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<SEC-DOCUMENT>0000950129-06-003075.txt : 20061117
<SEC-HEADER>0000950129-06-003075.hdr.sgml : 20061117
<ACCEPTANCE-DATETIME>20060324185225
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950129-06-003075
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20060324

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MITCHAM INDUSTRIES INC
		CENTRAL INDEX KEY:			0000926423
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359]
		IRS NUMBER:				760210849
		STATE OF INCORPORATION:			TX
		FISCAL YEAR END:			0131

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		8141 SH 75 SOUTH
		STREET 2:		PO BOX 1175
		CITY:			HUNTSVILLE
		STATE:			TX
		ZIP:			77342
		BUSINESS PHONE:		9362912277

	MAIL ADDRESS:	
		STREET 1:		P O BOX 1175
		CITY:			HUNTSVILLE
		STATE:			TX
		ZIP:			77342
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><IMG src="h34436c1h3443690.gif" alt="(MITCHAM LOGO)">
</DIV>

<DIV align="center" style="font-size: 10pt"><B><I>THE </I></B><B>EXPLORATION EQUIPMENT SUPPLIER </B><SUP style="font-size: 85%; vertical-align: text-top"><B>TM</B></SUP></DIV>


<DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">March&nbsp;23, 2006
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>VIA EDGAR AND FACSIMILE</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;John Cash<BR>
Branch Chief<BR>
Securities and Exchange Commission<BR>
Division of Corporation Finance<BR>
100 F Street, NE<BR>
Washington, D.C. 20549-0405

</DIV>
<DIV align="RIGHT">
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Re:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Mitcham Industries, Inc.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Form&nbsp;10-K for the fiscal year ended January&nbsp;31, 2005</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Form&nbsp;10-Q for the quarter ended October&nbsp;31, 2005</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>File No.&nbsp;0-25142</B></TD>
</TR>
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</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dear Mr.&nbsp;Cash:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;28, 2006, Mitcham Industries, Inc. (the &#147;<U>Company</U>&#148;) received the comments
of the staff of the Division of Corporation Finance (the &#147;<U>Staff</U>&#148;) of the Securities and
Exchange Commission (the &#147;<U>Commission</U>&#148;) to Form 10-K for the fiscal year ended January&nbsp;31,
2005 (the &#147;<U>2005 Form&nbsp;10-K</U>&#148;) and Form 10-Q for the quarter ended October&nbsp;31, 2005 (the
&#147;<U>Form&nbsp;10-Q</U>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
respect to the comments, for the reasons stated in the Company&#146;s
response letter dated January 31, 2006, the Company
believes that any revised or supplemental disclosure would not be material to the Company&#146;s overall
historical disclosure. Accordingly, the Company respectfully requests that the Staff permit the
Company to address any of these revised or supplemental disclosures in its Annual Report on Form
10-K for the year ended January&nbsp;31, 2006 (the &#147;<U>2006 Form&nbsp;10-K</U>&#148;), rather than amending or
supplementing the disclosure in the 2005 Form 10-K or the Form 10-Q.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following responses are for the Staff&#146;s review. For your
convenience, we have repeated in bold type each comment of the Staff exactly as given in the Staff&#146;s comment letter.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Page 2 of 12
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Form&nbsp;10-K for the fiscal year ended January&nbsp;31, 2005</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U><B>Lease pool equipment and new equipment sales</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>1. We note your responses to prior comments one, seven, eight and nine with regard to your
accounting and disclosures surrounding your lease pool equipment and new equipment sales and
have the following concerns.</B>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>You indicate that you have not historically differentiated equipment sales as new
equipment versus used equipment. Demonstrate how you are able to appropriately
classify the cash receipts from the sale of used lease pool equipment within your
Statements of Cash Flows. In this regard, we believe that the cash receipts from the
sale of used lease pool equipment should be consistently classified and presented with
the related cash payments for the purchase of such equipment. Given your response to
prior comment two that your primary source of revenues is derived from short-term
leasing of equipment and given the fact that you have reflected the purchases of
seismic equipment held for lease within financing activities, tell us why you have not
presented the cash receipts from the sale of used lease pool equipment within
financing activities. Refer to paragraphs 16c and 24 of SFAS 95.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: The Company has not historically differentiated cash receipts from the sale
of lease pool equipment from cash receipts from the sale of new and used equipment.
Beginning with the 2006 Form 10-K, we will classify cash received from the sale of used
lease pool equipment as an investing activity in the statement of cash flows for all
periods presented. We assume your reference to &#147;financing activities&#148; in the last
sentence of your comment was intended to be &#147;investing activities.&#148;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>You indicate in your response to prior comment seven that your cash flow caption
&#147;Net book value of equipment sold&#148; should be &#147;Net book value of lease pool equipment
sold&#148;. However, it is still unclear to us what this line item represents. Is this line
item actually the net book value of your lease pool equipment? If so, why is it
reflected within cash flows from operating activity and why does it not agree to your
cost of equipment sales in your consolidated statements of operations?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: The cash flow statement for all periods presented will be modified to remove
this caption and to reflect the gross profit from the sale of lease pool equipment as a
reduction of income from operations and the cash receipts from the sale of lease pool
equipment as investing activities.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FAX: &#043;1 936.295.1922 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="center" style="font-size: 8pt; margin-top: 18pt"><B>www.mitchamindustries.com</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Page 3 of 12
</DIV>


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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Demonstrate how you have appropriately reflected your cash receipts and cash
payments related to your new equipment sales within your Statements of Cash Flows
pursuant to paragraphs 21, 22a and 23a of SFAS 95. In this regard, we note that in
your response to prior comment one you indicate that it would take an extraordinary
amount of time and resources to review the information within your fixes &#091;</B><B><I>sic</I></B><B>&#093; asset
ledger for lease pool equipment to attempt to isolate the sales of new equipment from
those of used equipment.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: The Company reflects cash payments for purchases of new and used equipment
and cash receipts from the sales of new and used equipment that were acquired for
resale, including receipts and payments under short-term financing agreements, in cash
flows from operating activities in accordance with the paragraphs 22a and 23a of SFAS
95. Please note that the Company does not include new equipment acquired for resale in
its lease pool.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note your response to prior comment eight that you only buy equipment for resale
for specific customer orders. Tell us why, then, you include new equipment purchases
that have been purchased for resale for specific customer orders within your fixed
asset ledger for lease pool equipment. Given the fact that you do not appear to have
historically maintained inventory and cost of sales information for new equipment
sales, help us to understand how you were able to conclude as you did in your response
to prior comment eight that you did not have new equipment on hand at any balance
sheet date primarily because you sell everything FOB shipping point and sales of new
equipment are sporadic.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: We do not include new equipment acquired for resale in our lease pool. Our
prior response to comment 1 pertained to the difficulty of separating new and used
equipment sales from equipment sales from our lease pool and was not intended to
suggest equipment acquired for resale is included in the lease pool. As previously
stated, new equipment, and occasionally used equipment acquired for resale is purchased
to fulfill a specific customer order. However, with respect to such purchases of new
equipment for resale, we have not held such equipment at a balance sheet date and
therefore, no such equipment has been reflected on our balance sheet. As sales of new
and/or used equipment are sporadic and are sold FOB shipping point, the probabilities
of the Company having new equipment held for resale in inventory at a given quarter end
are low.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>You indicate in your response to prior comment nine that you do not take title to
equipment on consignment. Tell us the amount of equipment on hand of third parties for
which you have not taken title as of each balance sheet date as well as the amount of
gross and net consignment sales</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FAX: &#043;1 936.295.1922 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="center" style="font-size: 8pt; margin-top: 18pt"><B>www.mitchamindustries.com</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Page 4 of 12
</DIV>


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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>recognized during each period presented. Tell us how you track and differentiate for
reporting purposes inventory held by you on consignment versus inventory purchased by
you for resale to your customers. Clarify what commitments you have as a consignee of
this inventory.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: The Company had no consignment sales during the periods covered in the 2005
Form 10-K.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Occasionally a customer will ask us to assist them in selling certain of their
equipment. If we agree, then we will attempt to find a buyer for the equipment. We do
not take title to the equipment to be sold. Any equipment requiring any transfer of
title is handled between the seller and the buyer. Additionally, we do not record
equipment held for consignment sale in our financial records. Usually the purchase
price is not fixed, but rather the seller establishes a minimum price that they are
willing to accept for the equipment. When the equipment is sold, the buyer will pay
Mitcham directly and Mitcham in turn pays the seller the minimum price. The difference
between the amount received from the buyer and the amount paid to the seller is
recognized by Mitcham as commission income at the time we finalize the sale and are
entitled to receive the commission from the seller. If the equipment to be sold is
physically delivered to us, then we physically separate that equipment from our lease
pool equipment. Consignment sales are on a &#147;best efforts&#148; basis and we are under no
obligation to buy or sell the equipment. Note that equipment sales on behalf of
customers are infrequent and immaterial.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>You discuss the appropriateness of gross revenue reporting in your response to
prior comment nine. We assume that this analysis relates to your SAP equipment sales
and not your sales you make as a consignee. Please clarify and separately assess the
appropriateness of your revenue presentation of consignment sales.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: The appropriateness for gross revenue reporting in our prior response is
related to SAP equipment sales and not to consignment sales. See the above response
regarding our revenue recognition relating to consignment sales.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U><B>Management&#146;s Discussion and Analysis &#151; Liquidity, page 15</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>2. Your response to prior comment four indicates that the increase in your cash flows from
operations was principally impacted by the increased demand for your equipment (e.g. income
from operations). We note however that there were also significant changes in working capital
accounts that you should also fully discuss in order to provide a comprehensive discussion of
your cash flows from operating activities for each period presented.</B>
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FAX: &#043;1 936.295.1922 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="center" style="font-size: 8pt; margin-top: 18pt"><B>www.mitchamindustries.com</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&nbsp;<B>Response</B>: Our principal sources of cash have been cash flows from our short-term leasing
operations. During fiscal 2005 and 2006, our cash flows from operating activities were affected
by several significant factors. The principal factor was a marked increase in oil and gas
exploration and development activities. Increases in the price of oil and natural gas, combined
with the maturation of the world&#146;s hydrocarbon producing basins, have improved market
conditions and have increased demand for our equipment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our working capital significantly increased due primarily to the increase in cash and cash
equivalents as a result of an increase in revenues while receivables remained relatively flat.
Additionally, capital expenditures for equipment purchases were lower thus allowing us to
retain a higher level of cash. Current maturities of long-term debt and equipment notes payable
reflected substantial decreases because of payment on these obligations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Although we believe these factors are inherent in the Company&#146;s discussion of its results of
operations, the Company will expand its discussion regarding changes in working capital
accounts and will address the foregoing and any other reasons for changes in cash flows from
operations in its 2006 Form 10-K.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U><B>Note I &#151; Organization and Summary of Significant Accounting Policies &#151; Seismic Equipment
Lease Pool, page F-8</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>3. We reviewed your response to our prior comment 11 and have the following additional
comments.</B>
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>You disclosed in Management&#146;s Discussion and Analysis that depreciation expense had
decreased significantly during the past three fiscal years because certain equipment
had reached the end of its depreciable life coupled with sales of assets with
remaining depreciable life. Based on your response, it is unclear to us how you were
able to provide these bases for the decrease in depreciation expense. Specifically,
how do you know that depreciation decreased because certain equipment had reached the
end of its depreciable life, if, as you indicate in your response, you are unable to
identify and disclose the cost basis of the seismic equipment pool that has been fully
depreciated? How do you know when fully depreciated equipment is still generating
lease revenue and thus positively impacting your results of operations? In addition,
how were you able to represent that you sold equipment with remaining depreciable
life? How do you identify the net book value of the used leased equipment sold if your
revenue system is not integrated with your fixed asset system?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: We are able to determine that depreciation expense has decreased as of the
end of a reporting period as certain groups of equipment reach the end of their
depreciable lives. We are able to determine that a group of</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FAX: &#043;1 936.295.1922 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="center" style="font-size: 8pt; margin-top: 18pt"><B>www.mitchamindustries.com</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>equipment has reached the end of its depreciable life based on the time that elapsed
since the equipment was first used. For example, when we purchase geophones in a given
year, we know from historical experience that they have a three-year depreciable life.
When the three-year period has passed, we know that the group of geophones has reached
the end of its depreciable life. The same analysis applies to other types of equipment
with variable depreciation lives, such as channel boxes, which have a five-year
depreciable life. When we purchase geophones or any other equipment, we purchase large
quantities (totaling several thousands units) of any given item at one time. Our
purchases of equipment are generally sporadic and we generally do not purchase the same
equipment every year. As a result, we are able to determine when large groups of
equipment have become fully depreciated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To further clarify, historically we have generally tracked asset sales by assigning a
&#147;book number&#148; to a &#147;lot&#148; of equipment. The &#147;lot&#148; could represent several thousand units
of equipment. Certain types of equipment had individual serial numbers assigned to each
unit; however, we did not have the ability to track the serial numbers for individual
items of equipment in our system. During the time that we own and lease the equipment,
all or a portion of it may be transferred to one of our subsidiary companies, and that
subsidiary would then assign a new book number to the equipment that they received.
Additionally, each time the same equipment was transferred to another of Mitcham&#146;s
subsidiaries, that item of equipment was given a new book number. The end result was
that an item of equipment could be assigned multiple book numbers. Each successive book
number bore no relationship to any previous book number that had been assigned. The
original acquisition date was the key component by which we could track an individual
asset. Once the asset was located, then the original cost and accumulated depreciation
could be ascertained. But as the number of book numbers for our assets multiplied, the
process of locating a particular asset became increasingly difficult. In addition,
determining net book value for assets sold was very time consuming due to our systems
limitations. We have, however, recently installed new software that allows us to more
easily track individual assets, but only from the software installation date forward.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We also believe that we need to clarify our previous response to item 11. When we
stated that &#147;&#091;t&#093;he Company is unable to disclose the cost basis of the seismic
equipment lease pool that has been fully depreciated as of each balance sheet date,&#148;
the statement was not meant to imply that we could not determine that value at all with
respect to particular pieces of equipment. But, rather, as described above it is very
difficult for us to determine the cost basis for an individual item of equipment within
our lease pool, which currently contains approximately 158,000 items. We are able to
determine the cost basis for each item of equipment that is sold, but the process to
accomplish that task is quite difficult and time consuming.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FAX: &#043;1 936.295.1922 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="center" style="font-size: 8pt; margin-top: 18pt"><B>www.mitchamindustries.com</B>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We have not historically tracked when fully depreciated equipment is still generating
lease revenue because that information is not available from our current or former
accounting systems.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Tell us supplementally and expand your accounting policy to clarify when fully
depreciated seismic equipment lease pool assets are removed from your books. If you
are not able to track lease revenues on a per item basis, how are you able to
appropriately determine when to remove fully depreciated equipment from your books?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: Historically, due to limitations in our accounting software, we have not
removed fully depreciated lease pool assets from our books. Due to systems upgrades, we
now have the capability to determine which assets should be removed from our lease pool
because they have become fully depreciated beginning with our fiscal year ended January
31, 2006, and have been able to create a program in response to the
Staff&#146;s comment, which will allow us to determine the amount of
lease pool assets that were fully depreciated at January 31, 2005. Accordingly, we will revise our disclosure in our 2006 Form 10-K as
appropriate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Given the fact that &#147;the Company has not historically tracked individual assets
that have been leased&#148; please explain to us how you have determined that you are
depreciating these assets over their useful lives. Your response indicates that
&#147;industry trends&#148; do not warrant an increase in the depreciable lives of the equipment
in your lease pool. Do you only look to industry trends when determining the
appropriate depreciable lives for your equipment lease pool? What is the average total
period of time your channel boxes and other peripheral equipment are under lease? Are
these periods longer than that suggested by the industry trends you use to assess the
appropriateness of the useful lives of your lease pool? If so, please explain.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: We look closely at industry trends in determining the appropriate useful
life for our equipment, as we must consider technological obsolescence, in addition to
actual useful service life. We also consider our historical experience. In 1999, the
equipment in our lease pool was subject to longer depreciable lives. Channel
boxes, for example, were subject to a seven-year depreciable life. Based on our
evaluation at that time, we recorded a $15&nbsp;million impairment
charge, a significant portion of which was attributable to channel
boxes. Since that time, we have attempted to establish depreciable lives for our lease pool equipment that are
sustainable through the periods of both high and low leasing demand,
which regularly permeate our industry.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The manufacturers of channel boxes produce a new generation of a channel box
approximately every five years. When new technology is available, often our customers
request the newer equipment instead of leasing older technology. Our channel boxes may
have useful life remaining after five years, but market demand could drop significantly
if newer technology is</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAX: &#043;1 936.295.1922&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>www.mitchamindustries.com</B>

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
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<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>available. The period of time we use for determining depreciable lives of our equipment
is not longer than that suggested by industry trends, but is consistent with those
trends.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>When we purchase new equipment for our lease pool, we begin to depreciate it upon its
first use and depreciation continues each month until the equipment is fully
depreciated, whether the particular item of equipment is in use during all of that time
period. As a result, during the years leading up to fiscal 2005 and 2006, the Company
had high levels of depreciation expense relative to its revenues, which gave rise to
losses in those years. It is our belief that depreciable lives are not solely a
function of the demand for our equipment, rather it is the functional utility of our
equipment as determined by market forces. The depreciable lives we assign to our
equipment are intended to reflect the prime revenue generating years for that
equipment. We don&#146;t believe it appropriate to adjust depreciable lives up and down with
each trend in the oil and gas industry. Rather, we look at the long-term view of the
industry.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our business primarily involves leasing our equipment on a short-term basis to our
customers. Those leases generally have three to nine month terms. We lease our
equipment multiple times until the end of its useful life or its sale. However, we
are not able to provide the average total period of time any particular type of
equipment is under lease. That calculation would depend on a number of variables,
including, among others, customer demand and investment in equipment by us.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Based on the significant impact the depreciation of your equipment lease pool can
have on your results of operations, it appears necessary for you to identify this
management estimate as a critical accounting policy. Please provide us with your
proposed disclosures.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: Beginning with our 2006 Form 10-K we will include the following or similar
disclosure in the &#147;Long-Lived Assets&#148; critical accounting policy:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;We review and consider industry trends in determining the appropriate useful life for
our lease pool equipment, including technological obsolescence, market demand and
actual historical useful service life of our lease pool equipment. When we purchase new
equipment for our lease pool, we begin to depreciate it upon its first use and
depreciation continues each month until the equipment is fully depreciated, whether the
equipment is actually in use during that entire time period.&#148;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAX: &#043;1 936.295.1922&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>www.mitchamindustries.com</B>

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U><B>Lease Pool, page F-8</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>4. We note your response to prior comment 12 and have the following additional comments.</B>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>As previously noted, your discussion within Critical Accounting Policies indicated
that the company &#147;...is not assured that their net deferred tax assets will be
realized...&#148;. We asked you to confirm that an assessment of your deferred tax assets
in accordance with paragraph 17c of SFAS 109 would not change the valuation allowance
you have recorded as of each balance sheet date presented. That is, did you
appropriately reduce your deferred tax assets by a valuation allowance for the portion
of your deferred tax assets, which based on the weight of available evidence, is &#147;more
likely than not (a likelihood of 50&nbsp;percent) will not be realized?&#148;</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: We confirm that an assessment of our deferred tax assets in accordance with
paragraph 17c of SFAS 109 would not change the valuation allowance we have recorded as
of each balance sheet date presented. Our assessment was that it was more likely than
not that some portion or all of our deferred tax assets would not be realized.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>As previously requested, expand Management&#146;s Discussion and Analysis to address the
positive and negative available evidence that led you to conclude that a valuation
allowance was necessary to reduce your deferred tax assets to zero. Refer to
paragraphs 21 through 24 of SFAS 109.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Response</B>: Beginning with our 2006 Form 10-K, we will expand Management&#146;s Discussion
and Analysis to address the positive and the negative evidence that lead us to increase
or decrease the remaining valuation allowance associated with our deferred tax assets
by including the following or similar disclosure:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Deferred tax assets and liabilities are determined based on temporary differences
between income and expenses reported for financial reporting and tax reporting. We are
required to record a valuation allowance to reduce our net deferred tax assets to the
amount that we believe is more likely than not to be realized. In assessing the need
for a valuation allowance, we have considered all positive and negative evidence,
including scheduled reversals of deferred tax liabilities, prudent and feasible tax
planning strategies, projected future taxable income and recent financial performance.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In years leading up to 2005, we had substantial consecutive net losses which were
indicative of the oil and gas industry at that time. The oil and gas industry is
cyclical in nature and historically the oil and gas service industry and our business
follows the trends of the oil and gas production and</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAX: &#043;1 936.295.1922&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>www.mitchamindustries.com</B>

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>exploration industry. When oil and gas prices were suppressed, our industry and our
business suffered. This is evidenced by the losses mentioned above. As of January&nbsp;31,
2005, the industry was experiencing more positive trend, but based on our history of
losses through fiscal 2004 and the difficulties faced by the oil and gas industry over
the past several years, we were unable to confidently predict how long this trend would
last and as such we were not prepared to, and we were not able to conclude that it was
more likely than not that the Company would be able to realize the deferred tax assets
subject to a 100% valuation allowance.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We intend to maintain the recorded valuation allowances until sufficient positive
evidence (for example, cumulative positive earnings or additional source income) exists
to support a reversal of the tax valuation allowances. As of January&nbsp;31, 2006, a large
portion of the Company&#146;s net operating losses in the United States and Canada will be
used to offset taxable income in fiscal 2006.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company anticipates that a material amount of deferred tax assets will continue to
remain as January&nbsp;31, 2006 and will have to make a determination as to whether all or a
portion of the remaining valuation allowance should be removed.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U><B>Additional Comments</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>Based on your overall response to our prior comment letter, we have the following additional
comments:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>5. We note that your equipment leasing revenues have increased 66% from 2003 to 2004 and 24%
from 2004 to 2005. Please tell us supplementally and expand your disclosures to discuss the
utilization rates for your equipment lease pool for each period presented as well as the
underlying reasons for the changes in these rates. In addition, discuss the impact the changes
in these rates had on changes in your revenues recognized from period to period.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>Response</B>: Although we do not compute utilization rates for our equipment lease pool, we
believe that the increase in our leasing revenues and the relatively constant size of our lease
pool can be attributed to an increase in utilization of our lease pool equipment. The Company
has relatively fixed costs within certain revenue ranges and, as a result, earnings are
particularly sensitive to changes in utilization and demand for our lease equipment.
Accordingly, we will expand our disclosure in our 2006 Form 10-K to address such utilization
trends.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>6. We also note that your depreciation decreased 7% from 2003 to 2004 and 23% from 2004 to
2005. Given the fact that depreciation is the most significant expense related to your leasing
revenues, your current disclosures within the Costs and Expenses section of your MD&#038;A regarding
depreciation expense is not sufficient enough to provide your investor with a comprehensive</B>
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAX: &#043;1 936.295.1922&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>www.mitchamindustries.com</B>

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Page 11 of 12
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>understanding of these significant fluctuations and the impact they have had on your business.
Please provide enhanced disclosures explaining why depreciation expense has continued to
decrease even in light of the significant increase in your leasing revenues. In this regard, we
note from one of your responses that the cost basis of your equipment has been declining due to
quantity purchase arrangements. Have there been any other reasons for the decrease in the cost
basis for your equipment? Is the market price of the equipment declining? If so, indicate if
this decrease in the cost of leasing equipment could have any impact on the amount of leasing
revenue you will be able to generate from that equipment.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>Response</B>: Beginning with our 2006 Form 10-K we will include the following or similar
disclosure:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&#147;Our business generally parallels trends in the oil and gas industry. When the oil and gas
industry was depressed over the period from 1998 to 2004, we experienced net losses for those
periods. As the oil and gas industry is on an upward trend and we are experiencing increased
demand for our equipment, including equipment that has been fully depreciated. Increased
demand for our equipment results in higher revenues and generally has no impact on depreciation
in the short term as our equipment is depreciated from the first month it is placed in service
until it is fully depreciated. Depreciation expense is recorded monthly whether or not the
equipment is actually generating revenue on a lease contract. During periods of high demand,
such as the one we are currently experiencing, our ability to lease older equipment, (including
fully depreciated equipment) is enhanced; whereas in periods of low demand, the opposite is
true. As a result, revenues and depreciation expense will not necessarily directly correlate.
Over the long-term, depreciation expense is impacted by increases in equipment purchases to
meet growing demand for our leased equipment. For example, we have been able to purchase
equipment at discounts through volume purchase arrangements. A lower purchase price results in
lower depreciation expense than in previous periods. These lower purchase prices are the sole
reasons for the decrease in our cost basis as the total number of units of lease pool equipment
have not materially decreased. On the other hand, although some of the equipment in our lease
pool has reached the end of its depreciable life, given the increased demand that equipment
continues to be in service and continues to generate revenue. Because the depreciable life of
our equipment in our industry is determined more by technical obsolescence than by usage or
wear and tear, some of our equipment, although fully depreciated, is still capable of
functioning appropriately. Currently, in our industry, higher demand is generating more leasing
revenue and older equipment is more in demand than in times past.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">In the years preceding fiscal 2005, when the industry was in a downward trend, demand for our
equipment was lower than it is currently. Now that the industry is in an upward trend, any
attempt to adjust depreciable lives so that depreciation expense can be paired with revenues
generated from the equipment now that it is fully depreciated would be inconsistent with our
prior practice and reporting. We feel it is
</DIV>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAX: &#043;1 936.295.1922&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>www.mitchamindustries.com</B>

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Page 12 of 12
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">more prudent to determine appropriate depreciable lives for our lease pool equipment that will
endure through frequent fluctuations in the industry.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">Finally, we do not believe that the market price of our equipment has decreased; rather, due to
our volume purchasing arrangements, our costs have decreased.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>7. Revise your statements of operations to include in direct costs &#151; seismic leasing the
appropriate portion of your depreciation expense associated with your seismic equipment lease
pool. Alternatively, parenthetically include in direct costs &#151; seismic leasing line item on
the face of your statements of operations, the amount of depreciation expense excluded from
such line item, which is included in depreciation and amortization. Refer to SAB Topic 11:B.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>Response</B>: Beginning with the 2006 Form 10-K, we will separate depreciation expense related to
our lease pool assets from all other depreciation expense and will include such amounts in
direct costs &#151; seismic leasing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U><B>Form&nbsp;10-Q for the quarter ended October&nbsp;31, 2005</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U><B>Note 3 &#151; Acquisitions, page 6</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>8. We note your response to prior comment 14. We note that upon the completion of your
valuation study on the intangible assets acquired, you will make an appropriate allocation from
goodwill to the intangible assets acquired. It was fully clear from your disclosures that the
purchase price had not been finalized. Please confirm that if your final purchase price
allocation results in a significant portion of the purchase price being allocated to goodwill
that you will provide a description of the factors that contributed to the goodwill being
recorded.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B>Response</B>: We confirm that there will be a portion of the purchase price allocated to goodwill
and that we will provide a description of the factors that contributed to the goodwill being
recorded in our 2006 Form&nbsp;10-K
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Should the Staff have any questions or comments, please contact the undersigned at
281.353.4475 or Michael A. Pugh, Chief Financial Officer of Mitcham Industries, Inc. at the same
number.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Very truly yours,<BR>
<BR>
<BR>
<B>MITCHAM INDUSTRIES, INC.</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;</TD>

<TD colspan="2" style="border-bottom: 1px solid #000000" align="left">&nbsp;/s/ Billy F. Mitcham, Jr.</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Billy F. Mitcham, Jr.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">President&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="center" style="font-size: 8pt; margin-top: 18pt">MITCHAM INDUSTRIES INC.<BR>
P.O. Box 1175 Huntsville, Texas 77342-1175 USA<BR>
<B>HUNTSVILLE</B>: &#043;1 936.291.2277&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>HOUSTON</B>: &#043;1 281.353.4475&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAX: &#043;1 936.295.1922&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMAIL</B>: sales@mitchamindustries.com
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>www.mitchamindustries.com</B>

</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
