Q4 2019 Earnings Call

Okay.

Welcome to the fourth quarter 2019 Summit Midstream Partners LP Earnings Conference call. My name is still down and I will be your operator for today.

At this time all participants are in listen only mode. Later, we will conduct a question and answer session.

During the question answer session. If you have a question. Please press Star then one using your Touchtone phone.

Please note that this conference is being recorded.

I'll now turn the call over to Mr. Blake markedly.

I'll, let you may begin.

Thanks, operator, and good morning, everyone don't already have you ever earnings release that was issued earlier. This morning. Please visit our website Www Dot summit midstream.

We're finding a home page on the news section.

With me today to discuss our fourth quarter, a point 19 financial and operating result is he Becky our president Chief Executive Officer, Marc Stratton, Our Chief Financial Officer, along with other members of our senior management team.

Before we start I'd like to remind you that our discussion today may contain forward looking statements. These statements may include but are not limited to our estimates of future volume operating expenses and capital expenditures.

They may also include statements concerning anticipated cash flow liquidity that strategy and other plans and objectives for future operations.

Although we believe that the expectations reflected in such forward looking statements are reasonable.

We can provide no assurance that such expectations will prove to be correct.

Please see our earnings release that was issued earlier. This morning for listing of factors that could cause actual results to differ materially for expect resolved.

Please also note on this call we use the terms EBITDA adjusted EBITDA and distributable cash flow. These are non-GAAP financial measures and we have provided reconciliations to the most directly comparable GAAP measures in our most recent earnings choice [laughter] and with that I'll turn the call over to eat.

Okay. Thank you Blake and good morning, everyone. So earlier this morning somewhat reports fourth quarter 2019, adjusted EBITDA of 77.5 million, which was a new quarterly record.

This record was driven by record record liquid volumes that averaged nearly 891000 barrels per day in the Williston basin and a combination of higher volumes in many of our other segments and lower expenses relative to the third quarter 2019, distributable cash flow totaled 47.1 million, which generated a distribution coverage ratio of four times.

For the quarter and based on our quarterly distribution of 12.5 cents per unit and enabled us to cover our common unit distribution by 35.4 million [noise].

The 2019 was certainly a challenging year for some I didn't really for the midstream sector. Overall I looking forward into 2020, yeah. We are expecting the challenging macro backdrop to continue which we think will result in further declines in drilling and completion activities across North America.

The oil and gas market is currently oversupply situation, which of course is weighing heavily on today's commodity prices [laughter]. The natural gas market is particularly challenged and we are witnessing in real time, the impact that of production surplus and one of the warmest winter that we've had on record is having on forward prices across the spectrum, we're seeing.

The upstream companies respond to lower prices like they should with lower rig counts and deferred completion activity.

Longer term, we're bullish on natural gas, but we expect prices will remain at depressed levels throughout 2020, even with the expected drop and drilling and completion activities.

Likewise, we're bullish on oil prices in the coming years as the supply treadmill accelerates the markets become more dependent on U.S. shelf. The balance however, given current surpluses all markets are continuing to rely more on OPEC cuts in the near term the balance softening demand, which we believe is keeping the overall led on prices.

Given expectation of oil prices, coupled with ongoing capital market constraints in the upstream sector. We are expecting an approximately 45% reduction in new well connects across our gathering systems in 2020 as compared to 2019.

Well, we're certainly disappointed with the lower activity levels would you believe that the 2020 guidance range announced this morning reflects a commodity environment that we're currently and and the budget constraints that our customers are facing.

Many of our Counterparties are well hedged in 2020 and approximately 70% of the total well connects that are in our 2020 plan our dogs, which we believe typically represents the highest going on use of capital for our producers.

The balance of new drilling and completion activities on our system has been highly scrutinized and at this time appears to be fairly well locked into our producers 2020 capital budgets.

We'll provide more detail around guidance later on in the call, but first I wanted to remind investors that we began implementing a plan designed to mitigate the impact of these industry headwinds strengthen our balance sheet increase our financial flexibility and right size. Our overall cost structure. This plan was initiated in the second after 2019 I would like to express my sincere gratitude.

Due to the entire organization for responding to the call laid out by both senior management and our board.

I really I applaud the hard work the positive attitude the can do spirit exhibited by our employees and I'm very pleased with the progress that we've been able to make on a number of these transformational initiatives today.

Now these include the partial payment of the DPP show.

Which was an agreement buyer sponsor to take back 71 million of common equity at roughly a 40% premium to market and an extension the remaining hundred 80.75 million DPP O payment from 2020 to 2022.

Our financing transaction to shift the next 80 million of doubly capital investments to TPG capital at a 7% analyze distribution white, while retaining the long term upside for the project.

Our decision to reduce the quarterly distribution by 56.5% to 12.5 cents per unit, which will enable us to incrementally retain over 60 million of annualized cash flow that we will be using to accelerate de leveraging and enhance our financial flexibility.

Our continued commitment to reducing costs across our organization and enhancing operating margins, which we expect will reduce 2026 by at least 10 million and up to 20 million of an annual run rate expense thereafter.

And finally, our enhanced capital discipline, and a higher return threshold for incremental capital investments as represented by our expectation for 2020 capital expenditures, including $10 million are related to double Lee will be less than $70 million.

In addition, we are having a constructive conversations on several fronts related to divestitures and joint venture opportunities within our legacy in core assets.

While we will continue to evaluate these opportunities in a very patient and disciplined manner. We are optimistic that we will enter into accretive transactions in 2020 that will would significantly improve our ability to reduce debt and increase our financial flexibility.

Well shifting back to our 2020 outlooks earlier. This morning, we disclose adjusted EBITDA guidance of 2020 of 260 million to 285 million.

This ranges down from 287 million of adjusted EBITDA that some of generated in 2019, which of course is primarily due to the slowdown in the upstream activity levels that I've touched on earlier.

I'll, let mark speak to some other detailed segment level assumptions later in the call, but I would like to kind of touch on a few high level things and key considerations, but behind our 2020 outlook.

As previously mentioned, our topline volume and revenue assumptions are based on the latest drilling schedules and production forecasts from our customers most of which had been updated in recent weeks.

We have heard expecting approximately 150, new wells brought on the line in 2020, which as compared to more than 260 wells are brought on in 2019.

However, approximately 70% of the new wells scheduled in 2020 have already been drilled as I mentioned and our into Q4 completions. This year.

The remaining 30% of connections have all been permitted and have been recently reaffirmed by our customer base.

Additionally, we do have six rigs currently operating today, which gives us further confidence that we'll see these new wells turned on line.

We have also incorporated a significant amount of risking to each of our customers development plans and activities are particularly those in the second half of the year.

This is intended to address the potential for well completion timing delays discount to initial production rates and reduction and activity levels. We believe this level of risk and certainly appropriate and warranted given the unstable outlook in crude oil.

Well the natural gas pricing.

Plus just the general capital market constraints on many of our customers are facing.

To provide context, if our customers hit their latest plans, which we recently provided to us.

We believe that that we will achieve the high end of our guidance range of 285 million.

As an example, the lower end of guidance range comes into play if reality proves to be more severe than the substantial risking that we've already incorporated into the midpoint of our range. As an example in the low end of our guidance, we could accommodate a complete deferral, a new well activity in the Utica and Marcellus regions that are currently scheduled to come online during the second.

Half of the year.

While we think that outcome is very unlikely given the plans and commentary we are hearing from our customers. We do believe it is it reflects the conservatism that we believe we have baked into our guidance range.

The Guy Hes also incorporates approximately 9 million of lower EBITDA in 2020 compared to 2019 as a result of contractual MVC step downs, including a 4.8 million dollar decrease in the Barnett a $3.3 million decrease in the beyond and a 1 million decrease in the Williston basin.

Finally, our outlook incorporates a 10 million of cost savings that were implemented in the late in the fourth quarter 2019.

But does not include the potential upside associated with the up to $20 million run rate that we believe we can achieve by 2020.

While we think is critical to be transparent with our public stakeholders on the challenges we face I would be remiss if I didn't touch on some of the bright spots and I'm excited about with with respect to 2020 M. beyond.

So first choppy markets like the ones. We are gearing today really highlight the value of having a diversified business model. Our legacy areas in particular are much less prone to cash flow volatility given the mature wedge of low declining PDP production and high levels of NBC underpinning throughout 2026 in 2019 are beyond.

Barnett and Marcellus business generated 162 million of combined EBITDA and we only spent roughly 3 million of of combined Capex. These business units will continue to generate high levels of free cash flow for summit. In 2020. We believe this is going to be instrumental in our deleveraging process. These assets also represent a call option with risk.

Back to our ongoing Andy program second the Wilson remains a strong the resilient business unit for us as represented by record liquids throughput in the fourth quarter, which generated run rate annualized EBITDA of over 80 million.

We view the Wilson has the most attractive unconventional production base in the North America and that they for certainly proved out, particularly when you look at how rig counts have held steady relative to many other basins, including the Permian.

We are highly encouraged by many of the well results. We are seeing on the system and are excited to see activity trend north in the Central Williams County, which we believe is become largely delineated over the are well delineated over them over the past 18 months.

This area generates drilling economics that compete favorably with a traditional core south of the river and with a much longer inventory runway.

We view the Wilson has a long term growth engine for summit and we believed that we can execute on this attractive invested multiples given the operating leverage that we currently have on existing platform.

Third 2019 was a transformational year for summit in terms of bringing on two major gathering and processing complex in the DJ in the Permian Basin, both systems ramp nicely over the course of 20 team and we're excited at the well results in both areas continue to meet or exceed our customer expectations.

Which we believe will result in additional volume growth in 2020 and beyond despite slowdown in the upstream sector.

In addition, we're thrilled to announce the financial partnership with TPG on the doubly project at the end of 2019. We believe this further validates the high quality nature of the project and the credit worthiness of our existing shipper base.

We remain enthusiastic about the long term upside of the project our ability to capture growing natural gas volumes in new Mexico, which will feed some of the new takeaway pipelines that are being built out of waha.

Finally, we continue made great progress on the project, we expect to receive our Sevenci certificate from FERC in in the third quarter of 2020. This milestone will facilitate our ability to raise institutional project financing for the majority of the remaining doubly development costs, which we believe will further shift obligations away from some its balance sheet.

While lowering the projects overall cost gap.

Finally, the northeast often gets painted with a broad brush and while we acknowledge that this is a challenging market. We think we have very good handle on the range of outcomes, particularly for 2020, and we believe weve appropriately accounted for the downside risk in our guidance.

And this region more so than really anywhere else. Our customers are focused on quarterly free cash flow generation and managing productions within firm transportation commitments.

Both concepts that necessitate new production to offset PDP declines and we believe that converting ducs in the flow in production is often times the most economic use of upstream capital.

This belief has been validated by our customers and provides the foundation of our 2020 plan, which focus is almost exclusively on activity from wells. So they have either been drilled are being drilled presently.

Additionally, I'd like to applaud our commercial team for being creative on ways to enhance our system, while minimizing capital spend for example earlier. This month, we executed agreement with a new customer that will facilitate volumes from anew four well pad site in the second half of 2020 throughput from this new pads I will earn a relatively lower gathering fee compared to the rest of the system.

However, 100% of capital expenditures will be incurred by third party.

We expected to generate capital efficient EBITDA growth in the Utica.

Given that the backbone of our system is fully built out but also think that there are other ways to work with customers and other midstream peers to optimize the use of our existing capacity and stimulate upstream activity on the systems over a multiyear period of time and we'll continue to work diligently to do so.

As I mentioned earlier, we're going to focus on controlling what isn't our control and Capex is certainly one of those items. We expect total capital expenditures to range from 50 to 70 million in 2020, which includes investments and W.

Our 2020, Capex guidance excludes all but $2 million capital that we expect invest in doubly their nimbler projects, primarily new well pad connections. Some line looping project and the Wilson and completing construction of a new power substation in the DJ which will all account for the vast majority of this Ben and all of the knowledge scrutinize and in general are.

Being developed in sub five dumb investment multiples so.

So with that let me hand, the call over to Mark to review our financial results. Thanks Heath and good morning, everyone.

Ill begin by walking through the segments that comprise our core focus areas.

Starting with the Utica shale segment.

The SMB system averaged 254 million cubic feet today in the fourth quarter and segment adjusted EBITDA totaled $8.6 million, which was up approximately $700000 over the third quarter of 2019.

Segment results included a $2.1 million payment related to a contract amendment with a customer that resulted in a partial release of acreage from our dedication area.

Quarterly results also benefited from two well completions in October but production from these new wells was offset by sooner than expected declines from four wells that were completed in the second quarter as well as customer related production interruptions behind our TPL seven connector.

While we expect that the production declined on these wells is more the exception than the role we're conservatively considering this data in our risking of future production expectations across the system.

For 2020, we expect for Utica shale segment, adjusted EBITDA to increase by approximately 15% over 20 Nike.

Of note one of our customers is currently completing a 150 million a day five well pad site, which is expected to be online next month, and we expect our other customer commission to Ducs in the second quarter 2020, which has a delay from the first quarter.

Turning to our Ohio gathering segment, adjusted EBITDA totaled $9.5 million for the quarter, which represented a $900000 decrease from the third quarter, primarily due to lower volume throughput and higher expenses.

Gross volumes in the fourth quarter 2019 were down 6.6% from the third quarter, primarily as a result of natural production declines from 13, New wells that were turned in line in the third from 2019 and no new well connections in the fourth quarter.

We expect our ODC customers to commission 20, new wells in 2020, all of which have already been drilled.

We do not intend to fund our capital contributions to Ohio gathering in 2020, given that Capex is largely focused in the lower volume condensate window.

Our Williston Basin segment had a particularly strong fourth quarter with segment adjusted EBITDA of $20.2 million up from 13.8 million in the third quarter, primarily due to record liquids throughput of 119000 barrels per day.

As a reminder, our third quarter results for the Wilson included $3.9 million or nonrecurring items that resulted in segment adjusted EBITDA for that period that was unusually low.

Volumes in the fourth quarter benefited from 12, new wells that were turned in line all of which generated a dual crude oil and produced water revenue stream together with continued strong performance from a backlog of 39 wells that were commissioned late in the third quarter.

For 2020, we expect nearly a 50% reduction in total well completions relative to 2019, driven in large part by a reduction in drilling activity by one of our historically more active customers on the polar and divide system at a shifting activity to other parts of the basin to delineate acreage and prove up additional drilling inventory.

However, we are encouraged by the optimism we are hearing from our other customers about accelerating development activities in 2020 in the northern and Central Williams County area, which has generated a number of highly productive wells for our gathering system over the last 12 months.

DJ Basin segment, adjusted EBITDA totaled $6.6 million in the fourth quarter of 2019, a 1.1% increase over the third quarter 2019, due to a 6.1% increase in volume throughput and a more favorable mix of revenue between our customers, partially offset by a 500000 dollar nonrecurring true up expense related to prior period NGL Spa.

Thanks.

Volumes were positively impacted by 13, new well completions by our Wyoming based customer, which generates processing only fee.

Our customers are currently operating one drilling rig and have more than 25 wells in DUC inventory.

We expect approximately 50, new well connections in 2020, which we expect will increase total system throughput by approximately 15% relative to our fourth quarter 2019 volume levels.

Our Permian Basin segment generated $100000 of segment adjusted EBITDA in the fourth quarter 2019 down from approximately $200000 in the prior quarter.

Fourth quarter results were positively influenced by 13, new well connects in the period, which increased volumes by 25% over the third quarter. However results were negatively impacted by higher operating expenses during the quarter.

Our customers are currently operating one drilling rig and have six wells and DUC inventory all of which we expect will be commissioned in 2020.

Our legacy areas, which include the payouts for Marcellus segments generated $39 million combined segment adjusted EBITDA in the fourth quarter 2019, which translated into $38.8 billion of free cash flow based on $200000 have combined to maintenance capex occurred in the period.

We do not anticipate any material activity from our customers in the P. on some Barnett and 2020, which we expect will result in PDP volume declines.

Both system throughout the year.

We're anticipating fee per segment adjusted EBITDA declines in these areas as a result of certain customer MVC step downs in the Barnett and in the PR.

Collectively we expect for the payoffs and Barnett segments to generate approximately $120 million of free cash flow in 2020, as a result of limited capital requirements associated with maintaining the systems.

In the POS basin, we expect to benefit from the disposition of an underutilized gathering and processing sub system that included over 1200 miles of pipeline, but represented less than 25 billion cubic feet per day of volume throughput.

The transaction, which was effective December one 2019 generate sale proceeds of $12 million and has significantly reduced our go forward operating expenses, which will enable more effective operation and optimization of our higher utilization areas and the Pos.

Finally in the Marcellus shale segment, we anticipate an uptick in activity in 2020 with nine Ducs that are currently in inventory scheduled for completion in mid year.

And an additional nine wells that are currently being drilled and are expected to be completed in the fourth quarter.

These wells are located in close proximity to five wells that are customer commissioned in September 2019, which helped facilitate an 8% increase in volume in the fourth quarter.

As a reminder, throughput in this area as gathered by third party systems and delivered to central receipt points located throughout our high pressure system.

So there are zero capex for summit associated with realizing the benefit of this volume growth.

Now turning back to the partnership.

Sanofi reported fourth quarter financial results that included $77.5 million of adjusted EBITDA and $47.1 million of distributable cash flow.

Relative to the third quarter 2019, adjusted EBITDA was up 7.7% and DCF was up 12.9%.

As it won't be reported a fourth quarter 2019, net loss of $327.1 million, primarily related to a $336.7 million noncash impairment to our equity investments in Ohio gathering and Ohio condensate.

A $14.2 million noncash impairment related to the $12 million sale of the sub system in the pay offs.

And $5.7 million of restructuring severance and transaction expenses associated with the November 2019, BPL Amendment and the ongoing internal initiative to reduce our cost structure.

The Ohio gathering impairment is the result of our lower near term and longer term outlook for volumes and cash flows behind the system as a result of the lower commodity price backdrop.

We did not fund capital contributions to Ohio gathering 2019 as capital spending has been primarily focused on.

On the connection of lower volume condensate wells.

Capital expenditures for the fourth quarter of 2019 totaled $30.6 million grew $3.6 million of maintenance capital expenditures.

SLP also make capital contributions totaling $7 million in the fourth quarter with respect to our 70% equity interest in one doubly pipeline project.

These investments were approximately $8 million lower than the third quarter of 2019 and were primarily related to expenditures in our Williston and DJ basin segments.

We had $677 million outstanding under our $1.25 billion revolving credit facility at December 31, 2019, and approximately $100 million of available borrowing capacity due to financial covenant limitations.

Total leverage at quarter end was 5.1 times compared to a maximum limit of 5.5 times.

Excluding the potential impact a potential asset divestitures and or joint ventures, which we are actively pursuing we expect for 2020 leverage in the 4.9 times to 5.2 times area, and we expect to generate approximately $50 million or free cash flow in 2020 to reduce outstanding debt.

And with that I'll turn the call back to heat for closing remarks. Thank you Mark So I'd like to close my comments by reiterating a few things that we discussed during the third quarter 2019 call.

While we're certainly disappointed with the pullback reflected in the most recent drills schedules provided by our customers. We remain adamant about the importance of being transparent with our stakeholders and setting realistic expectations that we're confident we can achieve.

We will continue to closely monitor activity in production levels throughout the year and will provide updates on our outlook as we get new information.

On emphasized the management team and the board of directors are fully committed to take every prudent action that we can strengthen the balance sheet and create long term value for our unitholders.

Despite further weakening of our 2020 expectations since our November call.

Steps that we have already taken will enable us to reduce approximately 50 million of debt in 2020, and we have a lot more opportunities ahead of us to further improve the balance sheet in doing so we will not compromise our commitment to providing safe responsible and reliable operations for our customers and we will continue to invest in our employees to maintain a healthy and vibrant workflow.

Source that we believe will be instrumental and repositioning the company for success in the future.

Very proud of what our employees have accomplished since I joined summit. This past September and I'm very confident in the team's commitment to stay focused on the work ahead and drive towards success.

Given the quality of our employee base the quality of our assets in support of our sponsor and board of directors I remain very optimistic about the future of summit.

And with that operator, we'd like to open the call up for questions.

Thank you we will now begin the question and answer session.

If you have a question. Please press star and then one on your Touchtone phone.

Just to be removed from the question Q. Please press the pound site are the hash key.

If you are using a speaker phone you may need to pick up the handset first before pressing the numbers.

Once again, if you have a question. Please press Star then one using your Touchtone phone.

We have a question from Kyle May from capital one securities.

Hey, good morning appreciate all the details you provided for your outlook on 2020.

But starting with the way that you're talking about risking customer development development plans can you talk more about I guess the approach you're taking the considerations.

And then how this compares to your planning in recent years.

Yeah, Hey, good morning College Heath here.

So look I think.

Hit of the last part of your question how does that compare to two recent years I think we've done a lot more work. This year are really digging and with our customers and not.

And keeping actively digging in all the way up to this release and so I think I think if you think about the the range that we have here what's different about this year as if we believe the midpoint has significant risking relative to the forecast that we've actually received from the producer base. So I think at the hype one of the range if you actually.

To drill schedules and volume forecast from the customers and they perform to those and again. These are expectations that were reaffirmed here over the past couple of weeks.

Then we would come out closer to the high end of the range.

The midpoint of a range is really our risking of both volumes.

The type curves and the expected volumes as well as.

Some pullback in activity as well as just deferral of some of the timing of the drill schedules that we have in place that kind of gets to the midpoint you think about the downside case or the low end of the range.

That is really a what I would kind of call a fairly substantial pullback in activity largely in the second half of the year that would have to happen too for the for that for the low end of our guidance to come into place. So like an example, I gave on the call was.

If if relative to our to our moderate case or even our.

Yeah relative to our moderate case, if we had a complete turn off of new well connect activity in the in the Appalachian region. For example in the second half.

We would still come within our guidance range. Likewise, if we're kind of that our midpoint assumptions and we have more pullback in crude in the Wilson or DJ basins. We think we could still come in north of our to 60. So look I think look guide, we obviously theres a lot going on in the in all markets today and worldwide and so we can account for every.

Circumstance or situation, but when I think you when you look at.

The majority of the plans at our producers have the way that we've attacked risking them. This year and the way that we've approached guidance I think the management team and I even in light of recent news that we feel comfortable that we ought to come in somewhere around the midpoint to the upper side of our range.

And we have accommodate as as we said in the bottom half just further.

More difficult.

Commodity environment is going forward.

Yes, and Kyle just relative to two years past I mean, obviously.

We've we've taken a much more conservative view, just given the commodity price backdrop and what we're hearing from our customers. So just a kind of quantify a little bit more for you.

Effectively the wells that we have.

Visibility towards coming on here in the next few months to quarters, we've effectively applied a one to two month.

Discounting to that timing.

Those wells that are expected in the second half of the year upwards of four months of risk and we've applied there. So we think a fairly healthy level of of discounting that we've applied and something that's probably warranted given given the debt backdrop.

Got it okay that that's really helpful and and then from my next question.

Revisiting the asset sale program I realized for competitive reasons, you probably can't give a specific but from a high level perspective can you talk about the level of interest from other parties or.

Any maybe potential separation in the bid ask spread on these assets just just trying to get a sense for the potential rate of improvement to your leverage ratio that you could say this year.

Yes, we will I think what we can say this point identity fill at the interest level as high I think we are in two of the processes that we kind of have underway we have.

Fair amount of folks that are that are really digging in and.

In spending a lot of time I will say I think our legacy assets were continuing to.

Not really see bid values that we think they're going to be constructive but in some of the core areas, where we're evaluating either complete sales or joint ventures. The indications, we're getting back are strong and interest levels extremely high.

And I think the the transactions will be very credit accretive.

They come in around what the current expectations are.

Okay got it thanks guys.

Thank you once again for any questions. Please press star one.

If you are using a speaker phone you may need to pickup dance at first before pressing the numbers.

We have a question from Elvira Scotto from RBC capital markets.

Hey, good morning, everyone. Just a quick question for me.

You talked about in the Utica a contract amendment that resulted in a 2.1 million.

Dollar payment and then a release of acreage dedication can you provide a little more detail.

On that and how how to think that kind of going forward.

Yes. This is Ryan Simmons good morning Elvira.

That was an area on the southern to end of our system.

The acreage was.

On developable.

By the producer and so they approached us they were.

Looking to sell that acreage, we amended the contract to release that and got a.

And attractive payment for that.

Okay.

Thanks Seth.

That's all I have for now thank you.

Thank you as a reminder, if you have any questions. Please press star one.

I just want.

I will like to turn the call back to Mr. Heath Deneke, you for closing remarks.

Absolutely look well, thanks again, everyone for for joining the call today.

Look as we said and I think this is obviously some challenging times, we're definitely disappointed with the pullback that that we've had year over year in drilling activity, but definitely generate reiterate the management team to board were fully committed to take a reaction I prudent action that we can and we don't like where our leverages and so everything that we're doing is in the context of.

Strengthened balance sheet and I think we're going to make some meaningful progress on that not only with the the 50 million that we expect to be able to pay down today, not including asset sales. We remain confident that we're going to be able to get some deals done that we think Anna can move the needle move the needle on our overall leverage so we sit here today, we feel confident that we've got a lot less.

Adjustable and we really have a high degree of confidence and the midpoint to upper end of our guidance and we will commit to provide updates.

Throughout the year as we get new information or any of these these.

Ranges of shift.

With that thank you and have that weekend.

Thank you ladies and gentlemen, this concludes today's conference.

Thank you for participating you may now disconnect.

[music].