Transportadora de Gas del Sur SA TGS

Welcome to the TGS conference call. Throughout the call, all participants will be in listen-only mode. And afterwards, there will be a question-and-answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Christian Johansson. Please go ahead with your meeting.

Good morning, good afternoon, and good evening, depending on where in the world you're listening in from. My name is Christian Johansson. I'm the CEO of TGS. And with me today, I have our CFO, Fredrik Amundsen, who's based in our office in Norway. Like most employees in the U.S., I'm still working remotely, but I'm pleased to follow the developments in Europe where people are slowly returning back to work. As usual, we reported our preliminary revenues for the quarter on the sixth business day after quarter close. The numbers are therefore well known for you, but this morning we reported our full financials for Q1. I hope you've had a chance to review the numbers and that you have watched our pre-recorded presentation available at our website, tgs.com. We're also happy to take your questions at the end of the call. Q1 2020 was impacted by the COVID-19 crisis and the sharp drop in oil price. Protecting the health and safety of our employees at the same time as ensuring minimal disruption to the business have taken top priority. And in that regard, I'm extremely pleased with how the organization is had performed during these challenging times. With announced measures to protect cash flow, the company is well positioned to use the difficult market conditions to form the basis for further long-term value creation and continued industry-leading returns. TGS had net segment revenues of $152 million in Q1 2020. This is a 3% decline compared to last year. The quarter saw solid pre-funding revenues driven by Latin America and North America onshore, while late sales were hurt by the COVID-19 crisis and the large oil price drop towards the end of the quarter. At $125 million, EBITDA and Q1 came in 1% above last year as a result of favorable development in operating costs. We expect these operating costs to come down further as our cost-cutting initiatives start to kick in. TGS continues to deliver industry-leading return on average capital employed with 17% annual returns at the end of Q1 2020. Our balance sheet remains strong with a cash holding of close to $250 million at the end of the first quarter, allowing the company to pay a dividend of US dollar 0.125 per share in Q2 2020, despite the challenging market conditions. On April 8th, 2020, we announced several measures in response to the market turmoil. The highlights are, number one, a cost reduction from centralization of offices, a global salary freeze, temporary cut in employee bonuses, and right-sizing of the organization, leading to a 2020 cost state that is approximately 35% below the 2019 performer numbers. Number two, multi-client investments for 2020 reduced to approximately $325 million in from 450 million by postponing projects and reducing scope. And finally, the Q2 2020 dividend reduced to 0.125 per share from previously 0.375 per share. CDS has a history of maneuvering difficult times in such a manner that we come out in a stronger position at the end. And this is our goal in the current situation as well. But the measures I just described, we're ensuring that the balance sheet remains robust which will allow us to withstand a prolonged period with lower revenues, as well as taking advantage of interesting opportunities that tend to appear in periods such as this. These were the key points I wanted to cover initially. Thank you for your attention so far, and we will now open up for questions. Operator, please.

Thank you. If you do wish to ask a question, please press 01 on your telephone keypad. And if you wish to withdraw your question, you may do so by pressing 02 to cancel. There will be a brief pause while the questions are being registered. And we have our first question from Christopher from Carnegie. Please go ahead.