Q1 2020 Earnings Call

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These reconciliations along with his presentation earnings press release.

Four and a replay of this broadcast are available under the 40 Investor section of our website at Www Dot helix U.S.G. dr.

Well.

Hi, Good morning, I hope everyone else and their families are doing well one thing to say.

Oh, that's morning will review, our Q1 performance our operations in this challenging environment and provide our near term outlook.

Moving to the presentation slide five through eight which provides a high level summary of our results.

The first quarter.

Certainly been appointments weaker quarter for us with the seasonal slowdown of activity in the North Sea.

In an effort to maximize our earnings for this year, we made the decision to front load Q1, with five vessels dry dock recertification projects negatively impacting our results with a minimum of 73 days of loss availability.

In addition, we commenced operations on the Q 7000, West Africa, New vessel operating in a new region.

Excuse me.

Revenues in Q1 reported.

181 million with a net loss of 12 million EBITDA of 19 million.

The increase in revenues from Q4 was driven by the addition of the Q 7000 through our fleet working in West Africa.

Partially offset by reduced revenues and utilization well intervention Gulf of Mexico in UK regions.

The addition of the Q 7000 on an integrated project increase our cost basis combined with lower revenues in the UK in Gulf of Mexico has reduced our gross profit to 2 million.

We had several discrete items that impacted our results, including at 6.7 million charge for goodwill write all.

Kind of 14.1 million tax benefit related to the cares act another tax restructuring efforts.

Our results in the first quarter were better than anticipated.

BARDA up operations on the Q 7000 were outstanding with a little downtime on the vessel and the execution of our business units was exceptional.

Robotics and production facilities continue to look to deliver.

However, this is Ben to complete this has been completely overshadowed by recent market.

The impact that covert 19 on the loan market is unprecedented while the impact has been relatively minimal to our first quarter results the impact of coated mine team.

It will have on the remainder of 2020 and beyond will be significant.

The instability and predictability of our current market resulted in about withdrawing our guidance for 2020, while we're not yet in a position provide guidance at this point with this call and associated presentation, we will lay out the key data points as we feed them better currently influencing our business.

On slide eight.

Returning to our presentation.

From a balance sheet perspective, our cash balance at the end of the quarter was 159 million. We've been an additional 52 million in restricted cash associated with the short term LC.

As expected our cash flows were negatively impacted by the heavy load.

A vessel recertification costs during the quarter, our net debt at.

We ended the quarter increased to 183 million I'll now turn the call over to Scotty for an in depth. That's good discussion of our operating results.

Thanks, and good morning, everyone moving on slide 10.

Is it certainly difference in challenging times. However, we have written into the occasions in the first quarter was better than expected and periods considering the effects of the virus globally. The slow winter seasonal period, and we completed find reconciliations identification and other masons in five of our seven about what intervention vessels.

Devices cause limits that logistical challenges.

And just to keep the fleet fleet active currently work in six countries unfold continents and company operation on 12 vessels five well intervention vessels six RV support vessels and the HP, one with strong operational performance regarding safety and uptime.

In February and Swift response to the virus, we introduced strict measured set protocols on older vessels.

Shale craze Alliance partners and supplies have been fantastic can rise to the challenge.

I'll show personnel stock price I'd like to 14 days complete half documents before travel and the screen prior to joining the vessels.

In the UK to U.S. and visit we have recently been able to test SNL for device products are allowing access to the vessels.

Test kits constant we have to come by.

Once on board divested of locked is now somewhat different than before common areas such as Jim Landers incentives as a currently claims faced covering our always willing when nothing cabins, social space and MPP the data to meal times that restricted in the number attendance and to the last session distance and they thought they services of available.

Teams have undertaken to extend the life of shift patents to reduced travel and if anything any person shows any sense is related to the virus.

Hey, immediately currency and removed from the vessel. We also have decreased increase on the vessels continues declines in working accommodation areas.

Slide 11.

The first quarter, we achieved revenues of 191 million, resulting in the gross profits of 1%, resulting in a profits of team really.

Considering the effects of the virus the seasonal winter period in our fund regulatory maintenance period, we attend good levels of utilization.

Well intervention three achieved utilization of 72% globally robotics chartered fleet achieve utilization of 89% globally.

In the Gulf of Mexico to key 5000 completes that shed to five year inspection and the key 4000 convicted that shared with annual inspection.

Yes, as much for to find some numerous wells.

The North Sea business had five vessels currently expected seasonal warm stacking shed you mentioned experience and work to full clot customers on four wells.

The key 7000 had a very successful project in Nigeria, performing well with various with downtime competes in back on five wireless for declines highlights an exception starts up for new investments obviously system.

Divested in now now in transit to the warm that period.

Performance in Brazil was usually strong again vessels performed very well achieving high utilization of 99% Weve excellence uptime.

Robotics chartered fleet was very active working between RV supporting renewable works competes in 405 days of utilization across eight vessels with fourth of vessels working outside the oil and gas market.

Again, we are ready proud of our heat exchange and partners. Our offshore teams I follow not climates and kept the fleet performance and our onshore staff has done a great job working remotely supporting all of our businesses. We are still very active globally. However, this is a challenge in time and will commence cost reduction programs and as the markets evolves, we will right size to accordingly.

Slide 12 provides a detailed review of our operations for outlet intervention business in the Gulf of Mexico.

The key 5000 that 51% utilization after completing its shed five year inspection program and then performance to our ultra deepwater intervention works for two clients working on a one enhancement project for one client and forming environment for another client.

The helix Sanjay jointly on 15 KRS system is currently mobilized to the key 5000, and we now commence went for BP and contracted for the remainder of the year.

The key 5000 that as a fully integrated Sanjay spread on the vessel and we let's continue working closely with Schlumberger products and interest initiatives to multi screen in our staff to reduce headcount and ultimate costs.

The key 4000 performed well with 68% utilization and ultra deepwater completing the multi well program for one clients and then completed its planned regulatory inspections vessel that went straight back to work undertaken production enhancement work on two wells.

Moving to slide 13.

I know Stephen intervention business performed well coming out of the seasonally warm stack and maintenance period split in the harsher winter conditions on both vessels.

Lung cancer achieved 63% utilization working for one client working for one clients on one well completion scheduled maintenance join it seasonally expected the vessel bank recommenced work.

For a major clients.

The seawell achieved 34% utilization, forming shchedrin announcements during the seasonally warm stacked period commencing multi well abandonment work for two points.

The key 7000, Mobilizes someday services equipments arrived in Nigeria in early January.

Enough, declaring customs, increasing regulatory inspections and final final Cline test in the vessel infant high at January 20 foot and competed production enhancement work on four wells in the quarter.

The vessel completed the project sites in five wells in mid April and is currently in transit to a one lab.

Moving to slide 14.

In Brazil, our operations for Petrobras continues to go extremely well and again produced another quarter of operational excellence with continued strong performance regarding safety uptime inefficiently efficiency.

We are currently ranked the number one rig contracted for Petrobras.

In the first quarter the same hynix, one achieved 90% utilization working on four wells one wellbeing production enhancement works and working on three wells performing abandonments.

The Siem helix to achieve 99% utilization working on four wells performing production enhancement skirts on two wells environment, where it's on two wells. The vessels are completed shed shipyard nine centers during the quarter.

Moving on to slide 15 from robotic surgery Robotics continues to go run is looking to have a solid year. We're continue to diversify robotics business internationally with numerous works that are not oil and gas related.

In the first quarter the vessel charter fleet utilization was 89%, including 272 days from spot vessels free vessels are utilized nicely renewable energy projects in the North Sea the Grand Canyon, CMV Pride worked and yet the APEC region and the rest candies operated in the Gulf of Mexico.

And the APEC region, the Grand Canyon. So you had 100% utilization performing works on RV support projects Dnbi.

The MD projects currently working in Australia undertaken an interest in 70 day to day salvage project.

Ross can these at 53 days utilization, where can RV support for free clients in the Gulf of Mexico.

And then they will see the Grand Canyon free had 46% utilization.

Working 42 days in renewable Trenching. We also continued work from two smaller spot charter vessels decline law waving the christenson throughout the quarter working on alongside wind farm site clearance in survey project.

It's exciting to share how we're expanding our new service offerings lightly and contract another service of other than just changing.

Susan.

Now also been awarded our fresh and it will trenching project in the USA mobilizing the T. 1200, Trenching unit to the client provided vessel. This week in the UK to transit to the U.S. East Coast. We've also just signed a contract adding significant trenching backlog at inside of the work and Twentytwenty, two and Twentytwenty free in Europe.

Slide 16.

Now, let this slide detailed on the vessels Arvind trenching utilization Crs Prudence I'll now turn over the call to Eric for discussion on our balance sheet and now twentytwenty outlets.

Thanks Scott.

Slide 18 outlined for debt instruments and their principal maturity profile during the first quarter, we extended the maturity of our Q 5000, low until January of 2021 extension was completed to align the debt maturity with our expected cash flow generation in the second half of 2020.

Moving to slide 19. This slide provides an update on key balance sheet metrics, including long term debt and net debt levels as as the first quarter. Our net debt in Q1 increase to 183 million from 143 million in Q4.

The increase in net debt during Q1 was driven by the incurred recertification cost of our fleet approximately $18 million and capital expenditures during the quarter approximately 12 million.

We reduced our long term debt by $13 million, our cash position at the end of Q1 was 159 million, excluding $52 million of restricted cash.

At quarter end net debt to book capitalization was 10%.

Moving to slide 21 for our discussion on our 2020 outlook.

Our industry our market is an unprecedented.

Territory in late March we were to our guidance for 2020 with a clear expectation that being cash flow positive in 2020.

Lack of stability that led to that decision to withdraw guidance remains today, even to a greater extent.

Our expectations have not changed although we will not provide guidance today as we had hoped.

Therefore, we are focusing on providing the details of our business as we know them today that serve as our foundation to our current expectations.

Our contracted backlog for the balance of 2020 is approximately 400 million.

Although subject to change we expect the majority if not all of this contractor work to be completed in 2020.

Providing more color by segment in region first with our well intervention segment.

UK North Sea, we expect this region to be a one vessel region for the balance of 2020, well enhancer has contracted work into Q3 with spot opportunities. The seawell completed contract work in Q2 and will be stacked until work reserves with discussions providing upside ongoing.

Q 7000 has successfully completed its first campaign in West Africa. The work has has been the add on work has been suspended and the vessel will be warm stacked until work resumes whether in West Africa or another region.

In the Gulf of Mexico. The Q 5000 commenced operations for BP and is expected to remain on higher for the balance of 2020 Q4 thousand has contracted work into Q3 with the likely charging spot market thereafter.

In Brazil, the CMP lets one and siem helix to higher for the balance of 2020.

Moving to our product segment on slide 22.

Robotics is thus far been mortgage brilliant in this market that well intervention.

Work into renewables wind farm sector continues mostly undeterred by current events.

Project Awards have continued during this time, providing much needed signs of continued work robotics is certainly expected to be impact by the slow down in oil and gas work, but the continued reductions in costs and the activity levels in the removals market are mitigating a significant portion of the impact to date.

The Grand Canyon Twos on contract through April is expected to have good utilization the remainder of 2020.

The Grand Canyon three is currently working with contracted Trenching operations made through September Ross Candies is expected to have good utilization through trigger exploration in early Q3.

Our windfarm surely insight clearance project using to be close is expected to continue into Q4 revenue production facilities. The HP ones our contract balance for the balance of 2020 with no expected change.

As we have previously stated we will we will aggressively move to reduce our cost commensurate with the levels of work activity by assets in overheads.

Tenure is 5.3.

We have lowered our capex forecast to approximately $38 million for the year, comprising primarily of the reef certification costs of our vessels.

Joining of which has already been spent in Q1.

Reviewing our balance sheet, our funded debt is expected to decreased by 33 million. The remainder of 2020 as a result of scheduled principal payments.

With the recent completion of the Q 7000 campaign, we expect our restricted cash to be ruling released in the near future.

We also anticipate tax refunds in the model of 16 million. The next 18 months as a result with the tax changes from the cares Act.

I'll Skip slide 25, albeit for your reference this time I'll turn the call back to our for closing comments. Thanks, Eric will first I'd like to applaud and thank all helix personnel that may be listening in as the virus continued to spread globally. Our initial focus was on safely maintaining offerability.

We established.

Protocols and evolve to utilization of testing to keep 13 vessels in six countries on four continents Offerable, we've avoided and tractions on most of our vessels and of course and contained outbreaks on two vessels without a loss of any meaningful productive time.

Our operations team have done an outstanding job our offshore personnel have demonstrated a flexibility patients and resolve to keep operations up our AOS office personnel have adopted to be very efficient working from home and our IP Department has enabled us to make what seems to be a seamless transition.

So my thanks to everyone involved.

We previously our world, we have purposely planned greater than historic levels of maintenance periods on our vessels. During this past quarter. So from the outset, our expectations were slow quarter in spite of some everything that transparent transpired in such a short period our people are producer.

Order that exceeded our expectations.

He said that I realize that there are three issues that in grocers are primarily inter interested in outlook cash flow in debt.

Our fire Fireside chat a few weeks ago.

We said that we expected read free cash flow positive in 2020, and 2021 and that we would give more detail, let our earnings call.

Given the changing environment, we continue to speak with our clients continue to reviewing our contract provisions and continued stress testing of our financial models, all of which have reinforced our previous assumptions and let me just say we have we are not really.

Focused on trying to zero when exactly on what we think our guidance could be this year. Our focus is really been on running various sensitivities of worst cases.

To assess our our needs and what our future looks like.

So that's the that's another reason why the guidance is not out right now as we're really focused on the downside.

We continue to believe that will be free cash flow positive for 2020 and 2021.

Beginning of this week, we thought we would be in a position too.

As announced guidance for 2020.

Based on primarily our contracted backlog with minimal.

Additions from any thing from the spot market.

While we considered that Max storage might be reach that due to actually start to occur and we're starting to see the results what that light might look like this last Monday.

So as everyone knows Lance.

Landscape continues to evolve over time, and where no. One knows is what will happen now.

We can share some of the broader assumptions that we were and are considering and our modeling.

Our under outlook, we were considering that Max storage would be filled in the near term.

We consider that the impact from recovered 19 on shutdowns and therefore demand could extend through the end of Twentytwenty.

Reopening efforts might produce a sharp, but relatively modest uptick in demand on a negotiation, but would be hampered by a virus construction rate induce start stop cycles lagging consumer confidence and capacity to spend.

This would especially be true for deep recession occurs.

Thereafter, we think demand might build at a slow rate until an effective therapeutic vaccine as available.

Shutdowns could before they will be forced on the industry. These shut ins might not be uniform.

Our made disproportionately impact shale small independent producers without a downstream refining capacity.

Demand.

Rises so tends to be restored, but where the loss of capacity due to bankruptcies access to capital lack of capital spending reservoir of damage and decline.

Structural damage to supply should not be under estimated limiting the ability to restore supply the previous pre crisis levels.

Offsetting this those that demand may also not recovered to pre crisis levels.

Shut in production will compete with stored oil depressing oil prices until demand exceeds production in storage is reduced to a rational level oil prices gradually increase, but perhaps not to a level that promotes new development.

This process could take place over 12 to 18 months and likely only begins with reopening in earners.

Our best guess would be early 2022 with producers starting to spend ahead of this in anticipation.

We would expect offshore, especially in regions with ready access to markets are having an oil quality in high demand would be less effective in fact, some of our clients are giving signals that they intend to proceed with intervention work as usual, but we'll have to see how that unfolds.

Well as far as free cash flow is concern using these conditions.

Which are not there again this is our sensitivity testing.

Using these conditions Weve stress tested models, we've looked at each region as the impact will not be completely uniform.

Our conclusion is that we need to be prepared for a sharp decline in work volume in the second half of Twentytwenty that continues through most of 2021.

Our work is like for field work falling under the producers Opex budgets most of our work involves keeping the wells flowing and remediation while reduced commercial reality may advance the timing of required peony work. We believe that much of this might be allowed to be deferred some operators may seek to take advantage of low cost.

To abandon but at this point, we don't see tremendous boom in abandonment work recurring.

We've had several projects planned for the second half of 2020 deferred into 2021.

And we're receiving request for a rate does discounts, but we've had very little in a way of contract terminations.

Our rates never fully recovered from the downturn in 2016. So this time around there is less margin for EBITDA destruction from discounting, but we have taken into consideration.

We've spoken with our major long term contract holders and so far we believe there secure.

We were hoping to issue revised guidance today, however, the industry entering territory, that's never been seen before.

And then instead of running the risk of providing more precise but in an accurate guidance, we'll continue to observe the market in our clients reactions and assess the validity of our assumptions.

Applying what's been outlined here and barring further degradation to our outlook. We still believe we should be able to manage to a 2020. EBITDA result that is free cash flow positive. We also believe that 2021 will likely be our troughed here.

But we should nevertheless be able to manage.

And be able to remain free cash flow positive through 2021.

With regard to our debt, we have $423 million funded debt obligations, we plan to pay down 33 million during the last three quarters and 2020 and have another 91 million in 2021.

We anticipate being able to maintain a strong because that cash position on the balance sheet at year end 2020 and 2021.

With an outlook of remaining free cash flow positive through this period, we should be able to meet our debt obligations out of cash on hand, and cash flows were not completely dependent on refinancing or rolling into.

This does this does not mean that will sit simply sit back and wait though we are and will be seeking possible solutions for restructuring of our debt Bedford volumes investors with confidence in our ability to meet our obligations.

Our strategy remains the same of as it has been which is the use our cash and cash flows to reduce debt. We no longer have significant cash capex obligations as we did going into the last downturn.

We were anticipating the time, when we would be strongly free cash flow positive and to return value to shareholders.

Thats still our ultimate goal.

But we're going to have to be patient profile, probably a few years out as our previous goal of getting to net zero is now more like.

At free.

There's no way to sugar coat, what's happening so try to only to be is realistic as possible. However, there is a silver lining I expect emerging on the other side of this will be a much leaner oilfield service market with diminished capacity for supply.

Services should be in high demand and rate and utilization recovery may well be faster than what we've been seeing.

Helix would be in a good position to be a significant beneficiary of this.

We may in fact, the further along in realization of our earnings potential at that time, and then we would have been under the circumstances of the past couple of years, continuing as we've had to deal with supply over hit overhang and Neoepitopes sector.

Bottom line is that we expect that we'll be able to manage this environment in the way that generate free cash flow based on our contracted work of with minimal reliance on the spot market.

And we have a plan to address our debt maturities going away that doesn't rely on major market recovery or other aspirationally factors.

We believe we're in a position to whether this latest storm and are committed to do whatever it takes some emerge on the other side so with that I'll turn it back there. Thanks Ellen operator at this time will take any questions.

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One moment. Please for my first question.

And our first question comes from the line of Ian Macpherson. Please proceed with your question.

Thanks, Good morning.

Good morning, Alan.

Got it thank you for the.

The blunt commentary.

You know I think coming into the year. Scott do you had mentioned that we would you were expecting a habit I think you said 60% of your.

Activity oriented towards intervention.

Maybe little bit more than that I don't know if that's changed much and I hear you.

And that.

Do you expect DNA obligations to be deferred in this environment, but my question is.

Is there a window of opportunity now to.

To transact four assets and this oil price environment, whether you did with marathon on drugs get yours.

Is that commodity price.

Two on accommodative too.

We continue that part of the business strategy right now.

I think that remains to be seen in prior to Monday, we were actually getting calls of interest.

So.

If you had asked me on Friday, I would observe though it's becoming very interesting the pause possibilities. There on Monday of course of everything blew up and everything went on pause and we're probably in a period right now of everyone just sort of blood typing to see where everything settles, but yes when when can.

Moderately.

Prices drop.

To a point, where the expected liabilities of abandonment.

Hi.

And we have a lower cost of abandonment there they're creates an arbitrage there for us to realize value of so I think we are entering a period, where we'll be very open to taking calls and talking with produces about what's possible.

Yes, I mean, it just strikes me that the opportunity the sharp utilization is one of the biggest levers you have right now in terms of preserving an EBITDA floor.

And.

Yes, I think my follow up question would be maybe you could just update us on what your.

Flexibility on on vessel costs is as you.

I have to tap dance between ready.

Active vessels and warm stacked or if you go maybe a little bit cooler than warm what is that range of variability on variable costs as you have it or think about longer term.

States and readiness per per on maybe on a per vessel basis would be that uses for for us to digest.

I'll say that let me say.

Currently our plan is that really warm stacking the key 7000.

Lukewarm stacking the seawell until what comes back we're in discussions with clients fueled by for those vessels to have work later in the year.

That we have to wait and see if that comes together.

In the range of stack cost from home see sort of code is anything from a low twentys bands at about 4000 today.

Okay.

Less than usual up pricing cost.

And I'll just add to our sensitivity is sort of based on the of the possibility of stacking three vessels.

Whether or not they remain in stack or they come out for work is yet to be determent of so for instance, and see where we're starting off with a warm stack here because we are talking with producers about or further on this year, although we're not considering that that work would just be considered upside to our current expectations.

So we will will remain in cold stack and if the work falls away than it would revert to cold stack. So it's not possible for us to give you a number of days on specific vessels as to what will happen until the market unfolds a little more.

Understood. Thanks on but the three vessels at your that you're looking at would be the Seawell then to 7000, what's the third one.

Oh, possibly the Q4 thousand but thats very uncertain at this point because of the Gulf of Mexico, we sort of to the Gulf of Mexico remaining a little more active.

Just.

We like we're in discussions with clients. The key 4000 has work into August we're in discussions with four clients who work after that.

In the North Sea, we're in discussions to typically around the works for the two vessels. This morning aligned we were awarded a 30 day project for one of the vessels that has said right on what city. The bus companies. So it's not like the markets that we're in discussions for these vessels when just taking a look at it.

Good. Thanks, Thank you guys and answers appreciate it.

Our next question comes the line of Mike Sabella. Please proceed with your question.

Good morning, Hey, good morning, everybody.

Just kind of local we could talk for you touched a little bit on on capital allocation. We can all look out there the price year debt today.

Could you just walk us through sort of the options you have with respect to maybe thinking about bringing some of that in early.

Is there any limitations that you have in your credit facility that would stop you from doing so.

We don't have any limitations under the credit facilities is normal workover.

Right.

Well, let me tell your our Capex for this year, we have lowered from 50 down to 38 or 38.

Most of that was already spent in the first quarter because of the high maintenance period. So we have a relatively small tranche left for the rest of this year next year. Our expectations are that is going to be somewhere between 15 and 20, so you'll see another reduction in capex at that point and.

Nice and so we are reducing we have reduced the capex expectations and.

I'm not understanding the move forward, we do have some flexibility on moving dry dock around which would affect capex, but we only have one.

Maintenance period for next year that I'm aware of.

And then specifically around around potentially bringing some of the getting early.

Oh, Okay, Oh from that standpoint.

We currently have here with them.

Like our mentioned 33 million still scheduled to pull off this year 91 scheduled for for next year. So we are being aggressive on paying that down.

No I think other than that I do think that there are certain requirements within our credit facility as far as maintaining liquidity and things of that nature. If we were going to try to accelerate any of the debt at.

Thats out there in 20 to 23, so that I think there would be.

Certain requirements, we would have to meet yes, Im sorry, I thought I thought you were talking about Capex enough capital allocation, Mike My apologies.

Yes, no worries that I, probably asked the question.

Yes poorly.

And then if we just go you start thinking about the robotic segment. I mean are we positive you're confident that we can maintain positive EBITDA.

In the segment through the cycle as we kind of think about fixed cost in this business.

Should we be thinking about EBITDA.

In the segment level.

So robotic slightly said, we were expecting quite a sell digit income.

There's a lot made in parts of the robotic side in the business that we've expanded our offerings into renewables side. The trenching season looks pretty good in the North Sea GC twos on higher OEM and APEC.

And we picked up some of the spotlight clearly set the price cut in Western Australia. So we should expect that our EBITDA reached somewhat in line with nexgen, but so sent down since some of the cost reductions environment last year. So that's some the cost reductions we've had and I cannot renewable services I think also remember in previewed so earnings we.

I mentioned that this year was expected to be or an off year for trenching for us with the recovery and 21.

That's perfect. Thanks, guys.

As it reminded you Register fun question. It is the one followed by the four.

And our next question comes from the line of Michael Massey. Please proceed with your question.

Hello, Yes. My question is in regards to gross margin I noticed for Q1, it was 1.1%, but historically, we have a 14.5% gross margin I just want to know if you got to speak to why the margin was reduced so much this first quarter.

Yes, I think we if you look at at our historical performance. If you go back five years.

Our gross margin fluctuate by quarter, usually the first and fourth quarter, which are the quarters that we have challenged utilization our margins are lower and I think that was the case here in the first quarter.

We the vessels the Q4 thousand Q 5000, which worked in the fourth quarter.

Hi.

Had I think about 70 plus days of of idle time as they did their.

Dry dock recertification caso idle idle asset utilization definitely hurts us in that in those standpoints.

That with the addition of the Q seven to our cost basis.

Really drove our gross margin down in the first quarter.

Alright, great. Thanks.

Our next question comes from the line as Sri Nadesan. Please proceed with your question.

Hi quick question can you clarify the 52 million of cash in restricted cash and then do those restrictions come off in what conditions.

So that was restricted cash that we had to put in place for.

LC related to our work in West Africa on the Q seven.

That work is completed on the vessel has left the region.

So we expect that LLC to be released here in the near term.

Thank you.

And there are no further questions at this time I'll turn the call back to you for your closing remarks.

Thanks for joining us today, we very much appreciate your interest and participation and look forward to having you on our second quarter 2020 call in July Thank you.

That does conclude the conference call for today, we thank you for your participation and assets you. Please disconnect your lines.

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