Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group Second Quarter 2020 Earnings Call. At this time, all participants will be in a listen-only mode [Operator Instructions]. Your call leaders for today's call are Alicia Dada, IR Coordinator and Stephen Taylor, Chairman, President and CEO. I would now like to turn the call over to Ms. Alicia Dada. Alicia, you may begin.

Thank you, Ross, and good morning listeners. Please allow me a moment to read the following forward-looking statement prior to commencing our earnings call. Except for the historical information contained herein, the statements in this morning's conference call are forward-looking and are made pursuant to the Safe Harbor provisions as outlined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements as you may know involve known and unknown risks and uncertainties, which may cause Natural Gas Services Group's actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the loss of market share through competition or otherwise, the introduction of competing technologies by other companies and new governmental safety, health or environmental regulations, which could require Natural Gas Services Group to make significant capital expenditures. The forward-looking statements included in this conference call are made as of the date of this call, and Natural Gas Services undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include but are not limited to factors described in our recent press release and also under the caption Risk Factors in the company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. Having all the stated, I will turn the call over to Steve Taylor, who is President, Chairman and CEO of Natural Gas Services Group. Steve?

Thank you, Alicia, and thank you, Ross. And good morning, everyone and welcome to the Natural Gas Services Group's second quarter 2020 earnings review. I want to thank all of you for turning into our call. In spite of continued weakness in the energy demand and volatile energy commodity prices larger a result of the effects of the COVID-19 pandemic, NGS posted solid financial results in the second quarter. Our ability to react rapidly to reduce our cost structure and respond to our customers' needs resulted in less impact than many in our industry on both our income statement and financial condition. We have been able to address our customers’ requests for pricing and shutting assistance, while maintaining a strong financial position. While our revenues declined in the quarter, we were able to post sequential gains in both gross margin and EBITDA. Importantly, we continue to strengthen our balance sheet and liquidity position, even in this very challenging market environment. NGS delivered free cash flow during the quarter and grew our cash balance to $15.5 million and $13.1 million at the end of the first quarter. Our liquidity position has continued to strengthen into the third quarter as our cash balance at the end of July was approximately $17 million. While commodity prices have improved from the trough, they remain significantly below levels that will spur significant oilfield activity. While business has improved, the pace has been slow and inconsistent, a trend we expect to continue but gradually improve to the balance of the year. That said, we're seeing new opportunities for which we are uniquely qualified and believe our fabrication capabilities, superior service and strong financial position will allow us to capitalize on those. As you're aware, we extend the time period to file our second quarter report due…

At this time, we’ll conduct the question-and-answer session [Operator Instructions]. Our first question comes from Robert Brown from Lake Street Capital.

Just want to get a little further color on the CapEx you're projecting for the rest of the year and really that sounds like a new contract and maybe what area is that contract covering entire horsepower business again, and maybe just some color on what that business is?

Well, just like about everything else in the world, it's centered around the Permian. So the majority of that $6 million we're looking at is Permian base. And probably half of it is, well, 50% to 60% is what we classify as large horsepower and the balance being medium horsepower where I guess that we're essentially out of but that are required also. So it's a smattering but it still continues along the Permian route and then the large horsepower route.

And then maybe just digging in a little bit into the gas versus the oil market. Are you seeing any recovery or were you seeing kind of the spotty recovery? Is it basin driven or resource driven, or maybe some color on how the recovery is taking place?

Yeah, Permian is providing probably the majority of it. But we have seen more activity in some of the scoops stack stuff, Texas, Panhandle along there. So it's a little spread. And actually we're seeing a little more in the Rockies somewhat. So, the resurgence in activity we've seen has -- is not just concentrated in the Permian from the point of all the CapEx we just talked about, but that's smattering in two or three geographies. So Permian, Mid Continent and the Rockies would probably be the primary ones that we're seeing most of the regrowth from.

And then last question on the tax refund and you said $15 million tax refund you’ve implied for. Do you expect that this year and what's the status that?

I've been chastised about trying to put a timeline on the tax reffrom the U.S. government in these times. So I'll diplomatically say that we hope for it this year but there are no guarantees. We think it should be, but there are no guarantees to it. Of course, they won't -- IRS didn’t give you any help as far as timing and the stuff. And obviously they're busy printing checks for other things but we're hoping for this year but there's no guarantee on that.

[Operator Instructions] And Stephen, at this time, there appears to be no further questions.

Okay, Ross. I appreciate it. Thank you everybody for joining us on this call. I think we had a good quarter, but we appreciate your time this morning and look forward to visiting with you again next quarter. Thanks.

This concludes today's conference call. Thank you for attending.