Good morning and welcome to the Core Laboratories Q1 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to David Demshur, CEO and Chairman of the Board. Please go ahead.

Thank you, Grant. I’d like to say good morning in North America, good afternoon in Europe and good evening in Asia Pacific. We'd like to welcome all of our shareholders, analysts and most importantly our employees to Core Laboratories' first quarter 2020 earnings conference call. This morning, I'm joined by Chris Hill, Core's CFO; Gwen Schreffler, Core's Head of IR; and Larry Bruno, Core's President and COO. The call will be divided into five segments. Gwen will start by making remarks regarding forward-looking statements. Then, I’ll return and we’ll review Core's three financial tenets which the company employs to build long-term shareholder value. Chris will then follow with a detailed financial overview and additional comments regarding building shareholder value. Gwen will also add comment. Then, Larry will go over Core’s two operating segments, detailing our progress and discussing the continued successful introduction of new Core Lab technologies and then highlighting some of Core’s operations and major projects worldwide. Then, we'll open the phones for a Q&A session. I'll turn it back to Gwen for remarks regarding forward-looking statements. Gwen?

Before we start the conference call this morning, I'll mention that some of the statements that we make during this call may include projections, estimates and other forward-looking information. This would include any discussion of the company's business outlook. These types of forward-looking statements are subject to a number of risks and uncertainties relating to the oil and gas industry, business conditions, international markets, international political climate and other factors including those discussed in our 34 Act filings that may affect our outcome. Should one or more of these risks or uncertainties materialize or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the foregoing risks and uncertainties, see Item 1A, Risk Factors, in our most recent annual report on Form 10-K as well as other reports and registration statements filed by us with the SEC and the AFM. Our comments include non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures is included in the press release announcing our first quarter results. Those non-GAAP measures can also be found on our Web site. With that said, I'll pass the discussion back to Dave.

Thanks, Gwen. I’d like to review the three financial tenants on which Core has used to build shareholder value over the 25-year history of being a publicly traded company. During the first quarter of 2020, Core generated over $18,500,000 in free cash flow marking the 74th consecutive quarter of generating free cash. The company's free cash flow remains lucid. Also in the first quarter, Core once again produced oilfield industry-leading return on invested capital for the 42nd consecutive quarter with an ROIC exceeding 12%. And Core's third financial tenant, Core returned over $12 million back to our shareholders via our quarterly dividend and repurchasing a modest amount of stock, while reducing debt in the quarter. I’ll now turn it back over to Chris for a detailed financial review. Chris?

Thanks, David. One of the focal points in many of our discussions that began in early March has been around our corporate debt structure and the associated financial covenants. So we changed the format of today’s financial overview to include some comments to address these points of interest. I’ll first summarize the company's current liquidity position, our two primary debt instruments and the associated financial covenants. Then, I will provide the overview of our operational performance for the first quarter, material items in the balance sheet and cash flow. I would like to start off by saying we understand some of the differences between prior downturns in the industry and what has been caused today by the global COVID-19 pandemic. However, it is still important to understand that Core Lab was one of the few oilfield service companies which was able to remain profitable and generate free cash flow throughout the last downturn, which is also pretty severe. It is this history our light-asset business model and company culture that provides our organization with the confidence that we will continue to generate positive free cash flow and maintain our profitability through the current challenges. Core continues to utilize its $300 million revolving credit facility under which we had 154 million outstanding as of March 31, 2020, and the ability to draw an additional 131 million if needed. However, we are not projecting the need to borrow additional funds against our credit facility. In fact, with the changes to our future dividend policy, reduced capital needs and the cost reduction initiatives announced and implemented, our projections indicate a reduction of outstanding debt. For clarity, I’m going to repeat the cost reduction plans that we have quantified in the earnings release, have been approved, are within management’s control and are near completion…

Thank you, Chris. Core Lab expects crude oil prices to remain low for the near to mid-term given the decline in global crude oil demand seen in the first quarter of 2020. Global consumption fell as transportation, daily community movement and other mandated restrictions around the globe were implemented to mitigate the outbreak of COVID-19. As uncertainty around the longevity of the imbalance between supply and demand continues to place downward pressure on the price of crude oil or clients’ focus on managing their balance sheet has never been greater. In addition, they will evaluate the breakeven crude oil price needed to support capital spending for both short and long-term cycle projects. During the first quarter of 2020, crude oil prices declined 55% which resulted in E&P companies significantly reducing their 2020 capital expenditure plans especially in the U.S. as witnessed by a 12.5% fall in the average frac spread index and a 24% decline in completion activity. In addition, as a result of the overall decline in demand and COVID-19 related disruptions associated with transportation and supply chain, international activity is experiencing negative impacts as well. On April 12, the OPEC and non-members, OPEC+, announced an unprecedented three phase plan to reduce crude oil production by 9.7 million, 7.7 million and 5.8 million barrels of oil per day through April of 2022. As the remainder of 2020 unfolds, the OPEC+ agreement and the COVID-19 demand disruptions abate, the price of crude oil and consequently the E&P industry activity, may modestly improve. Core believes the actions taken by the E&P companies during the first quarter of 2020 in response to the decrease in crude oil price indicate lower overall activity in 2020 versus 2019. Core projects activity declines to continue internationally and in North America during the second quarter of…

Thanks, Gwen. First, I’d like to thank our global team of employees for providing innovative solutions, integrity and superior service to our clients. The team’s collective dedication to servicing our clients is the foundation of Core Lab’s success. Before turning to the details of our operational review, I also want to especially thank all of Core Lab’s dedicated staff for their commitment and for the personal sacrifices they have made during this unsettled period in the energy industry. This dedication and adaptability to recent challenges has allowed Core Lab to safely conduct our business, to remain largely operational across our global network and very importantly allowed Core to continue to service our clients on their schedules. Those of us that have weathered previous difficult periods in the industry understand both the cyclical nature of the business as well as the critical role Core Lab plays in providing best-in-class technologies and service to the industry for more than 84 years. Turning first to reservoir description. The Northern South Atlantic margin continues to be a very attractive area for exploration, appraisal, development and production projects. It is currently among the most active international regions for Core Lab. In the first quarter of 2020, Core Lab, under the direction of BHP, was engaged to provide laboratory analysis for BHP's Deepwater Northern Licenses project offshore Trinidad and Tobago. This multi-well analytical program is employing Core’s proprietary and patented laboratory technologies to assess reservoir rock properties from the Bele - 1 ST - 1, Bele - 1 ST - 2, Boom - 1, Hi Hat - 1, and Tuk - 1 wells. High quality, conventional core was recovered from unconsolidated strata in the target reservoir intervals. Once the cores reached the rig floor upon recovery from the subsurface, the cores were stabilized at the well…

Thank you, Larry.

We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Sean Meakim with JPMorgan. Please go ahead.

Good morning, Sean.

It looks like we are instead going to take George O’Leary with TPH & Co. Please go ahead.

Hi, George. George O’Leary: Good morning, Gwen. How are you?

Doing well.

Hi, George. George O’Leary: Good morning, guys. Just wanted to kickoff with customer dialogue-oriented question, just curious, I realize you guys aren’t providing quantitative color but just from a qualitative perspective, could you describe how the dialogue is progressing with international customers versus North American domestic customers? And then maybe also IOC versus NOC behavior, any differences in tone, discussion, outlook, rate of change, just anything high level even if it has to be qualitative would be helpful framing?

Yes, George, a few comments along that. So on our international projects, none of those have been cancelled. The disruptions have largely been quite frankly – operations have been shutdown say on an offshore project, say offshore South America for the time being and that’s largely transportation related. They’re not sending their staff to the location and so we’re not sending our staff to the location at their request. So those are all projects that I think very reasonable anticipation is they’re going to move forward with. That’s what they have told us. And some of them have told you publicly – told the investment community publicly they’re not stopping these projects. They’re moving forward with them. These are big development, long cycle projects. Those are all going to be moving forward from the information that we’ve received and from what they’ve said publicly. And so once they get back to normal ability to move people and equipment around the planet, those will move forward. So I think those will be a very nice stabilizing influence for us. Clearly on the international front, the stability with the projects appears to be much greater. I think in North America there has been very clear statements by some companies about laying down rigs and cutting back on frac crew. So I think everything that we’ve heard is in line with what’s been talked about publicly. There will be a steeper drop off in the North America region than there will be outside the U.S. In terms of IOC and NOC, really no change there. I would say, hang in there. We’ll call you when we’re ready for you. George O’Leary: Okay, great. That’s helpful color. And then on – you guys have a large portion of your reservoir business on the fluid side now which you highlighted in the release and have highlighted through time that that percentage of your revenue stream is increasing. How do shut-ins in the North America market, and I realize that business has a lot of international exposure, but shut-ins in the North American market, we’ve heard rumblings that maybe Norway is mulling over shut-ins. Clearly there’s going to be some of those emanating from OPEC to a pretty stout degree. How does shut-ins impact that business and what are you guys seeing on a leading edge basis in North America? Have folks already started to do some shut-ins here?

Yes. So I need to frame the question a little bit. There is such long cycle waves in where – on the laboratory side of the business and the reservoir description side of the business and which is the bigger revenue generator, rocks or fluids. That goes in cycles. And so from 2010 to 2014, the rock business was more than 50%. And then since then fluids business has been more than 50%. And so what I would anticipate is as we get into the next round of global development exploration somewhat, but for us for Core Lab more development and appraisal of those projects come on into play, we’ll see the rock business come back and be sub equal with the fluids business. That being said, the fluids business is less tied to rig count, for example, in that people need to continue to monitor their fluid properties. Now when they shut-in a well, one of the first things that’s going to have to happen is that they will have to go back and check the properties of the oil, because pressure might have drifted in the reservoir or at the near wellbore is probably a better way to say it rather than the reservoir. And so they’ll have to go back and check that. So there might be a period where some shut-ins would impact the immediate fluids testing, but then there might be a concomitant rebound in that as people bring production back on. And so with the – and I will say with the – back to your earlier question about work in different areas, we’re making adjustments in our workforce. The largest adjustments that we’ve made to our labor pool has been in the U.S. And internationally there’s some that’s gone on. I anticipate there will be some more of those as we move forward and we see plans develop. But I think all that comes together to say, we’ll have a period of transition in front of us but a lot of the heavy lifting has been done to get our fixed cost in line with what we see today as the market demand for our services. George O’Leary: Great. Thank you very much for the color. I’ll turn it back over.

Our next question will come from Sean Meakim with JPMorgan. Please go ahead.

Good morning, Sean.

Good morning. Thank you. So I was hoping to start off with a question on the reservoir description. There’s a number of factors that make this downturn more challenging than the last one. You’ve been able to sustain that $100 million a quarter of revenue for quite a long time now. The fluid analysis business is still helpful just given that OpEx orientation and that’s maybe two-thirds of the mix today. So given the challenges that are unfolding here, oil price pressure on customer budgets, COVID disruptions, et cetera, do we see risk of reaching that $100 million a quarter mark? How do we think about the puts and takes there going forward?

Yes. The way we’ve always looked at that, Sean, was say over the last cycle is that $100 million a quarter was Core Labs participation in keeping that roughly 100 million barrels of oil moving around the planet, being produced and transported and tested in the laboratory. And so yes, there is an impact that could happen as we see that production drop for some period of time. And so I don’t think that floor is a fixed dollar amount that’s insensitive to the amount of oil being produced and put into consumption. So I do think that’s something that we will likely see that we will face and that will be revenue in that segment below 100 million, but again not ready to give specific guidance on that. We’ll have to see.

Understood and I appreciate that feedback, Larry. And so then on production enhancement, a pretty high decremental in the first quarter. It’s naturally a pretty high decremental or incremental business, but particularly in 1Q. Can you maybe put some parameters around downside to margins in the second quarter just given – or how to think about the operating leverage given the acute pressure that the whole industry is going to face and what can be done to mitigate in future quarters the impact? I’m just trying to think about what happened in the first quarter and how it should frame what we think about 2Q and beyond?

Yes, I’ll take the first part of that question and then I’ll let Chris fill in a little bit about going forward there. So, Sean, if you think about where we were coming out of Q4, we had a sharp slowdown in U.S. completions. We had a lot of constructive conversations going on with clients. Yes, we’re getting back to business in the early part of the new year. So we had furloughs in place in response to the Q4 slowdown. We turned those off. We start responding to client demands. That brings the cost back into play, add materials in and we’re starting to build. What we saw is a pretty nice rebound into 2020. That clearly didn’t pan out after the virus and the events of the OPEC+ meeting not going the way any of us would have liked to see that happen. And so we had a very sharp reversal in that. So we had some cost come on early in the quarter to respond to the rebound that we were seeing and being advised off by our clients. And so we brought some cost back into the system. And then we had a very steep drop off. So we’ve turned the knobs very quickly on getting those costs under control following – by the time we made our March 16 release, we had started making adjustments at that point. And so we had to unwind some of those costs that we brought back into the first quarter. And with respect to decremental going forward --

So just like Larry was saying, I think some of the cost that we’re taking out on a temporary basis in Q4 kind of came back in Q1. And with the really sharp drop off at the end of the quarter, the structural changes that we’re talking about, so the reduction in workforce, that really didn’t have any impact in Q1. That was done very late in the quarter and a lot of it done honestly in beginning of Q2. So those savings will flow through in Q2 and it will definitely soften the decremental going forward. So we are not expecting or projecting decremental for Q2 like you saw in Q1.

Thank you. That’s really helpful. But just with Q2 and with respect to downside to where revenue could go, where completion activity could go, any feedback about that component of the decremental?

Yes, I would tell you that we have internally done a pretty robust two-year forecast and we’ve come up with sort of a base case and a worst case, which is pretty much in line with the consensus out there. And I can tell you we probably got additional cost cuts coming our way. So don’t be surprised if you see some additional cost reduction initiatives coming through in Q2. So I would tell you we’re trying to be very thoughtful about that. We’re talking about our employee base, our workforce. So we’re monitoring that very closely but we’re also doing it in a thoughtful way. So you will see that continue as we move through and monitor where exactly the activity is going to be and is that going to be more short term or long term.

I appreciate that. Thanks, Chris. Thanks, Larry.

You’re welcome.

Our next question will come from Scott Gruber with Citigroup. Please go ahead.

Good morning, Scott.

Good morning, everybody. Good morning, Gwen.

Good morning, Scott.

Good morning. Just following on the question around reservoir description, I understand that the COVID activity disruptions and the shut-ins interject a great deal of uncertainty near term. If we look out to say the middle of '21 and we’re back 100 million-ish barrels or so in oil demand, but international E&P spending is down 20%, 25%, is reservoir description back to 100 million or so of revenues or how much is it now just given the low leverage to customer CapEx?

Yes. I think the important thing to remember that reservoir description revenue is largely tied to OpEx spending. So that ties in with Sean’s question from a bit earlier. As OpEx maybe has a pause here or a decline, we’re going to feel that. But as the effects of the COVID-19 disruptions change and world demand starts to come back later in the year and we made reference to that that we saw some opportunity for some improved activity in the second half of this year as demand starts to come back up, then we’ll start to see that filter through and reservoir description will benefit as those OpEx budgets turn back on. So that tends to be a pretty OpEx heavy segment of our business with some obvious CapEx sprinkled in for these large projects like we’ve talked about in the last several quarters, the BHP one we just referenced here, the Guyana work that we’ve talked about, offshore Australia, things like that.

Got it. Just turning to the balance sheet and you guys are now focused on turning that debt with excess cash. Just some color on how long you think about debt pay down being a priority for excess cash? Is there a medium-term leverage target you want to get to before you start balancing that pay down with other uses of cash, how should we think about that?

Yes, this is Chris. So again, we’ve done a two-year forecast. What I would tell you is even in that sort of worst case scenario, we’ve tried to stress test that and see how close we get to our debt covenant. And right now we look to be okay. So that’s good news. Longer term I think I’ve historically or in the past have said, hey, maybe a leverage ratio of 1.5x is an appropriate target. What I would say about that is when we are comfortable that we’ve reduced the debt and we’ve got room under that leverage ratio and there is more less uncertainty I’ll say in the forecast for the energy sector, then you might start to see us change our focus. But for the time being, so for the foreseeable future we’re going to focus excess cash flow or free cash flow on reducing the debt.

I appreciate it. Thank you.

Our next question will come from Chase Mulvehill with Bank of America. Please go ahead.

Good morning, Chase.

Good morning, Gwen. Hi, Larry. I hope everybody’s safe and healthy.

Same here.

Thank you. I guess a point I wanted to come back to reservoir description a little bit and maybe if you could frame reservoir – the fluids business and how it reacted during the 2015 and 2016 downturn? Obviously it’s not going to be down as much as during your completion spending, but maybe just kind of talk to that and how it performed during the last downturn? And you talked about it maybe being a little bit more impacted in the near term, but as you start these wells up you’re going to see a rebound in fluids. So it would be good to have the '15 and '16 context to work off of?

Yes. I think if you go back and look at the financial performance of reservoir description, you see our base of revenue there was about 100 million and that tied pretty closely to the 100 million barrels I would say maybe somewhat coincidently, but trend wise it tied pretty much to that 100 million barrels of oil that we were consuming across the planet every day. So I think what you saw in that was resilience – even though the rig counts came down, you saw resilience in there tied to pretty much the amount of oil being produced and consumed across the globe. And so I think that ties very well into what we’re seeing today which is there is going to be a hiccup here while the world is producing and consuming less oil. But as those things unwind and we think the back half of this year we start to feel some of those effects – well, no one can really predict how quickly the recovery is going to be in demand, but we think that plays out and the fluids side of the business will respond pretty quickly to that. I think the core side of the business, the rock side of the business, will respond a little more slowly to that. That being said, I think it’s always important to reemphasize here that some of our major IOC clients and NOC clients have talked specifically about that they are making changes into onshore land North America plans, but they are not derailing large CapEx projects, the offshore ones that are very lucrative to our business.

That sounds good. That makes sense. And then if we were to think about the cost cuts, nice bump up to the cost cuts, the 46 million annualized. It looks like you maybe got some more in your pocket that you’ll kind of look at and consider for 2Q as well. But could you talk about the segment’s flip of that 46 million and where do you think you’re able to kind of pull some more cost out as we kind of look into 2Q and 3Q? And then wrapped into that kind of how we should think about the downside risk, the reservoir description margins and if you think we can kind of hold above 10% for reservoir description?

Hi, Chase. This is Chris. So I know Gwen gave some additional guidance on that 46 million and the sort of split across the segments. What I would tell you is if you look at production enhancement relative to its size, the cost reductions, the reduction in workforce there is actually deeper on a relative basis. So the bulk of our employees are really in the reservoir description group. So if cuts are actually deeper from that perspective for production enhancement, but like I mentioned earlier there are additional cost reduction plans that are being formulated as we speak. So the ones that we’ve announced are the ones that have been finalized, approved and kind of put in place. So there will be additional cost cuts. For long term, I think that business is going to be more challenged because it is more directly tied to North American onshore activity. But we’re committed to keeping that business at a minimum breakeven going forward. So the sort of benchmark that you laid out there for reservoir description with 10% EBIT margins or operating margins, we think that’s on the low end of where our projections could be even in a worst case scenario. We are dedicated to making the appropriate amount of structural cost reductions if necessary to keep that at those kind of margins or higher I would say.

And I’d just amplify a little bit on the cost cuts. So what we put in the table in our release and I’m sure most of you looked those over there, we considered those to be structural and in large matter fixed costs. Those are reductions in workforce, furloughs, pay cuts. In other words, we say that there are going to be – you’re not going to see those come back until the work demands it, so things like nonessential travel and stuff like that have all been cut and that’s all we included in that table. We did not include variable costs like supplies and materials and the cuts that we’ve talked about in that table in our release.

Okay. I appreciate the color. I’ll turn it back over.

Thanks, Chase.

Our next question will come from Blake Gendron with Wolfe Research. Please go ahead.

Good morning, Blake.

Hi. Good morning, everybody. So pretty encouraging commentary from some of your larger customers on the international projects that might bridge the activity here over the near term if things kind of dip down. We also know though that there’s been a lot of changing of – assets changing of hands, so some of the larger providers selling assets to smaller providers. I’m wondering what you’re hearing from the smaller operator group internationally? I would imagine maybe more of a conservative response here in the near term, but maybe a more aggressive response if things start to normalize. Is that kind of what they’re communicating just in terms of having to re-stimulate production and free cash flow in the backend of this downturn?

Yes, I think the biggest voice in the room have been from our big IOC clients who talked about they’re not taking the foot off – they’re not changing any of their plans. They’re pausing on some of these large projects. But they’re going to continue with these large CapEx projects. I think as a general rule as we look over time here, when assets change hands that’s a good thing for Core Lab because there’s always questions that come up that need to be answered because different companies look at different aspects of reservoir performance to try to model the value of that asset. So when things change hands, that tends to be good for us.

That makes sense. The conservation has also gravitated away from oil to natural gas as of late particularly in the long-term outlook for global gas. Wondering if Core has done anything to get into that market in a bigger way? I know it’s been somewhat of a subscale part of your reservoir description, but wondering specifically in the Middle East if there are any opportunities for you to potentially get in on that secular tailwind?

Actually, a couple of things here. If you look at our release, we talked about opening up a new fluids lab in the Middle East. We commissioned that. That was tied to a country that’s got a lot of gas in play. And the project that I referenced earlier today in the call offshore Trinidad and Tobago from BHP, that’s a big gas project. There are some others that we are anticipating will spool up here over the next couple of quarters. So I guess the short answer there is we’ve always been involved in gas projects. Oil projects tend to be a little more lucrative for us when there’s three phases of fluids present in the core structure. Crude oil, natural gas and water, it’s much more complex for the clients to understand the behavior of that multi-phase flow. So those tend to be a little more lucrative. But we participate in gas projects everywhere from Pennsylvania to pick your place or hemisphere on the planet and we’ll likely have some involvement.

That’s helpful. If I can squeeze one more in, in terms of working capital. It was a pretty big source of cash for you in the last downturn and working capital appears to have been built up relative to 2014 levels fairly appreciably here. I know you made some comments in the prepared remarks, but wondering if you could just go through the major components of working capital and what we should expect from a cash contribution perspective at least here in 2020?

Right. This is Chris. So I think if you look at our DSOs, we’ve actually maintained those pretty well throughout the whole cycle. They crept up on us a little bit the last couple of quarters, but an actual improvement from this quarter versus last quarter. So I think we’re expecting those to stay around those levels. I’d like to see improvement in the DSOs, so that would be – I think the biggest build in working capital has been around inventory. And if you kind of go back a couple of years even with the acquisition of Guardian and our production enhancement segment, we started building inventory to service that preassembled market. So we understand the dynamics have changed for that. Our organization that’s focused on that will be working diligently to reduce inventory. I think that’s going to take a little bit of time, but as we progress through the year we’ve got some aggressive goals to reduce that. So it’s going to take some help from our key suppliers and vendors to work with us, because a lot of those raw materials are sort of long lead time, bulk purchase type items. So we’re going to have to adjust those plans and kind of push those things out.

Got it, that’s helpful color. Thanks.

Our next question will come from Kurt Hallead with RBC Capital Markets. Please go ahead.

Good morning, Kurt.

Good morning, everybody. Hope everybody’s doing well?

Thank you. Hope you are too?

Yes, hanging in. So I guess for Chris, focus on free cash flow and your leverage ratios I heard commentary a little bit earlier, but I’m not sure if you mentioned this on the free cash flow dynamic as you look forward through this two-year period where you kind of did this stress testing. What’s kind of range of free cash flow that you came up with under that stress test?

Well, we’re not giving guidance in that respect so I’m not going to be able to give you numbers. There’s still a lot of uncertainty about the timing of some of this stuff especially with the COVID-19 factor in there. But you can take the last few quarters and you can come up with your projections across the company. We’ve tried to outline and give you enough what our variable costs are, the changes to our structural costs so that you can kind of model what free cash flow might look like under different scenarios. I can tell you we haven’t tried to model anything that would be excessively different than what we’ve experienced in the past through the last downturns. We really didn’t experience any significant write-offs of customers’ bad debt. I can tell you we’ve tried to make that a lot higher just to sort of stress test it. But DSOs should remain about the same. I think inventory will be a challenging area for us but we are working – we’re going to be working to reduce that. I’m not going to say our inventory turns are going to improve, but I’m telling you our inventory balances are going to go down for the remainder of the year. So that is a multi-variable equation you’re talking about there, but I think if you use the last few quarters as a model you can kind of model what that looks like going forward.

Okay. And then maybe just what would be a reasonable assumption in the context of debt reduction as we work through, if not 2020, as we get out into 2021 as well?

Yes, I think what I would do there is just try to model what you think cash flow from operations is, okay, subtract out what we’ve given you guidance for on CapEx, take the dividend out and then use that excess free cash flow above the dividend, assume that’s going to be 100% for reducing debt.

Got it. Thank you so much.

Yes.

Okay, Grant, we are at our hour. So in summary, Core operations continue to position the company for activity levels in the second quarter of 2020 and we know significant challenges await. However, we’ve never been better operationally or technologically positioned to help our clients to maintain and expand their production base. We remain uniquely focused and are the most technologically advanced reservoir optimization company in all of oilfield services. This positions Core well for the challenges and long-term ahead. The company remains committed to industry-leading levels, free cash generation, return on invested capital with capital being returned to our shareholders via dividends and future opportunistic share repurchases. So in closing, we’d like to thank all of our shareholders and the analysts that follow Core. And as already noted by Larry Bruno, the executive management and Board of Core Laboratories give a special thanks to our worldwide employees that have made these results possible. We are proud to be associated with our continuing achievements. So thanks for spending time with us this morning and we look forward to our next update. Goodbye for now.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.