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corresp

January 31, 2006

VIA EDGAR AND FACSIMILE

Mr. John Cash

Branch Chief

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C. 20549-0405

    Re:

    Mitcham Industries, Inc.

    Form 10-K for the fiscal year ended January 31, 2005

    Form 10-Q for the quarter ended October 31, 2005

    File No. 0-25142

Dear Mr. Cash:

     On January 10, 2006, Mitcham Industries, Inc. (the “Company”) received the comments of
the staff of the Division of Corporation Finance (the “Staff”) of the Securities and
Exchange Commission (the “Commission”) to Form 10-K for the fiscal year ended January 31,
2005 (the “2005 Form 10-K”) and Form 10-Q for the quarter ended October 31, 2005 (the
“Form 10-Q”).

     With respect to the comments, for the reasons stated in this response letter, the Company
believes that any revised or supplemental disclosure would not be material to the Company’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 31, 2006 (the “2006 Form 10-K”), rather than amending or
supplementing the disclosure in the 2005 Form 10-K or the Form 10-Q.

     The following responses are for the Staff’s review. For your convenience we have repeated
each comment of the Staff exactly as given in the Staff’s comment letter.

MITCHAM INDUSTRIES INC.

P.O. Box 1175 Huntsville, Texas 77342-1175 USA

HUNTSVILLE: +1 936.291.2277 HOUSTON: +1 281.353.4475 FAX: +1 936.295.1922 EMAIL: sales@mitchamindustries.com

www.mitchamindustries.com

Form 10-K for the fiscal year ended January 31, 2005

Management’s Discussion and Analysis — Revenues, page 14

    1.

    Separately quantify new seismic equipment sales and sales of depreciated
seismic equipment being sold from your lease pool. Also quantify the related cost of
goods sold associated with these sales. In this regard, we note you [sic] disclosure
that gross margins can be significantly impacted by the mix of sales revenue between
new versus depreciated equipment. Expand your disclosure to clarify why gross margins
are significantly different between new versus depreciated equipment.

Response: The Company has not historically differentiated equipment sales as new
equipment versus used equipment. The Company’s fixed asset ledger of lease pool equipment
has historically been maintained in an excel spreadsheet, which contains tens of thousands
of pieces of equipment. As a consequence, it would take an extraordinary amount of time
and resources to review the information and attempt to isolate the sales of new equipment
from those of used equipment and the related cost of goods sold associated with those
sales. Finally, the Company could not guarantee the accuracy of any information that the
Company could compile from such a review, in light of the manual manner in which the data
was input.

Sales of new equipment will typically have gross margins of 10 to 25%. The gross margins
on used equipment, on the other hand, will vary widely depending on the level of
depreciation for each item at the time of sale. The Company will expand its disclosure to explain these
differences in gross margins between new versus used equipment beginning with the 2006
10-K. In addition, beginning in the 2006 10-K, the Company will report Seamap
International Holdings Pte Ltd, one of the Company’s subsidiaries as a separate segment.
Seamap, which was acquired on July 12, 2005, derives substantially all of its revenues from sales of new equipment.

    2.

    Disclose the business decisions management considers with regard [sic]
selling depreciated equipment to customers versus holding such assets for lease.

Response: Our primary source of revenues is derived from short-term leasing of
seismic equipment. However, management periodically decides to sell depreciated equipment
to customers rather than holding such assets for lease. In making that determination,
management considers the type and age of equipment and whether the equipment can be
replaced with a newer model at a reasonable cost. Such sales allow the Company to upgrade
its equipment lease pool with newer equipment models. From time to time, management will
also decide to sell starter units to customers in hopes of attracting repeat business in
the future that might include those customers purchasing or renting additional equipment
from

MITCHAM INDUSTRIES INC.

P.O. Box 1175 Huntsville, Texas 77342-1175 USA

HUNTSVILLE: +1 936.291.2277 HOUSTON: +1 281.353.4475 FAX: +1 936.295.1922 EMAIL: sales@mitchamindustries.com

www.mitchamindustries.com

us. Occasionally, the Company will sell equipment to customers who have leased equipment
from the Company for an extended period of time and who desire to purchase the equipment
that they have been leasing. Management also considers the level of equipment inventory
and balances the potential benefits of selling used equipment with the need to maintain an
inventory level that will allow the Company to meet customer demands. The Company will
expand its disclosure to explain the business decisions management considers with regard to
selling depreciated equipment to customers beginning with the 2006 10-K.

Management’s Discussion and Analysis — Liquidity, page 15

    3.

    We note that you have had significant equipment sales during the last three
fiscal years and that these sales have had a significant impact on your operating
income. In this regard, we also note that your seismic equipment lease pool has
decreased significantly. Expand your discussion of liquidity to adequately address
how this decrease in your seismic equipment lease pool will impact your ability to
generate equipment leasing revenues in future periods. Address whether you will have
to invest in significant amounts of seismic equipment in the near term to sustain
equipment leasing revenue growth.

Response: The Company has been able to purchase new equipment for our lease pool
at lower prices in recent years through volume purchasing discounts, which has allowed the
Company to maintain a constant level of equipment at a lower unit cost. We do not anticipate
that we will need to purchase more equipment than we would customarily purchase in order to
sustain equipment leasing revenue growth; however, we may purchase additional equipment
should favorable economic factors continue to exist. The Company will clarify these
matters in its discussion of liquidity in its 2006 10-K.

    4.

    Provide a comprehensive discussion of your cash flows from operating
activities for each period presented. Specifically address the reasons for your
significant increase in cash flows from operations. This discussion should be made in
light of our comment below regarding discontinued operations.

Response:

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 that has affected our cash flows is 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’s hydrocarbon
producing basins, have improved market conditions and have increased demand for our
equipment. The Company will specifically address these and any other reasons for
increases in cash flows from operations in its 2006 10-K.

MITCHAM INDUSTRIES INC.

P.O. Box 1175 Huntsville, Texas 77342-1175 USA

HUNTSVILLE: +1 936.291.2277 HOUSTON: +1 281.353.4475 FAX: +1 936.295.1922 EMAIL: sales@mitchamindustries.com

www.mitchamindustries.com

Item 9A — Controls and Procedures, page 18

    5.

    We note your disclosure that your “principal executive officer and principal
financial officer have concluded that your current disclosure controls and procedures
are effective to timely alert them to material information regarding the Company that
is required to be included in your periodic reports filed with the SEC.” Revise to
clarify, if true, that your officers concluded that your disclosure controls and
procedures are also effective to give reasonable assurance that the information
required to be disclosed by the Company in reports that it files under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC. Alternatively, you may simply state that your
principal executive officer and principal financial officer have concluded that your
current disclosure controls and procedures are effective.

Response: Our principal executive officer and principal financial officer have
concluded that our disclosure controls and procedures are effective to give reasonable
assurance that the information required to be disclosed by the Company in reports that it
files under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Commission. The Company will clarify
its Item 9A disclosure in future filings to provide this disclosure.

Consolidated Statements of Cash Flows, F-6

    6.

    We note that cash flows relating to discontinued operations are not required
to be set out separately in the statement of cash flows. However, whether or not cash
flows from discontinued operations are set out separately, the reconciliation of net
income to net cash flows from operations must begin with net income, as required by
paragraphs 28 and 29 of Statement 95. Please revise your statements of cash flows
accordingly.

Response: The Company will revise its statement of cash flows to begin the
reconciliation of net income to net cash flows from operations with net income and we will
no longer disclose discontinued operations separately in the cash flow statement.

    7.

    Tell us and revise to clarify what the net book value of equipment sold
represents within your cash flows from operating activities. Reconcile the net book
value of equipment sold to the cost of equipment sales reflected in your Consolidated
Statements of Operations.

Response: The caption titled “Net book value of equipment sold” should be titled
“Net book value of lease pool equipment sold” and we will revise the caption accordingly in
future filings with the Commission. As previously mentioned, the Company’s records do not differentiate historical sales of new versus used
equipment.

MITCHAM INDUSTRIES INC.

P.O. Box 1175 Huntsville, Texas 77342-1175 USA

HUNTSVILLE: +1 936.291.2277 HOUSTON: +1 281.353.4475 FAX: +1 936.295.1922 EMAIL: sales@mitchamindustries.com

www.mitchamindustries.com

    8.

    We note you have no inventory reflected on your balance sheet, however, your
Management Discussion and Analysis and Business sections indicate that you have sales
of new equipment during the periods presented. Please tell us and revise to clarify
whether you had new equipment on hand as of each balance sheet date presented. If so,
quantify such amounts and clarify why inventory is not reflected on your balance sheet
and changes in this asset account are not reflected within your cash flows from
operating activities.

Response: The Company has not historically had equipment on hand at its balance
sheet dates primarily because it sells everything FOB shipping point and sales of new equipment are sporadic. In addition, the Company has
only sold new equipment when a customer has specifically requested the Company obtain new
equipment for that customer.

Note 1 — Organization and Summary of Significant Accounting Policies — Revenue Recognition of
Equipment Sales, page F-7

    9.

    We note that you buy equipment for resale in response to specific customer
orders and on occasion will hold equipment of third parties and sell such equipment on
consignment. We also note that SAP sells equipment, consumables and engineering
hardware. Please expand your disclosure to clarify whether you take title of such
equipment, and if so, why you do not appear to have inventory reflected on your
balance sheets. With regard to the sales of such equipment, please tell us and expand
your disclosure to address the appropriateness of reporting revenue gross versus net.
Refer to EITF 99-19 and address the indicators of gross and net revenue reporting.

Response: The Company does not take title to equipment held on consignment but does
take title to equipment sold by SAP. The amount of inventory maintained by SAP, however,
has been immaterial and therefore, the Company has not reflected such amounts on its
balance sheets. For example, at July 31, 2005 and October 31, 2005, SAP had equipment in
inventory valued at $135,000 and $180,000, respectively.

     The Company believes it is appropriately reporting revenues as gross because (1) it is
the obligor in the sales arrangement; (2) it has full latitude in pricing the product for
sale; (3) it has general inventory risk should there be a problem with the equipment being
sold to the customer or if they do not complete payment for the items purchased; (4) it has
discretion in supplier selection if the equipment ordered is not unique to one
manufacturer; and (5) the Company assumes credit risk for equipment sold to its customers.

MITCHAM INDUSTRIES INC.

P.O. Box 1175 Huntsville, Texas 77342-1175 USA

HUNTSVILLE: +1 936.291.2277 HOUSTON: +1 281.353.4475 FAX: +1 936.295.1922 EMAIL: sales@mitchamindustries.com

www.mitchamindustries.com

     The Company will expand its disclosure to clarify these matters accordingly in future
filings with the Commission.

Note 1 — Organization and Summary of Significant Accounting Policies — Sales Allowances and
incentives, page F-7

    10.

    You indicate that from time to time you offer incentives to customers as part
of leasing transactions. You indicate that these allowances and incentives are
accounted for as a reduction of revenue. Tell us and expand your disclosures to
indicate when the reduction to revenue is reflected in your financial statements.
Identify the authoritative literature you relied on with regard to credits on future
purchases and credits on existing equipment repair charges. We assume that free
equipment rent is recognized ratably over the lease term in accordance with SFAS 13
and FTB 85-3.

Response: In fiscal years 2004 and 2005, in connection with pricing disputes with
certain Canadian customers, the Company granted credits for rental
and repair of equipment to those
customers. The amounts were immaterial and the Company has discontinued this practice.

     The Company recognizes reductions in revenue when the credit is granted to the
customer. We relied on paragraph 9 of EITF 01-9 with regard to these credits on future
purchases and credits on existing equipment rental and repair charges. Free equipment rent is
recognized ratably over the lease term in accordance with SFAS 13 and FTB 85-3.

Note 1 — Organization and Summary of Significant Accounting Policies — Seismic Equipment
Lease Pool, page F-8

    11.

    We note that the estimated useful life of channel boxes is five years and
that for other peripheral equipment, the average useful lives is 2 to 10 years. We
have the following comments regarding these management estimates.

    •

    Please tell us and expand your disclosure to indicate whether any
salvage value is assigned to this equipment and if not, clarify why not.

Response: The Company does not assign a salvage value to its equipment because of
the likelihood that the equipment will have limited or no value at the end of its useful
life. For example, channel boxes are often subject to technological obsolescence. Major
manufacturers produce a new upgraded version of channel box technology on average every
five or six years. The production of upgraded equipment typically res