Q2 2020 YPF SA Earnings Call
Well to begin shortly please continue to standby. Thank you for your patience.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Q2 2020, why P.S. earnings Conference call. At this time all participants are in listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session. You want me to press Star one on your telephone.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker Mr. Santiago Wesson with Investor Relations manager. Please go ahead Sir.
Good morning, everyone and welcome to wipe, yes second quarter 2020 earnings call I Hope you on your family's RC.
My name is on deal wishing I am the new Investor Relations manager of wipe yes.
Let me start by saying that it's my pleasure touching wipe Ya largest leading energy company, Argentina I'm also here today would be shouldn't wanting some chairman of the board Citic, a film DCIO wipe, yes, I'm going to come to see if all the company before we begin I would like to draw your attention to our cautionary statement on slide two leased it.
Because he regime that our remarks today and I'm sure suit abortions, maybe forward looking statements, which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplating by these remarks also noted the exchange we're using calculations to reach our main financial figures in dollar terms.
Our financial figures are stated in accordance with a year for us but during the call. We might just got some known I first measures such as adjusted EBITDA I will now turn nickel tuition.
Thank you sendero for your introduction.
Welcome and thanks to all of you for joining this call today.
Before entering into the specifics of the oil and gas sector in Argentina, where a company does most of its activities.
Let me start this introduction by saying that.
After six months ago negotiations I'm following this change.
Numbers restructuring proposals from both sides.
Argentina has reached an agreement with the Threed mainboard coordinators groups of Wall Street to support the sowing the restructuring on always the fourth.
I wouldn't potential default.
Okay goes well have until August 24 to a deal Bose.
We are optimistic about the outcome of this negotiations.
No bondholders and Argentinians would benefit from a successfully agreement.
Paving the way for large ours Indian companies like life year to return to international financial markets.
That's it seems so less person donation to the markets. We have seen coal it could be 19 pandemic cast unevenly evolved.
He has hit car almost all geographies, including the U.S., most Latin American countries and in recent weeks. The news are showing you outbreaks in some European countries that Headingley left behind.
Look the measures weeks area.
As you may well be aware, Argentina has been since March in different stages look down depending on the provinces and examination of the speed of the speed of the virus.
Loved them was intended to flatten the curb positive cases at a very early stage.
As Dan cases have continued to increase but in a slower pace than in other geographies and with a lower fatality rate mainly concentrated in the C. diff Warner Sars and the grade Wanna Cerus area.
We're still highly exposed to do iris, but quarantine measures are becoming more flexible in some parts of the country considering the impact on economic activity.
And with the government enforced trying to be extremely precise meticulous throughout the emissions and procedures to contain the virus.
In this scenario, we have seen coal demand for our products.
As to recover from the Nishu stage models, we are reaching yet the normal demand levels.
As you all know the Argentine economy has been heat by several economic crisis in recent decades, but this time around demand for refined products has been hit hardest even comparing with the impacts of the 2000 and won 2002 crisis or the 1989 hybrid.
Malaysian price.
Even though we're still confident that as could be 19 contagion Kirk starts to flatten a normal economic activity resumes demand for approach, we would cover and production will go up.
But as we have seen in other parts of the were the timing of dependent make evolution cannot be predicted so must be formal attentively co things develop.
Before leaving the floor to the management team, which will be percenton why be F. second quarter results. Let me just say that both myself and the board of directors. We are satisfied for what has been done.
Where continues to be done Studer company in extremely difficult time, your oil and gas industry is going through all over the world.
We remain very optimistic for the best energy potential apart that Argentina holds including the incredible opportunity to became to become a net.
Oil and gas exporter by fully developing the back I'm more to shale play having said this let me now switch to sit here from D. quite <unk> CEO and I haven't got level might be a CFO, who will go on with the presentation. Thank you very much.
Thank you and good morning, everyone.
Oh, you and your families are staying safe in this tough times.
In the middle of this unprecedented crises for the industry globally.
We are optimistic on see significant value potentially might be if.
I'm going to taking the actions required for another you gave the short term onto cuts or devaluing the long term.
First of all I want to thank the women a man of wipe yet for the resilience and indication during this unique circumstances.
Unexpressed my price.
Not all in what do we have achieved but also in what do we contributed for the holiday.
The community, where we work on live.
I say already stated during our last earnings call.
Protecting our people is not the only a top priority, but also core value for us.
I will talk Cobi Committee.
Led by our Vice President of Health safety on environment.
Has established.
Protocols and procedures to assure that critical services on operations are maintained with that most chaos for our employees suppliers and customers.
My operating on their minimum safe money mode, we have reduced the number well employees.
Currently 97% of the personnel, whose positions and not require face to face interactions are working remotely.
We also monitoring the health of our employees on contract doors on a daily basis to prevent contagion and we have adopted shifts to minimize the stop turnover on transit.
I would also like to highlight.
Now the injury frequency rate keeps improving understood. Our the zero point 15 for the first half of Twentytwenty.
Okay, and pina as well as many other countries.
Has been under his trick.
Look down Messrs since March to prevent contagion onto reviews, the pace of the virus.
Now with the reduce mobility, we have experienced.
A big drop into demand for our products.
Since day, one because taking preventive measures to mitigate the impact on our operations.
So our cash position on the strengthen our balance sheet.
We have temporarily broad drilling and completion activities.
To halt uninsured storage capacity for the excess oil on refined products.
In this challenging environment, our oil and gas production costs decreased by 9%.
However.
Demand for refined products is starting to recover on following improved pricing conditions, we should resuming drilling and completion activities in the short term.
Let me just.
Regarding gas production.
Not the government has recently announced that it will be launching shortly in U.S. plan to improve prices stability and contractual terms for producers in Argentina.
This will be key to increased cash flow generation to develop our boss natural gas reserves.
We are fully aware that two active sustainable growth, we must become more efficient and agile when react into changing market conditions.
Improving resilience our leadership in the industry with it I think you'd relationship with all our stakeholders.
We must become leaner in order to be able to move faster.
Since appointed as CEO I have been devoted to ranging wipe here back to basics.
Revaluating our portfolio onto rate in the fundamentals for future growth, we're focusing on our roads assay highly efficient oil and gas company.
That is why.
We have been reshaping the way in which the company works.
Pushing for structural changes on redesigning our operations.
As an example, the upstream business gossiping decentralized.
Divided into two vice presidencies.
One for conventional operations on another four unconventionals based in new can problems.
We have also hurt encourage diversity in the workplace.
Which hassle pharma to realize.
Additional board ammonia as usual roles being held by women bolting White beer and its subsidiaries.
We have also started unprecedented companywide cost reduction program.
Which includes an open on Frank dialogue with unions towards everyone adapting to this new normal.
Internally, we have temporarily reduce salaries in a range between 10% to 25%.
Over the voluntary retirement program.
At the same time, we have put together a system of over 150 special cells.
To review all of endorse constructs aiming at cost reduction and efficiencies.
We are uniquely positioned to leverage a larger scale resource with world class characteristics on quality with both conventional and unconventional operations in a strong foothold.
We're refocusing on the Vaca Muerta sale play.
Targeting not just the domestic market, we've done met new energy needs.
But international markets as well.
We are pursuing a unique opportunity to transform Argentina into a net oil and gas exporter in the near future.
At the same time.
Long term financial instability remains a key priority.
To that and we have reduced our capex to maintain healthy cash position.
And also keep in net financial debt on check.
Furthermore, in July we proactively address our 1 billion dollar debt maturity on March 2021.
We successfully executed the market friendly liability management exercise.
Right.
On acceptance level of 58.
0.7% significantly alleviate in our short term refinancing needs.
For the rest of the year, we expect to manage our activity on capex level in line with keeping our net financial debt levels within the range seemed for the last 12 months.
Thus oil and gas production should stay at current level, we'll have a slight decline.
In summary, I'm confident that bias during the company through this critical times.
We will remarriage much stronger with a leaner more efficient operation.
On a healthier and more sustainable financial position.
The management, our leadership team that we have form.
Haas full confidence in our ability to respond successfully and create new era of growth and value for all stakeholders.
Once again.
Thank you everyone for joining us today and now I leave the float will handle.
Thank you so here and good morning, I also hope yellow safe and healthy.
Let me start by saying that the DC tremendous or not to close this call us new CFO of white here.
Joining the company just two months ago.
With regards to this quarter's main financial figures that were fully impacted by the effects of that dynamic.
Top of the list our revenues contracted by 47% year over year and 31% in comparison to last quarter to $1.9 billion with all our segment following the downturn.
Particularly relevant to highlight is the higher than average decline field sales, including diesel gasoline and jet, which constructed by about 50% in comparison to the same quarter last year, primarily on the lack of significant lower volumes as it will be shown later on in this presentation as well as lower dollar equivalent the prices.
Our products.
This decline led to a reduction in the shared a fuel sales in relation to total revenues to 52% for this quarter from over 60% in the previous one.
To compensate the severe decline in revenues as stated earlier by Sergio we have committed to a companywide structural cost cutting program that started to show its effects during the second quarter, but to a minor extent.
Consequently, while total cost have decline, particularly in areas of purchases of primarily crude oil to third parties and royalties to provinces.
They did not follow in the downtrend as much as revenues did.
However, I would highlight that on a per unit basis on the upstream segment. Our average lifting cost stood up 9.4 dollars there boy during the second quarter, which represent a 24% decline when compared to the same period of last year and 17% versus last quarter.
The net effect of the evolution of our revenues and costs resulted in a significant deterioration in our EBITDA as I will go through in more detail in a few moments, but for now I would refer to a significant reduction in capex for the quarter, which wasn't necessary to preserve our cash position and our long term financial sustainable.
Total investment during the quarter reached $162 million, representing an 82% year over year contraction or 73% when compared with last quarter's figure.
This was mainly driven by a full stop in drilling completion and closing of wells within the upstream segment.
Once again, we decided to prioritize financial sustainability over growth and to that end focused on keeping net financial debt within manageable levels.
This was particularly important by the end of the second quarter ahead of the successful exchange offer executing during July on our long 1 billion International bond do much 2021, which significantly alleviated our short term financial maturities.
Consequently at the end of June our net debt to that $7.4 billion or the about $250 million below the level at the end of March primarily as a result of an increase of nearly $150 million in our consolidated cash position.
Mainly driven by the construction in sales our adjusted EBITDA reached $28 million for the second quarter.
It is worth mentioning that this figure does not include nonrecurring items, such as the $65 million related to the sale of an 11% stake in bundu were sold on a social adjusted by certain items, that's how the different treatment on our financial statements based on accounting rules as a comparison reported EBITDA was slightly higher.
Yeah and stood at $171 million for the quarter.
Now let me now to go briefly through the main drivers for each segment before we move specifically to each one of them later on in this presentation.
Upstream was the most affected business its adjusted EBITDA contract is a 79% year over year, reaching 156 million donors.
Adjusted EBITDA margin for the segment stood up 19% versus 44% a year ago, and 37% reached last quarter.
Well this business benefited from lower lifting costs are lower royalties. This affects what outpaced by lowered production and lower transfer and realization prices for both crude oil and natural gas.
Adjusted EBITDA for downstream contributed $123 million in the quarter declining by 16% versus the same quarter of 2019.
The segment was significantly affected by a steep decline in demand, particularly gasoline diesel and jet fuel and also on prices have they been as measured in dollars.
Nevertheless, this segment was able to largely compensate this effects through significantly reduced purchases of crude oil both volumes and prices by a fierce mainly on volumes and diesel imports are primarily adjusted by prices all of which permitted to maintain a relatively stable margin at 8% compared to.
9% average for the last decade.
Indicates have gotten energy the negative evolution of adjusted EBITDA, which resulted in a 128 million dollar loss for the quarter was primarily driven by a deterioration in results coming from our subsidiary Metro less due to the lack of studies increases for over a year on the noncash accounting permission.
Of about $120 million related to the likely congressional rejection of precedential degree 10 53.
This degree stage that the central government is responsible for indirectly compensating natural gas producers for FX adjustments that were not allowed to be passed through to consumers back in 2018, and hence its potential rejection by Congress could impact the recoverability of our credit.
On the corporate and elimination segment, we had a negative net impact for the quarter of $122 million, primarily resulting from a significant adjustment in the value of inventories of crude oil and products on lower prices and net negative results from Nonconsolidated subsidiaries.
And finally moving beyond the adjusted EBITDA. This quarter, we registered an impairment in our natural gas assets for a free it pretax total amount of 850 million.
Finally, a lower long term expected prices, even despite the potential improvements on the back of the recently announced new blank asphalt.
Going into upstream and associate Minjun total hydrocarbon production declined by 9% when compared with previous here.
Both crude oil and natural gas production constructed while natural gas liquids output increased.
Crude oil production went down by 10% year over year to 201000 barrels of oil today.
This represents a decline of 23000 barrels per day with conventional declining by 26000, well unconventionals compensated with an increase of 3000.
On the natural gas front production came at 35 million cubic meters per day, a decline of 13% versus the previous year, primarily as a reaction to lower market prices a supply overcome in their natural gas market remain in place.
Regarding our crude oil realization price it averaged 28.9 dollars per barrel or 51 person down from the previous year, but the price evolution show to be at trends during the quarter.
During April local prices were full impacted by the collapse in Brent and lower demand in the local market, we average prices settling below $20 per Butler.
However, oil prices got supportive from May 20th onwards on the back of the enactment of proceeds Inshell urgency degree 48, which is known as Buddy could you show, which established a minimum reference price for me I need to quality good at $45 per Byron.
On the natural gas side and still as a consequence of excess offer market prices would also below the previous years realization price.
Our selling price averaged 2.5 dollars per million BT, you, including 14 cents of subsidy compared to 3.9 dollars per million BBU one year ago.
Going forward, we expect higher prices on the back of the recently announced new incentive plan for natural gas production.
This new planned gas for will establish a competitive auction that should result from Q4, Twentytwenty onwards is stable and higher prices for relevant portion of the total future production.
Now moving to the Unconventionals, we want to highlight that our commitment to continue the development of our shale assets remains unchanged.
While production this quarter contracted 14% sequentially. It showed a 21% increase on a year ago basis.
This trend committee that were shale production, 20%, 21% of our consolidated output during this quarter compared to 16% in the second quarter of 2019.
The sequential decline was mainly due to a reduction in activity at Loma Campana as we temporarily shut down 41 wells out of the 193 wholly SUNS. Thus we have there.
This resulted in production contract in for 44000 barrels per day in March 227000 barrels per day in April we took advantage of the large scale of Loma campana as an effective buffer rapidly adjust production on lower demand.
I think has been gradually recovering activity was for almost fully we assumed an output this almost fully back to break of initiatives.
During July our production averaged 42000 barrels per day as we only have three wells to be reopened.
On the back of copied and the cash restrictions that we face during the second quarter no new wells were connected in this period.
This means that we still have considerable inventory of drilled but uncompleted wells totaling 71 for shale oil and 10 for shale gas.
In fact, some of them are already fracture I need just to be connected.
This process would require investments for about $230 million and once in full production should out about 50000 barrels of oil equivalent per day.
Switching to our downstream business demand for most of our products during the quarter was severely impacted by the stringent love them.
Sales of our two main products gasoline and diesel ended up decreasing during the quarter, 54% and 20% respectively compared to a second quarter of 2019.
The worst was evidenced in April with gasoline volumes, dropping by 69% and diesel by 34% on a year ago basis.
She is then we have seen the recovery in volumes following subs flexibilisation in the love them.
Along this line our preliminary data for July shows volumes recovering to minus 39% for gasoline, whereas total diesel volumes sales are down only 2% year over year.
It is worth noting that the recovery in diesel is too large extent due to the volumes sold to COMESA for deliveries to thermal generation plants. Excluding this particular demand leasing volumes are still down close to 20% versus 2019 levels.
Moving to a chart on the bottom left we can see the average evolution of our gasoline and diesel prices against impropriety.
Despite the negative evolution of grain prices that was mentioned before pump prices remain unchanged in peso terms.
While this resulted in a positive spread to import parity for a good portion of the quarter recent improvements in international prices as well as they continue to devaluation of the peso how close the gap.
In terms of refinery utilization, we reacted quickly to the falling demand and immediately adjusted processing levels.
Crude oil volumes processed averaged 192000 bars per day in the quarter, resulting in an average utilization rate of 60% down from 82% in the second quarter of 2019.
Within the quarter capacity utilization reached its bottom in April at 47% as we operated only two of our three refineries.
In May we will assume the operations at plus a winkle, increasing the average realization to 64%.
In line with the partial recovery of the man hour preliminary figures show capacity utilization, reaching 75% in July.
In addition, as the drop in local demand that was jointly with a significant deterioration in Brent prices that make potential exports not attractive.
We temporarily increased our storage capacity to partially mitigate the activity reduction for our upstream business.
Purchases of crude oil to third parties would also reduced significantly reaching 1% of total crude oil purchased for the month of June.
Going into our key reaction to counteract the effects of these crises as mentioned by so here, we have launched an unprecedented cost cutting plan across the company targeting a structural cost reduction of 30%, which is based on different pillars.
We're working on an optimization plan on the way we run our business along this line, we have split our upstream vice presidency into two and decentralized their operations.
By moving the central offices have been unconventional business unit to NIM can we have played the decision making process closer to the operations.
On the other Han conventional operations as leading to the South region with its having some that goes on the west region headquartered in them can.
We believe this new structure, which has become more horizontal and flexible will result in fast decision, making that will optimize our operations and lead to efficiency related cost savings.
Separately last may we implemented a temporary reduction in salaries for non unionized personnel ranging from 10% to 25% depending on seniority.
Furthermore, in July we launched a voluntary retirement program also for non unionized employees, which closes by the end of August and should allow us to organic I will reduce our overall size and DNA costs.
We have also pursued a constructive dialogue with the leaders of the deeper and unions. We are in both with to discuss potential modifications to current working conditions.
We aimed at establishing new working pipelines that should render significant benefits to all parties. So far this dialogues have been very fruitful reaching agreements in three provinces Santa-cruz Mendosa untoward that should bring savings that range from 10% to 30% across drilling termination workover and pulling activities.
Based on these concrete savings, we're reading our selves two more heading resuming activity in these balances incoming days and weeks.
Lastly, we have set up special cells to review and renegotiate contracts with our vendors.
Something it was never done in the history of White beer.
We have more than 10000 contracts out of which in dollar volume terms, 68% are related to upstream.
10% to downstream and 14% to corporate contracts.
It is worth highlighting that these cuts cost cutting efforts should not only when they're very significant savings in our structural operating expenses, but also an equally or even more importantly on our future capex costs.
Further to the significant reductions in our development cost at Vaca Muerta, along with some years, we're very confident about the investment efficiencies that we are likely going to achieve and how which dollar invested going forward, we love to even further production gains.
Turning to cash flow financial discipline continues to be our key priority, particularly during these uncertain times.
Despite the $28 million adjusted EBITDA figure for the quarter cash generation from our operations reached a total of nearly $500 million after netting the effects of noncash items that was deducted from maybe the eight unlevered by working capital improvements, including among others collections from legacy land gas programs.
In addition, during the quarter, we had inflows of over $100 million related to M&A activities, including 90 million coming from the sale of an 11% interest in but Luty ASU two shale onec winner and about $20 million from the transfer of a 50% stake in a deep offshore block two equipment.
However, as total cash generated during the period became significantly below previous forecasts and lack of visibility on the future evolution of macro trends prevail, we took a conservative approach and decided to adjust our investment activities to preserve liquidity.
This was particularly relevant within the context of short term maturities that we had ahead of US specifically the March 2021, 1 billion dollar bond.
Therefore, total cash investments during the period were significantly reduced to $286 million, including purchases of materials and payments due from previous periods, resulting in a decline of about 71% when compared to last year's quarterly average levels.
With regards to our financing activities, we successfully managed to rollover practically all of the maturities of the quarter by taking advantage of attractive conditions in the local capital markets.
During the second quarter, we accessed the local market several times and managed to raise over $200 million through both peso denominated underlying securities with dinners of up to 24 months and a very competitive costs.
These transactions are the to the efficiencies of more than $200 million in the first quarter, resulting in a net borrowing from that source of more than $300 million. During the first half of the year after considering the amortization of local bonds. The can deal in the same period.
Finally, let me comment on the recent liability management exercise executed during July.
As we reckon market concerns on the bulk maturity of $1 billion that like the here on March 2021, we decided to proactively engage investors with a market friendly offer to extend any on the maturity of that bond.
We presented an exchange offer for the eight and a half notes due 2021 for new on more taking notes due 2025 with the same 8.5% coupon.
The offer was same anticipating refinancing risks for that particular, any materiality extending our debt profile on smoothing out principal amortization.
More specifically the transaction consistent on a combination of a partial cash payment upfront initially set up 10% and subsequently raise to 12 and have a new ones for total consideration that though for positive NPV for investors to incentivize their participation.
The other expired on July thirtyth, reaching an acceptance level of 15.7%.
Based on these results we retired old notes for the total of $587 million and have issues. The new 2025 notes for $543 million.
In summary, we this exercise we have managed to significantly mitigate refinancing risks for the next 12 months as we currently don't foresee major difficulties in rolling over the remaining maturities primarily given the liquidity available in the local capital markets and our long term banking relationships.
With this I would like to thank you all for your participation today and we're now open to answer your questions. Thank you.
As a reminder to ask a question you want me to press Star one on your telephone so what try your question press the pound key please standby, while we can tell the Q and Eva there.
My first question will come from lease cars and I would you be yes. Please go ahead.
Hi, everyone. Thanks for thanks for taking the question or several hundred hopefully like you have to inform read our safe.
Basically three questions. If I may here. The first one you already mentioned you pushed comments.
But it could give more details on on the new gas blending discounts and then how how the company by and the fact that within the it's the new rules.
The second question is about the to the free cash flow generation.
Second quarter realization price was close to $29 and your EBITDA was pretty much breaking right, but you were able to generate some cash so.
I'd like you sound a bit more you can give more details about your free cash flow breakeven.
Under the new environment.
And the third question is a follow up if you can share some updates on the divestments Ron Thank you.
Thank you lease for your questions. So now we also hope Youre your say five years family as well.
To your questions to starting with a with the first question on the Gosplan.
Basically award would we see from the recently announcements by the government is internally so generally positive signal.
As we see that it should create price stability.
For the could construct alternative is being discussed the four years.
We believe that should bring some normality into the market. As you know this is a market that has been severely distorted.
From a recent our previous government initiatives to incentivize production.
Basically we believe that new investments, we like it to be deployed.
On the back of this new program and that should mitigate production declined and broadly reviews, the likelihood of need so future needs for the country to input natural gas from next year and onwards.
More specifically on the program a we understand that the new mechanisms that are still like south.
Some specific details.
Sure being for the single auction.
That should aggregate demand for both our gas distribution companies.
Well start to supplement.
The natural gas needed for thermal power generation.
And that basically should minimize the way this being brought forward that should probably many mice.
Excess supply during the summer months.
Also our so we understand the program will probably established that producer participating in those functions will not be able to being more than 70% of their total production to be offered me within the program so that should live.
Enough supply.
Fair enough natural gas to be supplied to our industrial clients.
So she can you already know on that front, though at why do you have we expect to to participate in that program of course.
To be able to through that program secure.
Long or Oracle I would say medium term prices, but should support further investments.
Into our natural gas business.
On your second question about free cash flow in comparison to adjusted EBITDA I would tell you it's important to mention that the major adjustments.
A major reconciliation between the two are related to some non cash items.
Included in our adjusted EBITDA.
Including as was mentioned during the presentation. The recent.
The impact in provisioning that the recent.
Okay near Us from Congress, although the potential rejection of the Green 10, 53, which relates to the FX adjustments on receivables from doesn't gas distribution companies.
Well that Doug said pollution that at least for over $100 million that they impacted our net adjusted EBITDA and.
It's taken back when considering free cash flow.
And those so when considering noncash items, we also need to do to take into effect or to take into consideration.
The revaluation effects on our inventories.
On the evolution of of prices.
So and we're not seeing to those non cash effects.
We should also take into consideration that the cash there was generated by improvements in working capital and primarily on the back of the installments. The we collected on their legacy plan gases.
That's the plan gas from 2017.
And and finally some adjustments.
In terms of reconciliation for accounting or your first 16 accounting rules.
Related to leasing leasing payments. So all of that those are the primary issues that are taking.
Taking into consideration when reconciling adjusted EBIT da to free cash flow and and based on that yes. We can we can say that even though did was this was a difficult quarter as it was commented during our presentation. We managed to still make about 50 $500 million in terms of operating free cash flow.
Now.
In there, yes in relation to the.
To the.
Investments.
Okay.
Yeah, but but even before.
Divestments, you where you.
He was asking in terms of our breakeven sorry.
In terms of against its clearly had to do relate, especially if it began bryce.
On our free cash flow generation, primarily as you know we our free cash flow is primarily made off.
Of the realization prices at the pump I'm not that much specifically on the price a full of course on the long term they they have a significant correlation.
I'm not that much in the short term so.
It's a it's hard for us to establish a specific figure for two to come up with a breakeven price.
Two related with free cash flow.
And Andrew and and good morning or at least.
Again.
I'd like to take the third question.
Or expect to divestment.
As I commented before.
They're focused on a strengthening our core activities.
And in that regard up we are evaluating potential.
Its investment non core assets.
And within the financial restrictions that we face.
A generation.
But the divestitures.
On non core assets.
Should alleviate our constrains.
Im from even more rapid deployment of resources.
Into oil and gas.
In addition, we know there our upstream areas.
Okay, your profitability or prospect another.
In some cases in cold.
At our marginal to us.
And do not material value.
For the last year, while yes, divested some a small I'm not sure conventional filled.
And with respect to continue doing so.
Within our focus on those assets that create value for the company.
There are currently were evaluating some alternative.
No nothing specific to comment on any potential transaction.
Okay.
Okay. Thank you.
Thank you. Our next question will come from Bruno Montanari with Morgan Stanley. Please go ahead.
Good morning, everyone. Thanks for hosting and taking my questions. First one is is a follow up on leads US question about free cash flow.
Looking at your cash flow statement.
Seems that.
All of the free cash generation came from a release in working capital and you also highlighted on the explanation.
How sustainable is that into the second quarter of the year.
Now as your resuming of TV prices are going up than anything moving should we expect needs to be.
Partially not fully reverted.
Use of working capital needs in the second part of the year.
And my second question is I understand the company's rightly focusing on near term response for the prices, but I was wondering when we might expect a more thorough review of the strategic plan process, where white, yet, we'll deploy capital in coming years.
What lesions needs to be presently industry and in the market environment in Argentina for the company to move forward.
And third question, if I may is or how should we expect the evolution of comp exceeded coming quarters, and those investing such as more amounting to second quarter has any impact on volume and with all barrier conventional production that all thank you very much.
Okay. Thank you we will now for for your questions.
On the first one packing the working capital one.
Clearly the benefits on working capital during the second quarter it was mostly related to.
The net collections from legacy gas plants.
Not that much on.
On the adjustments on receivables or payables related to activity. So we expect on that front is to continue.
Generating an extra cash from further collections on those legacy plans as well as we are we are clearly working on some past due.
That's a from from other government entities that we hope.
During the second half of the year, we'll also have materialized. So all you know.
On top of.
Clearly some expectations for for EBITDA margins.
That's a into second quarter, what I would have affected by nonrecurring items, just as we mentioned the provision on the on the degree than 53, or so we expect more normalized.
And the margins and on top of that we should expect working capital to continue contributing primarily from those legacy plan gas programs.
On your more strategic.
A question in terms of how we see the future and I will broadly tackle both your second on for questions together.
As we as we commented during the presentation.
We are clearly still navigating through ready unprecedented times right and that we still not.
Significant be CVD on how things will continue shaping up.
Clearly on on that front, we will continue monitoring and the how demand for feels evolves and how are the relevant prices for our products.
Also end up materializing in in coming months.
So just due to continuing their same a with the same philosophy that we presented.
In the presentation, we will probably continue moving during the following months in.
We didn't see very narrow concepts.
First of all will be maintaining.
Our indebtedness or net indebtedness levels.
Within a sustainable levels, which we believe a them to be the ranges that we that we've seen in the last 12 months.
We will definitely continue our suite as we mentioned, we though where a relevant therefore and ER in terms of cost cutting.
All along our value chain.
We believe that that it's a critical aspect not only to improve margins.
But also to improve efficiencies when thinking about resuming capex activity in the near future and and finally and I'm not so as we said we will limit our capital deployment to two core businesses due mostly to our oil and gas.
Activities I clearly they are we continue to focus.
On the attractiveness of of course of.
Of our business, but again as I've mentioned before we have recently announced got new gas plan. We're also going to push forward with would further investments are in that phone. So.
In the back of that and as mentioned by third you at the beginning Oh, you know in Indonesia feature. This should result broadly in the in the total or really the total production for the year.
The remaining.
No.
The 2019 average broadly in the liver so similar to the level seen.
For the second quarter and I'm going.
More forward I would say that.
As we expect or as we see a market signals, providing more clarity in the future.
We are targeting all considering a new strategic plan.
Hopefully.
Sooner rather than later, but it's impossible to do exactly predict at this time and clearly that strategic plan should should lever.
On the structural cost reductions that we are working on as mentioned before and and that hopefully should allow us to 2% and.
And more aggressive plan.
For for the medium term.
That will allow us are enabled us to provide further value for for all of our stakeholders.
Got it.
In two last questions. It does yes, maybe one quick follow up then just is there any concern operationally on the on the decline on the conventional production I think the slide show something around 49000 barrels a day I know the shale, we recall being quite nicely roamed the.
The control topics and not really beating but eventually will sometimes can can be threeq year to recover so are those barrels responding.
Yeah.
On the I should mention on the unconventional we have recovered.
Our recovery levels.
And ER and so even though we have not resuming drilling activity.
We have managed to to recover our production due to record levels on the on the conventionals.
Yeah, and I'm not sure scene, we have ever reduction in production as of today, we have really.
Owned 20000 borrower today below our previous levels and that's a combination of natural decline.
But also some specific losses related to on the one hand restrictions are based on Colleen.
In in a way to do enter an operator the feels regularly but also some liquidity the restrictions as we mentioned during the presentation we.
We weren't they though we had agreed priority of preserving liquidity and industry God, We had limited.
The cash deployment.
Yeah, especially basically in an emerging areas surrounding areas switch I don't have a breakeven prices that are.
There are beneficial so.
But very especially because we are targeting and with the cost reduction program that we have put in place and as we mentioned we lease agreements so far which we the unions in some of the bromine seems like Santa-cruz untoward.
We are very likely to resume activity in the beginning of future I would say coming days and weeks and that should allow us to restore about at least 10000.
Borrowings today of production at our conventional or areas of field.
Very clear thanks again.
Thank you. Our next question will come from Avondale, Arizona with Citigroup. Please go ahead.
And just your line is open. Please go ahead.
Good morning, and apologists it wasn't mute and first question has to do it. The fact that some private producers have been taking advantage of international prices to to export some of its production or not the same time, they have been able to get better and quality discounts. So.
Two questions here. The first one is if you see any structural change to look at it.
Early station prices due to these lower quality scandal familiar an equal amount equal so really international markets.
The second one is if you have considered to export any of your production given the low and demand in the local market and the second one you should you can comment about fuel prices talks with government there have been some headlines.
The suggesting that its likely to see something in the in the short term so any update here. It's appreciate it. Thanks.
Okay. Thank I'm just for your questions.
In terms of exports.
As you know.
If we are we are integrated company, which typically our processes all that could that we produce and typically we also have purchases for around 20% of the total persisted amount.
But clearly in this particular time with the reduction in demand.
We did have some excess production.
For for the purpose of.
And at the beginning of the crisis or at least be though this quarter.
Given the very low realization prices are on the export markets, we have secured temporarily.
In storage capacity in the form of.
Of barges.
All of that crude was.
Finally processed unused, but even though we do that with our millennial, though we did experience some heavy oils.
Taking advantage of better export part of the prices on those qualities very specifically.
But we don't see a structural change then we will remain.
At producer that we'll refine therefore, the most part all of its its production and only a temporarily already tactically in some cases go and look into the into the export markets. That's for now of course as.
I suppose action hopefully.
We'll increase substantially in coming years, we hope we can become a net exposure as well.
But it's too early to to claim clearly a victory or their strategic view on that front for now.
And probably starting here, we will take the question in terms of local prices discussions.
Thank you Andrew and thank you one dress for their question.
About the price adjustment.
The as we mentioned in our presentation.
During the second quarter women maintained.
Prices the band flattened vessels.
Despite the deteriorating conditions for crude oil.
On refining products internationally.
Is this led to a positive spread.
When comparing to import parity.
That has changed recently.
On the back of racing international prices.
Lower dollar equivalent prices locally on the back off the depreciation of the currency.
It really lower prices need some adjustment to strengthen our cash generation capacity.
[noise] onto that and regain.
Our fire power.
On the Capex side.
As we consider it critical to reward the trend of production decline.
However on the same time.
We need to remain realistic on the overall delegate economic environment, our country's has been emerge.
Our teacher leases the outbreak of probably had 19.
Consequently, we are currently assessing the impact from potential price adjustments.
On the already that are related to levels of fuel demand.
And even.
More broadly the ramifications of our decisions on the economy.
This is what we can comment with respect to to see if requested.
Great. Thank you. Thank you guys, maybe I can ask and only one about clung gods do you think there could be up partially version of the impairment if the their new plan gas is officially launch.
[noise] on on that particular front as you.
As the these new flowing gas was a little more folks sometime and news was announced that before the release of our earnings.
With these are already take into consideration potential outcomes in terms of long term outlooks for our realization prices on on that sector on that segment.
So I would say that the provision.
Well the impairment that we have a registered in the second quarter or really considers.
Our best Thunder Spanish in terms of the long term outlook of prices, including.
The recently announced plan gas, so clearly we cannot say whether or how do we value on our perceived value of the assets that will evolve over time, but for now what I can say that was done on but was registered in this quarter already contemplates our.
Estimates of how these new announcement will or will affect us.
Okay. Thank you very much.
Thank you. My next question will come from Frank Mcgann with Bank of America. Please go ahead.
Okay. Thank you very much I was just wondering you mentioned that the production aroma compiler had come back up almost to a level that had been prior to the to the cut back that you had I don't we're looking for there's just wondering what your JV partners in general are doing how you're seeing the willingness to invest to expand in.
In the numerous joint ventures that you have and what that could mean for for output over the next year or two what would it take if they're not.
Yes, the holding back what would it take do you think too to have them start to move more aggressively and then Oh, along the same line I'm looking out longer term, even perhaps over the last several years. It's been a lot of talk in the industry about looking for outlets major outlets that could lead to a shot.
Rise in opportunities to increase production for natural gas that would be LNG or expanding petrochemical projects. What do you see now is the potential for that is that something that.
It is not likely could you could happen as you know appears to be a more or less likely and and you know what are the current thoughts on that.
Okay. Thank you Frank for for your questions.
In terms of Jvs and I'm not sure comfortably.
Managing in this uncertain times, such as we continue to say.
We are having an active dialogue with with most of our partners.
We there is nothing.
Very specific that we can comment on at this point in time, neither in terms of you know.
Evolution for the coming months, neither and most importantly for for next year.
However, having said that we do have Oh, we do expect to wish him some activity in some for these areas and particularly related to.
To putting a couple of frac sets of work in Loma campana to tackle our backlog.
And I know so a drilling a drilling with in ER in bundle their food and this is all four for the next few months.
But beyond those are very specific.
Considerations.
You know more broadly.
Yeah. The conversations are undergoing and of course, our partners. So the same Mustang as we are.
Expecting or you know for more visibility or for the quarter I Sun to clear up before being able to to make more strategic decisions.
Okay, and now and I would say that that is also true for the major plans or potential plans in terms of.
Big investments to industrialize natural gas I would say that in this context.
It is hard to predict.
Whether those plans so we didn't materialize anytime soon.
I think we mean.
Women more clarity on several fronts.
To be able to do you not to have any news on that.
Okay. Thank you very much.
Thank you. Our next question will come from Walter Chaperone easier with Santander. Please go ahead.
Hello, Good morning.
Thank you for taking my question reservations and your management team are getting the company I have two questions.
The first one.
Longer term, especially if you I know, but you still wants to present your sufficient.
Well I think.
Useful to hear your Oh, sorry.
Okay, how the Capex thing not to be in the upcoming several years, let's say five years, because when we say Oh the left.
The company topic, yes, because we like revealed a year.
Yeah.
Production has been.
The thing Oh, okay even.
Oh sure.
So a question specifically to you what do you feel good about how much topic.
Okay.
Five years.
Staying.
Production at the level of to sort of a nine ugly.
Or.
Sure shows on growth like let's say three per se, but the growth in the future and my second question is more short term.
About.
How do you see.
Painful in parts of the macroeconomic imbalance in Argentina.
Because the monetary policies being so easing.
Despite Sean.
Treat yarwun logo.
Inflation or more export of TD future on what we sailed path.
Right.
Usually lag.
Yes, or no organization and I could pose while the second.
No absolutely ratios.
Neither.
Because the show Russian growing.
Looking forward so.
How do you think you will deal with 11, well Oh jumping a thing you need to jump up just a just price Oh.
The pathway.
My two questions. Thank you very much.
Thank you Walter.
On the first one.
Again, it's a we I was related to our.
Say, a very strong effort in terms of reducing.
Costs.
Across our value chain and I were really not because that not only will help us in improving our EBITDA margins by reducing opex.
But also and I would say probably even more importantly should make our capex more efficient.
So it's a it's still too early.
To to go a success, we it's a process that now we are undergoing.
No we are targeting as we as mentioned at 30% overall reduction overall in our costs and that's why that not only affects our opex, but also what capex. So when you compared to past investment volumes are clearly would we expect the is that in the future we will need less dollars.
To affect our in store increase our production.
So we are still going.
Through those numbers and hopefully we will be able.
And again us our side of things develop hopefully, we'll be able to come up with or a combination of factors in terms of.
English in every day or cash flow generation and reduction in capex costs that will allow us to not only are not only sustained production, but also increase it in the future.
So sorry for not being a more precise.
But again there is no no magic number as of today that data we can comment.
That will either stabilize or for sure increased production in the future.
Hopefully, we will be able to to come back with more clarity on that in a in coming months.
And.
And in terms of.
Macro policies.
It's a related to what sorry, he was explaining on our efforts to or our analysis.
In terms of adjusting prices currently.
We clearly have to continuously monitor.
How would this issuance also affect not only there's none of our products, but also the macroeconomic body areas of the country actually hold we have to understand that the country's undergoing a significant.
Okay, economic crises and based on that.
Yes as things evolve.
We will.
I have to be.
I'm very careful and for the one hand not affect our.
Our cash flow generation capacity, and so not not not like avoid lagging the potential distortions that were being you know that should be brought by inflation and further evaluations, but at the same time, we have to be cognizant of the reality of again, the depressed demand and over.
Bill macro trends, so so hopefully we will be able to.
To come up with the first solution and a fair balance a two to combine our needs and those have a up the markets.
Great. Thank you very much appreciated.
Thank you. Our next question will come from Pavel Molchanov only Raymond James. Please go ahead.
Thanks for taking my question.
You've talked a lot about became topped up colby on demand I would like to ask about.
Impact of coal based on the in house operations of Waikiki out can you talk about the social distancing Andy.
Any restrictions or cost.
At the upstream fields as well as in your refineries they have been implementing.
Thank you color for your question as a as was commenting also during the presentation clearly the company takes a.
Our employee health.
Very very seriously and it's clearly our top priority.
Mostly on the under the environment that we are leaving a through the so called me pandemic.
So basically the first approach was due to suspend or activities that were dealing is to have a face to face interaction and with that we are working.
97% of our head count is working remotely where where possible and then in terms of our upstream and downstream operations.
We have among thing that minimum guards.
Nearly two to keep our operations up and running and nine them specifically on the refineries, we had a except for the suspension of the plus I wouldn't go live smaller one of the three or four a few days.
The three of them up and running and but again, maintaining strict protocols in terms of our social distancing and ER and ER and health.
Sales protections.
In terms of incremental costs. All we can comment is that on the refinery side is mostly related to.
To the lower production, so basically the lower production.
Increases the other has cost per unit.
The much because of the the actual situation of the pandemic, but rather because of the overall production levels.
The upstream side, yes, we didn't have some some standby costs in terms of.
Some activities.
Were suspended that were not related to the minimum guards that in a in a normal conditions could be capitalized as part of our investment programs, but in this time around.
You had to take a to take those in your and your income statement.
So roughly that is over $50 million for the quarter and that's the major impact that we have from a specific compete related.
<unk> costs.
I would say.
Can I also ask about.
Please god.
I remember three or four years ago, the guaranteed gas price for the initial plan gosh.
While $7, even even 750 per Mcf very high do you anticipate something similar to that in this new version of the program.
Yeah No no. This program has.
The price reference is significantly lower what has been announced so far is that the way, it's gonna be treaties with a maximum price, but can see it on a net present value basis, so oil producers interested in submitting bids.
We'd have to offer a fixed price for that for a year so of the contractual terms and that.
Rice that it's going to fix along those years is gonna be.
Yeah basis, using a 10% discount rate and that that.
Present value that price a person value.
We'll be kept up 3.4 dollars per million be to you.
So basically it's a it's significantly lower than the previous Splunk ass.
But but again, it's still a very important.
I would say step in the direction of normalizing War is now.
Clearly.
Normalized or or not normal the market because of the excess supply that ER that took place on the back of the previous mostly the news program related to resolution 46.
Okay. Thanks very much.
Thank you know our next question will come from my fellow Yeah with Credit Suisse. Please go ahead.
Good morning, Thank you for a fourth in the question most of the questions were already answered, but if I may have a true worth your.
First of all news on capital discipline anyway.
We saw that you were able to old.
An important part of the debt of 2021 maturities.
How do you plan to do we.
Short term maturities, which moves are all 2000 22021.
And the other question if I Lee.
How do you see a downstream margins going forward or does your after the divided Q2.
Or implemented Italy, or do I think we should expect lower margins, but there's clearly some discussions will do in terms of Oh places. So how do you see.
Poultry margins going forward. Thank you very much.
Thank you Marcelo.
Clearly.
On the refinancing or on the financial side.
Market conditions remain volatile.
That that's for sure.
But how will the you know that's the case that we currently perceive a significantly lower refinancing risk going forward.
We have about $750 million left in maturities for the rest of this year out of which about 150 million correspond to look at launch.
And that and in the context of for local market that is a significant cost significantly more liquidity, we expect that a source of funding to provide us with the extra funding in coming months.
So we will expect.
Two sub market for all in the near future earn in coming months.
Also voting vessel on dollar linked securities.
We might said in the first couple of the here, we do about $300 million net of additional funding from that source and we expect to continuing so and that is providing also.
Some relief on our bank relationships.
As you know the rest of the maturities outcome from the van market will that will probably.
Not be no need to be fully were lower so in that context, we expect to given the fact that we have long term relationships with with our with our primary banker.
Ben Counterparties.
We do expect to have those are.
I would say financial not committed lines, but our financial lines available in case that we need to two top doors that source in the first half of next year.
But in any case after the exchange that we pursue them that we successfully executed in July.
We now see even the first couple of next year not being a major risk.
As we will be battling less that $10 million of refinancing next year and again a good portion of that are coming from from the bank market. So all we know.
What I would say that our perception of refinancing risk costs improved.
Very significantly we are seeing that also in our ability to to start the loading our refinancing costs with a in the trade lines and ER and so even without having access to international market, which again, we understand that.
It could still be a possibility is down the road afterwards.
He is being done by the by the Republic.
Even without counting without source of funding, we believe that the combination of the local market.
And the efficiencies that we can a achieving the local market with tenors totally up to three or four years now in terms of rolling Securities.
Couple that with the facility is available in our banking relationships, which should not have any any major problem in ER in dealing with out where we know were shorter maturity.
And in terms of the downstream margins again this is related to the ability or on the possibility to adjust prices up at the pump in the future. It's hard to say today exactly how that will evolve.
But we hope to maintain a margins on the downstream side.
Healthy levels not only for the benefit of an integrated company like our sales, but also for the health of the general market, which needs to have reasonable.
Margin levels to be able to continue to operate and to supply.
The feels demanded by our markets. So hopefully you know the dislocations are we are seeing these days in the market. We've started to to be Europe and on margins will we start to normalize thing or hopefully in the near future.
Okay. Thank you very much worker.
Thank you. Our next question will come from me CTL Fernandez with balanced capital. Please go ahead.
Good morning, Thanks for the time to they have a three quick questions.
The first one is related to your drilling and completion plan.
Yes.
Can you unconventional wells.
You are targeting for their reminder of this year.
My second question is related to.
Reduction lifting costs, if we can visit structural savings we can expect it to go forward ER and finally good color.
Dave.
There have been any conversations with the government regarding.
The new hydrocarbon law that was this car.
Some are left you like.
Thank you again good morning.
In terms of drilling activity or we mention something a little earlier, but generally speaking.
In terms of unconventional.
We do expect on the own front, we do expect mostly to put a drilling rig at work in coming months in London via a bundle or sort of and then start putting a couple of trucks. So it's a relatively soon and probably one or two more in coming months a.
Due to start getting our our backlog.
As was mentioned there during the presentation.
In terms of lifting costs clearly this quarter. If it's continued this quarter, let's say a supplement to protect going forward.
As a general comment that this quarter was characterized by a suspension self fund non essential services and then but clearly had an impact on on the average lifting costs. So that's why it's hard to use this as a us.
Basis due to predict.
But in any case, we do expect the as was mentioned before that the company wide cost cutting efforts.
We are pursuing.
To have an important impact in our lifting costs going forward.
So what do you know a well we can say why now is that we would expect to 2 million paying at least mundane outage costs, a similar levels to the ones that.
We managed to materialize in the second quarter.
No.
Okay.
Yeah.
I think he said here in Q4 door with soon just three questions.
And going to tackle the hydrocarbon low.
In in order to fortune, Tina will be self sufficient in terms of energy.
Yeah, the country needs to be the country needs to incentivize [laughter].
The industry.
To to produce more.
And there is a big incentive for the government.
First to ensure that the local market.
Second promote.
To the international market.
Mainly considering the bus.
Oil and gas resources.
Our country hub.
However.
I would have been providing some ideas.
The should contribute to a more predictable.
They whatever environment to deploy significant event investment.
I'm not aware of the timing.
Okay.
12 measure if any and all.
The government might end up announcement.
And this is what it was up.
That would be good initiative.
Yes.
Yes.
No.
Tens and provides the.
Investments on underproduction, Luxor and knowing.
I'm very sorry.
So there's a gala I forgot to mention also when when talking about the drilling that if future drilling.
I was only commenting on oil and ER and clearly on the natural gas side as the new plan.
You know ends up materializing, we do expect some further activity in terms of for drilling on natural gas wells or in a in our non conventional so they are you know we may end up be having between door for drilling rigs active between now and the end of the to prepare our.
Our supplier our production curve.
To supply it what could potentially be our participation in the in the new plan yes.
Yeah.
Thank you for any extra calling that was very clear adult for my thought.
Thank you. Our next question will come from Daniel Guardiola with BTG. Please go ahead.
Hi, Good morning, and thank you for taking my questions I have a couple of once.
My first questions on leverage.
Obviously doing the quality, we saw significant deterioration leverage reaching levels close to three times.
And I was wondering if you could remind us your debt covenants.
What will be the implication of breaking these covenants. So that's my first question.
And my second question is on oil prices and I want Tonight, you can share with US what is the current the gap between Waikiki at health Cool reallocation prizes and eastern part levels. Thank you.
Thank you Danielle.
On your leverage question as you correctly mention a where a number.
Shown in the presentation. There was a 2.9 times are clearly that increased.
Significantly from that because this quarter are mostly as a result of the reduction in our adjusted EBITDA levels on the on the last 12 months basis.
Our net debt remained relatively stable uneven degrees.
In the in the quarter.
In terms of calling answer.
The specific a war going on the documentation has a relatively different way of calculating the covenant.
It's a bottom up approach I suppose of the typical our definition of EBITDA.
And also is based on our reported or.
Financials, which are done in precious.
So already known when calculating the covenants or become the or what are the evolution of our numbers in terms of the covenants. We do have and never that's prominent ER, which are basically some currents one a three times EBITDA.
But with a different definition and so for this quarter that number was slightly below two and half or so in terms of for complying with the coming on we were we still have some room, there and as I said before it's an incurrence one so.
Okay. So in the future that literally surpassed.
It will affect our ability to incur knew that.
No additional their drug because she probably knowing they said definitions of Cowen and so we do have the allowance due to continuing refinancings and ER and also do we do have a basket or that will allow us to also keep you know raise some additional funds.
And a very specific circumstances. So at this point in time, we don't foresee even in the case and again this is only.
Related to some of our AFFO would instruments, because it's not precedent in all of our nuclear bombs no no loans.
So it's mostly related to to the oldest securities that we still have outstanding.
But in general terms.
As I said, we are in compliance with the covenants in this quarter, we have some room and in the case.
Numbers continue deteriorating in terms of ER last 12 months EBITDA in the future.
Even if your surpassed the three times Incurrence test, we do have some flexibility in the baskets.
To avoid any type of a material effects on our regular operations. So right now we don't see any.
Any negative impact coming from that from the upfront.
Thank you know I'm showing no further questions in the queue at this time I'll turn the call back over to management for any closing remarks.
Well.
Thank you very much oh for participating or in this call. A we know that is so difficult times, what everyone and so we thank you for your time and we hope you continue to be safe.
In this.
This environment. Thank you are having today.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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