Q2 2020 Brooge Holdings Ltd Earnings Call
[music].
Greetings and welcome to Bruce on the limited financial results Conference call for the first half of 2020 the.
The time, all participants are in listen only mode risk.
The first question answer session will follow the formal presentation.
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That's the cycle in the conference over to Valter Pinto managing director of case, Yes, a strategic communications. Please go ahead.
Thank you operator and good morning.
Welcome to the Bruges Energy branch results conference call for the six months ended June Thirtyth 2020.
On today's call will be Niko part of Cooper, Chief Executive Officer, and so you Miss suit Chief Financial Officer.
I'd like to remind everyone that this conference call contains certain forward looking statements all statements that of dresser operating performance, the guts, where developments the we expect the or anticipate.
Moving in the future of forward looking statements. These forward looking statements are based on management's beliefs and assumptions and are not on the information currently available to our management team. Our management team believes these forward looking statements. The results are reasonable as and when made aware.
However, you should not place any undue reliance on any such forward looking statements because such statements speak only as of the day one day we.
We do not undertake any obligation to publicly update or revise any forward looking statements are there as a result of new information future events or otherwise except as required by law.
In addition forward looking statements are subject to certain risks and uncertainties the could cause actual results events and developments to differ materially.
From our historical experiences, where our present expectations or projections. These risks and uncertainties include but are not limited to those described in risk factors and elsewhere in our annual report on form 20-F, well. The this years and exchange Commission and those described from time to time now the reports, which we file with the FCC.
I'd now like to turn the call over to Mr., Nico pardon Cooper, Chief Executive Officer, Bruce Energy Nico of the floor is yours.
Well the anybody thinks of older put introduction on thank you everyone. The where do you want to us on the call today.
Well the Sunday 20 as growth what is many challenges and much volatility across the world.
Yeah, the very pleased with the progress we have made the Roche, which has continued throughout the year. Despite the exceptional market conditions.
I would say just one facility continues to operate the school capacity and we up force to generate significant growth going forward, especially without phase II facility.
Moving on the line the apparel, we are progressing with I would say sweep accounts, having commenced preconstruction work.
Earlier this month as mentioned in the separate press release.
The events with plenty of 20 and the impact it has had on the old markets that made the strategic value of oil source as a tool to manage price mobility and disruption more evident in the never sourced from most around the world of sitting up and approaching critical levels in the U.S. Europe, and the Middle East Asia and Africa.
Yes, especially seeing the rising demands all storage from countries such as India as the most parts of Africa, where they have limit the domestic options our terminals in the middle East they serve as the key global trade routes across Asia, Europe, and the even South America.
And they are strategically positioned to provide much needs of storage to old traders.
Oh, the storage terminals of built using Madora modern technology and bring a variety of benefits to both the bus.
Oh, the end users all the oil storage things on convertible and can be cleaned and Colbert at the service on the old books, well why though.
Including wise on which is much more look of <unk>.
Well the all sorts of the sort of just have the is built into the analogy, which is becoming increasingly important 40 inches and by building out. Thanks to these advances the specs.
The positioning ourselves to secure the most look of just contracts and maximize spoke to the ability.
Moreover, our ability to provide and should be shows this which includes true foodservices blending eating and entertain transfers enables us to provide the grades range or value added services, you will simply storage at.
At the time, when the industry requirements on changing and oil companies of focus on maximizing income.
As a reminder, we don't on any of the oil that we store and therefore, we don't take and the old you oil price exposure out.
The phase one terminal runs out on the present the capacity.
Even wendover covance reception the in place early this year.
Due to its ultimate its functionality.
As a result reported stable revenue of 23 million for the first of all 2020.
Compared with 22 million the fares hobbled 90.
And so the services, which contributed of 47% of revenue in the first of all the plenty going on pad, which is 46 percentage of revenues and 19 2019, we.
We believe we are in the incredible strong position to achieve strong growth over the next several years, serving as an especially essential link in the oil industry value chain by supporting the infrastructure and storage needs of the industry and enabling the markets the work efficiently.
This is a critical function that we anticipated being increasingly on demand over the next several years.
The business model of provides with strong revenue visibility as we signed multi year contracts that ensure guaranteed income regardless of the vagaries of the oil market.
As mentioned we are in the final stages of growth structuring outsized to pursue it.
This is being built to the same award winning specs as out of phase one facility and.
And that's one of the spend that was towards the capabilities to non <unk> also includes clinical as.
As well as adding more capacity diesel fuel and clean petroleum products.
That's on their percent our phase two stores the belt. The facility is already fully contracted the expect the chart.
Generating significant revenues from the facility as soon as is the as it is launched off the completion of phase two hours storage capacity will be expended by approximately 600000 cubic switching.
Switching that's true equals to 3 million 2.8 million barrels. This increases the overall capacity of the BPCI terminals to approximately 1 billion cubic what do you kind of lentil of 6.3 million barrels.
At this point, we will be the second largest non-GAAP the source of rights improves the era.
So the initially we also working towards the launching the module refinery to produce low sulfur fuel which is in high demand.
For the job and around the world.
You are currently entering the final stages of out of negotiations for the long term signing of the agreement without stays on Offtaker.
Well, we are expecting to take on the Capex to build the refinery itself. The anticipated launch day for the low self refinery is in the second half of the 21, which will the old price at that maintained by boots.
The the initial capacity of 25000 barrels a day.
Also we are progressing what I'll plan say Street facility say Street facility will bring out the total capacity of up to four and all of them in cubic storage capacity, which is the equivalent of 28 million barrels.
All kinds of all the products that will make us the biggest losses storage supplier inflows yeah. This.
This is a very exciting opportunity, which would transform our growth both on and we are pleased with the progress as we progress we are making.
We have completed the basic design and seed study and we have started the preconstruction work on the facility, which has also been on.
Announces the marks the in a separate press release and in the store and this is a significant that of the development and brings us closer to commencing construction.
We have expect we expect will have to complete the the preconstruction work by the end of this year, which is around the corner and I'm able to starved of construction showed the your Austin phase three is expected to come on line the late to 2022.
And potentially could be more than three times the size of phase two well.
Well on the two together.
Concurrently we are also in discussions with the global oil majors, which all have expressed interest in securing portions of the capacity of the say street facility right.
Right at the beginning construction, we will ensure that the capacity is fully contracted on the multi year take or pay contract to provide the revenue stability and visibility.
With that update I will now turn it over to Mr. save most of our C of the site [noise].
Over to you.
Thank you Nicole good morning, everybody.
Before I dive into the financial results on the first couple of things on D. A quick update on the East Coast makeup of the 2000 2019, the sense because announced by the form 6K on anybody can the company has concluded that the warrants shooting thinking on deemed should have been accounted for as the.
David the cloud, they're getting out of the <unk>.
That just makes the quite a bit of this I don't have the ustwenty hanting equally but the people on $7 million and he's got I'm glad to give the back of being bunch of them the and others are predicting block on non cash income of $1.2 million and you can't even get seem to get created on the off from getting the good luck on <unk>.
The if he's Kidman had no impact on previously reported and the go on the cash from operating financing on the small activities no disconnection I think boot energys underlying business operations you gave it to the liability the argument can be kind of looking good deed.
When the bought inside exercise ought to be a skin wished up on the body of the outstanding balance and the north of the in the outfield any cash flow by the growth.
No gun to the financial results for the first couple of couldn't couldn't do.
Our revenue was if you could be flat at $22 million because six months of when you couldn't be complete.
Compared with $22 million in the same <unk>, Oh 20 banking.
The revenue generated from using up the storage capacity of dogs, an excellent set of business such as heating on vending back of the things went up the action because of picking the kind of closed on capacity from both periods.
Oh, the ancillary services fee revenue increased to 10.8 million dollar doesn't because half of <unk>.
Oh, I thought the 7% of booking revenue.
This completes we can find the $1 billion on focus exposed simple cooking moving and before the south of Canadian banking.
Excuse me the revenue from the first half of <unk> was $4.6 million compared to the $8.4 million.
<unk> of last year.
In May 2020, or what the phase one of the biggest come on and we believe the and then 29000 cbm.
Okay, the <unk> of the fees on capacity.
I'm on can get the oximetry, one thought of it will be go up the because when the capacity back the Casey.
Yes, he leaves the capacity to a super major kind of six month PDH subsequent to the new wouldn't hold in any sense, it's not easy it.
With the mutual agreement on board the bigger <unk> and these are the major but everything from the simple major does not need the definition of the leads on that I thought of 16.
According to the the revenue the age of the media debt you hit its got to fight on but I thought of 15, instead of instead of doing so.
I must say the need for the close of whats going you couldn't deal of 7.6 million compared with people on 6 million the.
I live in.
The same thing enough yet.
Gross profit was $16.7 million lets look when you couldn't do all of 70 people some of the craving compared with $17.1 million on the 78 of simple convenient because of Monday.
General and administrative expenses were 2.7 million in Green, Kentucky, compared with $1.2 million in Glen the Nike.
Finance costs, what of flat at $2.4 million in both Pete's change.
Changes in the field of value of debt he would the financial instruments, what a gain of one of $1000.
Compared with the loss of putting a couple of them got us on the first half of <unk>.
The company reported a gain on the release you know that he would be bought I'm glad the gain of five point can you become one of us GAAP.
The big of it and then and the same via the country banking.
Net profit for the first half of Clinique, Wendy was $16.2 million compared to a bulk of the build the indoor those in the first couple of contracting.
Basic and diluted earnings per share the last 0.1, $8 Nicholas I will conclude.
The big point dues Ito growth.
20 cents in the first couple of clinical of printing banking.
The company had cash and cash balance of $1.1 million as of June to get great growth compared with $20 million as of technical December the doesn't I'd.
Subsequent to the big hit and we compete day trends couple of years on a 200 million five year senior secured bond with the bothering you make up the is on the books with the movement in the Nordic one market. The bond the true mature on September 20 can be placed the loved the picks up in a bunch of back home to support the future growth agenda on Moxi modest from for the company.
And then getting the bond market.
The second she got becomes would be used to the skin, it's getting to know of the balance sheet by the being existing bank debt part.
For the phase one data by enabling the company to have us in the consolidated debt cost would be on people of the gums. It can also be used to compete concentrating on hold on pizza too on the sort of capacity.
Which is anticipated to be completed in the coming weeks the debt other non osteoporotic of open the lines like with some of the bouncers.
Thank you.
Thank you well now be conducting the question and answer session.
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Thank you.
Our first question is from the line of Scott <unk> with RBC. Please proceed with your question.
Hi.
Good morning, or good afternoon, everyone.
[noise] the.
Hi, it's the casing question. The first one I just wanted to clarify the Super major that Oh, Gee I see had a lease you know that's the that the storage capacity for six months.
Did you say that favor the need for another six months.
<unk>.
We didn't know the good often on the good morning, Olivia Nico let me take the question. So the debt is an option for the super measure to lift that option and [noise].
We have not announced publicly of that has been done as yet.
[noise], Okay. Thank you and the.
Well I guess, that's kind of the water.
When I look at the financials day to release the.
On the area that the 2.1 restatement of prior period compared to the truck correction on accounting for the warrants was there any of their change to the floor or was it just purely an accounting change.
[noise] side can you. Please state your question.
It was fueled the an accounting change the change of treatment from the peak Mickey.
Mickey do that.
[noise] [noise] [noise], Okay. Thank you and then.
Contracting sort of phase three.
The thing about that contracting are you thinking about.
Securing contracts with some of the potential customers just to.
Further increase your customer diversity or you you know could you contrast that to just you know one or two.
[noise] Oh via the <unk> given the size of assays on the tree, we will have an additional set of customers on.
Because of some of the will be of 234, and 5 million cubic. So we have the ability to expand our customer base.
And and itself also having the long term contracts with all the parties as you might know the company's never building on speculation.
We always secure the construct first before we start doing the construction.
[noise] great. Thank you and then just the final question from me on [noise].
You talked about you know in in India, and Africa starts filling up [noise].
Hi.
Bruce.
Yes, you know play a role in helping their items.
You know what kind of opportunity of DC.
So the L. data can you repeat the first part of the question of Didnt come the over quite a clean.
Oh, Yes, I'm sorry in your prepared remarks, you talked about India and Africa and how the.
The orange.
There is is filling up on can you talk a little bit about what kind of opportunity. This presents from throughs.
[noise] there are markets that are currently not been entered into by VPG. She who are looking forward. The similar advanced technologies and the operations that we provide to the market. So by filling of those stores existing capacities, who doesn't have those additional features as yet the.
Well certainly we will have on a.
Ability to expand our businesses into those areas leave out the if I were marked at the first of all I was to do so.
Great. Thank you very much.
And then the mission to that go there the I think the of so it just it also feel of the founding fathers move out of the company was from day one.
Establish the global brands.
Starting into the jetta and that spending and sort of you gotta assays on the two answers and on the tree.
Still is the intention to expenses and build the two of levels.
Those areas, the do Mets or two clients in the industry the.
We present.
Thank you. Our next question is from a shame on with care of investment management. Please proceed with your question.
Hi, Josh.
A quick question on.
The.
Like the construction compete when can we expect revenue the comp.
Could you give the more detailed updates on why not.
Thank you.
Thank you for your question. So we know the time of the completion of its current configuration.
And over and above the and I also assessing the technical and financial impact.
On the two a lot of also clean petroleum products and the product mix into the season on the trees. In addition to the fuel on crude.
So the completion is pushing very shortly and based on the discussion and the assessment that we have Google announced the market. The view also introducing clean petroleum gross insights on the two.
[laughter] Rafi can you.
[laughter] ingot the Q1 net yeah when would you start recognizing revenue do you think.
Like I said, we know the time of completion, which is indeed early next year in the script and comfort configuration, the which is fuel and groups.
And we are now assessing also the technical and financial impact to allow groups of the clean petroleum products over and above into the fuel and true.
Which is Guernsey Glenn just the couldn't configuration on phase number two.
On that and just the <unk> and that the Dot is got kind of a one month delay it.
But I think on today.
[laughter], it's it's still pretty much it's too premature to comment on that because we are waiting for the results. The pull of our APC called director of close the assessment on but from our well the management consultant, especially from a company called the obviously.
[noise] onto the okay [noise] on.
And one more for me as well I could you can can you just help satcom lights on the change in order to that you guys. Just on the why was it the toll related to the mistake around the wanting to kind of thing or was that something else that we should be a lateral.
So you can do answer the question that's why the what else might go a little bit. So it's just the change of the treatment that is you know a debt management paradigm to fight and then the by both on your does the biggest and the second I'm ready to take on that is the nor the change going on [noise] on all the things that needs.
ER to be I like it here on the changes the reclassification of bodies, so lumpy the people that big.
Understood and the change of audit the.
Yeah, well could you shed some light on the reasoning for that change.
Came to 40 gives you know of yet why isn't that the look what the gets what he does the bid for the lost the T. The whole goods with us and I said the off.
After one of its taking the in the in the last year. The D. NASDAQ the part of the proceeds are they going to be had to do you have to distribute the audit fees for the.
The the big four and then VDC being just from a lot of couldn't or do you do any finalize the domestic wasn't non will go deeper analysis of having the more you know.
That moved up the which is in line with the market of the situation either of the lead bought the audio the that'd be the article you know keeping 40 of the five years.
On the.
Okay. Thank you I thought the question.
Our next question is from the line of the <unk> Aurora with the time and partner Devon investments. Please proceed with your question.
Hi, This is a the view from the on investments. Thank you for the call of my first question is linked to the your margins in general what do you you'll be able to give us the putting them all flow your EBITDA margins by segment how much of it is.
Actually we were able to do the the country the leasing and how much of it is actually been able to the services.
No we cannot distinguish the mahdi items, because many sort of this is I didn't get any idea what one set of of depending on the other sort of sit so we cannot the city to get the margins from the ancillary of video services on even from the the fix due on committee we cannot have the.
The Michigan.
But is there or is there sort of a sense of that let's say the margins also that's the.
It did it would be it on 50 to 60, plus instead of as this would be on the height of cycles on each of the 90%.
No no the the it keeps its a of the door. If it does any of that and then of the expenses on shapes of we don't have the the margins the distinguish what would the answer the engines, but it's like the says.
Oh, Okay all right.
The.
The other point is that you don't typically would be of see news that when it comes to competing you against the peers.
The the sort of margins that you have on <unk> on the much higher the side. So you end up at the margins of close to it the what did he wasn't plus when you look at some of these sort of spears leasing of out of the margins on not be on 50% to 60%. So one of the key reason behind that.
And I'd say good question the site.
You know when you're saying because in the markets I would kindly ask you, which is the peer group the us you're referring to of course, you know view of the has only one the.
The year that is.
Close to us with those who are not on the percentage of figure I I think that the and I hope that you're not comparing those two MLP structures, which we are not.
So to give you a comparison, which we most of the times use in our road shows on the and then the discussions with the investors is a company called vote book.
Who has about 60 to 70 terminals independent around the globe.
And even that is not on on the percent of comparable because those debt. The company has also edible oil to most of the new store terminals. They have set the closed on those.
And LNG for example, and most specifically the type of industries that we owe operating and so the reason for that and if you look it up on line what is there the.
So or until the service revenue as you'll see that the the most less and that's because it's a mix of all those products are sort of those sort of shows the over the scale of the.
So of sewage services, just like say he says you cannot you cannot let's say do of internal transfer of the mix a little bit of without doing the transfer from one thing to the other if you are eating.
The product was just typically requires the fuel you knew that on a daily basis, because otherwise you kind of moved the product.
So in the way the all in the linked to each of them and the revenue makes the having us because of the facility that we of course sort of took 10 to 11 simple things operations.
Well the into four on a thousand cubic phase two of that another 60 of that so yes, 16, 50 to see sort of 16 to 17 simultaneous operations the flow led to a double or triple the speed of other facilities. So on then she was the can do many more operations in the same facility with the same capacity.
And then he can do or she can do compared to the to the market. The fears in the market is another thing that this debt. It's fully automated so out of stuff. That's operating phase one of the seven people, we don't need extra stuff will phase in on the two yeah.
Seven people operating in force shifts you have the twinjet people, but in the facility. If you will see that the compared to the.
I would say global peers, you would expect to see a million.
Cubic's towards capacity operations by 15 to 20 people per shift so does the look of difference in that as well in terms of overhead in terms of the terms of the maintenance less less maintenance of course over the life. So the lifecycle of the facility.
So I hope that I'm answering the question to you in the this amount of where are we on different than another facility.
And I would still like to understand on the set of bases, which you consider the let's just be us because I would really like to understand.
He was looking at the names like LBC terminal Newstar logistics some of.
These are the couple of names obviously vote by OCA is.
The is the big company on until the dozen many segments, but they have a dominant I think inflicted on so if you don't know one of the margins that's exactly what's going on so those are the two companies of even anything at the compare or what are you trying to say that one of the most advanced sorry.
Yeah, Yeah, well, that's really like to set a vote book is producing or providing the the annual figures overall at the end of breaking it down for facility. So another thing is like you said new start on specialty LBC.
As liquid the Bill company I guess it is on the company is also doing a lot of the roaming.
And on the other type of operation that we are not doing the doings <unk> also having a well to the best of my understanding on chemicals, and the who has a different type of the net mix than we are doing.
HM Okay, but in general what are your point is that right.
The bank will make is that the debt the kind of taking on do you have as much more the advanced of what's it appears like the <unk> core business. The students that's going on and services so not like.
Okay Alright. The other question is linked to the.
Okay. Thank you. The other question is linked to the contract that do have a discipline of major so you're saying that currently you know it's it's it's up the them for six months and the extension as not the had been discussed.
Let's say, even if they don't want the extended then what happens next this this goes back to the space sort of space. It goes back to be on <unk> and a if the goes back to be a the goes for how long.
[noise] toward the tenure so in the in the case that the the Super major don't belong to the extent of goes back to be I am.
They have people lined up to take up the capacity does I think that's not the secret that the market. This is the hoped in terms of requirements are sort of capacity in two of your but let's say in the <unk> no wahoo whole world at large going forward and the takes on the next year. So from so we are on mopes be a multi.
Oh I'm worried that this capacity on won't be felt immediately.
On long term basis.
Okay, and just the last one from my side or on the on the phase one.
So do you know do you have the contract that you have it be a bad debt instead of a I think a couple of years to go to the.
Yes, the goal the day, but on the end use of the site the contracts that be a hazard end users I believe as per the last presentation. It was ending in the four to five months not contract of at the end users that'd be the you had so any any updates on that.
It was the motions on what are they have the option means of being taken up by the the airplanes or any of the clarity you can give us on on the for the the visibility on the end to end users, who we have the contract will be on long term basis and be a mirrors the the crimes that the PJ she has.
Yes, so that is the customer base from the <unk> with multiple large.
Investigate and usage.
And the customer base may change from time to time.
And once again if its debt.
Now the case, let's say the Super major is not extending there's enough other end users large investor grade Oprah interest.
And no Ses.
Or global traders, who wants to take of the space immediately.
Oh, Okay, all right. Thank you.
Thank you. The next question is from the line of Q Williams with Fig Partners. Please proceed with your question.
Hi, there. Thank you for the call most of my questions have been aren't the just on the topic of the I. I think one could you discuss what.
Turning to you on contract the Dan.
I understand that you know the remaining contract kind of what and use it could be different but youre moving contracts kind of whats the I a. that's the net.
On the net you put the cash.
Oh, yes.
So what I understand from the question of please correct me if on rumors how long the tenure of full phase number one is.
After today.
Yes, that's correct.
Yeah exactly on the trend could I just on gas.
Net mix of phase one.
Black.
Okay. So site I think that's more of your corner in terms of complex, but to the best of my understanding the.
That's and.
And we have full so probably gets announced in our online investor presentation that it is more than three.
Two years from today is that correctly.
Yeah, Yeah yeah.
From to the years okay.
Okay and is that and something that has option after that all yes. So you'll have to test the negotiate or from scratch, okay the option, but from.
We have options either I mean, the option is always to the new it's the same old favorite more favorable terms.
Or not too.
Revenue.
For the another five years on it.
Okay. Thank you.
You're welcome thank you.
Thank you as a reminder of interest or one to ask the question.
The next question is from the line of balance sheet Toshi with one Hill capital the she with your question.
Yeah, Hi, Hello, Thank you for taking my call given the on the the latest release I think the amount of cash left on balance sheet of together with the new on rate are you able to provide an update to the on liquidity situation and the meaning of.
Among the is a available for working capital at least until a phase two hydro testing is a is done and the contracts can start generating cash flow.
Thank you.
So it's kind of these types of question.
Yeah, So what kind of strength from the question is you need the new the.
The available cash balances Andy cash position for its true continue simply looking on the looking up to the Clemens right.
Yeah, and also I think we've got the phase two I think youre you shed the release regarding.
On the hydro testing being a in process.
And I think.
In line with the previous question when should we expect to see the hydro testing being complete the thank you.
Yes, so I did on so the first part of it and then the hydro just keep up the.
The the onset of bye bye it let's see you soon equal. This is the first block is the of yes. The of goes the bonds.
And we have made on the payments to the ASP of the Buzz is outlined on the utilization of the bone dumps the of secure the yeah.
The exits even though the of competing for the you finished the average.
I wanted to be mentioned everything and.
The us if he should be liquid throughput from all of the looking at the two requirements.
Yeah, the Delta and actions the board and the only Dick on the balance sheet is as good as of today is the blown victory of Disney since the close.
That is the annuity climbing opinions from support for the looking African.
For the second but one of the hydrogen stream of pizza too if an equal you of the you'll get the guns and I mean can you come up to the limit.
No absolutely so the hydro testing as the process, which is the let's say the milestone in the process, we have announced that sometime back.
We have completed more than half of the four of the testing successfully.
We have now reached over the last few of the large size things on these are huge and the on as an 8000 cubic each excuse me [laughter], but.
So.
We will finish the study very shortly and based on that.
We can connect the then maybe by the last two and the electrical connections to our existing control net bump house.
[laughter], but much of the [noise].
Thank you.
Thank you at this time of free send or a question answer session now I'll turn the floor back to management for closing remarks.
Thank you operator.
Thank you very much for everyone, who joined US on this day school, we are at the very important juncture of all the relevant and appreciate your support and interest you know the company at this time, there's a very significant opportunity for us to capture of demand for stores at the time when does sort of facilities around the world I reaching capacity.
Oh location and Porgera is one of the world's most important oil helps the strategic advantage of our location gives us.
[laughter] sort of gives us [noise].
HM.
It looks at the become even more important as into the future as European oil companies continue to divest soul of there were less its divergent even more of the industry to the middle East.
The the anticipated launch of phase two.
[laughter] the company is a tipping point and the expected to start generating significantly higher revenues of.
I will now lost oil price at the close of lots operating guy to close the loans.
Thank you. This concludes today's conference you may disconnect. Your lines at this time, we thank you for your participation.
Thank you everyone.