Q4 2021 Geospace Technologies Corp Earnings Call
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Yes.
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Thank you for calling May have a conference I do please.
Sure. It's G O F Q4 to one.
Alright, thank you.
Yeah.
And May I. Please have your last name followed by the spelling.
Janet Brown B R O W.
And your first name.
David.
Thank you Mr. Brown to me I have the name of the company that you're calling from please.
Error, that's a I E R. A.
Excellent. Thank you very much I'll place you into G E O S Q4 'twenty one.
Okay.
You're welcome.
Although the border patrol.
Did it to do and.
That's it.
For passenger expectations I guess.
No.
I can't answer for them of course I.
I can tell you as a seismologist and one of the innovators of it that I am very happy I am very pleased with how it how.
It is gone.
In our manufacturing of it it's a very complex system, so geo space in quantum bringing.
Bringing our mutual capabilities into a single solution.
That's a big milestone for us that we're now going to leverage going forward into many different applications in the future.
I am pleased we're getting it in the ground.
These are seismic acoustic systems and how we get them. There is important in an efficient and cost effective and environmentally friendly way.
And then how it performs.
These are.
Challenging environments that we go into we prepared for them. We did the good science and yes, I could not be happier with how well the system is doing but I'm only speaking it might be half I can't speak on behalf of the border patrol.
Well I appreciate the commentary Mark.
And once again that is star one if you have.
Have a question.
And we will wait to have an additional question from Mark <unk> with.
Morris and Cabot Your line is open.
Good morning, gentlemen.
Hi.
So Rick the credit facility is it the intent to increase the size of the credit facility with someone else.
Well in actuality, we havent use that credit facility in quite some time and and review of that you know we thought we could do better than that and I mean, let me, let Robert speak to that because he can give you some more details on it yeah. Our plans right now are not necessarily to increase the credit facility is just.
To look for what other options are out there and what better fits our needs today.
I think the last time, we even are.
Utilized any kind of a credit facility was back in two.
2013, Yes September of 2013, so it's just it's it's not been something that has really.
Benefit of this.
Has it been needed to benefit as Uh huh.
In time since then.
So where I'm going with that is obviously in 2013 was the last significant PRN contract I guess the interesting question for me is.
Hum.
If this P. R. M contract comes to fruition would you need additional resources.
We're actually not sure that we would or would not but I don't think we feel that we're under any stress with respect to coming out with the financial Wherewithal to proceed with any of these are discussions that we're having with the oil and gas companies.
So Rick the Gulf of Mexico, just had a fairly significant.
Our new leases.
Is there any historical perspective that you can provide for us related to activity in the Gulf, new leases et cetera, and what that May mean for your seismic equipment.
Well certainly our <unk> ocean bottom equipment has been very popular in the marine environment over the last several years youre in Youre well aware of that it certainly has the opportunity to be used in the Gulf.
There are discussions about various projects out there would apply.
There is also possibilities for permanent reservoir monitoring systems and Gulf waters as well.
So there's there's plenty of opportunities there, but as you well know.
Things change.
As political environments change that also impacts the future of those areas. So we will just have to see.
Rick and Mike correct.
Only.
There.
Competition for this P. R M contract from Alcatel.
Are there others.
I would say that in our estimation the primary competition would be from Alcatel. If there are others out there they're not ones that have been made themselves known to me.
It does not mean, there don't exist some out there.
And so.
I'm, assuming going back a year ago. When you guys decline to provide a bit that alcatel or the others also declined to bed and so.
What's different right now versus a year ago when when these discussions were taking place.
Well I mean in terms and conditions were tweaked a bit I guess from last time and that requires a you know.
New evaluations, which is what we're in the middle of at this point in time.
And obviously when you are used the word great encouragement.
Right.
Yeah.
Is this environment the best environment in terms of discussions that you guys have ever had.
At T O space.
That's a very fair statement, we have more ongoing conversations going on none of which imply there will be any revenue in our fiscal year 2022.
The the level of these discussions the depth that we're getting into on these discussions.
Certainly as the greatest it's ever been to be quite Frank and.
That being the case.
It's very much an indication of just how well this science is understood how much value there is in <unk> monitoring they call it.
On these reservoirs.
Ed.
They all do 40 monitoring or time lapse monitoring they don't always use permanent systems, but you know theres quite a bit of return on the investment and a sooner amount of time using permanent reservoir monitoring systems. They are also much more environmentally friendly because once.
Once your deployment to deploy the systems. Then subsequent surveys are generally a single vessel.
Towing and Aragon around.
So it's a very lightweight ongoing process there.
There's a lot of things that point to the effectiveness of P. R. M that may well be why we have as many conversations going on as we do.
But we'll just have to see how it all plays out.
If I could just ask Mark a couple of questions. So certain work.
The Secretary of Homeland Security is supposed to submit an annual report to the congressional committee as set forth in this.
This would include cross border tunnels et cetera, I'm sure you are quite aware of this what I've not been able to find is this report.
But this report supposed to be pretty exhaustive as best I can tell can can you give us any additional information on what this means.
And how this affects geo space.
Okay.
Yes.
Well.
Everybody pull up to your whiteboard.
It's a it's a very good question, but it requires more of an in depth answer then I think as I can go into here.
Yeah.
Our capabilities provide.
Solution for being able to.
Delivery of the border patrol actionable information.
Okay.
So border security is a key element.
Nonpartisan for ensuring that we remain aware of anything coming across our borders.
Whether it's legally two ports of entry.
Or illegally.
Threats come everyday so I'm not exactly sure what will be in his report.
But we do but we do know surface crossings.
Ariel crossings and subterranean crossings are mechanisms for bringing guns weapons drugs and other contraband in.
It's been no secret, we talked about it quite a bit that there is.
The requirements for.
Monitoring we are very attuned to.
And that.
This next level system that we've been that we've delivered is going to be evaluated and looked at for meeting those additional requirements.
So his report.
The plus up that came in the Senate Appropriations last draft language of taking border security technologies, and adding another $70 million to it.
So all indications that.
Security technologies are key element in addition to a physical barriers such as a wall to providing complete security domain awareness, along the southern border and the northern border to be included.
So if those funds have been exhausted and so therefore, we do have to wait for the next bill is that what you're referring to in terms of next spring.
I can't speak if all the funds have been exhausted, we're not privy to what remains in the funding coffers of the border patrol.
But funds come in different colors multiyear funds.
<unk> can sometimes be the case, but we're pretty sure that our next contract will be tied to future funding cycles and that's why we're trying to stay so attuned to the FY 'twenty two budget.
Got it and just lastly can you give us a little bit of.
Insight as to what this JV means for carbon management, Exxon recently put out a pretty big number.
Relative to the amount of money that they'd like to appropriate to this area.
How far out is this.
Where where are we in terms of products and availability can you give us some sense of what's going on with regards to this JV.
I'd be delighted to.
So.
Passive seismic monitoring.
Is.
An additional.
Endeavor that we're taking here at Geo space as.
As you know we offer best in class products for the active seismic world that Rick was just talking about.
We deliver acquisition systems.
That record intentional energy injected into the ground to image the upper layers of the Earth.
But in this new movement and the expansion of energy.
And how it's how we're going to deliver energy and it can be whether we're doing it cleanly to secure carbon.
Whether we're going to use geothermal.
Or other techniques when we're interacting with the with.
With reservoirs in the upper layers of the Earth by injecting fluids. These fluids can be liquids or these fluids can be gasses.
These reservoirs have a seismic expression.
They're going to release micro earthquakes.
So now we have the opportunity for passive monitoring and that standing back and listening for that seismic expression.
So youre right Exxon is putting a big investment now.
Was pleased to attend.
About a month ago.
A conference in which I was able to hear the CEO of oxy speak.
And she says this this.
Part of this new market, that's coming at Us is <unk>.
She said between three and five trillion as her prediction.
So of that very sizable market a component of that will be the monitoring of those reservoirs.
You can go look in Canada, you can look in California, you can Google for what these potential requirements will be to ensure that when we do.
Store carbon underground how are we going to make sure that it stays there.
And how long do we have to ensure that so.
So that aspect of the full carbon capture utilization and storage market that aspect is the <unk> component.
The verification component and that's where we come in.
So would this be like lane sensors on the border for the border patrol.
So our state of art technology that we're applying throughout that we have applied throughout the government to include the border patrol.
As an exact math over.
So the JV is very critical because it allows us to have energy the entire energy market see how well this works.
So that relationship that we have with carbon management, Canada, and they have a number of joint industry subscribers that they call. It from a number of major oil company, such as shell or chevron or synovus or BP.
It's an active carbon storage site.
Yes.
So our state our technology that we've developed it has now been deployed there and we're going to be analyzing the data and sharing those results.
With future potentially future customers.
Okay.
What do you think the.
Cycle time is.
For other players.
For people to evaluate this what's sort of the evaluation is it a quarter or two quarters four quarters, what's what's your guess I would say four to eight quarters.
Okay.
Yeah.
Thank you guys. That's always appreciate it.
You bet.
There are no further questions on the line at this time I will turn the floor back over to Rick Wheeler for any additional or closing remarks.
Alright, well, thank you Britney and thanks to everyone, who joined our call today and we'll look forward to speaking to you again on our conference call for the first quarter of fiscal year 2022 in February.
Thank you very much and goodbye.
Thank you. This does conclude today's geo space technologies fourth.
Fourth quarter 2021 earnings Conference call. Please disconnect. Your line at this time and have a wonderful day.
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