When this decade began, Input/Output (now known as ION Geophysical) was a small company that many thought was no longer in existence. After riding the land 3-D seismic equipment wave of the late 1980s and 1990s, the company ran headlong into the downturn that buffeted many seismic players from 1998 to 2004.

“You don’t know what you’ve got until you have a downturn,” Bob Peebler, CEO of ION, said. “Then, if you have any weaknesses, they really show.”

In 2003, I/O’s then-CEO left for another opportunity and Peebler, who had served on the I/O board of directors since 1999, was tapped to fill the vacant position. This was not Peebler’s first foray running a public company. After spending 17 years at Schlumberger, he became CEO of Landmark Graphics Corp., which later was acquired by Halliburton.

After becoming CEO at I/O, Peebler discovered a few flaws. One was an overreliance on seismic equipment and a disconnect from the ultimate end-use customer, E&P operators.

“We only had a couple of geophysicists back then,” Peebler said. “That struck me as odd, as we really didn’t know what problems our customers were trying to solve with our technology. We also found ourselves stuck trying to push new technology into the market through the seismic contracting community. Many contractors were struggling at the time (recall the Petroleum Geo-Services bankruptcy), and they didn’t have the incentives or the funds to adopt the latest technology.”

That was when Peebler made the first of several transformational moves – the acquisitions of both Concept Systems and GX Technology in 2004.

“These acquisitions rounded out our portfolio, giving us advanced command and control software that was critical to the seismic operation and a strong complement to our seismic hardware as well as a much stronger data processing and imaging capability,” he said. “They also brought us much closer to the E&P operators, giving us real insight into the problems that needed to be solved. We added more than 100 geophysicists to the company, many of whom were recognized as industry leaders in imaging complex reservoirs.”

The acquisitions were done with a strategic purpose. “We wanted to target the toughest problems in geophysics and knew that a holistic approach – involving survey design, hardware, software, and data processing services – would be needed to be successful,” Peebler said.

One area in which ION chose to focus, or remain focused, was onshore.

Peebler commented, “At the time, many of the E&P operators were focusing all of their energies offshore. We studied the market, however, and realized that nearly 80% of the world’s remaining hydrocarbons are located onshore. And many of the E&P operators had lost some of their capabilities in onshore seismic over the years and were ready to try some new approaches and partner with companies like ION.”

This led to developments like FireFly, ION’s cableless acquisition system that was brought to the market in 2006 through a partnership with Apache and BP. ION also continued to invest heavily in R&D, ramping up its spend to more than US $50 million per year, nearly three times the rate when Peebler took over. The company grew revenues 45% per year from 2003 to 2007 and saw its market capitalization rise nearly tenfold. In 2008, the timing seemed right for another acquisition. This time it was ARAM Systems, a land seismic equipment manufacturer from Canada.

As fate would have it, the timing could not have been worse. “We closed the acquisition with short-term debt in late summer with the plan to refinance the debt with long-term bonds by year end,” Peebler said. “Then the bond market collapsed, putting us in a corner with no good options for dealing with the short-term debt. At the same time, our land business, which had been running at a revenue rate of $425 million per year, collapsed to $100 million just two years later. Frankly, we were in a bit of a tailspin.”

The company tried everything to survive – workforce and salary reductions, expense management, and high-cost debt and equity issuances. But it was not enough. “We needed a ‘big bang’ solution,” Peebler said.

ION had long considered BGP to be one of its most important customers. The companies had discussed strategic partnerships before, but it took the downturn of 2008 to 2009 to get serious. After nine months of negotiations, the deal was closed. ION sold 51% of its land business to BGP, which also bought newly issued equity to become ION’s largest single shareholder. Suddenly, the company found itself with a much improved balance sheet and aligned with a strategic partner.

“It’s win-win for each of us,” Peebler said. “Through our land equipment joint venture – called INOVA – we get to work directly with BGP’s 100-plus land crews to really identify and develop the technologies needed to acquire seismic data in the toughest operating environments, while BGP gets access to a proven innovation engine that delivers cutting-edge seismic technologies.”

ION survived the storm, and now is positioning itself to chase the onshore opportunity once again. With unconventional shale reservoirs taking center stage, Russia’s economy getting better, and activity levels remaining high in the Middle East and North Africa, the future is looking rosier than ever for ION.