Rick Wheeler: No, I really can’t. These are proprietary utilizations of that technology that we’re working towards. And I think once they’re completed, we will be able to have more discussion about that.
Bill Dezellem: Okay, thank you. And congratulations on putting a lot of money on the bottom line.
Rick Wheeler: Thank you.
Robert Curda: Thank you.
Operator: [Operator Instructions] Our next question comes from Robert Marcin with TB Partners. You may proceed.
Robert Marcin: Thank you. Well, excellent quarter, gentlemen. I guess the $1 million question is what we follow it up with. I had a question on the ratio of the sales price of $30 million to the rental price at $20 million. It seems if the units were roughly the same, it seems that there’s a distinction of annuity there because it seems like who would rent if it’s only 50% more to purchase. Am I correct in assuming that? Offshore is heck pay 1.5x of annual rent for my house. That would be a little bit of a bargain. But I’m a new shareholder here. I have a few questions because part of my ignorance on the situation because there’s not a lot of information available from management’s communication with shareholders, and I don’t know if this has ever been answered in past calls. So could you just enlighten me as to that relationship? Thank you.
Rick Wheeler: Yes. There’s some reasonable logic in what you’re saying there. But certainly, the rental agreements that we are known for are ones that the customer as that rental proceeds is able to earn an equity interest in that equipment such that they can purchase it at a later date at below its initial list price value. So, some of that is accommodated in the types of rental agreements that are reflected there. It was certainly less than what the face value of the equipment was as it related to the overall sale, the outright sale simply because it’s going to be – that revenue is delivered over the course of time. But yes, in this particular case, they examined the very situation you’re seeing, keeping in mind even the equity value they would have gained over the course of that rental contract and felt it was a better value for them based on the project and utilization that we’re going to have to go ahead and purchase it in advance.
These are rather expensive instruments. We do our best to keep the costs down on these instruments, and we’ve made great progress in actually doing that, especially with the Mariner because it has absolutely brand-new technology in it, but as cost effective as we can possibly manufacture it, but that being said, they still remain a pretty big investment, and that’s why the rental of these units has been a historic manner of the commerce.
Robert Marcin: Okay. And when you make a large deal like this, is there any kind of recurring revenue for providing data or analytics or service or refurbishment and maintenance, any of that kind of stuff? Or is it all – is it on a one-off transaction where that goes out the door and that’s all we see for the lifetime of that equipment?
Rick Wheeler: There is certainly an element of recurring revenue as it relates to maintenance and upgrades and things of that nature. But by far, it’s a much smaller percentage and does not represent any significant amount going forward.
Robert Marcin: And do we have a preference, will we rather rent everything or sell everything? Or doesn’t it matter to our income statement?
Rick Wheeler: Well, selling is something we like to do. The fact is that we could and do rent equipment normally because it does represent such a large investment. But it’s not really viable to only offer a rental market because there are competitors out there that build equipment that is intended to serve the same purpose. And if a customer wants to buy the equipment, if we would not allow them to do so, then they would probably go buy it from someone else.
Robert Marcin: Okay. And then…
Rick Wheeler: Resembling our equipment also is a better use of our manufacturing facility versus doing…
Robert Marcin: Okay. Do we know anything about the TAM from the last cycle and where the replacement cycle would be if the last big up cycle 7 years ago were sort of recreated over the next few years with the lag in investment in the offshore area?
Rick Wheeler: Well, with respect to our involvement, it’s a closed market. It’s not a huge – an infinite sync for product demand as it were. So that is a careful balance actually that we have to monitor with respect to how much we’re willing to invest in our rental fleet compared to the volume of work that’s being led out for utilizing this equipment. That being said, it’s not a firm number because it varies significantly because of the demand itself varying enormously between the oil companies. But that’s where we’re encouraged because we are seeing more capital investment coming from the oil companies towards the seismic exploration and monitoring of existing reserves.
Robert Marcin: Okay, thank you. I appreciate it. I will go back into the queue.
Operator: [Operator Instructions] Our next question comes from Scott Bundy with Moors & Cabot. Please go ahead.
Scott Bundy: Good morning, guys.
Rick Wheeler: Hi, Scott.
Scott Bundy: A couple of questions. Robert, regarding trade accounts and notes receivable, will 50% of that number will you receive that over the next 3 to 6 months?
Robert Curda: We will receive payment, particularly on the Mariner or rather quickly. We anticipate to get – have a sizable portion of that receivable paid before the end of the second quarter.
Scott Bundy: So Rick, with what appears to be close to $50 million plus. What are you guys thinking about as it relates to that amount of money and the fact that it’s growing very nicely.
