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Pacific Drilling S.A. (PACD) Q2 2019 Earnings Call Transcript

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PACD earnings call for the period ending June 30, 2019.

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Pacific Drilling S.A. (PACD)
Q2 2019 Earnings Call
Aug. 13, 2019, 11:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good day, and welcome to the Pacific Drilling Second Quarter 2019 Earnings Conference. Today's conference is being recorded.

At this time, I would like to turn the conference over to Lisa Buchanan, Senior Vice President and General Counsel. Please go ahead.

Lisa Buchanan -- Senior Vice President and General Counsel

Thank you, Ryan, and welcome, everyone, to Pacific Drilling's Second Quarter 2019 Earnings Call. Before I turn the call over to Bernie, I'd like to remind everyone that any statements we make during this call about our plans, expectations, estimates, or predictions about the future, including those concerning our future, financial and operating performance, our earnings expectations, our beliefs and estimates regarding our relative valuation in the market, our market outlook, including our views of future contract day rates and our business strategies and plans for future operations, are all forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These statements are not guarantees of future performance, and our actual results could differ materially from any forward-looking statements made during this call due to a variety of factors, including those described in Risk Factors section of our 2018 Form 20-F and other filings with the U.S. Securities and Exchange Commission, which you can find on our website.

You should also note that we use certain non-GAAP financial measures during this call. You'll find the required supplemental disclosure for these measures, including the most directly comparable GAAP measures and associated reconciliation, in our earnings release, which is available on our website.

I'll now turn the call over to Bernie Wolford, Chief Executive Officer of Pacific Drilling.

Bernie Wolford -- Chief Executive Officer

Thanks, Lisa, and good morning, everyone. Welcome to our Second Quarter 2019 Earnings Call. I sincerely appreciate your participation today. Joining me in addition to Lisa are Jim Harris, our Chief Financial Officer; and Michael Acuff, Senior Vice President of Commercial.

As reported in yesterday's earnings release, Pacific Drilling generated adjusted EBITDA of $15.6 million and $76.4 million of revenue in the second quarter of 2019. These results were largely achieved through continued higher revenue efficiency and cost-effective service delivery.

Since our last call, we firmed up an option with Total for the Pacific Santa Ana, which was noted in our earnings release. Also, we are pleased to announce firming up our first option with Equinor for the Pacific Khamsin this morning. We have supported Equinor in conjunction with Total to firm up this option via assignment to Total for their South Platte well in the U.S. Gulf of Mexico. In combination, these option exercises add roughly 200 days to our firm backlog. Additional details can be found in our fleet status report published this morning. Each of these are important steps toward meaningful improvements in our liquidity runway and demonstrate our execution on key strategic objectives.

The Pacific Khamsin arrived in the Gulf of Mexico in late July, and is in the final stage of crew ramp-up while completing installation of our managed pressure drilling, or MPD, system. We anticipate commencing work for Equinor in the fourth quarter after completing a rig acceptance test.

Our crew and operation support team have done an excellent job of preparing the rig, which is one of the high-specification seventh-gen drillships in the active market. As a reminder, under the Equinor contract, we will be providing an MPD system along with other integrated services including casing running, ROV, and cuttings handling, for which we will receive additional compensation in the form of adders to our base day rate.

The Pacific Santa Ana has recently relocated from Senegal to Mauritania for the second of a two-well program with Total. On the conclusion of this program, the ship will move to Las Palmas to undergo thruster maintenance and install equipment for Phase 2 of the Petronas Plug and Abandonment Program in Mauritania. This program begins in the fourth quarter of 2019 with an anticipated duration of 12 months.

Turning to the market, for our fleet of sixth and seventh generation drillships, we continue to see a positive trend in terms of new tenders received and average durations for tender programs. In the second quarter, we received eight new tenders or bid opportunities representing 9.3 rig years of firm work. This, as compared to the first quarter, when we received six new tenders representing 2.3 rig years of firm work. In addition, in Q2, we received 13 requests for information or RFIs for contemplated drilling programs as compared to nine RFIs for Q1. We also continue to be engaged in a number of direct negotiations in addition to the tenders and RFIs noted. This improved opportunity rate continues quarter to date with three new tenders and eight new RFIs received.

You may recall that in our May commentary, we noted that approximately eight deepwater tenders were outstanding for anticipated award in the second half of 2019. All eight of those have since been awarded, which is surely a positive. Through the balance of 2019, we expect a further six deepwater tenders to be awarded. In combination, we read these measures as positive and indicative of continued gradual strengthening in demand, representing opportunities for Pacific Drilling to build additional backlog.

As mentioned in our previous call, we are targeting opportunities that are attractive in terms of rates, durations, or some combination that generates meaningful free cash flow for ready assets or supports the ramp-up of another smart-stacked drillship.

Turning to operating costs, in the second quarter, we delivered contract drilling services at an average direct rig operating cost of $109,000.00 per day, as compared to $118,000 per day in Q1, further demonstrating our commitment to deliver cost-efficient performance. Our team continues to make progress to reduce operating costs through smart procurement. Our efforts in supply chain management have netted more than $7.6 million in annualized savings to date.

Our liquidity runway is a priority for the company. As of the end of the second quarter, our liquidity was $342 million, including restricted cash and other cash collateral expected to be released this quarter. In the first six months of this year, we made $17.1 million of capital enhancements, completing the upgrade of the Pacific Santa Ana through the addition of a riser gas handling system, and significantly enhancing the Pacific Khamsin with the addition of a fully integrated MPD system. These not only improved the prospects for the respective rigs, but significantly upgraded the rigs in terms of their position in the global drillship fleet ranking and, as in the case of the Pacific Khamsin, generate economically attractive revenue streams over our base day rate.

On the subject of liquidity, I'm pleased to have Jim Harris, our new CFO, here with me today. Jim brings a strong finance and oilfield service leadership background to our executive team and is already making meaningful contributions, taking a proactive approach to liquidity management and providing valuable input to our strategy for securing additional backlog.

While on the subject of our team, I want to acknowledge that all we accomplished is made possible by the dedication and performance of our excellent rig crews, their unwavering commitment to safety, and the administrative and support teams that deliver day in and day out. I thank each and every one of you for your dedication and engagement.

All in, the company has performed well in the first six months of 2019 and remains very well-positioned in terms of both assets and capacity to participate in further improvements in the market. We continue to approach these opportunities in a balanced and disciplined way, where managing our liquidity remains a top priority.

I will now turn the call over to Jim for review of our second quarter results.

Jim Harris -- Chief Financial Officer

Thank you, Bernie, and good morning, everyone. I'm very pleased to have joined the Pacific Drilling team recently and look forward to meeting with our investors and industry analysts to talk about the company at several upcoming industry conferences and in other one-on-one opportunities.

As Bernie indicated, the second quarter was positive for the company in many respects. I will provide a more detailed look at our second quarter results and give high-level guidance on our outlook for the third quarter. I will also address our current liquidity levels and opportunities in light of the gradually improving market conditions for our services.

We achieved second quarter revenue of $76.4 million, a 15.9% improvement over first quarter results, with strong revenue efficiency of 97.4%. The increase in revenue was primarily from the Pacific Santa Ana commencing operations with Total in Senegal.

While we have been working with relatively short firm contract durations, we continue to have success finding good near-term projects for our active vessels. We are confident that our high-spec fleet will compete well for projects within the active basins we have positioned our equipment. Our team has been very active responding to an increasing number of tenders and engaging in direct negotiations with customers.

Our adjusted EBITDA for the second quarter was $15.6 million. This result represents an improvement of $11.3 million over the first quarter. The company managed its costs well in the second quarter, with operating expenses of $52.3 million in line with first quarter results, while, as stated, revenue improved to $10.5 million. Total general and administrative costs of $10 million were lower sequentially by $1.2 million, as cost-saving measures implemented in the first quarter bore fruit for the full three-month period.

Bernie has already highlighted the $7.6 million annualized savings our supply chain has delivered through competitive bidding and opportunistic timing on significant purchases. The group is also studying lead times on critical supplies at a very granular level to minimize supplies on hand, which will improve our cash flow, while at the same time, protecting operations from expensive stock-out events.

Capital expenditures for the first six months of the year totaled $21.4 million, comprised of $4.3 million of sustaining items and $17.1 million in rig enhancements, a portion of which will be paid for by our customers. The enhancement capex included two items: amounts incurred so far this year on the MPD system for the Pacific Khamsin; and final payments for the riser gas handling project started last year on the Pacific Santa Ana.

On a year-to-date basis, the company's operating cash outflow was $51.9 million, including cash interest paid on April 1st of $32.3 million and an increase in working capital of $36.5 million. A substantial portion of the increase in working capital is attributable to accounts receivable outstanding on the higher second quarter revenue, most of which has been collected in the third quarter.

We measure operational improvements and cash flow on an unlevered basis by adding back cash interest, cash taxes, and reorganization items. We closed the second quarter with $342 million in cash. Pro forma for $36 million of restricted cash and other collateral, included in other assets on our balance sheet, expected to be released by counterparties this quarter. We are currently evaluating options provided for in our outstanding bond debentures, permitting us to add a $50 million super senior secured revolving credit facility and a $50 million capital lease facility to potentially further enhance our liquidity position.

As a reminder, our first lien bonds mature in October 2023, and second liens in April 2024. While on the subject of liquidity, with regards to our ongoing Zonda arbitration against Samsung Heavy Industries, we are carrying a receivable of $205 million on our balance sheet. We remain confident that we should ultimately prevail, and the book value is significantly less than our full claim of over $300 million. There has been no change to date in the status of our claim as we continue to await the tribunal's final award.

Looking forward to the third quarter, the Pacific Bora came off contract with Eni in Nigeria in mid-July and has already moved to offshore Ghana as we pursue several opportunities. The Pacific Sharav will be coming to the end of a five-year contract in late August working for Chevron at a high legacy day rate, and rolling over to continue working for Chevron at a lower current market day rate, as disclosed in our feet status report.

As a result of these changes in our fleet status, we expect third quarter revenue to come down to between $49 million and $54 million. In addition to mobilizing the Pacific Bora, as noted, the Pacific Khamsin has moved to the U.S. Gulf of Mexico and is undergoing preparations for its recently awarded contract with Equinor for exploration drilling starting in the fourth quarter 2019. While these actions position our fleet for future revenue recovery, the ramp-up contributes to an expected increase in our operating expenses in the third quarter to within a range of $60 million to $65 million.

We expect third quarter general and administrative expense, depreciation, and interest expense to be in line with to slightly higher than second quarter results. Amortization expense, however, will be down by $11 million to around $21 million as the amortization of the Pacific Sharav legacy high day rate contract comes to an end, as already noted, in late August.

We estimate income tax expense for the second half of 2019 will be between $5 million and $6 million. Our guidance for the full year 2019 remains essentially unchanged except for minor tightening of several ranges and anticipated higher enhancement capital expenditures in the second half of the year.

Our sustaining capex should be between $3 million and $4 million per quarter for the second half of the year. We now expect to spend $40 million to $45 million in enhancement capex for the full year, with the increase being for the initial installment payments on a second MPD system we are evaluating for another vessel. If we proceed with this upgrade, it will only be on economically attractive terms under a firm customer contract, as we will continue to exercise careful stewardship of our capital.

We have posted our outlook in the Investor Relations section of our website at The team delivered good results in the second quarter against the backdrop of challenging but improving marketing conditions for our services. We are encouraged by the tone of recent conversations with customers and hopeful that contract durations might continue to extend on more economically attractive terms for us. Our near-term focus remains protecting our liquidity while investing prudently to prepare our fleet to deliver incremental margin on the opportunities we see in the market.

On a personal note, again, I am excited to join the Pacific Drilling and look forward to working with the entire team to deliver outstanding results for all of our stakeholders as the market recovers.

And with that, I will turn the call over to Michael.

Michael Acuff -- Senior Vice President of Commercial

Thank you, Jim, and good morning, everyone. The high-specification drillship market consisting of sixth and seventh-generation rigs continues to develop as expected. As Bernie indicated earlier, we continue to see an increase in the number of fixtures as well as tendering activity.

In the second quarter, there were 21 fixtures compared to 16 in the first quarter. Though we see the market is relatively flat for the balance of 2019, with only a couple of outstanding opportunities, we see further improvement in 2020, as customers are planning additional programs around the world with a focus in the regions of West Africa, Brazil, and the Gulf of Mexico.

Customers continue to extend currently contracted rigs and exercise options to retain access to the highest specification equipment available. To illustrate, during the second quarter, there were 11 options exercised or extensions granted, plus nine new awards, compared to only four contract roll-offs to warm stack mode. The significant roll-off risk, which has been a consistent concern from the market, has not been realized over the first half of the year.

Finally, we are beginning to see some term programs of one year or more come to the market for 2020 and 2021 starts. These include exploration programs in Brazil and Mexico, as well as development programs in Mozambique, Angola, Nigeria, and the U.S. Gulf of Mexico, all requiring high-specification units.

Looking at the supply numbers for the sixth and seventh generation drillship segment, we see effective utilization of the marketed fleet at 86%, with 66 high-spec drillships on contract at the end of the second quarter. This number consists of 39 seventh gens and 26 sixth gens working with five and six active units available, respectively. There remain just 26 high-spec rigs months available for the remainder of 2019 in the Golden Triangle regions. With the predicted increase in demand, we expect to see 80 or more drillships on contract by mid-2020, taking high-spec drillship utilization to over 90%. The high specification DP semi-submersible segment, which is typically not a significant part of the competition in our space, already has seven out of seven active units currently contracted. With respect to new builds, there are four units that are scheduled to be delivered by the second quarter of 2020. However, we do not believe these units will join the market by then.

Drilling a bit deeper into the high-specification market for each of the major deepwater areas, we see that there are six marketed units currently idle on the West African coast. The demand in the African region is expected to be flat to declining for the remainder of 2019. The near-term oversupplied market will make it challenging to obtain additional contracts before the end of the year, but we see this improving, as there are already seven visible opportunities for starts in the first half of 2020. We are also expecting a slight day rate improvement for this future work, though not as strong as in the other regions.

In South America, the Guyana-Suriname area has been the bright spot, with demand for three rigs on a continuous basis and possible incremental adds next year. However, the most significant market, Brazil, is in the early stages of its recovery from the challenging past four years, where deepwater rig counts went from the mid-50s down to as low as the high teens currently. We see this improving with Petrobras potentially returning to the market for replacement rigs of higher specification, and four to six incremental rigs over the next 12 months. This will be a welcome development, as it adds meaningful demand on top of the activity we're starting to see from the international oil companies, who are preparing for their exploration and development programs, which start in late 2020 and 2021. There are currently only two drillships available in Brazil from local contractors, which should make it a more commercially interesting market for the international drilling contractors, who will have to mobilize units in for work.

Finally, looking at the U.S. Gulf of Mexico, we see that it has become the tightest deepwater basin, with effectively 100% marketed utilization. The next potentially available high-spec drillship would roll off in November, with only two more units possibly becoming available in the first quarter of 2020. With the demand we see in the U.S. Gulf of Mexico, and particularly Mexico for next year, we believe spot rates will continue to strengthen, surpassing the $200,000.00 per day mark in the first quarter of the year.

Looking at the visible demand in the past quarter, we received eight new tenders, representing 112 months of firm work, as compared to Q1, when we received six new tenders, representing 28 months of firm work. We currently have more than 22 high-spec drillship opportunities in the active procurement stage, with 18 scheduled to start in 2020. This demand visibility, along with the discipline seen among the contractors, gives us some confidence that the high-specification drillship segment of the market will result in meaningfully higher day rates for the best equipment.

Regarding our fleet status, recently, the Pacific Khamsin arrived in the U.S. Gulf of Mexico and is expected to commence its two firm wells plus two well options contract with Equinor in November, following completion of the MPD installation and acceptance testing. We are excited to be working with a new customer who is deepwater-focused and clearly values performance. We hope that this is the beginning of a long, mutually beneficial relationship with Equinor.

As part of this contract, Equinor has assigned its second firm well to Total, who will use the Khamsin for one well in their South Platte field following the first well with Equinor. We expect with the two firm wells, the rig will be occupied at least until July 2020, with two additional options at escalating day rates remaining on the original contract.

We are very excited to be working on both exploration programs and are pleased with the confidence both operators have shown in Pacific Drilling and our unique stacking and ramp-up process. The Pacific Khamsin, which is about to complete her initial five-year contract with Chevron, has been extended for one firm well, with three additional option wells at escalating day rates. We continue to expect that Chevron will exercise the remaining options, and look forward to continuing our long-standing relationship.

The Pacific Santa Ana has recently moved from Senegal to Mauritania as part of the two-well exploration contract with Total. Total is currently expected to utilize the rig until sometime in October, when we will demobilize the Las Palmas to prepare for Phase 2 of the Petronas Permanent Abandonment Program in the Chinguetti field in Mauritania. This one-year program is expected to start in November. Additionally, as part of our continuing relationship with Total, we have added two option wells for Senegal and Mauritania to the Santa Ana rig line following Petronas in late 2020, and we will update you as we have more information to share on these options.

The Pacific Bora, which recently completed its second well with Eni in Nigeria, has been mobilized to Ghana where she remains in hot stack mode while we continue to pursue additional opportunities in Africa and other regions for work.

With respect to the smart-stacked rigs, we continue to look for the right opportunities to employ the Meltem, Scirocco, and Mistral. The Meltem, which is our high-spec unit and one of the latest generation drillships in the world, will give us a great opportunity to leverage the expected demand and higher pricing predicted in the second half of 2020 for a unit of its superior capabilities.

In summary, we continue to be encouraged with the developments we are seeing in the market and expect steady improvement in the 2020. With three high-spec smart-stacked rigs available, we are well-positioned to take advantage of an improving market, should an opportunity appear that makes economic sense.

With that, I will now turn the call back over to Bernie.

Bernie Wolford -- Chief Executive Officer

Thanks, Michael. In closing, I want to reiterate that we continue to leverage our operating experience and strong customer relationships to take advantage of the improving market for our high-specification rigs. To a person, we are committed to providing exceptional customer service, effective HSE programs, and industry-leading performance to deliver on the value that Pacific Drilling uniquely represents.

I will now hand the call back to the operator and open the call for any Q&A.

Questions and Answers:


Thank you. If you would like to ask an audio question, please signal by pressing *1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press *1 to ask an audio question. We'll pause for a brief moment to allow everyone an opportunity to signal for questions.

We'll take our first question, and that is from Fredrik Stene with Clarksons Platou Securities.

Fredrik Stene -- Clarksons Platou Securities -- Analyst

Yeah. Hi, guys, and congratulations on the new contract. It's very interesting to see. I want to touch a bit upon what you said about the potential second MPD with regards to your capital guidance. So, could you kind of just give me some color on how you think about kind of the contribution from the MPD systems, and what kind of basically margin you're running at when you see the disclosure in the status gets additional between $62,000.00 and $67,000.00 per day? Is that kind of a good way to go about it? As you said, you want to kind of have a backing of a firm contract if you're going ahead with the second one.

Bernie Wolford -- Chief Executive Officer

Thanks, Fredrik, for the question. Let me start with the comments you made with regarding to the rates we disclosed in our fleet status report. That additional amount disclosed in the footnotes represents the additional rate for the MPD, as well as for the integrated services we provide to Equinor, which include ROV, casing running, and cuttings handling. So, that is a combined number for those services altogether. Within that combined MPD and integrated service package, we expect to generate a margin of $20,000.00 to $30,000.00 per day.

Going back to your former question on the MPD specifically, generally what we look for is a calculation that will support our investment based on an internal rate of return that's on the order of 14% or higher. It's very, very customer-specific, very term-specific, and very much depends on the amount of money we get upfront for any particular term of work. We do not absolutely have to have payback in the initial term. We have to have the expectation that we will earn that rate of return well before the life of that asset is expired.

Fredrik Stene -- Clarksons Platou Securities -- Analyst

Thank you. That's very helpful. Jumping from that to sort of a quick question on the Santa Ana options with Total, the new ones, are those priced or unpriced? Or if they're priced, could you kind of give an indication on how you thought about that compared to the rate it has run on with Total historically?

Michael Acuff -- Senior Vice President of Commercial

Yeah. So, this is Michael here. Those are priced options, and it's part of the deal we worked with Total. I would say that market base is the best way to -- or what we expect to be market in that time period. And that's really all the color I can give you on that.

Bernie Wolford -- Chief Executive Officer

Our expectation, Fredrik, is that the market will be in a better place at that time, and the rates reflect our expectations.

Fredrik Stene -- Clarksons Platou Securities -- Analyst

Yeah. That's super helpful, guys. Thank you very much.

Bernie Wolford -- Chief Executive Officer

Thank you for the questions.


Thank you. We will take our next question from Elissa Chao with Tor Investment Management. Please go ahead.

Elissa Chao -- Tor Investment Management

Hi, Bernie and team, and congratulations on the good quarter. Thank you for taking the question. Just wanted to ask about, given kind of where the share price is today and the still healthy cash balance you're holding, is management or the board considering doing share buybacks?

Bernie Wolford -- Chief Executive Officer

So, thanks for the question, Elissa, and thanks for joining the call today. We have a small buyback program approved by the board currently. We have disclosed our activities with that. We have not been particularly aggressive with that. We feel like the best use of our cash continues to be our long-term liquidity runway, and we're likely to stay on that track as we stand today.

Elissa Chao -- Tor Investment Management

Okay, good. Thank you. 

Bernie Wolford -- Chief Executive Officer

Thank you, Elissa.


Thank you. As a reminder, that is *1 for questions. We will pause again.

Bernie Wolford -- Chief Executive Officer

Ryan, thank you. As -- wait, let's see.


It looks like we have a few more questions, if you'd like to take those. And our next question will come again from Fredrik Stene with Clarksons Platou Securities. Please go ahead. Fredrik, your line is now open.

Fredrik Stene -- Clarksons Platou Securities -- Analyst

Sorry, I muted myself there. Just wanted to follow a bit up on the demand picture, which I found very helpful, kind of on a region by region basis. It seems at least to me that you would share that view of some of your peers that there will be a bit unmuted incremental demand, I'd say, for the second half. Do you feel like we would see that ramp-up in 2020 being back or front-heavy, or kind of a weighted average, in a way, between those two? That's really what I'm wondering about.

Michael Acuff -- Senior Vice President of Commercial

Yeah. Yeah, no, as we stated in our comments, the rest of the year, I think you already see what's in the market, and we have good visibility into that. And that's why I call it kind of flat. But we're quite excited about 2020. Like I said earlier, we have 22 opportunities in-house. 18 of them are for early in 2020, kind of the first couple of quarters. And so, just looking at that alone, you can see there's a good amount of demand that we can already see visible, and we believe that'll continue to develop as people go through their budgeting cycle of 2020 and start developing more full-year programs.

As well, like I mentioned earlier, we're seeing some longer-term development programs coming to the market now. Obviously, those take some time from a planning standpoint for the operators, and so a lot of those tend to be more toward the later half of 2020 and into 2021. But again, we're starting to see that term come back into the market, which is encouraging, and seeing those -- of course, the FIDs continue to be approved. So, all that said, we're excited about the position for 2020 and what the demand profile looks like.

Fredrik Stene -- Clarksons Platou Securities -- Analyst

Thank you. Thank you. And would you say that it would be fair or unfair to assume then, given the kind of stance from '19, that there will be none or limited work for any of your stacked rigs for the remainder of the year, or would that be kind of too conservative, given your comments about the potential second MPD system, etc.?

Michael Acuff -- Senior Vice President of Commercial

Yeah. For the second half of the year, we're really focused on the Bora and trying to get that rig back to work. We have some opportunities that we believe will develop, and we can have that rig back to work by the late part of the fourth quarter. With respect to stacked rigs, yeah, I don't think that you'll -- we see many opportunities to bring those rigs out later this year, or really any opportunities to bring them out later this year. We would be focused more toward having those rigs ready to come to the market mid-2020, in the later half of 2020 . . . should the opportunity present itself that makes economic sense again, right?

Fredrik Stene -- Clarksons Platou Securities -- Analyst

Yes. That's very helpful. Thank you, and that's all for me, guys.

Bernie Wolford -- Chief Executive Officer

Thanks, Fredrik. Appreciate the questions.


Thank you. At this time, this concludes the question and answer session, and I will turn the conference back over to Bernie Wolford.

Bernie Wolford -- Chief Executive Officer

Thanks, Ryan. Thanks all on the call. Appreciate your interest in Pacific Drilling and look forward to speaking to you next quarter. Bye-bye.


Excuse me, ladies and gentlemen. This now concludes today's conference. Please disconnect your lines and have a great day.

Duration: 36 minutes

Call participants:

Lisa Buchanan -- Senior Vice President and General Counsel

Bernie Wolford -- Chief Executive Officer

Jim Harris -- Chief Financial Officer

Michael Acuff -- Senior Vice President of Commercial

Fredrik Stene -- Clarksons Platou Securities -- Analyst

Elissa Chao -- Tor Investment Management

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