- Industry Conditions."

EMPLOYEES

The Company employs approximately 350 persons, of which 293 are engaged in
providing energy sources and acquiring data, 12 are engaged in data processing,
seven are administrative personnel, 30 are engaged in equipment maintenance and
eight are executive officers. Of the employees listed above, 16 are
geophysicists. The Company's employees are not represented by a labor union. The
Company believes it has good relations with its employees.

The current level of demand for geophysical services has increased the
difficulty of obtaining qualified personnel. Although the Company thus far has
not experienced unusual difficulty in this regard, a continued acceleration in
demand for geophysical services may create a shortage of such personnel. The
Company maintains an active training program and attempts to promote from within
the Company.

PROPERTIES

The Company's principal properties are energy sources and data acquisition
and processing equipment. At June 30, 1997 the average age of the Company's data
acquisition equipment was approximately three years. In general, the Company
believes that this equipment is well maintained and suitable for its intended
uses. See "Business -- Equipment Acquisition" for information regarding capital
expenditures by the Company.

The location and description of the Company's principal real properties are
set forth in the following table:

FEE OR BUILDING AREA
LOCATION LEASED PURPOSE SQUARE FEET
-------- ------ ------- -------------

Midland, Texas.................. Fee Executive offices and data processing 10,400
Midland, Texas.................. Fee Field office 53,000
Equipment fabrication
Maintenance and repairs

OPERATING HAZARDS AND INSURANCE

The Company's activities are often conducted in remote areas under extreme
weather and other dangerous conditions. These operations are subject to risks of
injury to personnel and equipment. The Company's crews are mobile and the
equipment and personnel are subject to vehicular accidents. The Company uses
diesel fuel which is classified by the U.S. Department of Transportation as a
hazardous material. See "Risk Factors -- Litigation and -- Governmental
Regulations."

The Company carries insurance in amounts which it considers adequate on the
principal items of its equipment. The Company does not carry insurance against
certain risks, including business interruption resulting from equipment losses
or weather delays. The Company obtains insurance against certain property and
personal casualty risks, when such insurance is available and when management
considers it advisable to do so. Such coverage is not always available, however,
and, when available, is subject to unilateral cancellation by the insuring
companies on very short notice. The Company insures seismic data for amounts
considered

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acceptable by management. Accordingly, damage to such data should not have a
material adverse effect upon the Company.

LEGAL PROCEEDINGS

The Company is a defendant in two lawsuits pending in the 112th and 83rd
District Courts of Pecos County, Texas (respectively, Cause No. 8812, Ernestine
Bernal, et al. vs. Javier Antonio Orona, et al.; and Cause No. P5565-83-CV,
Carla Jaquez, et al. vs. Javier Antonio Orona, et al.) relating to a July 1995
accident involving a van owned by the Company which was used to transport
employees to various job sites and a non-Company owned vehicle. The accident
resulted in the deaths of four Company employees who were passengers in such
van. The Company is one of several named defendants in such suits. Other named
defendants include the estate of the deceased driver of such van, who was an
employee of the Company, the driver of such non-Company owned vehicle, who was
then an employee of the Company, the owner of such vehicle, and Ford Motor
Company, the manufacturer of the Company van involved in such accident. In
general, the claims against the Company include allegations of negligence, gross
negligence and/or intentional tort as a result of, among other things, the
Company's alleged failure to provide safe transportation for its employees and
to properly select, train and supervise the deceased driver of such van. The
plaintiffs in such suits are seeking actual damages from the defendants of $15.5
million, additional unspecified actual damages, pre-judgment and post-judgment
interest and costs of suit as well as exemplary and punitive damages in an
amount not to exceed four times the amount of actual damages. The Company
believes that it has meritorious defenses to the claims asserted against it in
such suits and it intends to continue to vigorously defend itself against such
claims. In addition, the Company believes that it has approximately $11 million
of liability insurance coverage to provide against an unfavorable outcome. Such
suits are currently in the discovery stage and the Company currently has pending
before the court a motion for summary judgment in Cause No. 8812 requesting that
the Company be dismissed from such suit based upon various legal theories. Such
motion has not yet been heard by the court. A trial date of July 20, 1998 has
been set in Cause No. 8812. No trial date has yet been set for Cause No.
P5565-83-CV. Due to the uncertainties inherent in litigation, no assurance can
be given as to the ultimate outcome of such suits or the adequacy or
availability of the Company's liability insurance to cover the damages, if any,
which may be assessed against the Company in such suits. A judgment awarding
plaintiffs an amount significantly exceeding the Company's available insurance
coverage could have a material adverse effect on the Company's financial
condition, results of operations and liquidity. See "Risk Factors -- Litigation"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

In addition to the foregoing, from time to time the Company is a party to
various legal proceedings arising in the ordinary course of business. Although
the Company cannot predict the outcomes of any such legal proceedings, the
Company's management believes that the resolution of pending legal actions will
not have a material adverse effect on the Company's financial condition, results
of operations or liquidity.

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MANAGEMENT

The Board of Directors currently consists of three persons who are
employees of the Company and three persons who are not employees of the Company
(i.e., outside directors). Set forth below are the names, ages, and positions of
the Company's Directors and executive officers.

NAME AGE POSITION
---- --- --------

L. Decker Dawson.............................. 77 President, Director
Floyd B. Graham............................... 69 Executive Vice President, Director
Howell W. Pardue.............................. 61 Executive Vice President, Director
Christina W. Hagan............................ 42 Vice President, Chief Financial Officer
Edward L. Huff................................ 60 Vice President
C. Ray Tobias................................. 40 Vice President
Stephen C. Jumper............................. 36 Vice President
Paula W. Henry................................ 40 Secretary
Calvin J. Clements............................ 76 Director
Matthew P. Murphy............................. 67 Director
Tim C. Thompson............................... 63 Director

L. Decker Dawson. Mr. Dawson founded the Company in 1952 and has served in
his present positions since that time. Prior thereto, Mr. Dawson was a
geophysicist with Republic Exploration Company, a geophysical company. Mr.
Dawson served as President of the Society of Exploration Geophysicists (1989-
1990) and received its Enterprise Award in 1997. He was Chairman of the Board of
Directors of the International Association of Geophysical Contractors (1981). He
currently serves as a director and honorary life member of such association. He
was inducted into the Permian Basin Petroleum Museum's Hall of Fame in 1997.

Floyd B. Graham. Mr. Graham joined the Company in 1974 and has served in
his present positions since that time. Prior thereto, Mr. Graham was an
independent geophysical consultant for 14 years, and prior thereto was a
geophysicist for the predecessor of Exxon Company, U.S.A. for 10 years.

Howell W. Pardue. Mr. Pardue joined the Company in 1976 and has served in
his present positions since that time. Prior thereto, Mr. Pardue was employed in
data processing for 17 years by Geosource, Inc. and its predecessor geophysical
company.

Christina W. Hagan. Ms. Hagan joined the Company in 1988, and was elected
Chief Financial Officer in January 1997 and Vice President in September 1997.
Prior thereto, Ms. Hagan served the Company as Controller and Treasurer. Ms.
Hagan is a certified public accountant.

Edward L. Huff. Mr. Huff joined the Company in 1956, and was elected Vice
President in September 1997. Prior thereto, Mr. Huff served as instrument
operator, crew manager and field supervisor. He has managed the Company's field
operations since 1987.

C. Ray Tobias. Mr. Tobias joined the Company in 1990, and was elected Vice
President in September 1997. Mr. Tobias is responsible for maintaining client
relationships and submitting survey cost quotations to client companies. He is
presently the chairman of the International Association of Geophysical
Contractors West Texas -- Eastern New Mexico Operations Committee and is Past
President of the Permian Basin Geophysical Society. Prior to joining the
Company, Mr. Tobias was employed by Geo-Search Corporation where he was
responsible for pricing and bidding geophysical work to major oil companies.

Stephen C. Jumper. Mr. Jumper, a geophysicist, joined the Company in 1985,
and was elected Vice President in September 1997. Mr. Jumper also serves as
manager of technical services with an emphasis on 3-D processing. Mr. Jumper has
served the Permian Basin Geophysical Society as Second Vice President (1991),
First Vice President (1992), and as President (1993).

Paula W. Henry. Ms. Henry joined the Company in 1981 and has served in her
present position since 1989. Ms. Henry supervises administrative operations of
the Company.

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Calvin J. Clements. Mr. Clements has served the Company as a director since
1972. Prior thereto and until his retirement in 1987, Mr. Clements was employed
by the Company as vice president of the data acquisition operations.

Matthew P. Murphy. Mr. Murphy has served the Company as a director since
1993. Until his retirement in 1991, Mr. Murphy served as an executive of NCNB
Texas, now known as Nations Bank of Texas, N.A. (and predecessor banks), and
from 1986 to 1991, Mr. Murphy served the bank as District Director-West Texas.

Tim C. Thompson. Mr. Thompson has served the Company as director since
1995. Mr. Thompson, a management consultant since May 1993, was President and
Chief Executive Officer of Production Technologies International, Inc. from
November 1989 to May 1993.

All directors and officers of the Company are elected annually and hold
office from the date of their election until their successors have been duly
elected and qualified, or until their earlier death, resignation or removal from
office. The Board of Directors has standing audit and compensation committees,
each consisting of Messrs. Clements, Murphy, and Thompson, all of whom are
non-employee directors.

EXECUTIVE COMPENSATION

The following table sets forth summary information regarding the
compensation paid by the Company to L. Decker Dawson, the President of the
Company, and to Floyd B. Graham, Howell W. Pardue, Edward L. Huff and Stephen C.
Jumper (collectively, the "named executive officers").

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION
---------------
ANNUAL COMPENSATION AWARDS
------------------------------------ ---------------
SECURITIES
UNDERLYING
FISCAL OTHER ANNUAL OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION (NO. OF SHARES)
- --------------------------- ------ -------- -------- ------------ ---------------

L. Decker Dawson..................... 1997 $119,892 $ -- $--
President 1996 90,301 -- --
1995 84,293 -- --
Floyd B. Graham...................... 1997 121,538 5,840 -- 5,000
Executive Vice President 1996 120,000 7,588 --
1995 120,000 9,138 --
Howell W. Pardue..................... 1997 121,538 5,531 -- 5,000
Executive Vice President 1996 120,000 7,168 --
1995 120,000 8,607 --
Edward L. Huff(2).................... 1997 102,498 4,603 -- 5,000
Vice President
Stephen C. Jumper(2)................. 1997 102,498 3,337 -- 5,000
Vice President

- ---------------

(1) Bonus amounts reflect discretionary amounts paid during the indicated fiscal
year based on prior fiscal year results.

(2) Messrs. Huff and Jumper were each elected Vice President in September 1997.

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The following table sets forth certain information with respect to options
to purchase Common Stock granted during the fiscal year ended September 30, 1997
to each of the named executive officers.

OPTION GRANTS IN FISCAL YEAR 1997

INDIVIDUAL GRANTS
------------------------------------------------
NUMBER OF
SECURITIES GRANT DATE
UNDERLYING % OF TOTAL VALUE(1)
OPTIONS OPTIONS GRANTED ----------------
GRANTED TO EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME (NO. OF SHARES) FISCAL YEAR PRICE ($/SH) DATE PRESENT VALUE($)
- --------------------------- --------------- --------------- ------------ ---------- ----------------

Floyd B. Graham............ 5,000 16.67% 24.125 9/30/2002 55,926
Howell W. Pardue........... 5,000 16.67% 24.125 9/30/2002 55,926
Edward L. Huff............. 5,000 16.67% 24.125 9/30/2002 55,926
Stephen C. Jumper.......... 5,000 16.67% 24.125 9/30/2002 55,926

- ---------------

(1) The "grant date present value" shown is a hypothetical value based upon
application of the "Black-Scholes" model which often is used to estimate the
market value of transferable options by calculating the probability, based
on the volatility of the stock subject to the options, that the stock price
will exceed the option exercise price at the end of the option term. The
Company's stock options are not transferable and, the Black-Scholes estimate
notwithstanding, an option will have value to the optionee only if and to
the extent the market price of the Company's stock rises above the market
price on the date the option was granted.

The following table sets forth certain information with respect to the
exercise of options to purchase Common Stock during the fiscal year ended
September 30, 1997, and unexercised options held at September 30, 1997, by each
of the named executive officers.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END OPTION VALUES

NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
9/30/97 OPTIONS AT
--------------- 9/30/97(1)
EXERCISABLE/ -------------
SHARES ACQUIRED VALUE UNEXERCISABLE EXERCISABLE/
NAME ON EXERCISE REALIZED (NO. OF SHARES) UNEXERCISABLE
- ---------------------------------------- --------------- -------- --------------- -------------

Floyd B. Graham......................... -- $ -- --/5,000 $--/$--
Howell W. Pardue........................ -- -- --/5,000 --/ --
Edward L. Huff.......................... 2,500 17,188 --/5,000 --/ --
Stephen C. Jumper....................... 3,750 23,906 --/5,000 --/ --

- ---------------

(1) The high sales price per share on September 30, 1997 was $24.38 as reported
by the Nasdaq National Market.

Defined Benefit Plans and Other Arrangements. Long-term incentive
compensation for senior executive officers is not a policy of the Company.
Accordingly, no awards or payouts have been made. The Company has no retirement
or pension plan except for its Employee Stock Purchase Plan and its 1991
Incentive Stock Option Plan, both of which are described below.

COMPENSATION OF DIRECTORS

Directors who are not also employees of the Company receive $1,000 per
month and 500 shares of Common Stock per year for serving as Directors.

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25

COMPENSATION PLANS

Stock Option Plan. The Dawson Geophysical Company 1991 Incentive Stock
Option Plan (the "1991 Plan") provides that 150,000 shares of the Company's
authorized but unissued Common Stock are reserved for issuance pursuant to the
1991 Plan and are subject to options granted to key employees during the
ten-year period ending January 8, 2001.

Options under the 1991 Plan will be granted at an exercise price equal to
the market price of the Common Stock on the date of grant. Each option that is
granted will be exercisable after the period or periods specified in the option
agreement, but prior to the expiration of five years after the date of grant.
Commencing one year after date of grant, optionees may purchase up to one-fourth
of the shares covered by a particular grant, and each option becomes exercisable
with respect to an additional one-fourth of the shares covered in each of the
next three years.

During fiscal 1997, options to purchase an aggregate of 30,000 shares of
Common Stock were granted to certain key employees of the Company under the 1991
Plan. The per share exercise price of all options granted in fiscal 1997 is
$24.125, being the fair market value of a share of the Common Stock on the date
of grant. During fiscal 1997, 36,500 shares of the Common Stock were issued
pursuant to the exercise of options granted under the 1991 Plan. As of October
20, 1997, the total number of shares covered by outstanding options was 89,000.

Stock Purchase Plan. On November 1, 1982, the Board of Directors of the
Company adopted an Employee Stock Purchase Plan (the "Purchase Plan") effective
January 1, 1983, in which eligible employees may elect to purchase, through
payroll deductions, shares of the Company's Common Stock and thereby increase
their proprietary interest in the Company. Pursuant to the Purchase Plan, the
Company contributes one dollar (before Social Security and withholding taxes)
for each dollar contributed by an eligible employee to purchase Common Stock for
the employee's account up to 5% of the employee's annual salary. As of September
30, 1997, two named executive officers participated in the Purchase Plan. On a
bi-weekly basis, the Company matches the participants' contributions and directs
the purchase of shares of the Company's Common Stock. There are no vesting
requirements for the participants. The Company contributed $164,530, $198,863
and $217,723 to the Purchase Plan during the fiscal years 1995, 1996 and 1997,
respectively.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee makes recommendations regarding
compensation subject to approval of the entire Board of Directors.

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PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information, as adjusted to reflect
the sale of the Common Stock offered by this Prospectus, with respect to the
beneficial ownership of the Company's outstanding Common Stock by (i) each
person known by the Company to own beneficially more than 5% of the outstanding
Common Stock, (ii) each of the directors and executive officers of the Company,
(iii) all directors and executive officers of the Company as a group and (iv) L.
Decker Dawson, the President of the Company and the Selling Shareholder.

SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE THIS SHARES TO BE OWNED AFTER THIS
OFFERING(1) SOLD IN OFFERING(1)
------------------- THIS -------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER PERCENT OFFERING NUMBER PERCENT
------------------------------- --------- ------- ------------ -------- --------

L. Decker Dawson.............................. 1,007,272 23.98% 500,000 507,272 9.76%
208 South Marienfeld
Midland, Texas 79701
Wellington Management Company(2).............. 410,000 9.76% -- 410,000 7.88%
75 State Street
Boston Massachusetts 02109
Dimensional Fund Advisors Inc.(3)............. 232,000 5.52% -- 232,000 4.46%
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401
Howell W. Pardue.............................. 77,000 1.83% -- 77,000 1.48%
Calvin J. Clements............................ 71,126 1.69% -- 71,126 1.37%
Floyd B. Graham............................... 60,425 1.44% -- 60,425 1.16%
Stephen C. Jumper............................. 21,928 * -- 21,928 *
Christina W. Hagan............................ 16,420 * -- 16,420 *
Edward L. Huff................................ 15,537 * -- 15,537 *
C. Ray Tobias................................. 15,146 * -- 15,146 *
Tim C. Thompson............................... 1,500 * -- 1,500 *
Paula W. Henry................................ 1,152 * -- 1,152 *
Matthew P. Murphy............................. 200 * -- 200 *
Share ownership of directors and executive
officers as a group (11 persons)........... 1,287,706 30.66% 787,706 15.15%

- ---------------

* Indicates less than 1% of the outstanding shares of Common Stock.

(1) Except as otherwise indicated, each shareholder shown in the table has sole
voting and investment power with respect to all shares listed as
beneficially owned by such shareholder.

(2) Wellington Management Company, LLP ("WMC") is an investment adviser
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended. As of June 30, 1997, WMC, in its capacity
as investment adviser, may be deemed to have beneficial ownership of 410,000
shares of Common Stock that are owned by numerous investment advisory
clients, none of which is known to have such interest with respect to more
than five percent of the class.

(3) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 232,000 shares of Common
Stock as of June 30, 1997, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business trust,
or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional Fund
Advisors Inc. serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares.

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DESCRIPTION OF CAPITAL STOCK

The Company is authorized to issue 5,000,000 shares of Preferred Stock,
$1.00 par value per share, and 10,000,000 shares of Common Stock, $.33 1/3 par
value per share. As of the date of this Prospectus, there were 4,200,000 shares
of Common Stock issued and outstanding, and no shares of Preferred Stock have
been issued. The outstanding shares of Common Stock are, and the shares of
Common Stock to be sold by the Company as described herein will be when issued,
fully paid and nonassessable.

PREFERRED STOCK

The Preferred Stock may be issued in series, and shares of each series
shall have such rights and preferences as shall be fixed by the Board of
Directors in the resolution or resolutions authorizing the issuance of that
particular series. In designating any series of Preferred Stock the Board of
Directors has authority without further action by the holders of Common Stock,
to fix the number of shares constituting that series and to fix the dividend
rights, dividend rate, conversion rights, rights and terms of redemption
(including any sinking fund provisions), and the liquidation preferences of that
series of Preferred Stock. The issuance of Preferred Stock could adversely
affect the voting power of holders of Common Stock and the likelihood that such
holders will receive dividend payments and payments upon liquidation and could
have the effect of delaying, deferring or preventing a change in control of the
Company. The Company has no present plans to issue any shares of Preferred
Stock.

COMMON STOCK

Each share of Common Stock has one vote on all matters presented to the
shareholders. Since the Common Stock does not have cumulative voting rights, the
holders of more than 50% of the shares may, if they choose to do so, elect all
of the directors and, in that event, the holders of the remaining shares will
not be able to elect any directors. Subject to the rights and preferences of any
Preferred Stock which may be designated and issued, the holders of Common Stock
are entitled to dividends when and as declared by the Board of Directors and are
entitled on liquidation to all assets remaining after payment of liabilities,
subject to the liquidation preferences of any shares of Preferred Stock. The
Common Stock has no preemptive or other subscription rights. There are no
conversion rights or redemption or sinking fund provisions with respect to the
Common Stock.

LIMITATION OF DIRECTOR LIABILITY

The Company's Restated Articles of Incorporation provide that the Company's
directors will have no personal liability to the Company or its shareholders for
monetary damages for breach or alleged breach of the directors' duty of care.
This provision in the Restated Articles of Incorporation does not eliminate the
directors' fiduciary duty of care, and in appropriate circumstances, equitable
remedies such as an injunction or other forms of non-monetary relief should
remain available under Texas law. Furthermore, each director will continue to be
subject to liability for (i) a breach of the directors' duty of loyalty, (ii)
acts or omissions not in good faith or involving intentional misconduct or
knowing violations of law, (iii) any transaction from which a director derives
an improper personal benefit, or (iv) an act or omission for which the liability
of a director is expressly provided by an applicable statute. This provision
does not affect a director's responsibilities under any other laws, such as the
federal securities laws or state or federal environmental laws.

SHARES ELIGIBLE FOR FUTURE SALE

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shares of Common Stock outstanding excluding 89,000 shares of Common Stock
issuable upon exercise of outstanding employee stock options. Of such
outstanding shares, the Company estimates that approximately 4,410,000 shares
will be freely tradeable without restriction or further registration under the
Securities Act unless purchased by an "affiliate" of the Company, as that term
is defined in Rule 144 under the Securities Act. The remaining shares were
acquired in transactions exempt from registration under the Securities Act and
are or formerly were "restricted securities" within the meaning of Rule 144 and
may not be resold unless they are registered under the Securities Act or are
sold pursuant to an applicable exemption from registration, including Rule 144
under the Securities Act.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least one
year from the later of the date the shares were acquired from the Company or
from an "affiliate" of the Company, is entitled to sell, within any three-month
period, a number of shares that does not exceed the greater of one percent of
the then outstanding shares of Common Stock or the average weekly trading volume
in the Common Stock during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to the availability of certain public
information about the Company, restrictions on the manner of sale and notice
requirements. A person who is not deemed an affiliate of the Company under the
Securities Act, has not been an affiliate during the preceding 90 days and has
beneficially owned shares for at least two years from the later of the date the
shares were acquired from the Company or from an "affiliate" of the Company is
entitled to sell such shares under Rule 144(k) without regard to the volume
limitations and other restrictions described above.

See "Underwriting" for a description of certain agreements prohibiting the
Company, the directors and officers thereof and the Selling Shareholder from
selling shares of Common Stock (other than the shares sold pursuant to this
Prospectus) for a period of 120 days from the date of this Prospectus.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C., Dallas, Texas.

UNDERWRITING

Subject to the terms and conditions of an Underwriting Agreement, the
Underwriters named below, through their representatives, Raymond James &
Associates, Inc. and Principal Financial Securities, Inc. (the
"Representatives"), have severally agreed to purchase from the Company and the
Selling Shareholder the following respective numbers of shares of Common Stock
at the initial price to public less the underwriting discounts and commissions
set forth on the cover page of this Prospectus:

NUMBER OF
NAME SHARES
---- ---------

Raymond James & Associates, Inc.............................
Principal Financial Securities, Inc.........................

---------
Total............................................. 1,500,000
=========

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The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to certain conditions. The Underwriters are obligated
to take and pay for all shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares are to
be purchased.

The Underwriters, through the Representatives, propose to offer part of the
shares of Common Stock directly to the public at the offering price set forth on
the cover page of this Prospectus and part of the shares to certain dealers at a
price that represents a concession not in excess of $ per share under the
initial price to public. The Underwriters may allow, and such dealers may
re-allow, a concession not in excess of $ per share to certain other
dealers. After the initial offering of the shares to the public, the offering
price and other selling terms may be changed by the Representatives. The
Representatives of the Underwriters have advised the Company that the
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.

The Company has granted the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to an aggregate
of 225,000 additional shares of Common Stock, at the initial price to public,
less the underwriting discounts and commissions set forth on the cover page of
this Prospectus. To the extent that the Underwriters exercise such option, each
of the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by it shown in the above table bears to the total shown, and the
Company will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise their option only to cover
over-allotments made in connection with the sale of the shares of Common Stock
offered hereby. If purchased, the Underwriters will sell such additional shares
on the same terms as those on which the shares that the Underwriters have agreed
to purchase from the Company and the Selling Shareholder are being offered.

This offering of Common Stock is made for delivery when, as and if accepted
by the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of this offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.

Until the distribution of Common Stock in this offering is completed, rules
of the Securities and Exchange Commission may limit the ability of the
Underwriters and certain selling group members to bid for and purchase the
Common Stock. As an exception to these rules, the Representatives are permitted
to engage in certain transactions that stabilize the price of the Common Stock.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Common Stock. If the Underwriters create
a short position in the Common Stock in connection with this offering, i.e., if
they sell more shares of Common Stock than are set forth on the cover page of
this Prospectus, the Representatives may reduce the short position by purchasing
Common Stock in the open market. The Representatives may also elect to reduce
any short position by exercising all or part of the over-allotment option
described above. The Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the Representatives
purchase shares of Common Stock in the open market to reduce the Underwriters'
short position or to stabilize the price of the Common Stock, they may reclaim
the amount of the selling concession from the Underwriters and selling group
members who sold those shares as part of this offering. In general, purchases of
a security for the purpose of stabilization or to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases. The imposition of a penalty bid might also have an effect on the
price of a security to the extent that it discouraged resales of any security.
Neither the Company, the Selling Shareholder nor any of the Underwriters makes
any representation or predictions as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Common Stock.
In addition, neither the Company, the Selling Shareholder nor any of the
Underwriters makes any representation that the Representatives will engage in
such transactions or the such transactions, once commenced, will not be
discontinued without notice.

The Company, the Selling Shareholder and officers and directors of the
Company, which upon consummation of this offering will own or have the right to
acquire in the aggregate 817,706 shares of Common Stock, have agreed that they
will not, without the prior written consent of Raymond James &

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30

Associates, Inc., sell, offer to sell, contract to sell or otherwise transfer or
dispose of any shares of Common Stock (other than the shares offered by the
Selling Shareholder in this offering), options, rights or warrants to acquire
shares of Common Stock, or securities exchangeable for or convertible into
shares of Common Stock, during the 120-day period commencing on the date of this
Prospectus, except that the Company may issue shares of Common Stock upon
exercise of options outstanding under the 1991 Plan and may grant additional
options under the 1991 Plan, provided that without the prior written consent of
Raymond James & Associates, Inc., such additional options shall not be
exercisable during such period.

The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against, and to contribute to losses arising out of, certain civil
liabilities, including liabilities under the Securities Act.

Prior to the filing of the Registration Statement of which this Prospectus
is a part, the Company paid the Representatives of the Underwriters a due
diligence and advisory fee in the aggregate amount of $25,000.

The foregoing includes a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the form of
Underwriting Agreement that is on file as an exhibit to the Registration
Statement of which this Prospectus is a part.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Stubbeman, McRae, Sealy, Laughlin & Browder, Inc., Midland, Texas.
Certain matters relating to this offering will be passed upon for the
Underwriters by Thompson & Knight, P.C., Dallas, Texas.

EXPERTS

The financial statements of the Company as of September 30, 1995 and 1996
and for each of the years in the three-year period ended September 30, 1996 have
been included herein and in the Registration Statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Commission a registration statement on Form
S-1 (as amended and together with all exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the shares of Common Stock
offered by this Prospectus. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information set forth in
the Registration Statement. For further information with respect to the Company
and the Common Stock offered, reference is made to the Registration Statement.
Statements contained in this Prospectus concerning the provisions of any
contract, agreement or other document are not necessarily complete. With respect
to each contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for the complete
contents of the exhibit, and each statement concerning its provisions is
qualified in its entirety by such reference.

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission, which can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the following
regional offices of the Commission: Chicago Regional Office, 500 W. Madison
Street, Suite 1400, Chicago, Illinois 60661, and New York Regional Office, 7
World Trade Center, New York, New York 10048. Copies of such material may also
be obtained by mail at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
The Commission maintains an Internet world wide web site that contains reports,
proxy and information reports and other materials that are filed through the
Commission's Electronic Data Gathering, Analysis and Retrieval System. The site
can be accessed at http://www.sec.gov.

29
31

INDEX TO FINANCIAL STATEMENTS

PAGE
----

Independent Auditors' Report................................ F-2
Balance Sheets as of September 30, 1995 and 1996 and June
30, 1997 (unaudited)...................................... F-3
Statements of Operations for the Years Ended September 30,
1994, 1995 and 1996 and the Nine Months Ended June 30,
1996 and 1997 (unaudited)................................. F-4
Statements of Cash Flows for the Years Ended September 30,
1994, 1995 and 1996 and the Nine Months Ended June 30,
1996 and 1997 (unaudited)................................. F-5
Statements of Stockholders' Equity for the Years Ended
September 30, 1994, 1995 and 1996 and the Nine Months
Ended June 30, 1997 (unaudited)........................... F-6
Notes to Financial Statements............................... F-7

F-1
32

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Dawson Geophysical Company:

We have audited the accompanying balance sheets of Dawson Geophysical
Company as of September 30, 1995 and 1996, and the related statements of
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended September 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Dawson Geophysical Company
as of September 30, 1995 and 1996, and the results of its operations and its
cash flows for each of the years in the three-year period ended September 30,
1996, in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Midland, Texas
November 5, 1996

F-2
33

DAWSON GEOPHYSICAL COMPANY

BALANCE SHEETS

ASSETS
SEPTEMBER 30,
--------------------------- JUNE 30,
1995 1996 1997
------------ ------------ ------------
(UNAUDITED)

Current assets:
Cash and cash equivalents........................ $ 1,671,000 $ 1,493,000 $ 2,645,000
Marketable securities............................ 3,767,000 988,000 3,680,000
Accounts receivable.............................. 5,008,000 6,161,000 8,454,000
Income taxes receivable.......................... 126,000 193,000 --
Prepaid expenses................................. 220,000 148,000 293,000
------------ ------------ ------------
Total current assets..................... 10,792,000 8,983,000 15,072,000
------------ ------------ ------------
Property, plant and equipment...................... 39,248,000 56,368,000 55,225,000
Less accumulated depreciation...................... (17,698,000) (23,442,000) (25,550,000)
------------ ------------ ------------
Net property, plant and equipment........ 21,550,000 32,926,000 29,675,000
------------ ------------ ------------
$ 32,342,000 $ 41,909,000 $ 44,747,000
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt............. $ -- $ 857,000 $ 857,000
Accounts payable................................. 682,000 2,079,000 1,560,000
Accrued liabilities:
Income taxes payable.......................... -- -- 174,000
Payroll costs and other taxes................. 291,000 560,000 294,000
Other......................................... 178,000 144,000 297,000
------------ ------------ ------------
Total current liabilities................ 1,151,000 3,640,000 3,182,000
------------ ------------ ------------
Long-term debt, less current maturities............ -- 4,857,000 4,214,000
Deferred income taxes.............................. 335,000 608,000 1,131,000
Stockholders' equity:
Preferred stock -- par value $1.00 per share;
5,000,000 shares authorized, none
outstanding................................... -- -- --
Common stock -- par value $.33 1/3 per share;
10,000,000 shares authorized, 4,149,050 shares
as of September 30, 1995 and 4,161,550 shares
as of September 30, 1996 and 4,199,250 shares
as of June 30, 1997, issued and outstanding... 1,383,000 1,387,000 1,400,000
Additional paid-in capital....................... 16,973,000 17,021,000 17,171,000
Net unrealized loss on marketable securities..... (13,000) (5,000) --
Retained earnings................................ 12,513,000 14,401,000 17,649,000
------------ ------------ ------------
Total stockholders' equity............... 30,856,000 32,804,000 36,220,000
------------ ------------ ------------
Contingencies (See note 11)
$ 32,342,000 $ 41,909,000 $ 44,747,000
============ ============ ============

See accompanying notes to the financial statements.

F-3
34

DAWSON GEOPHYSICAL COMPANY

STATEMENTS OF OPERATIONS

NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
--------------------------------------- -------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED)

Operating revenues............... $23,027,000 $28,188,000 $33,518,000 $24,485,000 $34,304,000
Operating costs:
Operating expenses............. 15,478,000 20,067,000 23,763,000 17,613,000 22,840,000
General and administrative..... 887,000 975,000 1,299,000 1,031,000 1,052,000
Depreciation................... 3,016,000 4,150,000 5,818,000 4,104,000 5,456,000
----------- ----------- ----------- ----------- -----------
19,381,000 25,192,000 30,880,000 22,748,000 29,348,000
----------- ----------- ----------- ----------- -----------
Income from operations........... 3,646,000 2,996,000 2,638,000 1,737,000 4,956,000
Other income (expense):
Interest and dividend income... 209,000 399,000 253,000 187,000 167,000
Interest expense............... (376,000) (170,000) (144,000) (26,000) (341,000)
Gain on disposal of assets..... 68,000 76,000 11,000 9,000 196,000
Other.......................... (30,000) 8,000 2,000 1,000 15,000
Proceeds from litigation
settlement.................. -- 131,000 -- -- --
----------- ----------- ----------- ----------- -----------
Income before income tax
expense........................ 3,517,000 3,440,000 2,760,000 1,908,000 4,993,000
Income tax expense:
Current........................ 1,212,000 970,000 599,000 373,000 1,222,000
Deferred....................... 39,000 296,000 273,000 314,000 523,000
----------- ----------- ----------- ----------- -----------
1,251,000 1,266,000 872,000 687,000 1,745,000
----------- ----------- ----------- ----------- -----------
Net income....................... $ 2,266,000 $ 2,174,000 $ 1,888,000 $ 1,221,000 $ 3,248,000
=========== =========== =========== =========== ===========
Income per common share.......... $ .74 $ .54 $ .45 $ .29 $ .78
=========== =========== =========== =========== ===========
Weighted average equivalent
common shares outstanding...... 3,045,294 3,989,949 4,182,891 4,180,520 4,190,713
=========== =========== =========== =========== ===========

See accompanying notes to the financial statements.

F-4
35

DAWSON GEOPHYSICAL COMPANY

STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
------------------------------------------ --------------------------
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------ -----------
(UNAUDITED)

Cash flows from operating activities:
Net income........................................ $ 2,266,000 $ 2,174,000 $ 1,888,000 $ 1,221,000 $ 3,248,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation................................ 3,016,000 4,150,000 5,818,000 4,104,000 5,456,000
Gain on disposal of assets.................. (68,000) (76,000) (11,000) (9,000) (196,000)
Non-cash interest income.................... (56,000) (229,000) (101,000) -- --
Deferred income taxes....................... 39,000 296,000 273,000 314,000 523,000
Other....................................... 44,000 -- -- (82,000) (3,000)
Change in current assets and liabilities:
Decrease (increase) in accounts
receivable................................ 46,000 (704,000) (1,153,000) (613,000) (2,293,000)
Decrease (increase) in prepaid expenses..... (47,000) (21,000) 72,000 13,000 (145,000)
Decrease (increase) in income taxes
receivable................................ -- (126,000) (67,000) (285,000) 193,000
Increase (decrease) in accounts payable..... (213,000) 548,000 (222,000) 2,163,000 (519,000)
Increase (decrease) in accrued
liabilities............................... 261,000 (118,000) 235,000 22,000 (113,000)
Increase (decrease) in income taxes
payable................................... 101,000 (121,000) -- -- 174,000
------------ ------------ ------------ ------------ -----------
Net cash provided by operating activities......... 5,389,000 5,773,000 6,732,000 6,848,000 6,325,000
------------ ------------ ------------ ------------ -----------
Cash flows from investing activities:
Proceeds from disposal of assets............ 69,000 273,000 33,000 31,000 288,000
Capital expenditures........................ (6,161,000) (10,961,000) (15,597,000) (10,490,000) (2,340,000)
Proceeds from sale of marketable
securities................................ -- -- 2,884,000 745,000 742,000
Proceeds from maturity of marketable
securities................................ 2,750,000 7,827,000 2,100,000 2,100,000 --
Investment in marketable securities......... (2,662,000) (5,935,000) (2,096,000) (2,096,000) (3,377,000)
------------ ------------ ------------ ------------ -----------
Net cash used in investing activities............. (6,004,000) (8,796,000) (12,676,000) (9,710,000) (4,687,000)
------------ ------------ ------------ ------------ -----------
Cash flows from financing activities:
Principal payments on debt.................. (14,625,000) (7,875,000) (286,000) (71,000) (643,000)
Proceeds from debt.......................... 15,267,000 1,500,000 6,000,000 3,854,000 --
Issuance of common stock.................... -- 10,776,000 -- -- --
Proceeds from exercise of stock options..... 29,000 142,000 52,000 52,000 157,000
------------ ------------ ------------ ------------ -----------
Net cash provided (used in) by financing
activities...................................... 671,000 4,543,000 5,766,000 3,835,000 (486,000)
------------ ------------ ------------ ------------ -----------
Net increase (decrease) in cash and cash
equivalents..................................... 56,000 1,520,000 (178,000) 973,000 1,152,000
Cash and cash equivalents at beginning of year.... 95,000 151,000 1,671,000 1,671,000 1,493,000
------------ ------------ ------------ ------------ -----------
Cash and cash equivalents at end of year.......... $ 151,000 $ 1,671,000 $ 1,493,000 $ 2,644,000 $ 2,645,000
============ ============ ============ ============ ===========

See accompanying notes to the financial statements.

F-5
36

DAWSON GEOPHYSICAL COMPANY

STATEMENTS OF STOCKHOLDERS' EQUITY

NET
COMMON STOCK UNREALIZED
----------------------- ADDITIONAL LOSS ON
NUMBER PAID-IN MARKETABLE RETAINED
OF SHARES AMOUNT CAPITAL SECURITIES EARNINGS TOTAL
---------- ---------- ----------- ---------- ----------- -----------

Balance, September 30, 1993......... 2,996,050 $ 999,000 $ 6,410,000 $ -- $ 8,073,000 $15,482,000
Exercise of stock options........... 6,750 2,000 27,000 -- -- 29,000
Net unrealized loss on marketable
securities........................ -- -- -- (91,000) -- (91,000)
Net Income.......................... -- -- -- -- 2,266,000 2,266,000
---------- ---------- ----------- -------- ----------- -----------
Balance, September 30, 1994......... 3,002,800 1,001,000 6,437,000 (91,000) 10,339,000 17,686,000
Issuance of common stock............ 1,114,000 371,000 10,405,000 -- -- 10,776,000
Exercise of stock options........... 32,250 11,000 131,000 -- -- 142,000
Net unrealized gain on marketable
securities........................ -- -- -- 78,000 -- 78,000
Net Income.......................... -- -- -- -- 2,174,000 2,174,000
---------- ---------- ----------- -------- ----------- -----------
Balance, September 30, 1995......... 4,149,050 1,383,000 16,973,000 (13,000) 12,513,000 30,856,000
Exercise of stock options........... 12,500 4,000 48,000 -- -- 52,000
Net unrealized gain on marketable
securities........................ -- -- -- 8,000 -- 8,000
Net Income.......................... -- -- -- -- 1,888,000 1,888,000
---------- ---------- ----------- -------- ----------- -----------
Balance, September 30, 1996......... 4,161,550 1,387,000 17,021,000 (5,000) 14,401,000 32,804,000
Exercise of stock options
(unaudited)....................... 36,500 12,000 145,000 -- -- 157,000
Stock compensation (unaudited)...... 1,200 1,000 5,000 -- -- 6,000
Net unrealized gain on marketable
securities (unaudited)............ -- -- -- 5,000 -- 5,000
Net income (unaudited).............. -- -- -- -- 3,248,000 3,248,000
---------- ---------- ----------- -------- ----------- -----------
Balance June 30, 1997 (unaudited)... 4,199,250 $1,400,000 $17,171,000 $ -- $17,649,000 $36,220,000
========== ========== =========== ======== =========== ===========

See accompanying notes to the financial statements.

F-6
37

DAWSON GEOPHYSICAL COMPANY

NOTES TO FINANCIAL STATEMENTS
(THE INFORMATION AND AMOUNTS FOR INTERIM PERIODS ARE UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Operations

Dawson Geophysical Company (the "Company"), which was incorporated in Texas
in 1952, has been listed and traded on the Nasdaq National Market under the
symbol "DWSN" since 1981.

The Company acquires and processes 3-D seismic data for major and
intermediate-sized oil and gas companies and independent oil operators who
retain exclusive rights to the information obtained. The Company's land-based
acquisition crews operate primarily in the southwestern United States, and data
processing is performed by geophysicists at the Company's computer center in
Midland, Texas.

Cash Equivalents

For purposes of the statements of cash flows, the Company considers demand
deposits, certificates of deposit and all highly liquid debt instruments
purchased with a maturity of three months or less to be cash equivalents.

Marketable Securities

The Company accounts for its investments in marketable securities in
accordance with Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities" (Statement 115). In
accordance with Statement 115, the Company has classified its investment
portfolio consisting of U.S. Treasury securities as "available-for-sale" and
records the net unrealized holding gains and losses as a separate component of
stockholders' equity. The cost of marketable securities sold is based on the
specific identification method.

Concentrations of Credit Risk

Financial instruments which potentially expose the Company to
concentrations of credit risk, as defined by Statement of Financial Accounting
Standards No. 105, consist primarily of trade accounts receivable and marketable
securities. The Company's sales are to customers whose activities relate to oil
and gas exploration and production. However, accounts receivable are well
diversified among many customers, and a significant portion of the receivables
are from major oil companies, which management believes minimizes potential
credit risk. The Company generally extends unsecured credit to these customers;
therefore, collection of receivables may be affected by the economy surrounding
the oil and gas industry. The Company invests primarily in U.S. Treasury
securities which are a low risk investment. However, the Company closely
monitors extensions of credit and has not experienced significant credit losses
in recent years.

Property, Plant and Equipment

Property, plant and equipment are carried at cost. Depreciation is computed
using the straight-line method. When assets are retired or otherwise disposed
of, the cost and related accumulated depreciation are removed from the accounts,
and any resulting gain or loss is reflected in the results of operations for the
period.

Impairment of Long-Lived Assets

In March, 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (Statement 121)
which requires companies to assess their long-lived assets for impairment.
Statement 121 requires companies to review for impairment whenever events or
changes in circumstances

F-7
38

DAWSON GEOPHYSICAL COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(THE INFORMATION AND AMOUNTS FOR INTERIM PERIODS ARE UNAUDITED)

indicate that the carrying amount of a long-lived asset may not be recoverable.
The Company adopted Statement 121 as of September 30, 1995. The effect of the
adoption of Statement 121 was not material to the Company and accordingly, no
provision was recorded in the Statement of Operations for the years ended
September 30, 1995 and 1996.

Income Taxes

The Company accounts for state and federal income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (Statement 109). Under the asset and liability method of Statement 109,
deferred income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. Under Statement 109, the effect on deferred taxes of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Income per Common Share

Income per common share is computed based on the weighted average common
shares and common share equivalents outstanding during each year. The dilutive
effect of stock options granted is included in the computation of income per
common share. The effect of common share equivalents on a fully diluted basis as
compared to a primary basis was less than 3% for 1994, 1995 and 1996.

Use of Estimates in the Preparation of Financial Statements

Preparation of the accompanying financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Interim Financial Statements

The interim financial information as of June 30, 1997, and for the nine
months ended June 30, 1996 and 1997, is unaudited. However, in the opinion of
management, these interim financial statements include all the necessary
adjustments to fairly present the results of the interim periods, and all such
adjustments are of a normal recurring nature. The interim financial statements
should be read in conjunction with the audited financial statements for the
years ended September 30, 1994, 1995 and 1996.

Reclassifications

Certain amounts have been reclassified in 1994 to conform to the 1995 and
1996 presentation.

2. MARKETABLE SECURITIES

Marketable securities, consisting entirely of U.S. Treasury Securities, had
a cost of $3,780,000 and $993,000 and a market value of approximately $3,767,000
and $988,000 at September 30, 1995 and 1996, respectively.

As of September 30, 1995 and 1996, gross unrealized holding losses were
$13,000 and $5,000, respectively. U.S. Treasury Securities held at September 30,
1996 will mature in March 1998.

F-8
39

DAWSON GEOPHYSICAL COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(THE INFORMATION AND AMOUNTS FOR INTERIM PERIODS ARE UNAUDITED)

During 1995, the Company received final settlement of $131,000 of the class
action lawsuit related to certain preferred stock purchased in 1987.

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, together with annual depreciation rates,
consist of the following:

SEPTEMBER 30
--------------------------
1995 1996 RATES
----------- ----------- -----------------

Land................................... $ 836,000 $ 836,000 --
Buildings and improvements............. 1,159,000 1,214,000 3 to 12.5 percent
Machinery and equipment................ 35,077,000 52,150,000 10 to 20 percent
Equipment in process(a)................ 2,176,000 2,168,000 --
----------- -----------
$39,248,000 $56,368,000
=========== ===========

- ---------------

(a) Equipment in process has not been placed into service and accordingly has
not been subject to depreciation.

4. SHORT-TERM AND LONG-TERM DEBT

As of April 1, 1996, the Company has two notes payable that exist under a
loan agreement with a bank. The loan agreement consists of (1) a revolving line
of credit of $5,000,000 to mature April 15, 1997 with funding availability
determined by a borrowing base calculation; and (2) a term note of $6,000,000 to
mature March 15, 2003. Both notes are secured by eligible accounts receivable
and equipment purchased from loan proceeds. The loan agreement contains various
restrictive covenants and compliance requirements. Among others, the agreement
requires that no liens exist upon any of the collateral nor any vehicle owned by
the Company. The notes bear interest at the bank's prime rate (8.25% at
September 30, 1996). The term note requires monthly principal and interest
payments.

The Company borrowed $6,000,000 through three advances on the term note for
the purchase of capital equipment. At September 30, 1996, the current maturity
of the long-term debt is $857,000. For fiscal years 1998 through 2002, the
annual maturity is $857,000, and for fiscal year 2003, the annual maturity will
be the balance. As of November 15, 1996, the Company has not utilized the
revolving line of credit.

The Company entered into a loan agreement, as amended (the "Loan
Agreement"), with Norwest Bank Texas, N.A. ("Norwest"). The Loan Agreement
consists of (1) a revolving line of credit of $6,000,000 which matures on April
15, 1999, (2) a term note in the aggregate principal amount of $6,000,000
bearing interest at Norwest's prime rate and which matures on March 15, 2003 and
(3) a term note in the aggregate principal amount of $5,000,000 bearing interest
at the prime rate as published in The Wall Street Journal and which matures on
April 15, 2003. The $5,000,000 term note, together with working capital, were
utilized to finance the purchase of equipment placed into service in August
1997. The term notes are secured by eligible accounts receivable and equipment
purchased from loan proceeds. At September 30, 1997, approximately $9.5 million
was outstanding under the term notes all of which were bearing interest at 8.5%
per annum.

F-9
40

DAWSON GEOPHYSICAL COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(THE INFORMATION AND AMOUNTS FOR INTERIM PERIODS ARE UNAUDITED)

5. STOCK OPTIONS

The Company's 1991 Incentive Stock Option Plan, which extends the 1981
Plan, provides options to purchase 150,000 shares of authorized but unissued
common stock of the Company. The option price is the market value of the
Company's common stock at date of grant. Options are exercisable 25% annually
from the date of the grant and the options expire five years from date of grant.

The transactions under the 1991 Plan are summarized as follows:

OPTION NUMBER OF
PRICE PER SHARE OPTIONED SHARES
------------------ ---------------

Balance as of September 30, 1993................... $ 3.625 to $ 8.875 133,750
Granted.......................................... $7.25 15,000
Exercised........................................ $ 4.25 to $ 4.75 (6,750)
Cancelled or expired............................. $ 4.75 to $ 8.875 (7,000)
---------- ------- -------
Balance as of September 30, 1994................... $ 3.625 to $ 8.875 135,000
Granted.......................................... $11.25 17,000
Exercised........................................ $ 3.625 to $ 4.75 (32,250)
Cancelled or expired............................. $ 4.75 to $ 8.875 (7,000)
---------- ------- -------
Balance as of September 30, 1995................... $ 4.25 to $ 11.25 112,750
Exercised........................................ $4.25 (12,500)
---------- ------- -------
Balance as of September 30, 1996................... $ 4.25 to $ 11.25 100,250
========== ======= =======

Options for 62,500, 54,250 and 73,000 shares were exercisable as of
September 30, 1994, 1995 and 1996, respectively.

6. EMPLOYEE STOCK PURCHASE PLAN

The Company has an employee stock purchase plan to invest in the Company's
common stock for the benefit of eligible employees. Participants were entitled
to contribute a percentage, not to exceed 5%, of their biweekly salary to the
plan. On a bi-weekly basis, the Company matches the participants' contributions
and directs the purchase of shares of the Company's common stock. There are no
vesting requirements for the participants. The Company contributed $88,659,
$164,530 and $198,863 to the plan during 1994, 1995 and 1996, respectively.

7. INCOME TAXES

Income tax expense (benefit) attributable to income before extraordinary
item consists of:

YEAR ENDED SEPTEMBER 30,
------------------------------------
1994 1995 1996
---------- ---------- --------

Current:
U.S. federal.................................. $1,128,000 $ 859,000 $596,000
State......................................... 84,000 111,000 3,000
---------- ---------- --------
1,212,000 970,000 599,000
Deferred -- U.S. federal........................ 39,000 296,000 273,000
---------- ---------- --------
Total................................. $1,251,000 $1,266,000 $872,000
========== ========== ========

F-10
41

DAWSON GEOPHYSICAL COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(THE INFORMATION AND AMOUNTS FOR INTERIM PERIODS ARE UNAUDITED)

Income tax expense varies from the amount computed by multiplying income
before taxes by the statutory income tax rate. The reason for these differences
and the related tax effects are as follows:

YEAR ENDED SEPTEMBER 30,
------------------------------------
1994 1995 1996
---------- ---------- --------

Expense computed at statutory rates............. $1,196,000 $1,169,000 $938,000
Effect of:
State income taxes, net of federal income tax
benefit.................................... 56,000 73,000 10,000
Other......................................... (1,000) 24,000 (76,000)
---------- ---------- --------
Income tax expense.............................. $1,251,000 $1,266,000 $872,000
========== ========== ========

A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax assets will not be realized. During 1995, the
Company decreased the valuation allowance as a result of the expiration and
utilization of the capital loss carryforward.

8. STATEMENT OF CASH FLOWS

The Company paid current and estimated tax payments of $1,091,000,
$1,019,000 and $619,000 in 1994, 1995 and 1996, respectively. Payments of
interest were $376,000, $170,000 and $144,000 in 1994, 1995 and 1996,
respectively. During 1995, the Company exchanged certain buildings and land plus
cash of $425,000 for buildings and land held by a third party.

9. MAJOR CUSTOMERS

The Company operates in only one business segment, contract seismic data
acquisition and processing services. The major customers in 1994, 1995 and 1996
varied and sales to these customers, as a percentage of operating revenues, were
as follows:

1994 1995 1996
---- ---- ----

Customer A.................................................. -- -- 11%
Customer B.................................................. -- 20% --
Customer C.................................................. -- 16% --
Customer D.................................................. 28% -- --

10. EQUITY OFFERING

During the first quarter of fiscal 1995, the Company completed a public
offering of 1,114,000 shares with net proceeds of approximately $10,776,000 used
to acquire seismic equipment and retire debt.

11. CONTINGENCIES

F-11
42

DAWSON GEOPHYSICAL COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(THE INFORMATION AND AMOUNTS FOR INTERIM PERIODS ARE UNAUDITED)

general, the claims against the Company include allegations of negligence, gross
negligence and/or intentional tort as a result of, among other things, the
Company's alleged failure to provide safe transportation for its employees and
to properly select, train and supervise the deceased driver of such van. The
plaintiffs in such suits are seeking actual damages from the defendants of $15.5
million, additional unspecified actual damages, pre-judgment and post-judgment
interest and costs of suit as well as exemplary and punitive damages in an
amount not to exceed four times the amount of actual damages. The Company
believes that it has meritorious defenses to the claims asserted against it in
such suits and it intends to continue to vigorously defend itself against such
claims. In addition, the Company believes that it has approximately $11 million
of liability insurance coverage to provide against an unfavorable outcome. Such
suits are currently in the discovery stage and the Company currently has pending
before the court a motion for summary judgment in Cause No. 8812 requesting that
the Company be dismissed from such suit based upon various legal theories. Such
motion has not yet been heard by the court. A trial date of July 20, 1998 has
been set in Cause No. 8812. No trial date has yet been set for Cause No.
P5565-83-CV. Due to the uncertainties inherent in litigation, no assurance can
be given as to the ultimate outcome of such suits or the adequacy or
availability of the Company's liability insurance to cover the damages, if any,
which may be assessed against the Company in such suits. A judgment awarding
plaintiffs an amount significantly exceeding the Company's available insurance
coverage could have a material adverse effect on the Company's financial
condition, results of operations and liquidity.

The Company is party to other legal actions arising in the ordinary course
of its business, none of which management believes will result in a material
adverse effect on the Company's financial position or results of operation, as
the Company believes it is adequately insured.

12. QUARTERLY FINANCIAL DATA (UNAUDITED)

QUARTER ENDED
---------------------------------------------------------
DECEMBER 31 MARCH 31 JUNE 31 SEPTEMBER 30
------------ ---------- ---------- -------------

1995:
Operating revenues................... $7,016,000 $7,467,000 $7,461,000 $6,244,000
Income from operations............... $ 848,000 $ 930,000 $ 873,000 $ 344,000
Net income........................... $ 547,000 $ 647,000 $ 713,000 $ 267,000
Net Income per common share.......... $ .16 $ .15 $ .17 $ .06
1996:
Operating revenues................... $7,358,000 $8,572,000 $8,555,000 $9,033,000
Income from operations............... $ 56,000 $ 931,000 $ 750,000 $ 901,000
Net income........................... $ 77,000 $ 630,000 $ 514,000 $ 667,000
Net Income per common share.......... $ .02 $ .15 $ .12 $ .16

F-12
43

======================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS OFFERING AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO
ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER TO SELL OR SOLICITATION IS
NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.................... 3
Risk Factors.......................... 6
Disclosure Regarding Forward-Looking
Statements.......................... 8
Use of Proceeds....................... 8
Price Range of Common Stock........... 9
Dividend Policy....................... 10
Capitalization........................ 10
Selected Financial Data............... 11
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 12
Business.............................. 16
Management............................ 21
Principal and Selling Shareholders.... 25
Description of Capital Stock.......... 26
Underwriting.......................... 27
Legal Matters......................... 29
Experts............................... 29
Available Information................. 29
Index to Financial Statements......... F-1

======================================================
======================================================

1,500,000 SHARES

[DAWSON LOGO]

DAWSON
GEOPHYSICAL
COMPANY

COMMON STOCK
------------------------
PROSPECTUS
------------------------

RAYMOND JAMES & ASSOCIATES, INC.

PRINCIPAL FINANCIAL SECURITIES, INC.

, 1997

======================================================
44

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, incurred or to be incurred in connection
with the sale of the common Stock being registered (all amounts are estimated
except the SEC registration fee, the NASD filing fee and the Nasdaq National
Market filing fee) all of which will be paid by the Registrant:

SEC registration fee........................................ $11,826.70
NASD filing fee............................................. 4,403.00
Nasdaq National Market filing fee........................... 17,500.00
Printing and engraving costs................................ *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue Sky fees and expenses.................................. 10,000.00
Transfer agent and registrar fees........................... *
Miscellaneous...............................................
----------
Total............................................. $ *
==========

- ---------------

* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article Seven of the Articles of Incorporation, as amended, of Dawson
Geophysical Company (the "Registrant") provides as follows:

"A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for an act or omission
in such director's capacity as a director, except for liability for (i) a
breach of a director's duty of loyalty to the corporation or its
shareholders; (ii) an act or omission not in good faith or that involves
intentional misconduct or a knowing violation of the law; (iii) a
transaction from which a director received an improper benefit, whether or
not the benefit resulted from an action taken within the scope of the
director's office; (iv) an act or omission for which the liability of a
director is expressly provided by statue; or (v) an act related to an
unlawful stock repurchase or payment of a dividend. If the laws of the
State of Texas are hereafter amended to authorize corporate action further
eliminating or limiting the personal liability of a director of the
corporation, then the liability of a director of the corporation shall
thereupon automatically be eliminated or limited to the fullest extent
permitted by such laws. Any repeal or modification of this Article Seven by
the shareholders of the corporation shall not adversely affect any right or
protection of a director existing at the time of such repeal or
modification with respect to events or circumstances occurring or existing
prior to such time."

Article IX of the Bylaws of the Registrant provides that:

"To the extent permitted by Texas Business Corporation Act Article
2.02-1, the corporation shall indemnify any present or former Director,
officer, employee, or agent of the corporation against judgments, penalties
(including excise and similar taxes), fines, settlements, and reasonable
expenses actually incurred by the person in connection with a proceeding in
which the person was, is, or is threatened to be made a named defendant or
respondent because the person is or was a Director, officer, employee, or
agent of the corporation."

Article 2.02-1 of the Texas Business Corporation Act permits corporations
to indemnify a person who was or is a director, officer, employee, or agent of a
corporation or who serves at the corporation's request as a director, officer,
partner, proprietor, trustee, employee, or agent of another corporation,
partnership, trust, joint

II-1
45

venture, or other enterprise (an "outside enterprise"), who was, is, or is
threatened to be named a defendant in a legal proceeding by virtue of such
person's position in the corporation or in an outside enterprise, but only if
the person acted in good faith and reasonably believed, in the case of conduct
in the person's official capacity, that the conduct was in or, in the case of
all other conduct, that the conduct was not opposed to the corporation's best
interest, and, in the case of a criminal proceeding, the person had no
reasonable cause to believe the conduct was unlawful. A person may be
indemnified within the above limitations against judgments, penalties (including
excise and similar taxes), fines, settlements, and reasonable expenses actually
incurred; however, indemnification is limited to reasonable expenses actually
incurred in a proceeding in which the person is found liable to the corporation
or is found to have improperly received a personal benefit and shall not be made
in respect of any proceeding in which the person shall have been found liable
for willful or intentional misconduct in the performance of his duty to the
corporation. A corporation must indemnify a director, officer, employee, or
agent against reasonable expenses incurred in connection with a proceeding in
which the person is a party because of the person's corporate position, if the
person was successful, on the merits or otherwise, in the defense of the
proceeding. Under certain circumstances, a corporation may also advance expenses
to such person.

Indemnification can be made by the corporation only upon a determination
made in the manner prescribed by the statute that indemnification is proper in
the circumstances because the party seeking indemnification has met the
applicable standard of conduct as set forth in Article 2.02-1 of the Texas
Business Corporation Act.

Article 2.02-1 of the Texas Business Corporation Act also permits a
corporation to purchase and maintain insurance or to make other arrangements on
behalf of any of the above persons against any liability asserted against and
incurred by the person in such capacity, or arising out of the person's status
as such a person, whether or not the corporation would have the powers to
indemnify the person against the liability under applicable law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following information relates to all securities sold by the Registrant
within the past three years and not registered under the Securities Act of 1933
(the "Securities Act").

The only securities sold by the Registrant within the past three years and
not registered under the Securities Act have been in connection with the
exercise of employee stock options granted to certain key employees of the
Registrant pursuant to the Registrant's 1991 Incentive Stock Option Plan. During
the past three years, 17 employees of the Company exercised stock options for
the purchase of a total of 81,250 shares of Common Stock at an average exercise
price of $4.33 per share.

Each of the transactions described above was conducted in reliance upon the
exemption from registration provided in Section 4(2) of the Securities Act and
the rules and regulations promulgated thereunder. Furthermore, each of the
certificates representing the Registrant's securities issued in connection with
such transactions contains a restrictive legend, as appropriate, and each person
acquiring such securities from the Registrant furnished investment
representations to the Registrant and no underwriters participated in such
transactions.

No other sales of securities were made by the Registrant during the past
three year period.

SCHEDULES:

The schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.

II-2
46

ITEM 16. EXHIBITS.

Exhibits.

EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------

1.1 (1) -- Proposed form of Underwriting Agreement.
3.1 (2) -- Restated and Amended Articles of Incorporation of Dawson
Geophysical Company.
3.2 (2) -- Bylaws of Dawson Geophysical Company.
5.1 (1) -- Opinion of Stubbeman, McRae, Sealy, Laughlin & Browder,
Inc., counsel for the Company.
10.1 (2) -- Form of Short Term Seismograph Service Agreement for
Periodic Performance between Dawson Geophysical Company
and clients.
10.2 (2) -- Form of Supplemental Agreement for Geophysical Services
for seismograph services between Dawson Geophysical
Company and clients.
10.3 (2) -- License Agreement granting license to use system for
seismic exploration, dated May 15, 1992 between Dawson
Geophysical Company and Techno Geophysical Services, Ltd.
10.4 (2) -- Dawson Geophysical Company 1991 Incentive Stock Option
Plan.
10.5 (2) -- Dawson Geophysical Company Employee Stock Purchase Plan.
10.6 (3) -- Loan Agreement dated April 1, 1996 by and between Dawson
Geophysical Company and Norwest Bank Texas, N.A.
10.7 (4) -- First Amendment to Loan Agreement, dated April 15, 1997.
10.8 (3) -- Security Agreement dated April 1, 1996 relating to the
Loan Agreement between Dawson Geophysical Company and
Norwest Bank Texas, N.A.
10.9 -- First Amendment to Security Agreement, dated April 15,
1997.
10.10(3) -- Term Note of Dawson Geophysical Company dated April 1,
1996.
10.11(3) -- Revolving Note of Dawson Geophysical Company dated April
1, 1996.
10.12(4) -- Term Note of Dawson Geophysical Company dated April 15,
1997.
10.13(4) -- Revolving Note of Dawson Geophysical Company, Dated April
15, 1997.
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 (1) -- Consent of Stubbeman, McRae, Sealy, Laughlin & Browder,
Inc. (included in their opinion filed as Exhibit 5.1).
24.1 -- Power of Attorney (included on the signature page of this
Registration Statement).

- ---------------

(1) To be filed by amendment.

(2) Incorporated by reference to Registrant's Form S-1, dated October 19, 1994
(Commission File No. 33-85328).

(3) Incorporated by reference to the Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1996.

(4) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnifica-

II-3
47

tion is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
48

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Midland, and the State of
Texas, on the 21st day of October, 1997.

DAWSON GEOPHYSICAL COMPANY

By /s/ L. DECKER DAWSON
-----------------------------------
L. Decker Dawson
President

POWER OF ATTORNEY

Each of the undersigned hereby appoints L. Decker Dawson, Floyd B. Graham,
and Howell W. Pardue, and each of them (with full power to act alone), as
attorneys and agents for the undersigned, with full power of substitution, for
and in the name, place and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, any and all
amendments, including post-effective amendments, and exhibits to this
Registration Statement and any and all applications, instruments, and other
documents to be filed with the Securities and Exchange Commission pertaining to
the registration of the securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite or desirable.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ L. DECKER DAWSON Director, President (Principal October 21, 1997
- -------------------------------------------------- Executive Officer)
L. Decker Dawson

/s/ FLOYD B. GRAHAM Director, Vice-President October 21, 1997
- --------------------------------------------------
Floyd B. Graham

/s/ HOWELL W. PARDUE Director, Vice-President October 21, 1997
- --------------------------------------------------
Howell W. Pardue

/s/ CALVIN J. CLEMENTS Director October 21, 1997
- --------------------------------------------------
Calvin J. Clements

/s/ MATTHEW P. MURPHY Director October 21, 1997
- --------------------------------------------------
Matthew P. Murphy

/s/ TIM C. THOMPSON Director October 21, 1997
- --------------------------------------------------
Tim C. Thompson

/s/ CHRISTINA W. HAGAN Vice President, Chief Financial October 21, 1997
- -------------------------------------------------- Officer (Principal Financial and
Christina W. Hagan Accounting Officer)

II-5
49

INDEX TO EXHIBITS

EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------

1.1 (1) -- Proposed form of Underwriting Agreement.
3.1 (2) -- Restated and Amended Articles of Incorporation of Dawson
Geophysical Company.
3.2 (2) -- Bylaws of Dawson Geophysical Company.
5.1 (1) -- Opinion of Stubbeman, McRae, Sealy, Laughlin & Browder,
Inc., counsel for the Company.
10.1 (2) -- Form of Short Term Seismograph Service Agreement for
Periodic Performance between Dawson Geophysical Company
and clients.
10.2 (2) -- Form of Supplemental Agreement for Geophysical Services
for seismograph services between Dawson Geophysical
Company and clients.
10.3 (2) -- License Agreement granting license to use system for
seismic exploration, dated May 15, 1992 between Dawson
Geophysical Company and Techno Geophysical Services, Ltd.
10.4 (2) -- Dawson Geophysical Company 1991 Incentive Stock Option
Plan.
10.5 (2) -- Dawson Geophysical Company Employee Stock Purchase Plan.
10.6 (3) -- Loan Agreement dated April 1, 1996 by and between Dawson
Geophysical Company and Norwest Bank Texas, N.A.
10.7 (4) -- First Amendment to Loan Agreement, dated April 15, 1997.
10.8 (3) -- Security Agreement dated April 1, 1996 relating to the
Loan Agreement between Dawson Geophysical Company and
Norwest Bank Texas, N.A.
10.9 -- First Amendment to Security Agreement, dated April 15,
1997.
10.10(3) -- Term Note of Dawson Geophysical Company dated April 1,
1996.
10.11(3) -- Revolving Note of Dawson Geophysical Company dated April
1, 1996.
10.12(4) -- Term Note of Dawson Geophysical Company, dated April 15,
1997.
10.13(4) -- Revolving Note of Dawson Geophysical Company, dated April
15, 1997.
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 (1) -- Consent of Stubbeman, McRae, Sealy, Laughlin & Browder,
Inc. (included in their opinion filed as Exhibit 5.1).
24.1 -- Power of Attorney (included on the signature page of this
Registration Statement).

- ---------------

(1) To be filed by amendment.

(2) Incorporated by reference to Registrant's Form S-1, dated October 19, 1994
(Commission File No. 33-85328).

(3) Incorporated by reference to the Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1996.

(4) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997.

   1
                                                                    EXHIBIT 10.9

                     FIRST AMENDMENT TO SECURITY AGREEMENT

       This First Amendment to Security Agreement (the "First Amendment to
Security Agreement"), dated as of April 15, 1997, is made and entered into by
and between Dawson Geophysical Company, a Texas corporation (the "Debtor"), and
Norwest Bank Texas, N.A., a national banking association (the "Secured Party").

                                   WITNESSETH

       WHEREAS, the Debtor and the Secured Party have entered into that certain
Loan Agreement, dated as of April 1, 1996, providing for the loans and the
other matters set forth therein;

       WHEREAS, pursuant to the terms and conditions of the Loan Agreement, the
Debtor and the Secured Party also entered into that certain Security Agreement,
dated as of April 1, 1996;

       WHEREAS, at the request of Debtor, the Lender is willing to amend the
Loan Agreement to provide for, among other things, additional financing
requested by the Debtor, but only upon and subject to the terms and conditions
of that certain First Amendment to Loan Agreement, dated of even date herewith,
and the further condition precedent that Debtor execute and deliver this First
Amendment to Security Agreement;

       NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:

SECTION 1. DEFINED TERMS.

       All terms defined in the Security Agreement, and not otherwse defined in
this First Amendment, shall have the meanings given them in the Security
Agreement when used herein.

SECTION 2. AMENDMENTS TO SECURITY AGREEMENT.

       (a) All references in the Security Agreement to "Secured Party" and
"Norwest Bank Texas, Midland, N.A." shall mean Norwest Bank Texas, N.A., a
national banking association with its principal offices at 500 West Texas,
Midland, Texas 79701.




                                     -1-
   2
        (b)     all references to the "Notes" appearing in the Security
Agreement shall mean and be deemed to include the same "Notes" as are
described and defined in the Loan Agreement, as amended by that certain First
Amendment to Loan Agreement, dated of even date herewith.

        (c)     Exhibit B to the Security Agreement is hereby deleted in its
entirety and a new Exhibit B in the form and content attached to this First
Amendment to Security Agreement shall be, and it hereby is, substituted in
place thereof.


SECTION 3.      NO OTHER AMENDMENTS; RATIFICATION.

        Except as expressly amended and modified by this First Amendment to
Security Agreement, all of the provisions and covenants of the Security
Agreement and all exhibits thereto are and shall continue to remain in full
force and effect in accordance with the terms thereof and all of such
provisions, covenants and exhibits are hereby ratified and confirmed by the
Debtor as of the date of this First Amendment to Security Agreement as if the
Security Agreement were executed as of the date of this First Amendment to
Security Agreement.


SECTION 4.      COUNTERPARTS.

        This First Amendment to Security Agreement may be executed by one or
more of the parties hereto in any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. 


SECTION 5.      GOVERNING LAW.

        THIS FIRST AMENDMENT TO SECURITY AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. 


SECTION 6.      GLOBAL AMENDMENT OF SECURITY AGREEMENT.

        The Security Agreement is hereby modified wherever necessary or
appropriate, and even though not specifically addressed herein, so as to
conform to the amendments to the Security Agreement as set forth herein, and
the Debtor covenants to observe, comply with and perform each and all of the
terms and provisions of the Security Agreement, as modified hereby. The
Security Agreement is hereby amended so that any reference to such Security
Agreement shall mean the Security Agreement as amended hereby.


                                      -2-
   3



        IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Security Agreement to be executed and delivered by their respective duly
authorized officers as of the date and year first above written.



                                                NORWEST BANK TEXAS, N.A., 
                                                a national banking association



                                                BY: /s/ MARK D. McKINNEY
                                                    --------------------
                                                    Mark D. McKinney,
                                                    Senior Vice President



                                                DAWSON GEOPHYSICAL COMPANY


                                                
                                                BY: /s/ L. DECKER DAWSON
                                                    --------------------
                                                    L. Decker Dawson,
                                                    President



                                     -3-

   1
 
                                                                    EXHIBIT 23.1
 
                        CONSENT OF INDEPENDENT AUDITORS
 
The Board of Directors and Shareholders
Dawson Geophysical Company:
 
     We consent to the use of our report included herein and to the reference to
our firm under the headings "Selected Financial Data" and "Experts" in the
Prospectus.
 
                                               KPMG PEAT MARWICK LLP
 
Midland, Texas
October 21, 1997