Q4 2020 ION Geophysical Corp Earnings Call

Ladies and gentlemen, todays conference is scheduled to begin shortly please continue to standby. Thank you for your patience.

[music].

Greetings and welcome to the Ion Geophysical fourth quarter earnings Conference call. At this time, all participants are in a listen only mode.

A question answer session will follow the formal presentation.

If anyone should require assistance during the conference. Please press star zero on your telephone as a reminder, this conference call is being recorded it is now my pleasure to introduce your host Rachel White, Vice President Investor Relations.

You may begin.

Okay.

Yeah.

Good morning, and welcome to <unk> fourth quarter 2020 earnings Conference call. We appreciate your joining us today as indicated on slide two our hosts today are Chris I'll share President and Chief Executive Officer, and Mike Morrison Executive Vice President and Chief Financial Officer, who will be using slides to accompany today's call, which are accessible via link on our website ion.

G O dot com, where you'll also find a replay of today's call before we begin let me remind you that certain statements made during this call may constitute forward looking statements.

These statements are subject to various risks and uncertainties, including those detailed in our latest 10-K and other SEC filings, including our recent registration statements, which may cause our results or performance to differ materially from those projected income statements. Our remarks. Today May also include non-GAAP financial measures additional details regarding these non-GAAP financial measures, including.

Felicia for the most directly comparable GAAP financial measures can be found in our earnings release issued yesterday I'll now turn the call over to Chris who will begin on slide four.

Thank you Rachel good morning, everyone and thanks again for joining us today.

Today, I'll discuss our fourth quarter and full year performance strategy execution progress and operational.

Mike will elaborate on our financial results from bond restructuring support agreement, then I will wrap up with our outlook and strategic elements for success in a rapidly evolving market that presents exciting even at a day translation and digitalization opportunities.

Given considerable press coverage in the U S. I will also touch on what we believe to be the negligible impact on our business at the garden administrations brief suspension on oil and gas leasing and drilling permits given islands diversified global footprint and international offshore focus.

We delivered substantial sequential improvement in our revenue and earnings from the fourth quarter.

Continued to benefit from the refined strategy cost cuts and digital approach we outlined in early 'twenty 'twenty.

While our annual revenue decline is consistent with the contraction in E&P spending for net loss improved by $11 million year over year, primarily due to the previously mentioned strategic structural changes and associated cost reductions.

As expected the impact of COVID-19, and associated oil price volatility was most pronounced on our new venture program activity.

<unk> services and equipment sales.

Given that data sales tend to be disproportionately impacted by budget cuts in our sector saw a nearly 50% decrease in multi client data spend in 2020, I'm encouraged with our relative performance for the year.

I am also pleased with the progress we made executing our refined strategy. This year in spite of unprecedented macroeconomic disruptions. We successfully acquired the initial phase of our mid North Sea high <unk> multi client program and build backlog for the significantly larger second phase for this summer we commercialized our proprietary Gemini source technology now seen as a key ingredient.

And for unveiling better three D images for Derisk drilling and the complex geological settings, where customers continue to invest.

The combination of our entry into the three D. New acquisition multi client market and commercialization of Gemini enabled us to increase our backlog for the last few quarters reversing several consecutive quarters of steady decline. We continued to build out our successful portfolio of low cost high return three day to re imaging programs and started benefiting commercially from the global to D data collaboration we signed with.

PGS in June 2020.

We installed our first Marlin smartcard system demonstrated several new valuable use cases through pilot projects outside of our core market and won a highly competitive tender for 17 additional ports.

Our qualified pipeline to optimize port operations and Maritime energy logistics is building, respectively, and I will provide more details on that shortly.

We have also advanced our market testing for new ESG compliant offerings.

Hi on the digitalization push across our traditional processes continues to benefit the company.

For example, we leverage machine learning to accelerate turnaround and improved three D images on new full waveform inversion workflows tightening collaboration with key clients.

Using artificial intelligence, new automated source and vessel steering technology enabled customers to improve accuracy and 40 reservoir monitoring services.

We also leverage new digital engagement tools to better connect with customers and joined the AWS partner network to accelerate our cloud offerings.

Lastly from a corporate perspective, we settled a decade long patent litigation with Western Veeco announced the divestiture of ion to non strategic equity interest in the Inova joint venture an agreed terms to extend their bond maturity for years to 2025.

In our E&P technology, <unk> services business, while we had anticipated lower new venture activity in 2020 due to the impact of COVID-19 R. Data library sales were more resilient declining only modestly compared to prior year in fact, well over 50% of our multi client data sales in 2020, where two D and a very tough year for.

Exploration highlighting the value of this global assets.

This was driven primarily due to shifts in the customer landscape, new data access frameworks and the increasing need for E&P clients for high grade their portfolios for better returns as we enter the energy transition.

Furthermore, we are delighted with how that global two day data collaboration agreement, we announced with PGS is progress there. It's been enthusiastic engagement to jointly market. The aggregate of nearly 1 million kilometers of data and both companies are commercially benefiting from more diversified exposure to share deals globally.

The spirit of the agreement. We're also collaborating on several license round data packages and reviewing new joint duty programs.

More strategically as mentioned last quarter, we achieved a top 2020 ion objective to enter the <unk> New acquisition multi client segment with our mid North Sea High project tap.

Tapping a larger addressable market for us.

Our historical focus on two D exploration data products has constrained us to only 3% of the expansive $2 billion to $3 billion global offshore multi client market, which is now dominated by three D data.

Importantly, this portfolio pivot towards three D, which we commenced initially through <unk> digital Remastering and re imaging will not will shift to our new product investment closer to the reservoir, where customers spend tends to be more consistent and programs have larger scale revenue and earnings potential.

We believe we can materially increase our market share even without significant improvement in the industry. This is premised on a combination of <unk> multi client data re imaging success, our tier one imaging credentials and our new Gemini seismic source technology.

Clients.

Now had significant exposure to the quality of the ion offering through our nearly 350000 square kilometers of <unk> re imaging program.

Our experience and relationships, creating two D programs translates very well to the three D program generation.

But the scale into perspective typical new <unk> towed streamer service costs between $20 million to $40 million with about five times, the revenue and earnings potential of the new two D program and at least twice the revenue and earnings potential of a three D re imaging program.

Our mid North Sea High <unk> survey will soon provide needed data coverage over more than 14000 square kilometers of one of the few under explored sections of the UK Continental shelf.

Phase one data was collected in Q3 of 2020 play opening drilling in our phase one faster imaging results are rallying support for phase II, where we have secured permits from underwriting for the main seismic campaign. This summer.

We will deliver deliver final three D data by mid 2022.

Our program launch the U K has awarded additional acreage within the survey area, increasing the potential client base for this new data assets.

When you look at client project pipeline reflects our shift which began a year ago towards new three D programs. Approximately two thirds of the leads are now three D evidenced of our credibility as an emerging <unk> multi client player.

With an established seat at the table moving forward.

Since commercializing Gemini in September E&P companies have specified our innovative extended frequency stores in a number of tenders Gemini has been deployed on its first proprietary 90 day project for a super major operating in the Middle East.

This long offset <unk> towed streamer survey Gemini is unique source spectrum more efficiently improve subsurface characterization with considerably less environmental impact our innovative energy source significantly extends low frequencies for limiting higher frequencies to a more ecologically friendly range in order to meet market demand, we are building Gemini capacity and seeking regulatory approval in additional jurisdictions.

Fiction.

<unk>, new ingredient for improving subsurface information differentiate for ion as we expand into the larger <unk> multi client market, while maintaining our asset light approach.

We continue to commit the majority of ion imaging capacity to distinguish our multi client offerings and deploy the balance of resources on challenging proprietary projects that keep ion tier one imaging tools sharp and relevant.

This year, we had a we had high praise from our clients for outstanding results and complex geology spending the middle East, Brazil, and West Africa, we.

We earned accolades and repeat work for imaging of improvements achieved using ion proprietary toolkit, including full way form inversion at least squares RPM on.

On <unk>, and 42, streamer and seabed nodal projects, where virtual teams managed very tight exploration or development timelines.

Despite radically shifted work methods in 2020, I've been really impressed by our advances in cutting edge algorithms from the use of artificial intelligence to enhance subsurface imaging ultimately improving client decision making.

This success led to several umbrella contracts with key customers, which will help derisk, our 'twenty 'twenty one revenue plan.

Our operations optimization group, which primarily caters to acquisition contractors has been impacted by the approximately 40% reduction in <unk>.

Sure seismic activity this year.

During industry downturns, most of our software revenue stems from large multiyear commanding control subscription.

In spite of the distressed market, we secured seven such contracts this year.

Although we don't treat these long term contracts as backlog. This recurring revenue lease model provides stability for our software business.

While we have been focused on diversifying our offerings outside of our core market for some time it has become increasingly important given the slowdown in the seismic activity, we are leveraging our technologies and core competencies across software and devices to optimize decision, making and new maritime markets, such as Port operations energy logistics and real time infrastructure monitoring.

And our software group, we continued to gain traction around our Marlin platform for them through trials and tenders, we cannot disclose details of the competitive tender. We initially announced on our third quarter earnings call in November for Marlin Smart towards software will supply Corp management services to <unk> 17 of Carmax harbors over an initial four year term telmex varies is the uk's largest fair.

Operator, managing 29 routes to over 50 destinations across 200 miles of Scotland's West Coast Marlin Smart Board will support <unk> modernization program to enhance efficiency improve the customer experience and reduce environmental impact. This award validates the competitiveness of our offering and demonstrates Marlin software its breath to support a wide range of applications, including port and for every man.

<unk>.

Several marlin trials are underway this quarter for both ports and port platform logistics, we are optimistic about the accelerating adoption given the range of valuable use cases uncovered through these deployment. Our team is laser focused on identifying and optimizing the most expensive aspects of offshore operations to maximize client value Marlin is the only system that links vest.

<unk> plans and schedules to live offshore activities, providing greater control and transparency in the management of offshore operations.

By monitoring plans and providing feedback in real time clients can minimize fuel consumption decreased submissions and operate with just in time efficiency.

And the large port platform logistics trial, we completed a highly successful proves approved towards concept with an E&P major and are now entering into discussions for what we hope will be a long term contract. The offshore cost of transporting cargo can be 10 times higher than onshore costs, which marlin can help reduce by identifying operational efficiency gain.

The largest variable expenses associated with offshore transit as fuel when vessel route plans prescribed slower steaming to destination day, 10% reduction in speed can yield up to a 19%.

<unk> and fuel burn, which can significantly reduce costs and emissions based on initial results, we see our clients investment and the Marlin platform, yielding a rapid payback and multi fold return on their investment, making it attractive for near term implementation.

This multi month project also helped us clarify valuable development requirements for vessel scheduling planning and activity tracking common across a number of marlin opportunity.

Between trials in tenders, we are building a robust pipeline of prospects across maritime energy logistics and port operations and believe we are non positioned to convert a healthy portion of these opportunities for revenue in 2021, we're expanding our revenue potential in the space through two primary avenues first we worked through direct outreach for partners to launch pilot projects quickly demonstrate value and then.

Progressed to paid subscriptions for near term revenue secondly, we're responding directly to tenders for port and logistics software for providing the software some ups component within much larger offshore infrastructure tenders.

In 2020 ion joined the AWS partner network is a collaborative effort to accelerate development of our cloud solutions and provide faster adoption of our cloud enabled products.

<unk> helps partner companies to build market and sell their offerings by leveraging the immense AWS ecosystem.

Access to this broad partner network that wants us to connect with other companies within the ecosystem to explore relevant business opportunities such as extending marlins functionality with new capabilities or data streams.

Last quarter, our devices engineers enhanced our selling system to include artificial intelligence based automated source and vessel steering technology that improves 40, repeatability to accurately image changes and reservoir fluids seismic surveys needs to be repeated as closely as possible in a dynamic marine environment based on achieving a 50% closer matched to the desired positions.

The <unk> trial, we secured backlog for one of our selling systems for most of 2021.

For devices group is also progressing to promising adjacent market initiatives that are synergistic with our software business and have the potential to accelerate our diversification efforts across operations optimization.

Our initial focus is to develop realtime monitoring solutions to address the challenge of increasingly aged offshore infrastructure and new decommissioning initiatives. We are directly addressing the E&P industry is focused on improving the safety and environmental compliance of offshore oil and gas operations, which aligns with our focus to provide data and analytics to enhance decision making.

Most regulators require subsea infrastructure to be inspected periodically the frequency of which can vary for months to years typically it's been expensive cursory inspection with high levels of uncertainty clients are seeking advancements in technology to cost effectively shifts from reactive to proactive systems that provide more frequent accurate measurement to assure safe operating environment.

We have advanced our promising concept with our new well alert branding to monitor wells, our technology integrates subsea sensing and communications technologies to monitor temporarily plugged and abandoned wells well alert provides on demand sensor readings system health and status checks without the need for costly RV operations from a prototype has been developed.

For a year and has attracted strong E&P interest we are focused on securing funding for sea trials in 2021.

We continue to develop defense and commercial interest and our demonstrated capabilities for managing potential waterside security threat, it's a longer wavelength business development cycle with defense customers.

Following a successful initial demo at <unk> 2019, we were invited back by the U S. Navy to participate in our second pilot, which was canceled due to COVID-19 in 2020, we.

We are now scheduled to participate in coastal tried in 'twenty, one the summer where we plan to showcase our progress.

That I will turn it over to Mike to walk us through the financials, then I'll wrap up before taking questions.

Thanks, Chris Good morning, everyone. We had some positive momentum in the fourth quarter with sequential revenue and earnings growth, our fourth quarter revenues of $27 million improved 68% sequentially.

Revenues in our E&P technology, <unk> services and operations optimization segments increased 98% and 20% on a sequential basis respectively.

Both increases are the result of proving market conditions in Europe spending.

We also generated positive adjusted EBITDA in the fourth quarter.

Accordingly, our backlog for majority of which we expect to recognize as revenue over the next year increase for the second consecutive quarter due to both our strategic entry into the three day, new acquisition multi client market and commercialization of our Gemini source.

Backlog, which consist of commitments for multi client programs and proprietary imaging and reservoir services work was $20 million.

For an 11% higher sequentially and 4% higher versus last year.

Moving to the full year, our revenues of $123 million or down 30% compared for the prior year consistent with the reduction in E&P spending while full year 2020 revenues declined by over 50 million or net loss improved by $11 million, primarily due to the over $38 million of structural changes and associated cost.

<unk> implemented during the first half of 2020, our full year, adjusted EBITDA was $18 million compared to $32 million last year.

E&P technology and service segment revenues of $92 million decreased 27% for the full year, primarily due to delays in new program activity as well as reduced E&P spending levels for COVID-19 travel and border restrictions impacted the timing and availability of crews for new acquisition programs into late access to existing day.

Data for new re imaging programs operations optimization segment revenues of $31 million declined 37% versus the prior year due to the COVID-19 related slowdown in offshore seismic activity and associated demand for our services and equipment.

As a result of lower revenues, we expect it to consume cash during the quarter, our cash balance was $38 million at the end of the year, including the $23 million, we drew on our revolver last March.

Our total liquidity defined as a combination of our cash balance and the available borrowing capacity under our credit facility was $45 million.

We still expect to close a 12 million sale of our 49% equity stake in the non strategic and know the joint venture.

However, the regulatory review is taking longer than anticipated and we now expect to close during 2021.

To address the up and coming to maturity of our $120 million second lien notes, we executed a restructuring agreement in late December supported by the majority of our bondholders once complete the deal will extend the bond maturity by for years through December 2025, with a lower 8% interest rate and how is the conversion feature to reduce.

Our financial leverage as we execute our strategy over the next couple of years. In addition shareholders have the opportunity to participate in concurrent rights offering to minimize dilution from the transaction, which provides us with additional liquidity for increased flexibility to operate the business through the tailwind of the pandemic and to support our diversification.

<unk> strategy as markets recover.

Based on the 20 trading day, the Wap since the initial announcement the equity price was set at $2 57.

And the conversion price was set at the high end of the color at $3 protecting shareholder equity.

While it has been worth the extra time to reach this mutually beneficial conclusion, because we are now within 12 months and the maturity date for that became current on our balance sheet, triggering a going concern issue.

We are working diligently to complete the restructuring transactions and anticipate doing so by the end of March.

We are holding a special meeting February 20, <unk> to request shareholder approval on three proposals, but first is to approve the bond restructuring transactions.

<unk> is to increase the number of shares available for issuance required to execute the deal.

The third is to allocate a small portion of those shares to provide appropriate stock based incentives to retain key employees, which I'll speak to in a moment.

We expect to execute the exchange offer and the rights offering as soon as practical thereafter for.

Additional details regarding the transactions. Please refer to our press release issued on December 23.

Before I wrap up I'd like to discuss the rationale of our long term incentive plan or <unk> for short.

Following the restructuring a recapitalization of the company it will be critical to re incentivize our key employees.

We have to be able to compete to attract and retain the best and brightest, especially in our industry, which is cyclical by nature.

To keep cost down since a protracted downturn began in 2014, we froze merit increases for five years and reduced salaries for for the last seven years, making equity based awards and especially useful pool. During these tough times to provide value to our shareholders by allowing us to attract and retain force right talent, while tied our employees financial.

Compensation for the performance of the company.

We're asking shareholders to approve adding three 5 million shares to our <unk>.

Once approved the shares available R. L tip will approximate 7% to 9% of the shares outstanding on a diluted basis post restructuring and post conversion and will enable us to continue providing employees appropriate stock based incentives over the next five years.

We ask that you support this initiative and we'd like to extend an open invitation to call us to discuss in more detail with that I'll turn it back to Chris.

Thanks, Mike.

In summary, I am proud of the strategic achievements. We've made this year in spite of the challenging market backdrop combined with a 30% reduction in our cost structure.

As described both business segments are singularly focused on diversifying into larger market. We entered the <unk> new acquisition multi client market and demonstrated traction with our Marlin software business. We ended the year with the sequential improvement in revenue earnings and backlog positioning us well entering 2021.

Looking ahead, while we expect the market will remain challenging in the near term.

Seen a number of positive developments oil prices have rebounded to their highest levels in a year in the energy industry has started to recover.

There is consensus around increasing oil price stability for 2021, the consistency of which is as important for investment as the price itself.

While clients are still setting budgets analysts expect the offshore E&P market to modestly improve as the year unfolds and digitalization to continue growing at a rapid pace.

Oil and gas exploration on a point forward cost basis remains competitive with the development of existing opportunities and assets reported in the case for investment.

We are starting to see license round activity, returning key ion geographies, such as the recently announced Brazil round 17, taking place later this year.

However, our near term visibility on seismic activity remains limited due to the uncertainty related to COVID-19, and E&P budget.

With regards to the administration's recent review order the temporarily suspend new exploration activities on public lands, we do not expect a material negative impact on <unk> business.

The global our global footprint and diversified portfolio helps minimize the impact of any regional or country specific slowdown. We are primarily focused internationally offshore and unlike our peers from a fairly modest exposure to the U S. Gulf of Mexico. Furthermore, our two day data library there is mature.

In exploration focused offering which has been well subscribed by incumbent Blockholders for small <unk> data library assets onshore North America cover private not public acreage should the moratorium result in longer term change. This could drive large scale E&P company portfolio investment for towards international offshore, which would be well aligned with our offerings.

The E&P industry is participating in the energy transition at an increasing pace and the pandemic has only accelerated these changes with wide ranging views of the shape of change companies are assessing impacts on their E&P portfolios and carving out distinct energy strategies within oil and gas E&P companies will seek to rebalance their portfolios to geographies with lower cost barrels.

For fiscal regimes and lower carbon footprint. These trends along with associated M&A activity will create opportunities for new players and for ion to license data to a new set of customers. There is also a clear focus on reducing costs across the sector augmented by real benefits from digitalization initiatives.

We believe long term oil and gas fundamentals are strong and that exploration and development will continue to be a salient requirement to meet the world's energy needs for some time.

Energy industry will remain important to ion, but we're also diversifying into attractive new markets, where our technology and capability has the potential to create value. We have re crafted ion platform for growth, including recent realignments within our executive team to more effectively map our strength to the evolving industry dynamics.

We are highly attuned to the industry is driving themes and rapid pace of change and are developing new offerings that capitalize on our strength and address key industry needs associated with the energy transition such as portfolio rebalancing environmental compliance sustainability and digitalization with that we'll turn it back for the operator for Q&A.

Thank you, ladies and gentlemen at this time, a little can be conducting a question answer session.

If you have a question. Please press the Star then one key on your telephone.

If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

Once again Thats star one for questions.

Our first question will come from the line of Colin Rusch from Oppenheimer you may begin.

Thanks, So much guys can you give us a sense of how much of your opex spend is going towards exploring adjacent markets and net building out those opportunities for the platform.

Yes, Hi, this is Chris.

Thanks for joining Collyn, yes, so right at the moment on the adjacent market stopped for new market stuff.

I'd say about a it's just fixed cost with developers predominantly and business development teams within our software unit in Edinburgh, So it would be about probably.

Probably 20 currently drilling up to about 25% of the cost base in Edinburgh.

So that's you know it's not a huge number relative to the cost base, we have in the company, but it's a significant focus we have a dedicated team.

For Marlin and all the Marlin web apps. They cover all the use cases for ports in E&P logistics et cetera.

So it's.

If you think of the revenues of the operations optimization unit.

Half of those being software.

If you think about the cost.

The cost base of that being about 25%, let's say okay.

Okay.

That's helpful and then.

As we go through this recovery.

And coming out of Covid can you talk a little bit about your expectations for ups.

Normal seasonality for for the revenue for this year.

You have a sense of that at all at this point.

Yeah, I would say sticking with the premise that we've said before and others have said to you that we think it's a broad U shaped recovery.

For the E&P space, and probably seismic as well so our premise that's been really we started the year strong in 2019, and then hit hard by the pandemic and oil and gas geopolitics.

<unk>, obviously got some momentum in Q4, there that you've seen and I think there's a seasonality element there.

The first half of 'twenty, one will be.

We will be.

The rebuilding and re stabilization period with the second half being stronger in the back end of that broader U shaped recovery. So I don't think Q4 is just the beginning of the U shape recovery I think thats a seasonality piece.

Yeah pretty much. So I think we still have over printed on our business and our peers due to as the low.

Kind of Q4 effect on data library buying.

Moving forward I think as we get more into the <unk> acquisition.

Which can be taken place at any time. It has underwriting you get away from just that data library buying at the end of the year. So R. E. R. Pts business will also be.

More and more stable and probably steady through the year, rather than backend loaded and the software and devices business will be pretty steady state.

Okay, and then from the last one is just really around.

Customer activity and what you are saying I have Mr line.

Lot of folks have gone through restructuring.

The answer for the customers.

Our now potentially.

Potentially getting more focused on how they're going to carry forward from a strategic perspective, but can you just talk about top levels of activity has fallen back to care about those customers.

Yes, so the customer landscape is very interesting and I'm sure you've seen all the highlight that in the market with the big all shifting.

Some of their portfolio with him to energy transition things like wind and solar with predominantly.

If we look at our customer base that is normally the buyers of our data library, it's all over the map you have.

Some that have finished finished some of their other cost cuts that came out of last year and finished the reorganizations and have announced budget from some of them are are up slightly year on year.

Which is good you have others that have actually.

Ironically have actually cut some of their day and G people, but announce larger budgets you have others that are still finishing their cost cuts some.

So one of the big majors are still kind of doing that.

But you've got smaller companies, who are have budgets and our volume. So it is there is a varied number of strategies that you are seeing between the large oil companies for national the national oil companies from smaller independent generally speaking, though I would suppose that the sentiment is better we're having a lot more dialogue than we were.

Middle of last year, Q4 was really the marker where the dialog started increasing.

And.

And really in this for the last few weeks, we've seen coming out of the kind of quiet for new year period.

Some of the major companies that had delight really almost no projects last year, starting to discuss projects and you also see that with our some of our acquisition customers there, they're starting to get backlog in bookings that they were mainly projects delayed from last year that have now moved to the right into 2021, so as expected that stuff starting to happen and we're seeing a knockout.

Benefits there with that customer base and we're also seeing that with the end customers who support that also for our data library buyers and underwriters of day program.

That's a perfect moving that's probably.

Characterize that as you know you've seen comments that E&P spending offshore could be up.

Single digits in 2021 versus 'twenty, and we're seeing that level of dialogue.

So.

Awesome. Thanks, guys.

Thank you.

And once again Thats star one for a question Star one.

Our next question comes from the line of Amit <unk> from H C. Wainwright you may begin.

Good morning, Mike.

I have a lot of most Connecticut when we line. So if you guys can you hear me Jerry I haven't been to London.

You can go ahead.

Hey, Amit your line is breaking up a little but I didn't catch that I don't know if Mike did.

Yes.

Yes, I'm getting a lot of static on my guys, maybe I'll just follow up from flooding sorry about this.

Yes, it's a little bit better now if you want to try again.

Okay.

Well.

And then.

Part of a diversified set of opportunities now for the LNG market beginning to stabilize.

Do you anticipate backlog continuing to post a question for you and potentially for any one being a net revenue growth here for you from day for Disney Bernie.

Yes, so I mean I did catch that so yes.

Yes, so two questions.

With the energy transition and also the increasing and backlog we've talked about and the customer activity. I. Just described do we see the 2021 being a growth year and backlog increasing so yes, we do see 2021 being a growth year over 2020.

Oh, yes.

Then.

Secondly, yes, we do see we're happy with the backlog growth. We've had sequentially. We do anticipate we will we will see that growing.

Right now the backlog is comprised of underwriting for the mid North Sea High three D program. This summer and also backlog around our proprietary services both data processing imaging.

And the Gemini sourced on a proprietary basis. So that's all good and I think we will consume some of that obviously, but we will see it also I think youll see it growing as well.

And then does the backlog we have.

Software revenues and net.

More than that sector.

Yes, so I did I did mention that in the script that they basically.

Basically I'm excited before that we actually don't count the the long term software contracts as backlog, we could I suppose but we just traditionally have not so for apples to apples, we keep it simple.

But we have actually seven seven contracts long term contracts for software that they're really provide the bulk of the.

The revenue stability in the software business.

2000, Twenty's software revenues.

Well over two thirds of that came from.

A long term contract subscriptions.

For the core software, which.

Which includes Martland and it and then we also have two long term contracts now with the ports and harbors. So that takes us to non long term contracts and we have won the software as a service marlin contract with them.

One of the largest oil and gas companies on the planet.

So that takes us to about 10 long term contracts, which in software. So that provides essentially backlog for for the software business.

Let me say, thank you for that.

We also went from being on the order, let's say something like $12 million annually kind of thing that's backlog website.

Yes.

In terms of the Mojave.

Is it anything particular from a regulatory perspective, that's moving the transaction up for just given what Christine.

Yes, it's a little bit of everything I think it's COVID-19 pandemic slowdown on pretty much everything it's also some bureaucracy.

Between.

Between the buyer and the filing requirements. They believe they have in the.

And the and the provision of that information from kind of the.

The Chinese side of our joint venture this delicate issues. There. So I think that's what's taking the time.

Still good interest from the buyer.

<unk>.

General support as well from from PGP Who's our coat.

Coke to our partner in the JV so low.

And we will get there we still.

We're not we're not forecasting it for Q1 vessel, let's put it that way.

Understood that's.

Thank you.

Amit. Thank you so much for joining us.

Thank you.

And I'm not showing any further questions in the queue I'd like to turn the call back over to Chris Usher for any closing remarks.

Yes. Thank you operator, thank you everyone for joining the call today.

Sure.

I ask that is interesting inflection point with coming out of the pandemic period in a building backlog and are identifying.

Identifying growth for the future both in our core business and then.

In our new businesses, and we're pretty excited about that and we look forward to having you back on the Q1 call to see how we're progressing that and progressing the closure of our bond restructuring as well. Thanks so much.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may disconnect. Your lines at this time have a wonderful day.

Thank you.

[music].